Всего публикаций в данном разделе: 1311
Опубликовано на портале: 11-01-2003Carmen M. Reinhart, Vincent R. Reinhart
With many emerging market currencies tied to the U.S. dollar either implicitly or explicitly, movements in the exchange values of the currencies of major countries have the potential to influence the competitive position of many developing countries. According to some analysts, establishing target bands to reduce the variability of the G-3 currencies would limit those destabilizing shocks emanating from abroad. This paper examines the argument for such a target zone strictly from an emerging market perspective. Given that sterilized intervention by industrial economies tends to be ineffective and that policy makers show no appetite to return to the controls on international capital flows that helped keep exchange rates stable over the Bretton Woods era, a commitment to damping G-3 exchange rate fluctuations requires a willingness on the part of G-3 authorities to use domestic monetary policy to that end. Under a system of target zones, then, relative prices for emerging market economies may become more stable, but debt-servicing costs may become less predictable. We use a simple trade model to show that the resulting consequences for welfare are ambiguous. Our empirical work supplements the traditional literature on North-South links by examining the importance of the volatilities of G-3 exchange-rates, and U.S. interest rate and consumption on capital flows and economic growth in developing countries over the past thirty years.
Опубликовано на портале: 11-01-2003Andres Velasco
This paper develops a political-economic model of fiscal policy one in which" government resources are a common property' out of which interest groups can finance" expenditures on their preferred items. This setup has striking macroeconomic implications. First, fiscal deficits and debt accumulation occur even when there are no reasons for intertemporal smoothing. Second deficits can be eliminated through a fiscal reform, but such a reform may only take place after a delay during which government debt is built up.
Government Debt [книги]
Опубликовано на портале: 11-01-2003Douglas W. Elmendorf, Gregory N. Mankiw
This paper surveys the literature on the macroeconomic effects of government debt. It begins by discussing the data on debt and deficits, including the historical time series, measurement issues, and projections of future fiscal policy. The paper then presents the conventional theory of government debt, which emphasizes aggregate demand in the short run and crowding out in the long run. It next examines the theoretical and empirical debate over the theory of debt neutrality called Ricardian equivalence. Finally, the paper considers the various normative perspectives about how the government should use its ability to borrow.
Are Windfalls a Curse? A Non-Representative Agent Model of the Current Account and Fiscal Policy [статья]
Опубликовано на портале: 11-01-2003Aaron Tornell, Philip Lane Journal of International Economics. 1998. Vol. 44. P. 83-112.
In several countries temporary terms of trade improvements have led to a deterioration of the current account. Furthermore, many of these countries failed to attain greater post-boom growth rates. The point we make is that the structure of the fiscal process is critical in determining outcomes. If fiscal control is unitary, then the consumption-smoothing effect is operative, and representative-agent models of the current account have predictive power. However, if control is divided among several fiscal claimants, a voracity effect appears which counteracts the consumption-smoothing effect, leading to a deterioration of the current account in response to a positive shock. We model the interaction among fiscal claimants as a dynamic game, and show that in equilibrium aggregate appropriation increases more than the windfall itself. This results in a deterioration of the current account. We also show that all the windfall is dissipated, with the country experiencing no increase in its growth rate. Lastly, we analyze the experiences of seven countries which have enjoyed large windfalls.
Опубликовано на портале: 11-01-2003Pierre-Daniel G. Sarte Federal Reserve Bank of Richmond Economic. 1998. Vol. Volume 84/4 . P. 53-72.
It is well known that when inflation is stochastic, Fisher's theoretical equation, according to which the nominal interest rate is the sum of the real rate and the expected inflation rate, fails to hold. Under stochastic inflation, the Fisher equation must be amended to include a compensation for inflation risk: the inflation risk premium. Consequently, this article uses a simple consumption-based asset pricing model to investigate the significance of the inflation risk premium. Given the relationship between U.S. consumption growth and inflation, we find that historical estimates of the inflation risk premium are inconsequential. This result emerges because inflation surprises and unexpected movements in consumption growth exhibit little covariation in U.S. data. Moreover, using two different preference specifications, we also show that this result is quite unrelated to the notion that the equity risk premium is generally small in consumption-based asset pricing models.
Опубликовано на портале: 11-01-2003Joro R. Faria Journal of Applied Economics. 2001. Vol. IV. P. 89-105 .
This paper investigates the relationship between inflation and output in the context of an economy facing persistent high inflation. By analyzing the case of Brazil, we find that inflation does not impact real output in the long run, but that in the short run there exists a negative effect from inflation on output. These results support Sidrauskis (1967) superneutrality of money in the long run, but cast doubt on the short run implications of the model for separable utility functions in consumption and real money balances, as exposed by Fischer (1979). The results are more likely to support a class of utility functions in which real money balances and consumption are perfect complements.
