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on Macroeconomics |
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Issue of 2013‒08‒05
forty-nine papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Lawrence J. Christiano; Martin S. Eichenbaum; Mathias Trabandt |
| Abstract: | We develop and estimate a general equilibrium model that accounts for key business cycle properties of macroeconomic aggregates, including labor market variables. In sharp contrast to leading New Keynesian models, wages are not subject to exogenous nominal rigidities. Instead we derive wage inertia from our specification of how firms and workers interact when negotiating wages. Our model outperforms the standard Diamond-Mortensen-Pissarides model both statistically and in terms of the plausibility of the estimated structural parameter values. Our model also outperforms an estimated sticky wage model. |
| JEL: | E2 E24 E32 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19265&r=mac |
| By: | S. Boragan Aruoba; Frank Schorfheide |
| Abstract: | This paper studies the dynamics of a New Keynesian dynamic stochastic general equilibrium (DSGE) model near the zero lower bound (ZLB) on nominal interest rates. In addition to the standard targeted-inflation equilibrium, we consider a deflation equilibrium as well as a Markov sunspot equilibrium that switches between a targeted-inflation and a deflation regime. We use the particle filter to estimate the state of the U.S. economy during and after the 2008-09 recession under the assumptions that the U.S. economy has been in either the targeted-inflation or the sunspot equilibrium. We consider a combination of fiscal policy (calibrated to the American Recovery and Reinvestment Act) and monetary policy (that tries to keep interest rates near zero) and compute government spending multipliers. Ex-ante multipliers (cumulative over one year) under the targeted-inflation regime are around 0.9. A monetary policy that keeps interest rates at zero can raise the multiplier to 1.7. The ex-post (conditioning on the realized shocks in 2009-11) multiplier is estimated to be 1.3. Conditional on the sunspot equilibrium, the multipliers are generally smaller and the scope for conventional expansionary monetary policy is severely limited. |
| Keywords: | Government spending policy ; Monetary policy ; Fiscal policy ; Macroeconomics - United States |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:13-29&r=mac |
| By: | Roger E.A. Farmer |
| Abstract: | Central banks throughout the world predict inflation with new-Keynesian models where, after a shock, the unemployment rate returns to its so called “natural rate’. That assumption is called the Natural Rate Hypothesis (NRH). This paper reviews a body of work, published over the last decade, which is critical of the NRH. I argue that the NRH does not hold in the data and I provide an alternative paradigm that explains why it does not hold. I replace the NRH with the assumption that the animal spirits of investors are a fundamental of the economy and I show how to operationalize that idea by constructing an empirical model that outperforms the new-Keynesian Phillips curve. I model animal spirits with a new fundamental that I call the belief function. |
| JEL: | E0 E24 E52 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19267&r=mac |
| By: | Matthias Neuenkirch (University of Aachen); Florian Neumeier (University of Marburg) |
| Abstract: | In this paper, we analyze the relationship between certain characteristics of incumbent central bank governors and their interest rate-setting behavior. We focus on (i) occupational backgrounds, (ii) party affiliation, and (iii) experience in office and estimate augmented Taylor rules for 20 OECD countries and the period 1974-2008. Our findings are as follows. First, the tenures of central bank governors who are affiliated with a political party are characterized by a relatively dovish monetary policy stance, irrespective of their partisan ideology. Second, party affiliation appears to be more important than occupational background, i.e., all bankers with(out) a party affiliation behave very similarly to each regardless of their specific occupational background. Third, party members react significantly less to inflation and more to output the longer they stay in office. |
| Keywords: | Central Bank Governors, Monetary Policy, Occupation, Partisanship, Taylor Rules |
| JEL: | E31 E43 E52 E58 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201336&r=mac |
| By: | Bachmann, Rüdiger; Born, Benjamin; Elstner, Steffen; Grimme, Christian |
| Abstract: | Does time-varying business volatility affect the price setting of firms and thus the transmission of monetary policy into the real economy? To address this question, we estimate from the firm-level micro data of the German IFO Business Climate Survey the impact of idiosyncratic volatility on the price setting behavior of firms. In a second step, we use a calibrated New Keynesian business cycle model to gauge the effects of time-varying volatility on the transmission of monetary policy to output. Our results are twofold. Heightened business volatility increases the probability of a price change, though the effect is small: the tripling of volatility during the recession of 08/09 caused the average quarterly likelihood of a price change to increase from 31.6% to 32.3%. Second, the effects of this increase in volatility on monetary policy are also small; the initial effect of a 25 basis point monetary policy shock to output declines from 0.347% to 0.341%. -- |
| Keywords: | survey data,time-varying volatility,price setting,New Keynesian model,monetary policy |
| JEL: | E30 E31 E32 E50 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:svrwwp:012013&r=mac |
| By: | Vespignani, Joaquin L.; Ratti , Ronald A. |
| Abstract: | It is found that over 1999:1-2012:12 China’s monetary expansion influences Japan through the effect of China’s growth on world commodity prices, increased demand for imports, and exchange rate policy. China’s monetary expansion is associated with significant increases in Japan’s industrial production, exports and inflation, and decreases in the trade-weighted yen. In contrast, U.S. monetary expansion results in contraction in Japan’s industrial production, exports and trade balance (expenditure-switching). Monetary expansion in the Euro area does not significantly affect Japan. Structural vector error correction models are estimated. Results are robust to various contemporaneous restrictions for the effect of international monetary variables, the interaction of foreign and domestic variables and to factor augmented VAR to identify monetary shocks. |
| Keywords: | International Monetary shocks, Japanese economy, Oil/commodity prices, SVEC models |
| JEL: | E4 E42 E5 E58 F0 F00 |
| Date: | 2013–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48709&r=mac |
| By: | Schnabl, Gunther |
| Abstract: | The paper identifies based on the monetary overinvestment (malinvestment) theories by Wicksell (1898), Mises (1912) and Hayek (1929) monetary policy mistakes in large industrial countries issuing international currencies. It its argued that a benign neglect towards monetary policy reform in a world dominated by financial markets has led to a erosion of the allocation and signaling function of the interest rate, which has triggered an excessive rise of government debt and structural distortions in the world economy. The backlash of high government debt levels on monetary policy making is argued to lead to the hysteresis of low interest rates and high government debt levels. In this context, monetary reform is discussed with respect to the exit from low interest rates and high debt policies and a reform of the prevalent world monetary system. It is concluded that enhanced competition between dollar and euro as international currencies, which is refereed by East Asia, can be a promising approach towards a more stable world monetary system. -- |
