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on Macroeconomics |
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Issue of 2009‒01‒24
29 papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Shipman, Arthur F. |
| Abstract: | The popular understanding of monetary policy is reviewed. A flaw is uncovered: Changes in the components of "money" have been ignored. Policy has therefore allowed the development of a monetary imbalance. This imbalance may be described as the excessive reliance on credit. The flaw has reduced the effectiveness of monetary policy. It is responsible for our failure to bring inflation to a halt. It is responsible for massive debt accumulation. It is responsible for our economic problems today. A solution is proposed. |
| Keywords: | monetary imbalance; monetary policy; new economic theory; credit-money; credit in circulation; debt accumulation; cause of hard times |
| JEL: | E0 E31 E51 |
| Date: | 2009–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12816&r=mac |
| By: | Elena Andreou (University of Cyprus, Cyprus); Marianne Sensier (The University of Manchester, UK); Alessandra Pelloni (University of Rome ‘Tor Vergata’ and The Rimini Centre of Economic Analisys, Italy) |
| Abstract: | We provide empirical support for a DSGE model with nominal wage stickiness where growth is driven by learning-by-doing and money shocks and their variance are allowed to impact on long-run output growth. In our theoretical model the variance of monetary shocks has a negative effect on growth, while output volatility is good for growth as a positive relationship exists. Utilising a bivariate GARCH-M model we test the empirical conditional mean and variance relationships of nominal money and production growth rates in the G7 countries. We corroborate the theoretical model predictions with evidence from Bonferroni multiple tests across the G7. |
| Keywords: | growth uncertainty, learning-by-doing, monetary uncertainty, multivariate GARCH-in-mean, nominal rigidity. |
| JEL: | C32 E32 O42 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:37-08&r=mac |
| By: | Stéphane Auray (Université Lille 3 (GREMARS), Université de Sherbrooke (GREDI) and CIRPÉE); Aurélien Eyquem (GATE, UMR 5824, Université de Lyon and Ecole Normale Supérieure Lettres et Sciences Humaines, France); Frédéric Jouneau-Sion (EQUIPPE (EA 4018), Université Lille Nord de France) |
| Abstract: | This paper proposes a conceptual framework to investigate the impact of military conflicts on business cycles, as well as defense policies through enrolment mechanisms. Our framework is a variation of a Real Business Cycle model first proposed by Hercowitz and Sampson (1991) that admits explicit solutions. We extend and estimate the initial model on US data to account for specific shocks that destroy the stock of capital and that may be as large as desired. We consider two types of dynamics on the depreciation rate of capital: short-term shocks, that may be interpreted as riots and captured by a Moving Average specification, and mid-term shocks, that may be interpreted as wars and captured by a Markov Switching process. Destructions may be limited by publicly decided enrolment, which allows to question the goals defense policies should aim at. First our model reproduces usual business cycle facts. Second, it allows to characterize the macroeconomic dynamics after shocks on the depreciation rate of capital. Finally, it provides a simple framework to quantify the welfare effects of alternative (simple) defense technologies. |
| Keywords: | military policy, Real Business Cycle model, random coefficient autoregressive model |
| JEL: | E13 E32 H56 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:09-01&r=mac |
| By: | James Costain (Banco de España); Antón Nákov (Banco de España) |
| Abstract: | This paper analyzes the effects of monetary shocks in a DSGE model that allows for a general form of smoothly state-dependent pricing by firms. As in Dotsey, King, and Wolman (1999) and Caballero and Engel (2007), our setup is based on one fundamental property: firms are more likely to adjust their prices when doing so is more valuable. The exogenous timing (Calvo 1983) and fixed menu cost (Golosov and Lucas 2007) models are nested as limiting cases of our setup. Our model is calibrated to match the steady-state distribution of price adjustments in microdata; realism calls for firm-specific shocks. Computing a dynamic general equilibrium requires us to calculate how the distribution of prices and productivities evolves over time. We solve the model using the method of Reiter (2008), which is well-suited to this type of problem because it combines a fully nonlinear treatment of firm-level state variables with a linearization of the aggregate dynamics. We compute impulse responses to iid and autocorrelated money growth shocks, and decompose the inflation impact into 'intensive margin', 'extensive margin' and 