Опубликовано на портале: 11-01-2003David R.F. Love, Jean-Francois Wen Canadian Journal of Economics. 1999. Vol. 32 . No. 1. P. 171-194 .
The costs of inflation are assessed using an endogenous growth macroeconomic model in which money reduces the time-costs of transacting. Inflation reduces growth in the model, which supports recent empirical evidence. Although simulations show time-costs to be small, inflation raises these costs and affects consumption, employment, and growth margins, implying greater welfare losses than generally found in the literature. The authors estimate welfare gains of 2 percent of GNP for reductions in inflation rates from 5 percent to zero when seignorage revenues are replaced with distortional taxes. Optimal inflation rates are negative.
Опубликовано на портале: 11-01-2003Lynn Elaine Browne, Rebecca Hellerstein, Jane Sneddon Little New England Economic Review. 1998. P. 3-32.
In 1980's, a new convention emerged in the economics profession - that central banks' primary, even sole, responsibility should be controlling consumer price inflation. By the 1990's, this view was gaining credibility in policy circles, and various countries mandated that their central banks make inflation their primary focus (generally with and escape clause in the event of a severe economic shock). Here in the United States, this orthodoxy never gained official status; rather, the U.S. policy goal remains promoting stable long-term growth using a variety of theoretical approaches. ; The recent problems in East Asia, as well as earlier difficulties in Japan, raise the question of whether such a concentrated focus on inflation became tunnel vision. Drawing on the crises in Japan and other Asian countries, with reference to comparable episodes in the United States, this article suggests that a preoccupation with inflation may have lulled policymakers and investors into ignoring useful signals from stock, real estate, and currency markets and from emerging imbalances in the real economy. Whether such imbalances would have been better addressed by monetary policy, or by improved disclosure, supervisory intervention, or tax policy, a broader perspective might have identified problems in Asia before they assumed such crippling proportions. ; This article concludes by suggesting that policymakers may want to look for signs of overheating emanating from asset markets and from emerging imbalances in the real economy, even when consumer prices are well behaved. Signs that high levels of debt may be financing increasingly optimistic investments warrant particular concern. The article also stresses the vulnerabilities that newly liberalized financial markets may introduce and the importance of measures that encourage the private sector to price risk more accurately and force it to bear the costs of international financial crises more fully. Overall, it advocates an eclectic approach to assessing economic performance.
Опубликовано на портале: 11-01-2003Andres Velasco, Eric Parrado
Using an optimizing model we derive the optimal monetary and exchange rate policy for a small stochastic open economy with imperfect competition and short run price rigidity. The optimal monetary policy has an exact closed-form solution and is obtained using the utility function of the representative home agent as welfare criterion. The optimal policy depends on the source of stochastic disturbances affecting the economy, much as in the literature pioneered by Poole (1970). Optimal monetary policy reacts to domestic and foreign disturbances. If the intertemporal elasticity of substitution in consumption is less than one, as is likely to be the case empirically, the optimal exchange rate policy implies a dirty float: interest rate shocks from abroad are met partially by adjusting home interest rates, and partially by allowing the exchange rate to move. This optimal pattern may help rationalize the observed fear of floating.
Опубликовано на портале: 08-12-2002Andrew B. Abel, Janice C. Eberly American Economic Review. 1994. Vol. 84 . No. 1. P. 1369-1384.
This paper extends the theory of investment under uncertainty to incorporate fixed costs of investment, a wedge between the purchase price and sale price of capital, and potential irreversibility of investment. In this extended framework, investment is a non-decreasing function of q, the shadow price of installed capital. There are potentially three investment regimes, which depend on the value of q relative to two critical values. For values of q above the upper critical value, investment is positive and is an increasing function of q, as is standard in the theory branch of the adjustment cost literature. For intermediate values of q, between two critical values, investment is zero. Although this regime features prominently in the irreversibility literature, it is largely ignored in the adjustment cost literature. Finally, if q is below the lower critical value, gross investment is negative, a possibility that is ruled out by assumption in the irreversibility of literature. In general, however, the shadow price q is not directly observable, so we present two examples relating q to observable varieties.
Опубликовано на портале: 04-12-2002Michael F. Bryan Federal Reserve Bank of Cleveland. 1997.
A historical look at the origin and uses of the word inflation, arguing that although the term has become nearly synonymous with "price increase," its original meaning--a rise in the general price level caused by an imbalance between the quantity of money and trade needs--is the definition driving many of those who advocate an anti-inflation policy for the Federal Reserve.