| Keywords: | Economic Instability,Credit Cycles,Monetary Policy,Hayek,Mises,Monetary Policy Reform,Currency Competition |
| JEL: | E42 E58 F33 F44 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:leiwps:121&r=mac |
| By: | Guray Kucukkocaoglu; Deren Unalmis; Ibrahim Unalmis |
| Abstract: | Using a methodology that is robust to endogeneity and omitted variables problems, it is found that the stock returns of all banks that are listed in Borsa Istanbul respond significantly to the monetary policy surprises on Monetary Policy Committee (MPC) meeting days prior to May 2010. It is shown that stock returns of banks for which interest payments constitute an important share in their balance sheets respond more aggressively to the changes in policy rates. In addition, foreign banks and participation banks give relatively less responses to monetary policy surprises. Estimation results differ between traditional and new monetary policy episodes. |
| Keywords: | Monetary Policy, Stock Market, Banking System, Emerging Markets, Identification through Heteroscedasticity |
| JEL: | E43 E44 E52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1330&r=mac |
| By: | varelas, erotokritos |
| Abstract: | Chicago rule is shown to be the unique optimal monetary policy rule from the viewpoint of an intergenerational welfare-maximizing social planner. But, in the absence of commercial banking, it really mandates the elimination of the public sector, because it involves the elimination of central bank seigniorage and hence, of the government spending based on this seigniorage, rendering subsequently tax finance incapable of sustaining alone such spending. In the presence of commercial banking, the government does have the option of benefiting from commercial bank seigniorage by borrowing it countercyclically as implied by Chicago rule, which is found to operate like a full-reserve requirement |
| Keywords: | Chicago rule, Seigniorage, Intergenerational modeling |
| JEL: | E3 E4 E5 E6 |
| Date: | 2013–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48770&r=mac |
| By: | Koray Alper; Hakan Kara; Mehmet Yorukoglu |
| Abstract: | Heightened volatility in cross-border capital flows has increased exchange rate volatility across emerging markets as well as in advanced economies, setting the stage for more active management of currencies. Traditionally, foreign exchange rate intervention has been the primary tool to address these types of challenges. However, given the limitations of foreign exchange rate intervention, it may be well worthwhile to explore alternative mechanisms for dealing with capital flow volatility. This paper explains how the new policy framework adopted by the Central Bank of the Republic of Turkey (CBRT) in the past two years has eased the need to conduct FX interventions. We first describe the rationale for the new policy framework, which is an augmented version of inflation targeting, with more emphasis on macro financial risks. Next, we explain the new instruments developed by the CBRT and their contribution to coping with capital flow volatility. In particular, we focus on the Reserve Option Mechanism, which is designed as a shock absorber for volatile capital flows, and thus reduces the need for FX intervention. We demonstrate that, since the adoption of new policy tools, the volatility of the Turkish lira has been remarkably low in comparison with the currencies of peer economies. |
| Keywords: | Monetary policy, Capital flows, Exchange rate interventions, Financial stability |
| JEL: | E52 E58 F31 F32 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1331&r=mac |
| By: | Chan Wang (China Economics and Management Academy, Central University of Finance and Economics); Heng-fu Zou (China Economics and Management Academy, Central University of Finance and Economics; Institute for Advanced Study, Wuhan University; Institute for Advanced Study, Shenzhen University) |
| Abstract: | This paper investigates the relationship between optimal monetary and tariff policy in open economies. In producer-currency pricing (PCP) case, as in Obstfeld and Rogoff (2002), optimal tariff policy rules are separable from optimal monetary policy rules. Except for PCP case, they are not separable from each other. The increase of tariffs will lead to a more insulated world economy in the sense that both home and foreign pay more attention to their domestic goals respectively. When tariffs are chosen optimally, except for PCP and reference-currency pricing (RCP) cases, optimal monetary policy is inward-looking. We also extend the model to consider gains from cooperation. Except for LCP case, there are gains from cooperation between Home and Foreign monetary policy makers. By comparison, there are gains from cooperation between Home and Foreign tariff policy makers in various cases. |
| Keywords: | Open economies, Tariff policy, Monetary policy, Exchange rate pass-through elasticity, International cooperation |
| JEL: | E52 F41 F42 |
| Date: | 2013–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:587&r=mac |
| By: | Kawai, Masahiro (Asian Development Bank Institute); Morgan, Peter (Asian Development Bank Institute) |
| Abstract: | Japan’s “two lost decades” perhaps represent an extreme example of a weak recovery from a financial crisis, and are now referred to as “Japanization.” More recently, widespread stagnation in advanced economies in the wake of the global financial crisis led to fears that Japanization might spread to other countries. This study examines the dimensions of Japanization—including low trend growth, debt deleveraging, deflation and massive increases in government debt—and analyzes their possible causes—including inadequate macroeconomic policy responses, delayed banking sector restructuring, inadequate corporate investment, loss of industrial competitiveness, a slowdown in total factor productivity (TFP) growth due to excessive regulation and economic rigidities, and an aging society. |
| Keywords: | economic growth; total factor productivity; inflation; demographics; credit growth; banking crises |
| JEL: | E20 E31 E51 F31 G01 |
| Date: | 2013–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0430&r=mac |
| By: | Junankar, Pramod N. (Raja) (University of New South Wales) |
| Abstract: | Most of the countries of the OECD are still suffering from the Global Financial Crisis (GFC) (or as the Americans call it the Great Recession), but the Australian economy appears to be powering ahead. It is a miracle economy! Unlike most of the OECD countries, Australia did not even have a recession. In this paper we study the behaviour of the Australian economy compared to some of the OECD countries and see that, in fact, Australia has a "miracle economy". The comparisons are made in terms of several macroeconomic indicators, GDP, Unemployment, Inflation, Current Account Balances, and debt. |
| Keywords: | OECD, Great Recession, macroeconomic indicators, unemployment |
| JEL: | E24 E30 E60 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7505&r=mac |
| By: | Kliem, Martin; Kriwoluzky, Alexander |
| Abstract: | Structural VAR studies disagree with narrative accounts about the history of monetary policy disturbances. We investigate whether employing the narrative monetary shock account as a proxy variable in a VAR model aligns both shock series. We quantify the extent to which the disagreement still applies and identify two explanations for the disagreement. One explanation is measurement error in the narrative time series, another is a misspecification of the VAR model. -- |