'selection' components. Under our most successful calibration, increased money growth causes a persistent rise in inflation and output. The real effects are substantially larger if money growth is autocorrelated. In contrast, if we instead impose a fixed menu cost specification, money growth shocks cause a sharp spike in inflation (via the selection component) so that the real effects are small and short-lived, especially if money growth is iid. An increase in aggregate productivity raises consumption but causes labor to fall. Also, impulse responses differ depending on the distribution at the time the shock occurs. In particular, increased money growth has different effects starting from the steady state distribution than it does if all firms have recently received an economy-wide productivity shock. |
| Keywords: | price stickiness, state-dependent pricing, stochastic menu costs, generalized (S,s), heterogeneous agents, distributional dynamics |
| JEL: | E31 E52 D81 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0831&r=mac |
| By: | Kaaresvirta, Juuso (BOFIT); Mehrotra, Aaron (BOFIT) |
| Abstract: | We use business survey data collected by the People’s Bank of China for inflation forecasting. Some survey indicators lead to enhanced forecasting performance relative to the univariate benchmark model, especially for a period of moderate inflation. However, the estimated models do not do a good job of tracking the recent pickup in Chinese inflation, due to increases in food prices. |
| Keywords: | inflation forecasting; business surveys; China |
| JEL: | C53 E31 |
| Date: | 2009–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_022&r=mac |
| By: | Barbara Annicchiarico (University of Rome ‘Tor Vergata’. Italy); Luisa Corrado (University of Cambridge, UK and University of Rome ‘Tor Vergata’, Italy); Alessandra Pelloni (University of Rome ‘Tor Vergata’ and The Rimini Centre of Economic Analisys, Italy) |
| Abstract: | We study the relationship between growth and variability in a DSGE model with nominal rigidities and growth driven by learning-by-doing. We show that this relationship may be positive or negative depending on the impulse source of fluctuations A key role is also played by the Frisch elasticity of labour supply and by institutional features of the labour market. Our general findings are that monetary shocks volatility will generally have a negative effect on growth, while the opposite tends to be true for fiscal and productivity shocks. These findings are somehow consistent with the existing empirical evidence: data show, in fact, a somewhat ambiguous relationship between output growth and real variability, but a generally negative relationship between output growth and nominal variability. |
| Keywords: | Growth; Volatility; Monetary and Real Shocks; Labour Supply Elasticity; Second-Order Approximation Methods |
| JEL: | O42 E30 C63 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:32-08&r=mac |
| By: | Sungbae An (Singapore Management University); Yongsung Chang (University of Rochester); Sun-Bin Kim (Korea University) |
| Abstract: | Accounting for observed fluctuations in aggregate employment, consumption, and real wage using the optimality conditions of a representative household often requires preferences that are incompatible with economic priors (e.g., Mankiw, Rotemberg, and Summers 1985). This discrepancy between the equilibrium model and the aggregate data is often viewed as evidence of the failure of labor-market clearing. We argue that such a conclusion is premature. We construct a model economy where all prices are flexible and all markets clear at all times but household decisions are not readily aggregated because of incomplete capital markets and the indivisible nature of the labor supply. We demonstrate that if we were to explain the model-generated aggregate time series using decisions of a fictitious" stand-in household, such a household is likely to have a non-concave or unstable utility. Our analysis suggests that the representative-agent model often fails to represent an equilibrium outcome of a heterogeneous-agent economy. |
| Keywords: | Representative-agent model, Aggregation, Heterogeneity, Incomplete Markets, Indivisible Labor, GMM Estimation |
| JEL: | E24 E32 J21 J22 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:roc:rocher:542&r=mac |
| By: | Sharon Harrison; Mark Weder |
| Abstract: | In this paper, we address the causes of the Roaring Twenties in the United States. In particular, we use a version of the real business cycle model to test the hypothesis that an extraordinary pace of productivity growth was the driving factor. Our motivation comes from the abundance of evidence of signi?cant technological progress during this period, fed by innovations in manufacturing and the widespread introduction of electricity. Our estimated total factor productivity series generate arti?cial model output that shows high conformity with the data: the model economy sucessfully replicates the boom years from 1922-1929. |
