THE MANCHESTER SCHOOL, Issue 2007
Article first published online: 9 AUG 200, MATTHEW B. CANZONERI
The European Monetary Union raises new and interesting questions about the coordination of monetary and fiscal policy. In this lecture, I discuss some of these questions and the answers that a new class of models,new neoclassical synthesis (NNS) models,is currently giving to them. I will argue that the new questions expose some weaknesses in current NNS modeling; in particular, the models do not seem to explain the positive correlation between national inflation and growth differentials that has been observed in the European data. I also review some recent work that has been done on policy coordination within a currency union. [source]

Equilibrium Determinacy under Monetary and Fiscal Policies in an Overlapping Generations Model

ECONOMIC NOTES, Issue 3 2005
Alessandro Piergallini
This paper studies the issue of equilibrium determinacy under monetary and fiscal policy feedback rules in an optimizing general equilibrium model with overlapping generations and flexible prices. It is shown that equilibria may be determinate also when monetary and fiscal policies are both ,passive'. In particular, under passive monetary rules, equilibrium uniqueness is more likely to be verified when fiscal policies are less committed to public debt stabilization. [source]

Forecasting the Adoption of Genetically Modified Oilseed Rape Prognosen hinsichtlich der Einführung von gentechnisch verändertem Raps Prévisions sur l'adoption de colza transgénique

EUROCHOICES, Issue 2 2009
Gunnar Breustedt
Summary Forecasting the Adoption of Genetically Modified Oilseed Rape We explore farmers' willingness to adopt genetically modified oilseed rape prior to its commercial release and estimate the ,demand' for the new technology. The analysis is based upon experiments with arable farmers in Germany who were asked to choose among conventional and GM rapeseed varieties with different characteristics. Our analysis has shown that ex ante GM adoption decisions are driven by profit expectations and personal as well as farm characteristics. Monetary and technological determinants such as the gross margin advantage of GM oilseed rape varieties, expected liability from cross pollination and restricted flexibility in returning to conventional oilseed rape growing affect the willingness to adopt GM rape in the expected directions. The results further indicate that neighbourhood effects and public attitudes matter a lot, such that individual farmers may not feel entirely free in their technology choice. Our demand simulations suggest that monopolistic seed prices would be set at between ,50 and ,100 per hectare, leaving farmers with a small share of the GM rent. This raises the question as to whether the farmers surveyed would actually benefit from the approval of GM rape varieties if the technology were to be provided by a single firm. Nous explorons le consentement des agriculteurs à utiliser du colza transgénique avant sa mise en marché et estimons la demande de cette nouvelle technologie. L'analyse se fonde sur des expériences menées auprès de cultivateurs allemands à qui l'on a demandé de choisir entre des variétés de colza conventionnelles et transgéniques aux caractéristiques différentes. Notre analyse a montré que les décisions a priori concernant l'adoption de variétés transgéniques sont fonction des profits attendus et des caractéristiques de l'agriculteur et de l'exploitation. Les facteurs financiers et technologiques comme les avantages des variétés de colza transgénique en termes de marge brute, ainsi que les risques possibles de fertilisation croisée et les contraintes relatives au retour vers des cultures de colza conventionnelles ont les effets attendus sur le consentement à adopter des variétés transgéniques. Les résultats montrent également que les effets de voisinage et l'attitude du public comptent beaucoup, de sorte que les agriculteurs individuels pourraient ne pas se sentir complètement libres de choisir leur technologie. Nos simulations sur la demande semblent indiquer que les prix des semences en situation de monopole seraient fixés entre 50 et 100 , par hectare, ce qui laisserait aux agriculteurs une faible part de la rente transgénique. Cela soulève la question de savoir si les agriculteurs de l'enquête tireraient vraiment avantage de l'approbation de variétés de colza transgéniques si la technologie n'était fournie que par une seule compagnie. Wir untersuchen die Bereitschaft von Landwirten, gentechnisch veränderten Raps einzuführen, bevor dieser auf den Markt gebracht wird, und schätzen die ,Nachfrage' nach dieser neuen Technologie ein. Unsere Analyse stützt sich auf Versuche mit Ackerbauern in Deutschland, bei denen sich die Landwirte zwischen herkömmlichen und gentechnisch veränderten Rapssorten mit verschiedenen Eigenschaften entscheiden mussten. Unsere Analyse zeigt, dass ex ante die Entscheidungen über die Einführung von gentechnisch verändertem Raps aufgrund von Gewinnerwartungen sowie von persönlichen und betrieblichen Charakteristika getroffen werden. Monetäre und technologische Bestimmungsgrößen wie z.B. der Vorsprung des gentechnisch veränderten Raps beim Deckungsbeitrag, die erwartete Haftbarkeit bei Fremdbestäubung sowie die nur eingeschränkte Flexibilität, zum herkömmlichen Rapsanbau zurückkehren zu können, beeinflussen erwartungsgemäß die Bereitschaft, gentechnisch veränderten Raps anzubauen. Desweiteren zeigen die Ergebnisse, dass Nachbarschaftseffekte und öffentliche Meinungen eine große Rolle spielen, so dass sich einige Landwirte womöglich bei der Wahl der Technologie in ihrer Entscheidungsfreiheit eingeschränkt fühlen. Unsere Nachfragesimulationen deuten darauf hin, dass sich monopolistische Saatgutpreise zwischen EUR 50 und EUR 100 pro Hektar bewegen würden, so dass den Landwirten ein kleiner Teil der ökonomischen Rente der GV-Technologie verbliebe. Dies wirft die Frage auf, ob die betrachteten Landwirte überhaupt von der Zulassung der gentechnisch veränderten Rapssorten profitieren würden, wenn die Technologie nur von einem einzigen Unternehmen angeboten würde. [source]