| Keywords: | vector autoregression model,monetary policy shocks,narrative identification |
| JEL: | E31 E32 E52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:232013&r=mac |
| By: | Athanasios Geromichalos; Lucas Herrenbrueck; Kevin Salyer (Department of Economics, University of California Davis) |
| Abstract: | A consistent empirical feature of bond yields is that term premia are, on average, positive. That is, investors in long term bonds receive higher returns than investors in similar (i.e. same default risk) shorter maturity bonds over the same holding period. The majority of theoretical explanations for this observation have viewed the term premia through the lens of the consumption based capital asset pricing model. In contrast, we harken to an older empirical literature which attributes the term premium to the idea that short maturity bonds are inherently more liquid. The goal of this paper is to provide a theoretical justification of this concept. To that end,we employ a model in the tradition of modern monetary theory extended to include assets of different maturities. Short term assets always mature in time to take advantage of random consumption opportunities. Long term assets do not, but agents may liquidate them in a secondary asset market, characterized by search and bargaining frictions a la Duffie, Garleanu, and Pedersen (2005). In equilibrium, long term assets have higher rates of return to compensate agents for their relative lack of liquidity. Consistent with empirical findings, our model predicts a steeper yield curve for assets that trade in less liquid secondary markets. |
| Keywords: | monetary-search models, liquidity, over-the-counter markets, yield curve |
| JEL: | E31 E43 E52 G12 |
| Date: | 2013–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:cda:wpaper:13-9&r=mac |
| By: | Michael J. Lamla (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Lena Dräger (University of Hamburg, Germany) |
| Abstract: | In this paper we explore the degree of anchoring of consumers’ long-run inflation expectations. If expectations are firmly anchored, short- and long-run expectations should show no comovement in response to transitory shocks. Utilizing the University of Michigan Survey of Consumer’s rotating panel microstructure, we can identify changes in inflation expectations of individual consumers over time. Our results indicate that long-run inflation expectations became more anchored over the last decades. While the degree of comovement fell significantly after 1996, the probability of a joint adjustment stayed constant. Regarding the possible determinants, we find that consumers’ rising interest rate expectations and perceived news on the monetary policy stance have a detrimental effect on the anchoring of long-run expectations. This effect is no longer present in the post-1996 period. Notably, a positive effect of perceived news on government debt on the degree of comovement emerges after 1996, alluding to a potentially problematic link between fiscal and monetary policy. |
| Keywords: | Anchoring, inflation expectations, microdata, news |
| JEL: | E52 D84 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:13-339&r=mac |
| By: | Nada Mora |
| Abstract: | This paper reconciles industry conditions with the state of the economy in driving asset liquidation values and, therefore, recovery rates on defaulted debt securities. Macroeconomic effects matter but they operate differentially at the industry level. |
| Keywords: | Credit ; Risk ; Business cycles |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp13-06&r=mac |
| By: | Pascal Michaillat; Emmanuel Saez |
| Abstract: | We present a static model of aggregate demand and unemployment. The economy has a nonproduced good, a produced good, and labor. Product and labor markets have matching frictions. A general equilibrium is a set of prices, market tightnesses, and quantities such that buyers and sellers optimize given prices and tightnesses, and actual tightnesses equal posted tightnesses. In each frictional market,there is one more variable than equilibrium condition. To close the model, we take all prices as parameters. We obtain the following results: (1) unemployment and unsold production prevail in equilibrium; (2) each market can be slack, efficient, or tight if the price is too high, efficient, or too low; (3) product market tightness and sales are positively correlated under aggregate demand shocks but negatively correlated under aggregate supply shocks; (4) transfers from savers to spenders stimulate aggregate demand, product market tightness, and employment; (5) the government-purchase multiplier is positive when the economy is slack, zero when the economy is efficient,and negative when the economy is tight; (6) with unequal distribution of profits and labor income, a wage increase may stimulate aggregate demand and reduce unemployment. |
| Keywords: | Unemployment, aggregate demand, matching frictions |
| JEL: | E10 E30 E24 E21 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1235&r=mac |
| By: | Centre for Policy Dialogue (CPD) |
| Abstract: | The present interim review of macroeconomic performance of Bangladesh focuses on the developments during the first few months of FY2012-13, and reviews the movements of major macroeconomic indicators in view of the targets set for the fiscal by various policy documents. The paper also contains two thematic issues of interest in the present context of Bangladesh economy – a brief review of the implementation status of the Sixth Five Year Plan with focus on macroeconomic framework and a selected set of sectoral issues; and a review of the manufacturing sector performance of Bangladesh. |
| Keywords: | Bangladesh economy, FY2012-13, SFYP |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:pdb:opaper:101&r=mac |
| By: | Elena Deryugina; Alexey Ponomarenko |
| Abstract: | The authors estimate a dynamic factor model for the cross-section of monetary and price indicators for Russia. They extract the common part of the dataset's fluctuations and decompose it into structural shocks. One of the shocks identified has empirical properties (in terms of impulse response functions) that are fully in line with the theoretically expected relationship between money growth and inflation, confirming that the process identified has the capacity for economic interpretation. Based on the finding, recent inflationary developments in Russia are decomposed into those that are associated with changes in monetary stance and other shorter-lived shocks. The analysis in this paper is based on the course material taught in the CCBS course: 'Applied Bayesian Econometrics for central bankers'. |
| Keywords: | Money-based, inflation, Russia, structural dynamic factor model |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:ccb:jrpapr:3&r=mac |
| By: | Chan Wang (China Economics and Management Academy, Central University of Finance and Economics); Heng-fu Zou (China Economics and Management Academy, Central University of Finance and Economics; Institute for Advanced Study, Wuhan University; Institute for Advanced Study, Shenzhen University) |