| Keywords: | Real Business Cycles, Roaring Twenties. |
| JEL: | E32 N12 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:0901&r=mac |
| By: | Tatiana Cesaroni (MEF) |
| Abstract: | This paper investigates the underlying sources of the Italian industrial sector fluctuations. It concentrates in particular on the role of different shocks on the manufacturing business cycle. To this end, it considers both domestic shocks (to hours worked and to technology) and external shocks (i.e. competitiveness and world trade shocks). The former concern internal conditions such as labour market and productivity dynamics; the latter relate to the effects of economic integration, globalization and the world economy scenario on the manufacturing sector performance. The findings show that although the cyclical fluctuations are mainly determined by productivity shock, hours worked and world trade shocks also contribute significantly to explaining the manufacturing business cycle. |
| Keywords: | Business cycle, Italian Industry performance,SVAR model, Economic integration, World trade |
| JEL: | C32 E32 F41 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:isa:wpaper:106&r=mac |
| By: | Barnett, William A.; He, Susan |
| Abstract: | Abstract: Grandmont (1985) found that the parameter space of the most classical dynamic general-equilibrium macroeconomic models are stratified into an infinite number of subsets supporting an infinite number of different kinds of dynamics, from monotonic stability at one extreme to chaos at the other extreme, and with all forms of multiperiodic dynamics between. But Grandmont provided his result with a model in which all policies are Ricardian equivalent, no frictions exist, employment is always full, competition is perfect, and all solutions are Pareto optimal. Hence he was not able to reach conclusions about the policy relevance of his dramatic discovery. As a result, Barnett and He (1999, 2001, 2002) investigated a Keynesian structural model, and found results supporting Grandmont’s conclusions within the parameter space of the Bergstrom-Wymer continuous-time dynamic macroeconometric model of the UK economy. That prototypical Keynesian model was produced from a system of second order differential equations. The model contains frictions through adjustment lags, displays reasonable dynamics fitting the UK economy’s data, and is clearly policy relevant. In addition, results by Barnett and Duzhak (2008,2009) demonstrate the existence of Hopf and flip (period doubling) bifurcation within the parameter space of recent New Keynesian models. Lucas-critique criticism of Keynesian structural models has motivated development of Euler equations models having policy-invariant deep parameters, which are invariant to policy rule changes. Hence, we continue the investigation of policy-relevant bifurcation by searching the parameter space of the best known of the Euler equations general-equilibrium macroeconometric models: the path-breaking Leeper and Sims (1994) model. We find the existence of singularity bifurcation boundaries within the parameter space. Although never before found in an economic model, singularity bifurcation may be a common property of Euler equations models, which often do not have closed form solutions. Our results further confirm Grandmont’s views. Beginning with Grandmont’s findings with a classical model, we continue to follow the path from the Bergstrom-Wymer policy-relevant Keynesian model, to New Keynesian models, and now to Euler equations macroeconomic models having deep parameters. |
| Keywords: | Bifurcation; inference; dynamic general equilibrium; Pareto optimality; Hopf bifurcation; Euler equations; Leeper and Sims model; singularity bifurcation; stability. |
| JEL: | E32 C14 C52 E52 C22 E37 E61 |
| Date: | 2009–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12803&r=mac |
| By: | Melisso Boschi (University of Perugia and Centre for Applied Macroeconomic Analysis (CAMA)); Alessandro Girardi (ISAE - Institute for Studies and Economic Analyses and University of Rome Tor Vergata) |
| Abstract: | This paper quantifies the relative contribution of domestic, regional and international factors to the fluctuation of domestic output in six key Latin American (LA) countries: Argentina, Bolivia, Brazil, Chile, Mexico and Peru. Using quarterly data over the period 1980:1-2003:4, a multivariate, multi-country time series model was estimated to study the economic interdependence among LA countries and, in addition, between each of them and the three world largest industrial economies: the US, the Euro Area and Japan. Falsifying a common suspicion, it is shown that the proportion of LA countries’ domestic output variability explained by industrial countries’ factors is modest. By contrast, domestic and regional factors account for the main share of output variability at all simulation horizons. The implications for the choice of the exchange rate regime are also discussed. |