Monetary and Fiscal Policy Rules in the EMU

GERMAN ECONOMIC REVIEW, Issue 4 2004
Bas Van Aarle
EMU; fiscal policy; monetary policy Abstract. This paper studies the design and effects of monetary and fiscal policy in the euro area. To do so, a stylized two-region model of monetary and fiscal policy rules in the EMU is built. We analyse how monetary and fiscal rules affect the adjustment dynamics in the model. Both the effects on the individual countries and on the EMU aggregate economy are studied. Three aspects play an important role in the analysis: (i) the consequences of alternative monetary and fiscal policy rules, (ii) the consequences of asymmetries between EMU countries (asymmetries in macroeconomic shocks and macroeconomic structures), and (iii) the role of alternative degrees of backward- and forward-looking behaviour in consumer decisions and inflation expectations. [source]

Wrapped input selection using multilayer perceptrons for repeat-purchase modeling in direct marketing

INTELLIGENT SYSTEMS IN ACCOUNTING, FINANCE & MANAGEMENT, Issue 2 2001
Stijn Viaene
In this paper, we try to validate existing theory on and develop additional insight into repeat-purchase behavior in a direct marketing setting by means of an illuminating case study. The case involves the detection and qualification of the most relevant RFM (Recency, Frequency and Monetary) variables, using a neural network wrapper as our input pruning method. Results indicate that elimination of redundant and/or irrelevant inputs by means of the discussed input selection method allows us to significantly reduce model complexity without degrading the predictive generalization ability. It is precisely this issue that will enable us to infer some interesting marketing conclusions concerning the relative importance of the RFM predictor categories and their operationalizations. The empirical findings highlight the importance of a combined use of RFM variables in predicting repeat-purchase behavior. However, the study also reveals the dominant role of the frequency category. Results indicate that a model including only frequency variables still yields satisfactory classification accuracy compared to the optimally reduced model. Copyright © 2001 John Wiley & Sons, Ltd. [source]

Designing Macroeconomic Frameworks: A Positive Analysis of Monetary and Fiscal Delegation,

INTERNATIONAL FINANCE, Issue 1 2005
Francesca Castellani
This paper proposes a simple model illustrating the potential benefits of approaching the design of a macroeconomic framework conducive to low inflation in both its monetary and fiscal dimensions rather than relying exclusively on the merits of central bank independence and other monetary commitment devices such as currency boards or dollarization. The reason is that monetary delegation alone merely ,relocates' the time-inconsistency problem stemming from the government's incentive to address structural output shortfall with a macroeconomic stimulus. This paper also provides a new argument explaining why fiscal deficit rules may be less effective than instrument-specific rules. [source]

Modelling & Controlling Monetary and Economic Identities with Constrained State Space Models