| Abstract: | This paper examines optimal monetary policy rules in open economies with vertical production and trade in which we emphasize the role played by reference currency. As evidenced by empirical ï¬ndings, we assume ï¬nal goods prices are sticky, but intermediate goods prices are flexible. We ï¬nd that the asymmetry of exporters' pricing behavior implies that the responses of monetary authorities to productivity shocks from the stage of ï¬nal goods production are asymmetric but symmetric to productivity shocks from the stage of intermediate goods production. We also ï¬nd that gains from cooperation are related to the covariance of productivity shocks in two stages. In addition, we give the conditions under which home and foreign are willing to take part in cooperation respectively. As for exchange rate policy, we ï¬nd that the volatility of nominal exchange rate in RCP case is greater than that in LCP case, but smaller than that in PCP case. The volatility of real exchange rate in RCP case is, however, greater than those in PCP and LCP cases. |
| Keywords: | Vertical production and trade, Reference-currency pricing, Optimal monetary policy, Monetary cooperation, Exchange rates |
| JEL: | E5 F3 F4 |
| Date: | 2013–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:586&r=mac |
| By: | Piergiorgio Alessandri; Haroon Mumtaz |
| Abstract: | The authors reassess the predictive power of financial indicators for output and inflation in the US by studying predictive densities generated by set of linear and nonlinear forecasting models. They argue that, if the linkage between financial and real economy is state-dependent as implied by standard models with financial frictions, predictive densities should reveal aspects of the co-movements between financial and macroeconomic variables that are ignored by construction in an ordinary (central) forecasting exercise. The authors study the performance of linear and nonlinear (Threshold and Markov-Switching) VARs estimated on a monthly US dataset including various commonly-used financial indicators. We obtain three important results. First, adding financial indicators to an otherwise standard VAR improves both central forecasts and predictive distributions for output, but the improvement is more substantial for the latter. Even in a linear model, financial indicators are more useful in predicting 'tails', or deviations of output and inflation from their expected paths, than 'means', namely the expected paths themselves. Second, nonlinear models with financial indicators tend to generate noisier central forecasts than their linear counterparts, but they clearly outperform them in predicting distributions. This is mainly because nonlinear models predict the likelihood of recessionary episodes more accurately. Third, the discrepancies between models are themselves predictable: a Bayesian forecaster can formulate a reasonable real-time guess on which model is likely to be more accurate in the near future. |
| Keywords: | Financial conditions, density forecasts, US, output, inflation |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ccb:jrpapr:4&r=mac |
| By: | Andrade, P.; Fourel, V.; Ghysels, E.; Idier, I. |
| Abstract: | Recent studies emphasize that survey-based inflation risk measures are informative about future inflation and thus useful for monetary authorities. However, these data are typically available at a quarterly frequency whereas monetary policy decisions require a more frequent monitoring of such risks. Using the ECB survey of professional forecasters, we show that high-frequency financial market data have predictive power for the low-frequency survey-based inflation risk indicators observed at the end of a quarter. We rely on MIDAS regressions to handle the problem of mixing data with different frequencies that such an analysis implies. We also illustrate that upside and downside risks react differently to financial indicators. |
| Keywords: | inflation forecasts, inflation risk, survey data, financial data, MIDAS regression. |
| JEL: | E31 E37 C53 C83 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:437&r=mac |
| By: | Richhild Moessner |
| Abstract: | We quantify the impact of explicit FOMC policy rate guidance used as an unconventional monetary policy tool at the zero lower bound of the policy rate on market interest rates. We study the impact on short- to medium-term interest rates implied by Eurodollar interest rate futures contracts, and on near- to long-term interest rates implied by US Treasury securities. We find that explicit policy rate guidance announcements significantly reduced interest rates implied by Eurodollar futures at horizons of 1 to 5 years ahead, with the largest effect at the intermediate horizon of 3 years. We also find that they significantly reduced forward interest rates implied by US Treasuries at horizons of 1 to 7 years ahead, with the largest effect at the intermediate horizons of 4 and 5 years. Moreover, we find that explicit FOMC policy rate guidance led to a significant reduction in the term spread, ie to a fiattening of the yield curve, both for the Eurodollar futures curve and the US Treasury yield curve. |
| Keywords: | Monetary policy; central bank communication; policy rate guidance |
| JEL: | E58 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:384&r=mac |
| By: | Ahmet Benlialper (Department of Economics, METU); Hasan Cömert (Department of Economics, METU) |
| Abstract: | Especially, after the 2000s, many developing countries let exchange rates float and began implementing inflation targeting regimes based on mainly manipulation of expectations and aggregate demand. However, most developing countries implementing inflation targeting regimes experienced considerable appreciation trends in their currencies. Might have exchange rates been utilized as implicit tools even under inflation targeting regimes in developing countries? To answer this question and investigate the determinants of inflation under an inflation targeting regime, as a case study, this paper analyzes the Turkish experience with the inflation targeting regime between 2002 and 2008. There are two main findings of this paper. First, the evidence from a Vector Autoregressive (VAR) model suggests that the main determinants of inflation in Turkey during this period are supply side factors such as international commodity prices and the variation in exchange rate rather than demand side factors. Since the Turkish lira (TL) was considerably over-appreciated during this period, it is apparent that the Turkish Central Bank benefited from the appreciation of the TL in its fight against inflation during this period. Second, our findings suggest that the appreciation of the TL is related to the deliberate asymmetric policy stance of the Bank with respect to the exchange rate. Both the econometric analysis from a VAR model and descriptive statistics indicate that appreciation of the Turkish lira was tolerated during the period under investigation whereas depreciation was responded aggressively by the Bank. We call this policy stance under the inflation targeting regimes as “implicit asymmetric exchange rate peg”. The Turkish experience indicates that, as opposed to rhetoric of central banks in developing countries, inflation targeting developing countries may have an asymeyric stance toward exchange rates and favour appreciation of their currencies to hit their inflation targets. In this sense, IT seems to contribute to the ignorance of dangers regarding to over-appreciation of currencies in developing countries. |
| Keywords: | Inflation Targeting, Central Banking, Developing Countries, Exchange Rates |
| JEL: | E52 E58 E31 F31 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:met:wpaper:1308&r=mac |
| By: | Rangan Gupta (Department of Economics, University of Pretoria); Lardo Stander (Department of Economics, University of Pretoria) |