| Keywords: | International business cycle, Latin America, exchange rate regimes, Global VAR methodology, VEC models. |
| JEL: | C32 E32 F31 F41 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:isa:wpaper:105&r=mac |
| By: | David Büttner (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Bernd Hayo (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Matthias Neuenkirch (Faculty of Business Administration and Economics, Philipps Universitaet Marburg) |
| Abstract: | In this paper, we study the effects of euro area and US macroeconomic news on financial markets in the Czech Republic, Hungary, and Poland (CEEC-3) from 1999 to 2006. Using a GARCH model, we examine the impact on daily returns of three-month interest rates, stock market indices, exchange rates versus the euro, and the US dollar. First, foreign macroeconomic news has a significant impact on CEEC-3 financial markets. Second, neither US nor European news has a stronger effect over the whole observation period. Third, the process of European integration is accompanied by an increasing importance of euro area news relative to US news. Fourth, there are country-specific differences: the Czech markets become more affected by foreign news after the Copenhagen Summit than the other countries. Finally, testing the persistence of news over a business week confirms our main results. |
| Keywords: | Financial Markets, Czech Republic, Hungary, Poland, Macroeconomic News, European Monetary Union |
| JEL: | G12 G15 F30 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:200903&r=mac |
| By: | Codrina Rada |
| Abstract: | Unprecedented demographic changes are set to unfold in most of the industrialized world. They are relevant not only because of the diminishing pool of workers, but also because of the increasing importance of retirees as an economic class. Retirees’ consumption and saving patterns can differ considerably from those of wage earners and capitalists, as retirees tend to consume more services and save less or in fact dissave. From this perspective of changing aggregate consumption and saving patterns I argue that population aging together with existing constraints to growth and the institutional framework in place leads to a reconfiguration of income distribution and therefore to possible changes in the growth rate of the economy. Understanding how future income distribution may look like and the behavior of different economic classes, helps in designing the right policies to accommodate the demographic transition. |
| Keywords: | population aging, income distribution and growth, Keynesian macroeconomics |
| JEL: | E12 E24 E60 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:uta:papers:2009_01&r=mac |
| By: | Marika Karanassou (Queen Mary, University of London); Hector Sala (Universitat Autonoma de Barcelona) |
| Abstract: | The debate in Australia on the (constant-output) elasticity of labour demand with respect to wages has wrongly sidelined the role of capital stock as a determinant of employment (Webster, 2003). As far back as 1991, Pissarides had argued that the influence of capital stock on the performance of the labour market is crucial but not well understood, a research area which is particularly relevant for Australia. This paper attempts to fill this void by estimating a multi-equation labour market model comprising labour demand, wage setting and labour supply equations. The model is used to examine the causes of the unemployment upturn in 1973-1983 and the subsequent decline in 1993-2006. Our results show that (i) the main determinants of the unemployment rise in the 1970s and early 1980s were wage-push factors, the two oil price shocks and the increase in interest rates, and (ii) the acceleration in capital accumulation was the crucial driving force of unemployment in the 1990s and 2000s. Furthermore, although the recent boom in the terms of trade is equally important, its downward effect on unemployment was partially reversed by the resulting decrease in net foreign demand. |
| Keywords: | Labour market dynamics; capital accumulation; chain reaction theory |
| JEL: | E22 E24 J21 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2008-26&r=mac |
| By: | Marika Karanassou (Queen Mary, University of London and IZA); Hector Sala (Universitat Autònoma de Barcelona and IZA) |