INTERNATIONAL STATISTICAL REVIEW, Issue 2 2007
Gurupdesh S. Pandher
Summary The paper presents a method for modelling and controlling time series with identity structures. The approach is presented in the context of monetary targeting where the monetary identity (e.g. reserve money equals net foreign assets plus domestic credit) is modelled using a constrained state space model and next-period changes in domestic credit (policy variable) are estimated to reach the target level of reserve money. The constrained modelling ensures that aggregation and identity relations among items are dynamically satisfied during estimation, leading to more accurate forecasting and targeting. Applications to Germany, UK and USA show that the constrained state space model provides significant improvements in targeting and forecasting performance over the AR(1) benchmark and the unconstrained model. Reduction in the mean square error of targeting over AR(1) is in the range of 76,95% for the three countries while the gain in targeting efficiency over unconstrained modelling is between 21% and 55%. Beyond monetary targeting, the method has wide application to the dynamic modelling and control of economic and financial time series with identity and aggregation constraints (e.g. balance of payment, national income, purchasing power parity, company balance sheet). Résumé L'article présente une méthode de modélisation et de contrôle des séries temporelles avec des structures d'identité. L'approche est présentée dans le contexte de ciblage monétaire où l'identité monétaire (c. à d. monnaie de réserve égale avoirs étrangers plus crédit intérieur) est modélisée en utilisant un modèle spatial sous contrainte et où les variations du crédit intérieur à la période suivante (variable de politique) sont estimés pour atteindre le niveau visé de monnaie de réserve. La modélisation sous contrainte assure que les relations d'agrégation et d'identité entre items sont satisfaites en dynamique dans l'estimation, ce qui conduit à des prévisions et ciblages plus précis. L'application à l'Allemagne, le Royaume-Uni et les USA montrent que le modèle contraint apporte des améliorations importantes dans la performance de ciblage et de prévision par rapport à l'étalonnage auto-régressif (1) et au modèle sans contrainte. La réduction d'erreur du moindre carré par rapport à l'AR est comprise entre 76 et 95% pour les trois pays tandis que le gain en efficacité de ciblage sur le modèle sans contrainte se situe entre 21 et 55%. Par delà le ciblage monétaire, la méthode a une large application à la modélisation dynamique et au contrôle des séries temporelles économiques et financières avec des contraintes d'identité et d'agrégation (par ex. la balance des paiements, le revenu national, la parité de pouvoir d'achat, le bilan d'une compagnie). [source]

Assessment of registration quality of trials sponsored by China

JOURNAL OF EVIDENCE BASED MEDICINE, Issue 1 2009
Xuemei Liu
Abstract Objective To evaluate the quality of the registration information for trials sponsored by China registered in the WHO primary registries or other registries that meet the requirements of the International Committee of Medical Journal Editors (ICMJE). Methods We assessed the registration information for trials registered in the 9 WHO primary registries and one other registry that met the requirements of ICJME as of 15 October 2008. We analyzed the trial registration data set in each registry and assessed the registration quality against the WHO Trial Registration Data Set (TRDS). We also evaluated the quality of the information in the Source(s) of Monetary or Material Support section, using a specially prepared scale. Results The entries in four registries met the 20 items of the WHO TRDS. These were the Chinese Clinical Trial Registration Center (ChiCR), Australian New Zealand Clinical Trials Registry (NZCTR), Clinical Trials Registry , India (CTRI), and Sri Lanka Clinical Trials Registry (SLCTR). Registration quality varied among the different registries. For example, using the Scale of TRDS, the NZCTR scored a median of 19 points, ChiCTR (median = 18 points), ISRCTN.org (median = 17 points), and Clinical trials.org (median = 12 points). The data on monetary or material support for ChiCTR and ISRCTN.org were relatively complete and the score on our Scale for the Completeness of Funding Registration Quality ranged from ChiCTR (median = 7 points), ISRCTN.org (median = 6 points), NZCTR (median = 3 points) to clinicaltrials.gov (median = 2 points). Conclusion Further improvements are needed in both the quantity and quality of trial registration. This could be achieved by full completion of the 20 items of the WHO TRDS. Future research should assess ways to ensure the quality and scope of research registration and the role of mandatory registration of funded research. [source]