| Abstract: | Conventional models of social status purport a positive infl ation-growth relationship, and attribute this empirical contradiction to the presence of a consumer's desire for social status. These models are dominated by a substitution effect of money holdings for capital holdings, as an increase in the in ation rate due to money growth raises the cost of holding money and depresses the real money holdings. Using a monetary endogenous growth model, the effects of wealth-induced social status on long-run growth is reconsidered. The analysis is enhanced through the addition of a competitive banking sector that intermediates the available capital in the economy, subject to a mandatory cash reserve requirement. The cash reserve requirement creates a wedge between the deposit rate and the loan rate. While, the real loan rate is tied with the constant marginal product of capital, the real deposit rate is negatively related to the rate of infl ation. This leads to another, opposing substitution effect of deposit holdings for real money holdings and hence, increases the cost of holding deposits as infl ation increases. The consolidated theoretical model described herein supports a diverse range of theoretical findings, contingent on the presence of wealth effects or the spirit of capitalism, using a simpler and more tractable framework that accounts for the role of the banking system in monetary policy decision outcomes. Significantly, as long as the mandatory reserve requirement imposed on the banking system by the monetary authority exceeds a (small) critical value, an increase in the money growth rate will lead to a decrease in the long-run growth rate of the economy. |
| Keywords: | Social status, reserve requirements, monetary model with endogenous growth, cash-in-advance |
| JEL: | E58 O4 P1 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201336&r=mac |
| By: | Gabriela Lopes de Castro; Ricardo Mourinho Félix; Paulo Júlio; José R. Maria |
| Abstract: | Using PESSOA, a small open economy DSGE model, we analyze the size of short-runfiscal multipliers associated with fiscal consolidation under two distinct alternative scenarios, viz "normal times" and "crisis times." The crisis times scenario embodies a higher share of hand-to-mouth households, stronger nominal rigidities, and more severe financial frictions, which purportedly better refflect the underlying economic environment during the "Great Recession." Results show that fiscal multipliers can be twice as large in crisis times, being approximately 2 for a government consumptionbased fiscal consolidation in the first year. One-year ahead effects are also substantially larger if this type of consolidation is performed in crisis times. Revenue-based fiscal consolidations are also more recessive in crisis times, though the differences against normal times are less pronounced. |
| JEL: | E62 F41 H62 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201311&r=mac |
| By: | Dean Baker; Sheva Diagne |
| Abstract: | Despite being thoroughly debunked, concern over high government debt-to-GDP ratios has hardly disappeared from policy debates. As such, an overlooked possibility for reducing a high debt burden is simply buying back bonds at a discount when interest rates rise, as is widely predicted. This issue brief calculates the potential savings to the government through a hypothetical buyback of government debt in 2017. Long-term bonds that are issued at low interest rates will sell at substantial discounts to their face value if market interest rates rise. Looking at publicly held marketable debt issued as of the end of February 2013, the face value of the debt is $3,857 billion. The projected market value of this debt is $3,399 billion for an implied debt reduction of $458 billion, or just under 2.3 percent of the GDP projected for 2017. The interest burden on the Treasury will not change through these transactions. The only effect will be to lower the official value of outstanding debt. However if people in policy positions continue to attach importance to this number then this sort of debt exchange should rank high on the list of policy options. There is no less costly way to eliminate close to half a trillion dollars in debt. |
| Keywords: | debt, deficit, fed, debt-to-GDP ratio, government bond, GDP growth |
| JEL: | E E3 E31 E6 E5 G |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2013-12&r=mac |
| By: | He, Qichun |
| Abstract: | We propose creative destruction as the channel for inflation to impact growth. The banks reap revenue from higher rates of credit growth, attracting more labor into banks and decreasing the profit of entrepreneurs. But when the revenue is achieved by issuing more credit to entrepreneurs, part of the revenue goes to entrepreneurs, attracting more resources into R&D. When banks retain a larger share of the revenue, the former effect dominates and credit inflation retards growth. When entrepreneurs get the larger share, the latter effect dominates and credit inflation increases growth. Empirical evidence from the U.S. and China is provided. |
| Keywords: | Creative Destruction; Credit Inflation; Credit Demand Function; Nash Bargaining |
| JEL: | E31 E51 G21 O31 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48766&r=mac |
| By: | Amélie Barbier-Gauchard; Francesco de Palma; Giuseppe Diana (LaRGE Research Center, Université de Strasbourg) |
| Abstract: | We consider a heterogeneous labor market in a two-country monetary union. The domestic economy is characterized by a dual labor market with formal and informal sectors as observed in most Southern EMU economies. Among formal workers, wage-levels result from efficiency considerations. In the foreign economy, with reference to Northern EMU economies, we assume another type of wage rigidity explained by the presence of unions. More precisely, only wages are bargained between firms and employees as in the right-to-manage model. These rigidities lead to inefficient allocations of workers in each country: a misallocation of workers among sectors in the domestic country and unemployment in the foreign one. In this context, the labor market flexibilization may appear as a relevant option for improving the situation of activity and employment in the monetary union. This is the reason why we investigate the overall effects of a decrease in trade union bargaining power in the foreign (Northern) economy. We show that, at the new equilibrium, a lower bargaining power in the foreign economy leads to a decrease in all prices and the effects are positive overall. In the foreign economy, the equilibrium level of production is higher, unemployment decreases and wages are lower. In the domestic one, the production also increases, the labor market benefits from a better allocation of workers between formal and informal sectors, and all wages are higher. |
| Keywords: | efficiency wage, dualism, EMU, trade unions, bargaining. |
| JEL: | E60 F16 F41 J31 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2013-08&r=mac |
| By: | Baldi, Guido |
| Abstract: | The macroeconomic literature has found puzzling effects of government spending on private consumption, the real exchange rate and the terms of trade. Some authors find that private consumption increases after a shock to government spending, while others report a decrease. The same ambiguity can be found for the real exchange rate and the terms of trade. Our paper offers an intuitive explanation for these divergent results by distinguishing between productive and unproductive government spending. We show within a calibrated two-sector DSGE model that the two government spending categories have different effects on private consumption, the real exchange rate and the terms of trade. Hence, our findings suggest that the composition of government spending matters not only for long-run growth, but also impacts on the short-run. |
| Keywords: | Fiscal Policy, Productive Public Capital, Government Spending, Open Economy Macroeconomics |
| JEL: | E62 F41 H11 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48600&r=mac |
