Macroeconomics Commons^™

Credit, Sectoral Misallocation And Productivity Growth: A Disaggregated Analysis, Carlos Urrutia, Felipe Meza, Sangeeta Pratap

Carlos Urrutia

Real-Time Macroeconomic Forecasting With A Heteroskedastic Inversion Copula, Ruben Loaiza-Maya, Michael S. Smith

Michael Stanley Smith

International Reserves And Rollover Risk, Javier Bianchi, Juan Carlos Hatchondo, Leonardo Martinez

Leonardo Martinez

No abstract provided.

Why The World Needs A Reserve Asset With A Hard Anchor, Warren Coats, Dongsheng Di, Yuxuan Zhao

Warren Coats

From the 1970s, the global currency system has two features: the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies.This paper points out that the costs of the dollar’s use as an international reserve currency exceed the benefits for both the US and the rest of the world. These costs include the exporting of American manufacturing as a byproduct of its current account deficit needed to supply its currency to the rest of the world. In addition to the detriment to trade from unpredictable exchange rate fluctuations, …

Partial Disability And Labor Market Adjustment: The Case Of Spain, José Ignacio Silva, Judit Vall

José Ignacio Silva

Although partially disabled individuals in Spain are allowed to combine disability benefits with a job, the empirical evidence shows that the employment rate of this group of individuals is very low because they have a much lower job finding and a higher job separation rates than nondisabled workers. Moreover, a decomposition analysis of the equilibrium employment rate shows that the differences in the job finding rates explain 85 percent of the disabled employment gap. To explain these facts, we construct a labor market model with search intensity and matching frictions to identify the incentives and disincentives to work in Spain …

Discretionary Policy And Multiple Equilibria In A New Keynesian Model, Volker Hahn

Volker Hahn

The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman

Matthew Freedman

Debt Dilution And Sovereign Default Risk, Juan Carlos Hatchondo, Leonardo Martinez, Cesar Sosa Padilla

Leonardo Martinez

No abstract provided.

Fiscal Rules And The Sovereign Default Premium, Juan Carlos Hatchondo, Leonardo Martinez, Francisco Roch

Leonardo Martinez

No abstract provided.

An Estimated Open-Economy Dsge Model With Search-And-Matching Frictions: The Case Of Hungary, Istvan Konya, Zoltán Jakab

Istvan Konya

This paper builds and estimates a mediumscale, small open economy DSGE model augmented with search-and-matching frictions in the labor market, and different wage setting behavior in new and existing jobs. The model is estimated using Hungarian data between 2001-2008. We find that: (i) the inclusion of matching frictions significantly improves the model’s empirical fit; (ii) the extent of new hires wage rigidity is quantitatively important for keymacro variables; (iii) labor market shocks do not play an important role in inflation dynamics, but the structure of the labor market influences the monetary transmission mechanism.

Holes In The Dike: The Global Savings Glut, U.S. House Prices And The Long Shadow Of Banking Deregulation, Mathias Hoffmann, Iryna Stewen

Mathias Hoffmann

We show how capital inflows into and financial deregulation within the United States interacted in driving the recent boom and bust in U.S. housing prices. Interstate banking deregulation during the 1980s cast a long shadow: in states that opened their banking markets to out-of-state banks earlier, house prices were more sensitive to aggregate U.S. capital inflows during 1990-2012. Capital inflows relaxed the value-at-risk constraints of geographically diversified (‘integrated’) U.S. banks more than those of local banks. Therefore, integrated banks absorbed a larger share of capital inflows and expanded mortgage lending more. This drove up housing prices.

Asymmetric Forecast Densities For U.S. Macroeconomic Variables From A Gaussian Copula Model Of Cross-Sectional And Serial Dependence, Michael S. Smith, Shaun Vahey

Michael Stanley Smith

Designing Monetary Policy Committees, Volker Hahn

Volker Hahn

Exploring The Transformative Potential Of The E3+3 Joint Comprehensive Plan Of Action With Iran For Improving The Iranian Economy And Its Reintegration Into The Global System, Mohammad Reza Farzanegan

Prof. Dr. Mohammad Reza Farzanegan

This is background note for my presentation at the Peace Research Institute Frankfurt.