| Abstract: | The debate in Australia on the (constant-output) elasticity of labour demand with respect to wages has wrongly sidelined the role of capital stock as a determinant of employment (Webster, 2003). As far back as 1991, Pissarides had argued that the influence of capital stock on the performance of the labour market is crucial but not well understood, a research area which is particularly relevant for Australia. This paper attempts to fill this void by estimating a multi-equation labour market model comprising labour demand, wage setting and labour supply equations. The model is used to examine the causes of the unemployment upturn in 1973-1983 and the subsequent decline in 1993-2006. Our results show that (i) the main determinants of the unemployment rise in the 1970s and early 1980s were wage-push factors, the two oil price shocks and the increase in interest rates, and (ii) the acceleration in capital accumulation was the crucial driving force of unemployment in the 1990s and 2000s. Furthermore, although the recent boom in the terms of trade is equally important, its downward effect on unemployment was partially reversed by the resulting decrease in net foreign demand. |
| Keywords: | Labour market dynamics, Capital accumulation, Chain reaction theory |
| JEL: | E22 E24 J21 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp636&r=mac |
| By: | Karanassou, Marika (University of London); Sala, Hector (Universitat Autònoma de Barcelona) |
| Abstract: | The debate in Australia on the (constant-output) elasticity of labour demand with respect to wages has wrongly sidelined the role of capital stock as a determinant of employment (Webster, 2003). As far back as 1991, Pissarides had argued that the influence of capital stock on the performance of the labour market is crucial but not well understood, a research area which is particularly relevant for Australia. This paper attempts to fill this void by estimating a multi-equation labour market model comprising labour demand, wage setting and labour supply equations. The model is used to examine the causes of the unemployment upturn in 1973-1983 and the subsequent decline in 1993-2006. Our results show that (i) the main determinants of the unemployment rise in the 1970s and early 1980s were wage-push factors, the two oil price shocks and the increase in interest rates, and (ii) the acceleration in capital accumulation was the crucial driving force of unemployment in the 1990s and 2000s. Furthermore, although the recent boom in the terms of trade is equally important, its downward effect on unemployment was partially reversed by the resulting decrease in net foreign demand. |
| Keywords: | labour market dynamics, capital accumulation, chain reaction theory |
| JEL: | E22 E24 J21 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3924&r=mac |
| By: | Gennaro Zezza |
| Abstract: | The Federal Reserve's latest Flow of Funds figures reveal that household borrowing has fallen sharply lower, bringing about a reversal of the upward trend in household debt. According to the Levy Institute's macro model, a fall in borrowing has an immediate effect--accounting in this case for most of the 3 percent drop in private expenditure that occurred in the third quarter of 2008--as well as delayed effects; as a result, the decline in real GDP and accompanying rise in unemployment may be substantial in coming quarters. For further details on the Macro-Modeling Team's latest projections, see the December 2008 Strategic Analysis Prospects for the U.S. and the World: A Crisis That Conventional Remedies Cannot Resolve. |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levysa:sa_jan_09&r=mac |
| By: | Riccardo Fiorito; Giulio Zanella |
| Abstract: | In this paper we compare “micro” and “macro” labor supply elasticities in a MaCurdy-type equation. Using PSID data, we obtain the micro elasticity from standard panel techniques, and the macro elasticity from the time series generated by aggregating individuals every year. This procedure relies on the exact aggregation of first-order conditions in a life-cycle model with home production. We find an individual elasticity of about 0.1, a low value in line with mainstream microeconometric studies, and an aggregate elasticity of about 1, a much larger value often assumed in calibration studies. This discrepancy is not due to aggregation bias: it is due to the fact that individual and total hours are different variables, with the extensive margin that empirically dominates. A broader implication of our result is that micro evidence is not always appropriate for calibrating an aggregate model economy |
| Keywords: | elasticity of labor supply, aggregation, calibration |
| JEL: | E13 E32 J22 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:547&r=mac |
| By: | Sonali Das (CSIR, Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Alain Kabundi (Department of Economics and Econometrics, University of Johannesburg) |