Monetary and Fiscal Policy Switching

JOURNAL OF MONEY, CREDIT AND BANKING, Issue 4 2007
HESS CHUNG
regime change; policy interactions; Taylor rule; fiscal theory of the price level A growing body of evidence finds that policy reaction functions vary substantially over different periods in the United States. This paper explores how moving to an environment in which monetary and fiscal regimes evolve according to a Markov process can change the impacts of policy shocks. In one regime monetary policy follows the Taylor principle and taxes rise strongly with debt; in another regime the Taylor principle fails to hold and taxes are exogenous. An example shows that a unique bounded non-Ricardian equilibrium exists in this environment. A computational model illustrates that because agents' decision rules embed the probability that policies will change in the future, monetary and tax shocks always produce wealth effects. When it is possible that fiscal policy will be unresponsive to debt at times, active monetary policy (like a Taylor rule) in one regime is not sufficient to insulate the economy against tax shocks in that regime and it can have the unintended consequence of amplifying and propagating the aggregate demand effects of tax shocks. The paper also considers the implications of policy switching for two empirical issues. [source]

Comment on "Asian Currency Crisis and the International Monetary Fund, 10 Years Later: Overview"

ASIAN ECONOMIC POLICY REVIEW, Issue 1 2007
Mohamed ARIFF
[source]

CENTRAL BANKS: FROM POLITICALLY INDEPENDENT TO MARKET-DEPENDENT INSTITUTIONS

ECONOMIC AFFAIRS, Issue 3 2009
Pedro Schwartz
Responses to the financial crisis are undermining the Chinese walls painfully built between monetary and fiscal authorities. Central banks and state treasuries are working side by side as lenders of last resort. Central banks are helping economic ministers with purchases of public debt and discounting of private paper. Regulation and control of financial institutions is now a political football. Central banks must be seen again as market-dependent institutions in a world of currency competition. Privatisation in law or in fact is back on the table. [source]

Equilibrium Determinacy under Monetary and Fiscal Policies in an Overlapping Generations Model

Greek Monetary Economics in Retrospect: The Adventures of the Drachma

ECONOMIC NOTES, Issue 3 2005
Sophia Lazaretou
This paper enumerates the adventures of the drachma step by step, dividing its story into seven parts. Specifically, its main purpose is to present some historical perspective on the behaviour of the monetary and fiscal policies pursued in Greece during the period from the early 1830s until the introduction of the euro. For Greece, the lessons of historical experience are very important. Since the formation of the modern Greek state, government officials have striven , sometimes making hard efforts , to keep abreast of international monetary developments. This was because they understood that the participation of a peripheral, poor and inflation-prone country with a weak currency and an underdeveloped money market, like Greece of the time, in a monetary club of powerful economies could improve her international credit standing and imply important benefits in terms of exchange rate and monetary stability, and long-term foreign borrowing. [source]

Fiscal Policy in the UK

ECONOMIC OUTLOOK, Issue 3 2001
Brian Henry
Although the conduct of macroeconomic policy in the UK has been very good by historical standards, Brian Henry argues in this article that there are shortcomings in the framework which mean it is less well suited to adverse shocks than it should be. He recommends that an extension of the present framework be made setting up a committee charged with the independent assessment of fiscal policy. This would help mitigate the lack of balance between monetary and fiscal policy which is evident at present. Fiscal judgements based on cyclical adjustments are too heavily dependant on domestic factors and underestimate the effects of the cycle on revenues. In consequence, fiscal policy, rather than supporting monetary, has been loosened and this indirectly accounts for the continuing strength of the exchange rate. [source]

How Should Macroeconomic Policy Respond to Foreign Financial Crises?,

ECONOMIC PAPERS: A JOURNAL OF APPLIED ECONOMICS AND POLICY, Issue 2 2010
Anthony J. Makin
F31; F33; F41 This paper examines the impact of global financial crises on the Australian economy and how monetary and fiscal policy may be used to manage economic downturns that result. To do so, it presents a straightforward analytical framework incorporating financial wealth, exchange rate expectations, foreign demand and interest rate risk to analyse the key role played by the nominal exchange rate in insulating national income from the worst effects of foreign financial crises. In the event the economy is not fully insulated by exchange rate depreciation, it shows that, in principle, monetary policy is a superior instrument to fiscal stimulus for restoring aggregate demand to the full employment level. Since monetary policy is not handicapped by numerous problems that render fiscal stimulus less effective, it should normally be considered a sufficient instrument on its own. [source]

From Great Depression to Great Credit Crisis: similarities, differences and lessons