| By: | Travis Berge |
| Abstract: | This paper evaluates the ability of several commonly followed economic indicators to predict business cycle turning points. As a baseline, forecasts from univariate models are combined by taking averages or by weighting forecasts with model-implied posterior probabilities. These combined forecasts are compared to those from a sophisticated model selection algorithm that allows for nonlinear model speci_cations. The preferred forecasting model is one that allows for nonlinear behavior across the business cycle and combines information from the yield curve with other indicators, especially at very short and very long horizons. |
| Keywords: | Recessions ; Economic indicators ; Business cycles |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp13-05&r=mac |
| By: | Javier Bianchi; Juan Carlos Hatchondo |
| Abstract: | This paper provides a theoretical framework for quantitatively investigating the optimal accumulation of international reserves as a hedge against rollover risk. We study a dynamic model of endogenous default in which the government faces a tradeoff between the insurance benefits of reserves and the cost of keeping larger gross debt positions. A calibrated version of our model is able to rationalize large holdings of international reserves, as well as the procyclicality of reserves and gross debt positions. Model simulations are also consistent with spread dynamics and other key macroeconomic variables in emerging economies. The benefits of insurance arrangements and the effects of restricting the use of reserves after default are also analyzed. |
| Keywords: | Macroeconomics - Econometric models |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:151&r=mac |
| By: | Tommaso Trani (School of Economics and Business Administration University of Navarra) |
| Abstract: | In this paper, I study the international transmission of shocks when assets traded across borders are differently suitable as collateral for borrowing (i.e., pledgeability). Under financial integration, differences in pledgeability have implications for the demand for assets. For instance, if a shock makes it more difficult to pledge the assets of the country receiving the shock, agents expect these assets to yield a relatively higher premium than foreign assets in the near future. I develop an approach to determine the optimal portfolio allocations, as existing methods cannot be directly applied to capture differences in asset pledgeability. In this case of heterogeneously pledgeable assets, financial shocks are transmitted from one country to another because the same asset is held by residents of different countries. Valuation effects arise as a consequence of the reaction of asset returns in different countries. In contrast, a standard model cannot generate any of these implications when assets have the same degree of pledgeability. Indeed, when assets have the same degree of pledgeability, financial shocks are country-specific and hinder the access to credit only for the residents of the country hit by the shock. * The external appendix with the methodological details is available upon request. |
| Keywords: | international portfolio choice, riskiness of pledged collateral, return dierentials, macroeconomic interdependence |
| JEL: | E44 F32 F41 G11 G15 |
| Date: | 2013–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:una:unccee:wp2812&r=mac |
| By: | Ngoc-Sang Pham (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne) |
| Abstract: | This paper considers an infinite-horizon monetary economy with collateralized assets. A Central BanK lends money to households by creating short- and long-term loans. Households can deposit or borrow money on both short- and long-term maturity loans. If households want to sell a financial asset, they are required to hold certain commodities as collateral. They face a cash-in-advance constraints when buying commodities and financial assets. Under Uniform or Sequential Gains to Trade Hypothesis, the existence of collateral monetary equilibrium is ensured. I also provide some properties of equilibria, including the liquidity trap. |
| Keywords: | Monetary economy; liquidity constraint; collateralized asset; infinite horizon; liquidity trap |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00848057&r=mac |
| By: | Nayan, Sabri; Ahmad, Mahyudin; Kadir, Norsiah; Abdullah, Mat Saad |
| Abstract: | Post Keynesian economics is actually macroeconomics in a world of uncertainty and endogenous money. Post Keynesians posit that money supply in a market oriented production economy is endogenous or endogenously determined (rather than exogenous as claimed by Monetarists). Money supply is said to be endogenous if it is determined within the economic system itself. The present paper investigates this theory using a panel dataset of 177 countries from year 1970-2011 utilising dynamic panel data analysis and has found that money supply is endogenous as proposed by Post Keynesian theorists. |
| Keywords: | Post-Keynesians; Endogeneity; Panel Data Analysis; System GMM. |
| JEL: | E12 E51 |
| Date: | 2013–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48716&r=mac |
| By: | Baldi, Guido |
| Abstract: | Sound public finances are crucial for ensuring a successful transformation of transition countries to democratic market economies. The transition countries in North Africa are an important example for this. These countries experienced increasing budget deficits in 2011 and 2012. Public finances will probably remain a serious issue in the coming years due to political uncertainties, distributional struggles and weak world economic growth. What kind of institutional rules for the budget process are suitable to limiting the size of these potential budget deficits in a new democracy? In this paper, I argue that numerical fiscal restraints are not the right tool to reduce budget deficits in a new and fragile democracy. Instead, I hold the view that a strong finance minister and a transparent budget process are much more important than numerical fiscal rules. Assigning prerogatives to the finance minister allows limiting the political deficit bias that may arise due to distributional struggles over government spending and revenue. History has shown that numerical policy rules on their own do not lead to desirable outcomes if they are not supported and embedded by the main political parties. If there are weak institutions, fiscal policy rules might even have a perverse effect when politicians – in trying to comply with the rules – use optimistic forecasts and creative accounting, which would lead to a deterioration of the actual budget situation. Therefore, transition countries should first focus on improving the transparency and accountability of the budget process. |
| Keywords: | Fiscal Policy Institutions, Numerical Rules, Constitutional Economics |
| JEL: | E61 E62 H60 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48677&r=mac |
| By: | Zsolt Darvas; Balázs Varga |
| Abstract: | This paper studies inflation persistence with time-varying coefficient autoregressions for twelve central European countries,in comparison with the United States and the euro area. Inflation persistence tends to be higher in times of high inflation. Since the oil price shocks, inflation persistence has declined both in the US and euro-area. In most central and eastern European countries, for which our study covers 1993-2012, inflation persistence has also declined, with the main exceptions of the Czech Republic, Slovakia and Slovenia, where persistence seems to be rather stable. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:787&r=mac |
| By: | Renaud Thillaye |