| Abstract: | This paper analyzes whether a wealth of information contained in 126 monthly series used by large-scale Bayesian Vector Autoregressive (LBVAR) models, as well as Factor Augmented Vector Autoregressive (FAVAR) models, either Bayesian or classical, can prove to be more useful in forecasting real house price growth rate of the nine census divisions of the US, compared to the small-scale VAR models, that merely use the house prices. Using the period of 1991:02 to 2000:12 as the in-sample period and 2001:01 to 2005:06 as the out-of-sample horizon, we compare the forecast performance of the alternative models for one- to twelve–months ahead forecasts. Based on the average Root Mean Squared Error (RMSEs) for one- to twelve–months ahead forecasts, we find that the alternative FAVAR models outperform the other models in eight of the nine census divisions. |
| Keywords: | Dynamic Factor Model, BVAR, Forecast Accuracy |
| JEL: | C11 C13 C33 C53 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:200902&r=mac |
| By: | Mário R. Páscoa; Myrian Petrassi; Juan Pablo Torres-Martínez |
| Abstract: | It is well known that, under uniform impatience, positive net supply assets are free of bubbles for non-arbitrage kernel deflators that yield finite present values of wealth. However, this does not mean that prices cannot be above the series of deflated dividends for the deflators given by the agents' marginal rates of substitution, which also yield finite present values of wealth. In particular, binding no-short-sales constraints lead to positive prices of fiat money. These monetary equilibria are Pareto improvements but they are still inefficient. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:176&r=mac |
| By: | Andrew Sharpe; Jean-François Arsenault; Peter Harrison |
| Abstract: | The most direct mechanism by which labour productivity affects living standards is through real wages, that is, wages adjusted to reflect the cost of living. Between 1980 and 2005, the median real earnings of Canadians workers stagnated, while labour productivity rose 37 per cent. This report analyzes the reasons for this situation. It identifies four factors of roughly equal importance: rising earning inequalities; falling terms of trade for labour; a decrease in labour’s share of GDP; and measurement issues. This report also explores the relationship between labour productivity and real wages by province and by sector, as well as in the United States and in other high-income countries. |
| Keywords: | Productivity, Real Wages, Earnings, Labour Share, Inequalities |
| JEL: | E20 E25 O51 O40 J38 J39 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:0808&r=mac |
| By: | Rangan Gupta (Department of Economic, University of Pretoria); Stephen M. Miller (College of Business, University of Las Vegas, Nevada) |
| Abstract: | We examine the time-series relationship between housing prices in Los Angeles, Las Vegas, and Phoenix. First, temporal Granger causality tests reveal that Los Angeles housing prices cause housing prices in Las Vegas (directly) and Phoenix (indirectly). In addition, Las Vegas housing prices cause housing prices in Phoenix. Los Angeles housing prices prove exogenous in a temporal sense and Phoenix housing prices do not cause prices in the other two markets. Second, we calculate out-of-sample forecasts in each market, using various vector autoregessive (VAR) and vector error-correction (VEC) models, as well as Bayesian, spatial, and causality versions of these models with various priors. Different specifications provide superior forecasts in the different cities. Finally, we consider the ability of theses time-series models to provide accurate out-of-sample predictions of turning points in housing prices that occurred in 2006:Q4. Recursive forecasts, where the sample is updated each quarter, provide reasonably good forecasts of turning points. |
| Keywords: | Ripple effect, Housing prices, Forecasting |
| JEL: | C32 R31 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:200901&r=mac |
| By: | John Duggan (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158); Tasos Kalandrakis (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158); Vikram Manjunath (Department of Economics, University of Rochester) |
| Abstract: | We specify and compute equilibria of a dynamic policy-making game between a president and a legislature under insitutional rules that emulate those of the US Constitution. Policies are assumed to lie in a two-dimensional space in which one issue dimension captures systemic differences in partisan preferences, while the other summarizes non-partisan attributes of policy. In any period, the policy choices of politicians are influenced by the position of the status quo policy in this space, with the current policy outcome determining the location of the status quo in the next period. Partisan control of the legislature and presidency changes probabilistically over time. We find that politicians strategically compromise their ideal policy in equilibrium, and that the degree of compromise increases when the opposition party is more likely to take control of the legislature in the next period, while politicians become relatively more extreme when the opposition party is more likely to control the presidency. We measure gridlock by (the inverse of ) the expected distance of enacted