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Full-Text Articles in Macroeconomics

Can Price Controls Be Optimal? The Economics Of The Energy Shock In Germany, Tom Krebs, Isabella M. Weber Jan 2024

Can Price Controls Be Optimal? The Economics Of The Energy Shock In Germany, Tom Krebs, Isabella M. Weber

Economics Department Working Paper Series

In the wake of the global energy crisis, many European countries used energy price controls to fight inflation and to stabilize the economy. Despite its wide adoption, many economists remained skepti- cal. In this paper, we argue that price controls should be part of the policy toolbox to respond to shocks to systemically important sectors because not using them can have large economic and polit- ical costs. We put forward our arguments in two steps. In a first step, we analyze the impact on the German economy and society of the global energy crisis that followed Russia’s attack on Ukraine …


Intersectoral Conflict And Delays In Macroeconomic Stabilization, Arslan Razmi Jan 2024

Intersectoral Conflict And Delays In Macroeconomic Stabilization, Arslan Razmi

Economics Department Working Paper Series

An important body of literature explores the political economy reasons
underlying delays in macroeconomic stabilization. This paper develops
a framework to analyze conflict between two groups of economic actors,
one that has an endowment of internationally tradable goods and another
that is endowed with non-tradable goods. The focus is on the exchange
rate policy in a developing country set-up where the government employs
seigniorage revenue to finance spending pre-stabilization, and faces fiscal
and balance of payments problems that necessitate stabilization with a step
devaluation. The presence of exchange rate and endowment uncertainty,
the role of forward-looking expectations, and the possibility …