How Does Labour Market Structure Affect The Response Of Economies To Shocks?, Istvan Konya, Aurelijus Dabusinskas, Stephen Millard

Istvan Konya

The recent crisis in the Eurozone has led to much discussion about the structure of labour markets in different Eurozone economies. In particular, there has been much talk of the need for structural labour market reform in the Eurozone periphery. But, there are many aspects of labour market structure – eg, wage flexibility, flexibility in hiring and firing, benefits, etc – and it is not clear a priori which aspects really matter. In this paper, we analyse how cross-country differences in labour market characteristics – in particular, wage and employment rigidities – shape the response of different countries to a …

Bank Solvency And Economic Activity, Lester G. Telser

Lester G Telser

This note explains why bank solvency is extremely important in a modern economy. Although banks provide many services including loans to business and households, these are secondary. Provision of the means of payment is primary. Every transaction in a modern economy involves a means of payment offered by the buyer and acceptable to the seller.

Lecciones De Economía Para No Economistas, Sergio A. Berumen

Sergio A. Berumen

Este libro estudia la totalidad de los contenidos de los cursos de Introducción a la Economía y de los primeros cursos de Microeconomía y Macroeconomía de los grados y las licenciaturas en Ciencias Sociales.

Chaotic Behavior In Monetary Systems: Comparison Among Different Types Of Taylor Rule, Reza Moosavi Mohseni Dr., Wenjun Zhang Dr., Jiling Cao Prof.

Reza Moosavi Mohseni

The aim of the present study is to detect the chaotic behavior in the monetary economic relevant dynamical system. The study employs three different forms of Taylor rules: current, forward and backward looking. The result suggests the existence of the chaotic behavior in all three systems. In addition, the results strongly represent that using expectations in policy rule especially rational expectation hypothesis can increase the complexity of the system and leads to more chaotic behavior.

Ex-Ante Evaluation Of Public-Private Partnerships: Macroeconomic Analysis, Junxiao Liu, Peter Love, Brad Carey, Jim Smith, Michael Regan

Michael Regan

Public-private partnerships (PPPs) are currently a popular approach for governments to procure social and economic infrastructure. The macroeconomic environment plays a critical role and influences the factors that can lead to the successful delivery of a PPP project. Despite the importance of the macroeconomic environment, limited attention has been paid to ex-ante (that is, before the event, or forecast) evaluation. A review of the normative literature was undertaken, aiming to derive key performance indicators (KPIs) of PPP success. The KPIs were validated by using a vector error correction model. It is suggested that the developed KPIs can be used to …

Chaotic Behavior In Monetary Systems: Comparison Among Different Types Of Taylor Rule, Reza Moosavi Mohseni Dr., Wenjun Zhang, Jiling Cao

Reza Moosavi Mohseni

The aim of the present study is to detect the chaotic behavior in monetary economic relevant dynamical system. The study employs three different forms of Taylor rules: current, forward, and backward looking. The result suggests the existence of the chaotic behavior in all three systems. In addition, the results strongly represent that using expectations in policy rule especially rational expectation hypothesis can increase complexity of the system and leads to more chaotic behavior.

Ii Keynes On Safe Assets, Lester G. Telser

Lester G Telser

Only the monetary authorities can create and issue safe assets. A safe asset is not offset by any liability so no private entity can issue it. The nominal value of a safe asset is fixed and it usually offers no nominal yield. The rationale for safe assets can be traced to the factors underlying the Keynesian liquidity trap. Since late 2008 the Fed has paid 0.25 percent on member bank reserves held in deposits at the Fed. This is part of the program known as ‘quantitative easing.’ It may have presented collapse of the U.S. banking system.

Respuestas Exámen, Francisco Carlos Ruiz Diaz

Francisco Carlos Ruiz Diaz

No abstract provided.

The Intuition Behind Wallace Neutrality, Richard H. Serlin

Richard H. Serlin

Wallace neutrality is a term that, as far as I know, was coined by University of Michigan economist Miles Kimball. It refers to the seminal model of Neil Wallace in "A Modigliani-Miller Theorem for Open-Market Operations", American Economic Review, June 1981. In Wallace's model, open market operations have no effect on any asset prices, including money (no effect on inflation). This is a shocking result, and it cries out for how and why. Intuitively, how and why can this possibly happen? However, like so many modern models, it's extremely difficult to see the intuition behind the wall of math, and …

Exchange Rate 'Overshooting': An Empirical Study Of Bangladesh And India, Mohammad Ali Tareq, Fazle Rabbi