policies from the status quo in the long run, and we show that both gridlock and the long run welfare of a representative voter are maximized when government is divided without a super majority in the legislature. Under unified government, we find that the endogeneity of the status quo leads to a non-monotonic effect of the size of the legislative ma jority on gridlock; surprisingly, under unified government, gridlock is higher when the party in control of the legislature has a superma jority than when it has a bare ma jority. Furthermore, a relatively larger component of policy change occurs in the non-partisan policy dimension when a superma jority controls the legislature. We conduct constitutional experiments, and we find that voter welfare is minimized when the veto override provision is abolished and maximized when the presidential veto is abolished. |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:roc:wallis:wp56&r=mac |
| By: | Bredemeier, Christian (University of Dortmund); Juessen, Falko (University of Dortmund) |
| Abstract: | We propose a new explanation for differences and changes in labor supply by gender and marital status, and in particular for the increase in married women's labor supply over time. We argue that this increase as well as the relative constancy of other groups' hours are optimal reactions to outsourcing labor in home production becoming more attractive to households over time. To investigate this hypothesis, we incorporate heterogeneous agents into a household model of labor supply and allow agents to trade home labor. This model can generate the observed patterns in US labor supply by gender and marital status as a reaction to declining frictions on the market for home services. We provide an accounting exercise to highlight the role of alternative explanations for the rise in hours in a model where home labor is tradable. |
| Keywords: | labor supply, gender, home production, heterogeneity |
| JEL: | J22 J16 E13 D13 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3944&r=mac |
| By: | Francesco CHELLI (Universita' Politecnica delle Marche, Dipartimento di Economia); Chiara GIGLIARANO (Universita' Politecnica delle Marche, Dipartimento di Economia); Elvio MATTIOLI (Universita' Politecnica delle Marche, Dipartimento di Economia) |
| Abstract: | This paper explores the determinants of the heterogeneity in the expenditure behaviors of the Italian households, using the Households Expenditure Survey provided by the Italian National Institute of Statistics (ISTAT) for the year 2005. We assume that differences among consumers are associated with differences in their economic and socio-demographic characteristics (such as gender, employment status and age of the householder, number of household components, presence of under 18 years old components), and we look for those characteristics that better differentiate groups of households according to their purchasing patterns. We apply a nonparametric discriminant analysis based on the various expenditure budget components, and detect the most discriminating partitions of families. The technique allows us also to identify the specific goods of consumption that significantly differ across the groups identified by the best partitions. We then study the different effects of the price dynamics on subgroups of households, and propose consumer price indices specific for the optimal households groups |
| Keywords: | consumer price index, consumption, discriminant analysis, household expenditure survey |
| JEL: | C43 D12 E31 H31 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:329&r=mac |
| By: | Andrew Sharpe; Jean-François Arsenault; Peter Harrison |
| Abstract: | Investment is one of the main drivers of productivity growth, which is the key determinant of living standards in the long run. Investment in British Columbia is lagging when compared to that of Canada, particularly in machinery and equipment and ICT investment. Going forward, a poor investment performance in BC would likely lead to below average growth in labour productivity, as was the case in the last 25 years. Weak labour productivity growth in BC would in turn translate into weak economic growth and falling relative standards of living over time. A number of measures may be taken to ensure sustained investment in physical capital in BC. This report puts forward a number of recommendations to increase investment in British Columbia. |
| Keywords: | Investment, British Columbia, Public Policy, Taxation, Harmonization, Infrastructure, Productivity |
| JEL: | E20 E22 R50 R53 R11 O40 H71 H25 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:sls:resrep:0810&r=mac |
| By: | Appelqvist, Örjan (Dept. of Economic History, Stockholm University) |