ECONOMIC POLICY, Issue 62 2010
Miguel Almunia
Summary The Great Depression of the 1930s and the Great Credit Crisis of the 2000s had similar causes but elicited strikingly different policy responses. While it remains too early to assess the effectiveness of current policy, it is possible to analyse monetary and fiscal responses in the 1930s as a natural experiment or counterfactual capable of shedding light on the impact of current policies. We employ vector autoregressions, instrumental variables, and qualitative evidence for 27 countries in the period 1925,39. The results suggest that monetary and fiscal stimulus was effective -- that where it did not make a difference it was not tried. They shed light on the debate over fiscal multipliers in episodes of financial crisis. They are consistent with multipliers at the higher end of those estimated in the recent literature, and with the argument that the impact of fiscal stimulus will be greater when banking systems are dysfunctional and monetary policy is constrained by the zero bound. --- Miguel Almunia, Agustín Bénétrix, Barry Eichengreen, Kevin H. O'Rourke and Gisela Rua [source]

Financial dollarization: evaluating the consequences

ECONOMIC POLICY, Issue 45 2006
Eduardo Levy Yeyati
SUMMARY Financial dollarization The presence in residents' portfolio of foreign-currency assets and liabilities (or ,financial dollarization') has been alleged to influence monetary policy in developing economies and, especially, to cause debtors' insolvency in the aftermath exchange rate depreciations (the ,balance sheet effect'). The abundant and influential literature on these implications, however, contrasts sharply with the scarcity of empirical work aimed at confirming or refuting them. Using a new database, this paper assesses the evidence on the determinants of financial dollarization and tests whether its empirical effects on monetary and financial stability and on economic performance are consistent with theoretical predictions. It finds that financially dollarized economies display a more unstable demand for money, a greater propensity to suffer banking crises after a depreciation of the local currency, and slower and more volatile output growth, without significant gains in terms of domestic financial depth. The results indicate that active de-dollarization policies may be advisable for the many economies, including Central and Eastern European ones, where foreign-currency denominated assets and liabilities are important in residents' financial portfolios. , Eduardo Levy Yeyati [source]

POLITICAL MONETARY CYCLES UNDER ALTERNATIVE INSTITUTIONS: THE INDEPENDENT TREASURY AND THE FEDERAL RESERVE

ECONOMICS & POLITICS, Issue 3 2005
Jac C. Heckelman
The theory of opportunistic political business cycles predicts incumbent politicians will alter their economic policies to spur short-run growth to attract additional votes for the upcoming election. There has not been much emphasis on the possibility of historical political business cycles prior to the Keynesian Revolution. No study has yet undertaken a systematic approach to testing for policy cycles during this period. Our study will bridge this gap by considering cycles in monetary policy for the periods of 1879,1914 until the start of Fed operations, and 1914,1932 until abandonment of the gold standard. To properly test for political cycles, it is necessary to develop reaction functions for the Treasury and compare against the reaction function later held by the Fed. This also reveals that creation of an independent monetary authority to be insulated from political pressures changed the manner in which policy was directed, aside from political issues. The evidence is not consistent, however, with monetary cycles closely tied to electoral concerns. [source]

Monetary and Fiscal Policy Rules in the EMU

Civil Servants, Economic Ideas, and Economic Policies: Lessons from Italy

GOVERNANCE, Issue 4 2005
LUCIA QUAGLIA
Building on theoretically oriented and empirically grounded research on two key macroeconomic institutions in Italy, this article explains how and why civil servants can engineer major policy changes, making a difference in a country's trajectory. Italy provides a challenging testing ground for this kind of analysis, as it is generally portrayed as a highly politicized system in which political parties and politicians fully control public policies. Three general lessons can be learned, the first being that the role of civil servants in changing modes of economic governance depends on the resources that they master in the system in which they operate. "Intangible assets" are of primary importance in complex and perceived technical policies, such as monetary and exchange rate policy, which have high potential for "technocratic capture." Second, in these policies, certain intangible assets, such as specific bodies of economic knowledge or policy paradigms, have a considerable impact on policy making. Third, besides interactions in international fora, the professional training of civil servants is a mainstream way through which economic policy beliefs circulate and gain currency, laying the foundations for policy shifts. By highlighting the importance of the intangible assets of macroeconomic institutions, this research makes an unorthodox contribution to the primarily economic literature on central bank independence. [source]

Setting the rules: private power, political underpinnings, and legitimacy in global monetary and financial governance