| Abstract: | The most commonly held opinion about the eurozone crisis is that it should lead to greater EU integration. Yet despite all the talk about fundamental design flaws and the need for a federal ‘leap forward’, EU governments and citizens are not ready to pool further sovereignty and resources as a way to strengthen the common currency and to improve the EU’s delivering capacity. Blueprints and roadmaps for completing the Economic and Monetary Union have been dealt with contempt by national leaders. As a result, more attention ought to be focused on how the imbalances threatening the EU’s cohesion and stability could be addressed within the existing boundaries of EU treaties. Improving the current set-up of policy coordination should be the priority of the next few years. This policy paper suggests ways to improve the institutions and scope of policy coordination in the EU. In terms of substance, the experience accumulated before and after the crisis has shown that a narrow approach in terms of fiscal and macroeconomic discipline is not enough. If EU member states do not want markets to impose adjustments in their own terms, they must embrace a broader approach to convergence and improve the conditions in which they adjust to each other. Wage and social developments should be included in EU supervision frameworks. As regards institutions, more reflection should be devoted to the innovations that would increase the impact of mutual commitments. This paper analyses the increasing contractual approach to EU governance, and argues that a stronger sense of reciprocity could arise from ad hoc cooperations on a smaller scale for the euro area and voluntary countries. One should nevertheless be clear about the limits of what coordination can achieve. Greater ambition in terms of EU cohesion and democratic legitimacy would require a more substantial rethink of EU policy-making in the long term. |
| Keywords: | EU integration, European economic policy, European governance, European Monetary Union, good governance, multi-level governance, policy options, political economy of policy reform |
| JEL: | E02 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:feu:wfewop:y:2013:m:7:d:0:i:32&r=mac |
| By: | G. Gallipoli; G. Pelloni |
| Abstract: | This paper critically appraises the approaches that have characterized the literature on the macroeconomic effects of job reallocations. Since Lilien's (1982) seminal contribution there has been a flourishing of empirical analysis but no unifying theoretical framework has obtained consensus in the scientific debate. We face a corpus of research which is heterogeneous in variables' selection and experimental design. This heterogeneity makes the evaluation of results a daunting task. As a guiding principle for our excursion we track down the methodological development of the solutions to the crucial problem of observational equivalence of aggregate and sectoral reallocation shocks. We draw two main conclusions from our analysis. The first is that the non-directional nature of reallocation shocks holds the key to the solution of the fundamental identification problem. In this sense the recent perspective on job creation and destruction shows much promise. The second conclusion is that sectoral reallocation of labor has been responsible for no less that 1/4 and no more that 2/3 of the variance of aggregate unemployment in postwar data. While this range may seem wide it is an indication that the importance of labor reallocation may have changed over time, being quite large at particular historical junctures. |
| JEL: | E30 C10 J21 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp897&r=mac |
| By: | Daniel Cooper; Karen Dynan |
| Abstract: | The effect of wealth on consumption is an issue of longstanding interest to economists. Analysts believe that fluctuations in household wealth have driven major swings in economic activity. This paper considers so-called wealth effects—the impact of changes in wealth on household consumption and the overall macroeconomy. There is an extensive existing literature on wealth effects, but there are also many unanswered issues and questions. This paper reviews the important issues regarding the role wealth plays in the macroeconomy and argues that there is a need for much more wealth effect research as well as better data sources for conducting such analysis. |
| Keywords: | Wealth ; Consumption (Economics) |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpp:13-4&r=mac |
| By: | Mark J. Holmes (Department of Economics, Waikato University, New Zealand); Jesus Otero (Facultad de Economia, Universidad del Rosario, Colombia); Theodore Panagiotidis (Department of Economics, University of Macedonia, Greece) |
| Abstract: | Abstract This paper provides evidence that unemployment rates across US states are stationary and therefore behave according to the natural rate hypothesis. We provide new insights by considering the effect of key variables on the speed of adjustment associated with unemployment shocks. A highly-dimensional VAR analysis of the half-lives associated with shocks to unemployment rates in pairs of states suggests that distance between states and vacancy rates respectively exert a positive and negative influence. We find that higher homeownership rates do not lead to higher half-lives. When the symmetry assumption is relaxed through quantile regression, support for the Oswald hypothesis through a positive relationship between homeownership rates and half-lives is found at the higher quantiles. |
| Keywords: | Unemployment; market integration; speed of adjustment. |
| JEL: | E24 J60 F15 R10 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1315&r=mac |
| By: | Kamal, Mona |
| Abstract: | In light of the political and economic conditions that Egypt has challenged during the last two years and its influences, it is crucial to re-investigate the link between financial sector and economic growth using recent data sample. This paper re-explores it using annual data for the period from 1988 to 2012. The results imply that the banking sector development has a unidirectional causal impact on economic growth. However, stock market development does not cause growth. The interpretation of such outcomes has to be taken with caution since other relevant factors are more likely to affect this link. |
| Keywords: | Financial Development, Economic Growth, Egypt. |
| JEL: | E44 O53 |
| Date: | 2013–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48564&r=mac |
| By: | Kamath, Amit; Jayaraman, R |
| Abstract: | In spite of the proliferation of the activity, construction management is not a much studied or systematized subject. There are still only pockets of excellence in a sea of seat-of-the-pant and ad-hoc working. Most second level construction firms do not have systematic recording, documenting, planning and quality control procedures. While the tier-1 firms have evolved and practice sophisticated systems based on advances in civil engineering and project management, the others are not yet ready to embrace modern practices. The BCA (Buildings Construction Authority) Singapore made efforts to bring some order into the entropy. They codified a simple construction management process which could be easy to adopt by the second and third tier construction companies too. This system is named as CONQUAS, which has been in vogue since the late eighties. Beginning with Singapore, it has spread to the rest of Asia. Larsen and Toubro is an Asian giant corporation. A division of this company, after a lot of study, thought and discussions, decided to adopt the CONQUAS method of construction management. This paper describes how these efforts have borne fruit and the company is planning to adopt the system in more projects. |