| Abstract: | Characterizes conflict and cooperation in the intertwined careers of Gunnar Myrdal and Dag Hammarskjöld as economists, actors in Swedish policy 1940-1947 and international civil servants, Myrdal being Executive Secretary of the UN ECE 1947-1957 and Hammarskjöld being General Secretary of the UN 1951-1961. In economics the difference between dynamic and neoclassical approaches are noted. It contrasts Myrdal’s very early formulation of growth oriented financial policy with the very lasting refusal of counter-cyclical policies of the Swedish government under the influence of Hammarskjöld. In regard to official US postwar policies their differences are highlighted from the pre-cold war period as well as from the early fifties, Myrdal defending a ‘universalist’ position trying to defend the ECE against power policy intrusion whereas Hammarskjöld wanted to ‘proceed with caution’ in regard to what he considered to be ‘a friendly government’. <p>Their differences are traced to personal backgrounds while at the same time expressing principal dilemmas facing civil servants in international organisations in a political climate of strong tensions between national interests. |
| Keywords: | Swedish economic policy; history of economic ideas; intellectual history of United Nations; Gunnar Myrdal; Dag Hammarskjöld |
| JEL: | B25 B31 |
| Date: | 2008–12–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:suekhi:0002&r=mac |
| By: | Till Dannewald; Lutz Hildebrandt |
| Abstract: | In times of increasing oil prices and a weak dollar, European companies that focus their business on the US market may find themselves in a weak position. While many businesses can hedge this kind of risk by relocating production to the US, or employing financial remedies, these strategies may not work throughout the consumer goods industry. Especially for brands whose consumption is strongly impacted by country of origin (e.g. French whine, Swiss chocolate, German beer, etc.), there are only limited possibilities to bypass these challenges. To react efficiently to these threats, managers need a precise picture of complete market mechanisms before they can set up an appropriate marketing strategy to react. We aim to enhance the understanding of market mechanisms that are caused by exogenous cost shocks for typical consumer goods. The contribution of our work is twofold: To investigate the underlying process and to derive concrete managerial suggestions. We hereby propose a combination of two different empirical frameworks to measure the effects of exchange rate variations in fast moving consumer markets. Furthermore we extend existing work in being the first to model vertical interactions with a Manufacturer-Wholesaler-Retailer Model. Within this framework we investigate how changes in local currency affect the strategic management variables of price, margin and profit in a typical consumer goods market. While it is widely known that exchange rate changes cause variations in export/import prices and numerous studies show that the effect of currency fluctuations decreases within the distribution process, recent marketing research in this area has not explicitly accounted for the mechanisms that occur within the distribution channel. Many empirical studies implicate that exogenous cost shocks, which are caused by exchange rate changes, are passed through imperfectly to final consumer prices. We therefore show that the margins of the players involved in the distribution process will be affected differently by exchange rate variation dependent on the competitive situation. Although our empirical study focuses on the effect of exchange rate variations on strategic marketing variables of a selected fast moving consumer good, our framework can be easily adapted to any other market and other sources that cause a change in production cost. |
| Keywords: | Exchange Rate Pass-Through, Structural Choice Modelling, Endogeneity, International Marketing, Pricing, Channel Management |
| JEL: | M31 F12 L66 F14 L13 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2008-070&r=mac |
| By: | Christian Le Bas (LEFI - Laboratoire d'Economie de la Firme et des Institutions - Université Lumière - Lyon II) |
| Abstract: | L’objet du papier est d’analyser les conséquences pour les pays en voie de développement de l’existence, du fonctionnement, et de l’évolution du système de brevet tel qu’il est maintenant structuré par les TRIPS (au sein de l’OMC). Nous définissons et analysons l’économie post-TRIPS, comme nouvelle structuration des relations économiques internationales modifiées sous l’effet du renforcement des droits de propriété intellectuelle. Nous fournissons un survol commentée de la littérature théorique et empirique sur les TRIPS et sur l’évolution du système de propriété intellectuelle et les capacités de développement. Les effets d’un renforcement des droits de brevets sur les transferts de technologies sont également abordés. |
| Keywords: | TRIPS;brevet;développement;transfert de technologie |
| Date: | 2009–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00351067_v1&r=mac |