INTERNATIONAL AFFAIRS, Issue 3 2008
GEOFFREY R. D. UNDERHILL
The role of private market agents in global monetary and financial governance has increased as globalization has proceeded. This shift in both markets and patterns of governance has often been encouraged by states themselves in pursuit of liberalization policies. Much of the literature views these developments in a positive light, yet there are other aspects of these developments that also merit attention. This article supports its central propositions with two cases of emerging global financial governance processes: the Basel II capital adequacy standards for international banking supervision and the International Organization of Securities Commissions-based transnational regulatory processes underpinning the functioning of cross-border securities markets. Based on the case findings, the article argues first that private sector self-regulation and/or public-private partnership in governance processes can leave public authorities vulnerable to dependence on the information and expertise provided by private agents in a fast-moving market environment. Policy in the vital domain of financial regulation has been increasingly aligned to private sector preferences to a degree that should raise fears of bureaucratic capture. Second, the article contends that the overall outcome in terms of global financial system efficiency and stability has been mixed, bringing a range of important benefits but also instability and crisis for many societies to a degree that has led to challenges to global governance itself. The case material indicates that the input, output and accountability phases of legitimacy in global monetary and financial governance are highly problematic, and much of the problem relates to the way in which private market agents are integrated into the decision-making process. Third, the article posits that a better consideration of these three ,phases' of legitimacy and their interrelationships is likely to enhance the political underpinnings and legitimacy of global financial and monetary order. [source]

Designing Macroeconomic Frameworks: A Positive Analysis of Monetary and Fiscal Delegation,

The Euro and International Capital Markets

INTERNATIONAL FINANCE, Issue 1 2000
Carsten Detken
Long before the introduction of the euro there was an active debate among researchers, policy-makers and financial market participants over how the new European money would change the relative roles of currencies in the international monetary and financial system. A widely held view was that the euro's use in international capital markets would be the key element. Therefore, this paper provides a broad empirical examination of the major currencies' roles in international capital markets, with a special emphasis on the first year of the euro. A contribution is made as to how to measure these roles, both from the viewpoint of international financing and from that of international investment activities. Time series of these new measures are presented, including euro aggregates calculated up to six years back in time. The data allow for the identification of changes in the role of the euro during 1999 compared to the aggregate of euro predecessor currencies, net of intra-euro area assets/liabilities, since the start of stage 2 of EMU in 1994. A number of key factors determining the currency distribution of international portfolio investments, such as relative market liquidity and relative risk characteristics of assets, are also examined empirically. It turns out that for almost all important market segments for which data are available, the euro immediately became the second most widely used currency for international financing and investment. For the flow of international bond and note issuance it even slightly overtook the US dollar in the second half of 1999. The data also suggest that most of this early supply of euro bonds by non-euro area residents, clearly exceeding the euro-predecessor currency aggregate, is actually absorbed by euro area residents and not by outside investors so far. [source]

Risk attitude in lotteries offering real products and monetary outcomes

INTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 2 2010
Shavit Tal
C91; D44; D81 Using two auction mechanisms, the second price auction and the Becker, DeGroot, and Marschak mechanism, we examined individuals' buying and selling bidding patterns in three types of binary lotteries: a lottery offering only real products, a lottery offering only monetary outcomes and mixed lotteries offering both real products and monetary value outcomes. Participants' willingness to pay and willingness to accept for the product lottery suggest risk neutrality. In contrast, participants' bidding prices for the monetary and mixed lotteries suggest risk aversion. These findings suggest that an individual's risk attitude depends upon the type of lottery, perhaps indicating a "product illusion." [source]

Will only an earthquake shake up economics?

INTERNATIONAL LABOUR REVIEW, Issue 2 2010
Ronald SCHETTKAT
Abstract. "Natural rate theory", the Efficient Market Hypothesis and its labour market application dominated interpretations of economic trends and policy prescriptions from the 1970s onwards, with their views of public policy and regulation as distorting otherwise well-functioning free markets. The upheaval of the current crisis is shaking these theories to the core. In this context, Schettkat examines European experience from the 1990s onwards and shows the theories to be unsubstantiated: high unemployment persisted post-recession despite structural reforms to labour market institutions, and the resumption of economic growth was hindered by then-dominant deflationary monetary and fiscal policies inspired by these theories. [source]