| Keywords: | CONQUAS, Project Management, Construction Management, EPC, ISO 9000 |
| JEL: | E2 E23 L74 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48767&r=mac |
| By: | Eric Ghysels (UNC); Andros Kourtellos (University of Cyprus); Elena Andreou (University of Cyprus) |
| Abstract: | We introduce easy to implement regression-based methods for predicting quarterly real economic activity that use daily financial data and rely on forecast combinations of Mixed Data Sampling (MIDAS) regressions. We also extract a novel small set of daily financial factors from a large panel of about one thousand daily financial assets. Our analysis is designed to elucidate the value of daily information and provide real-time forecast updates of the current (nowcasting) and future quarters of real GDP growth. Our findings show that while on average the predictive ability of all models worsens substantially following the financial crisis that started in 2007, the models we propose suffer relatively less losses than the traditional ones. Moreover, these predictive gains are primarily driven by the classes of government securities, equities, and especially corporate risk. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed012:1196&r=mac |
| By: | Alice M. Henriques; Joanne W. Hsu |
| Abstract: | Researchers use different types of household balance sheet data to study different aspects of lifecycle saving and wealth accumulation behavior. Macro data from the Flow of Funds Accounts (FFA) are produced at a quarterly frequency and are available in a timely manner, but they can only be used to study the behavior of the household sector as a whole. Micro data from the Survey of Consumer Finances (SCF) are available every three years and only with a lag, but they can be used to address questions that involve differences in behavior over time and across various types of households. Despite the very different approaches to estimating household net worth, the two data sets show the same general patterns wealth changes over the past twenty-five years. Areas where the FFA and SCF diverge in aggregate levels—in categories such as owner-occupied housing, noncorporate equity, and credit cards—may be explained by methodological decisions applied in the production of the data. Those differences do not fundamentally alter one's perception of household wealth dynamics in the period leading up to and following the Great Recession. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-46&r=mac |
| By: | Cette, Gilbert (Bank of France); Chouard, Valérie (Bank of France); Verdugo, Gregory (Bank of France) |
| Abstract: | This paper investigates whether increases in the minimum wage in France have the same impact on the average wage when intended to preserve the purchasing power of the minimum wage as when intended to raise it. We find that the impact of the minimum wage on the average wage is strong, but differs depending on the indexation factor. We also find some empirical evidence of circularity between the average wage and the minimum wage. |
| Keywords: | minimum wage, average wage, France |
| JEL: | E24 J31 J58 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7502&r=mac |
| By: | Lionel Fontagné; Jean Fouré |
| Abstract: | Economic projections for the world economy, particularly in relation to the construction of Computable General Equilibrium (CGE) baselines, are generally rather conservative and take scant account of the wide range of possible evolutions authorized by the underlying economic mechanisms considered. Against this background, we adopt an ‘open mind’ to the projection of world trade trajectories. Taking a 2035 horizon, we examine how world trade patterns will be shaped by the changing comparative advantages, demand, and capabilities of different regions. We combine a convergence model fitting three production factors (capital, labour and energy) and two factor-specific productivities, alongside a dynamic CGE model of the world economy calibrated to reproduce observed elasticity of trade to income. Each scenario involves three steps. First, we project growth at country level based on factor accumulation, educational attainment and efficiency gains, and discuss uncertainties related to our main drivers. Second, we impose this framework (demographics, gross domestic product, saving rates, factors and current account trajectories) on the CGE baseline. Third, we implement trade policy scenarios (tariffs as well as non-tariff measures in goods and services), in order to get factor allocation across sectors from the model as well as demand and trade patterns. We show that the impact of changing baselines is greater than the impact of a policy shock on the order of magnitude of changes in world trade patterns, which points to the need for care when designing CGE baselines. |
| Keywords: | Growth;Macroeconomic Projections;Dynamic Baselines |
| JEL: | E23 E27 F02 F17 F47 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2013-22&r=mac |
| By: | Klimczuk, Andrzej; Siedlecki, Marcin; Sydow, Michał; Sadowska, Paulina |
| Abstract: | Raport powstał z inicjatywy Fundacji Pomocy Matematykom i Informatykom Niesprawnym Ruchowo w ramach projektu „Centrum Edukacji i Aktywizacji Zawodowej Osób Niepełnosprawnych - Oddziały Bydgoszcz i Łódź". Stanowi on rezultat badań zjawiska niepełnosprawności i kategorii społecznej, jaką stanowią osoby niepełnosprawne, oraz funkcjonowania ponad 30 agencji zatrudnienia wyspecjalizowanych we wsparciu osób niepełnosprawnych na rynku pracy. Pierwszy rozdział ekspertyzy dotyczy sposobów definiowania zjawiska niepełnosprawności, w drugim zaś - podjęto zagadnienie budowania potencjału niepublicznych służb zatrudnienia osób niepełnosprawnych. Trzeci rozdział raportu zawiera informacje dotyczące przyjętej metodologii badań, a czwarty prezentuje wyniki analiz zebranego materiału empirycznego w odniesieniu do oferty agencji zatrudnienia i jej klientów. Tematem piątego rozdziału pracy jest kondycja agencji zatrudnienia osób niepełnosprawnych, prowadzonych przez organizacje pozarządowe. Motyw przewodni kolejnego rozdziału to otoczenie zewnętrzne agencji zatrudnienia. Ostatnia cześć raportu dotyczy rekomendacji wspomagających rozwiązywanie dylematów rozwojowych, przed którymi stoją agencje zatrudnienia. -- This report was made on the initiative of the Foundation Supporting Disabled Mathematicians and IT professionals in the project "Centre for Education and Vocational Activation of Persons with Disabilities - Branches Bydgoszcz and Lodz." It is the result of research on disability phenomenon and people with disabilities social category. It contains information about operations of more than 30 employment agencies specialized in helping people with disabilities into the labor market. First chapter of expertise relates to methods for defining the prevalence of disability and in the second - it was the issue of capacity building for non-disabled employment services. Third chapter of the report provides information on the methodology of research, and the fourth presents the results of an empirical analysis of the collected material in relation to the offer of employment agencies and their clients. Theme of the fifth chapter of the work is the condition of the disabled employment agency run by NGOs. Theme of the next chapter is the external environment of employment agencies. Last part of the report focuses on solving a recommendation supporting development dilemmas faced by agencies employment. |
| Keywords: | employment agencies,disability,non-governmental organizations,persons with disabilities,employment services,third sector,employment offices,labor market |
| JEL: | E24 J68 Z13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esrepo:77960&r=mac |