Fazle Rabbi

Exchange rates are difficult to forecast because the market is continually reacting to unexpected events or news. Even in the absence of any major news, exchange rates adjust through the day as foreign exchange dealers manage their inventories and respond to trades with others who may be better informed. The role of exchange rate changes in eliminating international trade imbalances suggests that we should expect countries with current trade surpluses to have an appreciating currency, whereas countries with trade deficits should have depreciating currencies. Such exchange rate changes would lead to changes in international relative prices that would work to …

Cruzar El Río Sintiendo Las Piedras. Trece Historias De Éxito, Francisco Carlos Ruiz Diaz

Francisco Carlos Ruiz Diaz

En el periodo 1980-1998 el ingreso por habitante del Paraguay creció a una tasa anual promedio de 1,1%. En esas condiciones, un paraguayo medio debía esperar 65 años para ver sus ingresos duplicarse. Sin embargo, las reformas económicas parciales iniciadas en el año 2003 contribuyeron a que el ingreso por habitante crezca a un promedio anual de 2,8% en el periodo 2003 y 2014, lo que ayudó a recortar el plazo de duplicación del ingreso por habitante a tan solo 25 años ¿Cómo se logra este tipo de resultados? ¿Esas reformas son suficientes para sostener el crecimiento de largo plazo? …

How Default Probability Affects Returns On Loans, Lester G. Telser

Lester G Telser

Even the simplest kind of default as an independent random event poses difficulties. The correct formulas for the nominal return on a default free loan and the revisions to apply for a loan that may default follow from 2 assumptions. 1. A good now is better than a good later because survival from now to later is not sure. 2. Private loans occur only if the probability of default does not exceed an upper bound set by the reciprocal of the nominal return on a default free loan. This upper bound makes sense if and only if the nominal interest …

Public Actors In Private Markets: Toward A Developmental Finance State, Robert Hockett, Saule Omarova

Saule T. Omarova

The recent financial crisis brought into sharp relief fundamental questions about the social function and purpose of the financial system, including its relation to the “real” economy. This Article argues that, to answer these questions, we must recapture a distinctively American view of the proper relations among state, financial market, and development. This programmatic vision – captured in what we call a “developmental finance state” – is based on three key propositions: (1) that economic and social development is not an “end-state” but a continuing national policy priority; (2) that the modalities of finance are the most potent means of …

Small Firms And Domestic Bank Dependence In Europe's Great Recession, Mathias Hoffmann, Bent E. Sorensen

Mathias Hoffmann

The paper studies the role of small businesses (SME) in the transmission of the Eurozone crisis to member countries and whether regions or countries with many SMEs were less able to share risk. Our analysis draws attention to domestic bank dependence---defined as the share of domestic private credit originated by domestic banks---as a key variable modulated the impact of shocks on bank-dependent SMEs and thus on the real economy. We argue that Eurozone banking integration in the years after the creation of the single currency was lopsided in the sense that, until 2008, cross-border lending between banks increased markedly while …

‘By A Silken Thread’: Regional Banking Integration And Pathways To Financial Development In Japan’S Great Recession, Mathias Hoffmann, Toshihiro Okubo

Mathias Hoffmann

Regional differences in banking integration and bank dependence interacted in spreading Japan’s Great Recession after 1990. Nationwide banks were generally more exposed to the crisis than regional ones, but their internal capital markets also substantially dampened the impact of the crisis in prefectures with many bank-dependent small firms. We instrument for modern-day banking inte- gration using the prefecture-level importance of the late-19th-century silk industry: export finance for the silk industry relied on local, cooperative banks. These local banks preserved their comparative advantage in relationship lending to small firms for a century, effectively segmenting regional banking markets during Japan’s lost decade.

Economic Growth And Wage Stagnation In Peru: 1998-2012, Carlos Urrutia, Peter Paz

Carlos Urrutia

In the last two decades, the Peruvian economy exhibited rapid growth. Moreover, the composition of the labor force improved in terms of education and experience, two variables which are typically associated to higher human capital. The average worker in 2012 had a higher level of education and was one and a half years older than in 1998, reflecting the impact of the demographic transition. However, the average real wage was roughly constant. We show that a decline in the wage premium for education, and to a minor extent for experience, is responsible for the lack of growth in the average …