Putting a Human Face on Development

INTERNATIONAL SOCIAL SCIENCE JOURNAL, Issue 166 2000
Rubens Ricupero
The century is ending with failure to solve two major threats to the future: mass unemployment and growing inequality. Furthermore, in the poor parts of the world, the very possibility of sustainable development has been questioned by the economic crisis that started in Asia two years ago. This monetary and financial crisis truly deserved to be called a "crisis of development", for three main reasons. First, it hit almost exclusively most of the developing countries, at the same time sparing and even benefitingthe industrial economies. Second, paradoxically, it was much more destructive in the most advanced of the developing nations. Third, it has created uncertainties and questions regarding the possibility of regaining the previous levels of economic performance that characterised "the Asian tigers". Competition is very analogous to games. Both need fair rules and impartial arbiters. Governments and trade negotiators think that these are sufficient, forgetting a third and fundamental element. To play a game, you have to learn how to play it; through education and time to train. A key to success will be access to information. [source]

Assessing Profitability Factors in the Greek Banking System: A Multicriteria Methodology

INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH, Issue 5 2002
Ch. Spathis
The increasing competition in the national and international banking markets, the changeover towards monetary union and the new technological innovations herald major changes in the banking environment, and challenge all banks to make timely preparations in order to enter into the new competitive monetary and financial environment. Therefore, it is interesting to investigate the effectiveness of Greek banks, as it is valued by the financial markets, i.e. the greater the efficacy the higher the competitiveness and vice versa. Taking into consideration the bank assets, we distinguish banks into small and large ones. Finding factors that make the differences in such effectiveness may explain the effective advantage of these two types of financial institutions and help us understand the ,financial intermediation' industry in Greece better. Based on their size, a classification of Greek banks, in a multivariate environment, according to the return and operation factors for the years 1990,1999 takes place. In order to investigate the differences of profitability and efficiency between small and large Greek banks, as well as the factors of profitability and operation related with the size of banks, a multicriteria methodology has been used. The results of this paper may help us determine the key success (or failure) factors of these two categories of Greek banks as well as the responsible banking decision,makers for future readjustments. [source]

Economic and Legal Issues in Reducing the Eurosystem's Excess of International Reserves

JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 3 2004
Harald Badinger
Economic studies suggest that the Eurosystem's international reserves ($370 billion) could be reduced by up to half of its existing level. The article discusses the likely size and distribution of excess reserves and proposals for their uses. Small economic gains can be expected from a reserve reduction, as well as an elimination of incompatibilities and conflicts of interest between the conduct of monetary and investment policy. A careful and co-ordinated reserve reduction would pose no threat to financial stability, making it also admissible from a legal perspective against the background of Art. 31 of the ESCB (European System of Central Banks) Statute. Finally, transferring reserves as an extraordinary gain to the government does not constitute monetary financing as prohibited by Art. 101 EC Treaty. [source]

A Single EU Seat in the IMF?

JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 2 2004
Lorenzo Bini Smaghi
This article examines the rationale for consolidating EU Member States' position in the International Monetary Fund (IMF). Although a substantial amount of co-ordination already takes place, particularly on issues related to the euro area and the single monetary and exchange rate policy, co-operation between EU countries in the IMF remains a relatively new phenomenon and divergences still prevail. The current institutional set-up, whereby the 15 EU countries are spread in nine constituencies, undermines effectiveness. Al though there is scope for further improving co-operation, there are natural limits to what can be achieved within the existing co-operation frame work. A single EU constituency would enable EU Member States to have a strong impact on IMF policies, potentially as strong as that of the US. However, this may not be an objective for all EU countries in the current conjuncture. [source]

Deficit Targeting Strategies: Fiscal Consolidation and the Probability Distribution of Deficits under the Stability Pact

JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 3 2003
A.J. Hughes Hallett
Using stochastic simulations, this article analyses the probability distribution of a country's deficit ratio under fixed exchange rates and a variety of monetary and fiscal policy rules. The purpose is to show how the probability of an ,excessive deficit', defined by Europe's Stability Pact as a deficit to GDP ratio above 3 per cent, varies with different deficit targets and policy rules. Using a macro model, we find that when subject to historically consistent shocks, these fiscal ratios typically have a wide distribution, with fat tails and significantly longer tails on the upper side. That means fiscal targets may have to be country-specific and conservative, and that fiscal policy has to be forward-looking to keep the probability of excessive deficits below acceptable limits. [source]