Monetary Policy in a World Where Money (Also) Matters
Makram El-Shagi, Sebastian Giesen
IWH Discussion Papers,
No. 6,
2012
Abstract
While the long-run relation between money and inflation as predicted by the quantity theory is well established, empirical studies of the short-run adjustment process have been inconclusive at best. The literature regarding the validity of the quantity theory within a given economy is mixed. Previous research has found support for quantity theory within a given economy by combining the P-Star, the structural VAR and the monetary aggregation literature. However, these models lack precise modelling of the short-run dynamics by ignoring interest rates as the main policy instrument. Contrarily, most New Keynesian approaches, while excellently modeling the short-run dynamics transmitted through interest rates, ignore the role of money and thus the potential mid-and long-run effects of monetary policy. We propose a parsimonious and fairly unrestrictive econometric model that allows a detailed look into the dynamics of a monetary policy shock by accounting for changes in economic equilibria, such as potential output and money demand, in a framework that allows for both monetarist and New Keynesian transmission mechanisms, while also considering the Barnett critique. While we confirm most New Keynesian findings concerning the short-run dynamics, we also find strong evidence for a substantial role of the quantity of money for price movements.
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Pre-announcement and Timing: The Effects of a Government Expenditure Shock
Alexander Kriwoluzky
European Economic Review,
No. 3,
2012
Abstract
An econometric strategy to identify a pre-announced fiscal policy shock is proposed. I show that the reduced form innovations can be recovered by estimating a Vector-moving-average model using the Kalman filter. The structural effects are identified exploiting the shock's pre-announced nature, which leads to potentially different signs of the responses of some endogenous variables during the announcement and after the realization of the shock. I illustrate my strategy by identifying a pre-announced shock to government consumption expenditures. I find that the response of private consumption is significantly negative on impact, rises and becomes significantly positive two quarters after the realization of the policy shock.
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Effects of Fiscal Stimulus in Structural Models
Mathias Trabandt, Günter Coenen, Christopher J. Erceg, Charles Freedman, Davide Furceri, Michael Kumhof, René Lalonde, Douglas Laxton, Jesper Lindé, Annabelle Mourougane, Dirk Muir, Susanna Mursula, Carlos de Resende, John Roberts, Werner Roeger, Stephen Snudden, Jan in't Veld
American Economic Journal: Macroeconomics,
No. 1,
2012
Abstract
The paper subjects seven structural DSGE models, all used heavily by policymaking institutions, to discretionary fiscal stimulus shocks using seven different fiscal instruments, and compares the results to those of two prominent academic DSGE models. There is considerable agreement across models on both the absolute and relative sizes of different types of fiscal multipliers. The size of many multipliers is large, particularly for spending and targeted transfers. Fiscal policy is most effective if it has moderate persistence and if monetary policy is accommodative. Permanently higher spending or deficits imply significantly lower initial multipliers.
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Incubator Organizations as Entrepreneurship and SME Policy Instrument in Transition Economies: A Survey among six Countries
Michael Schwartz, Sebastian Blesse
Asia Pacific Journal of Innovation and Entrepreneurship,
No. 3,
2011
Abstract
Within incubator-incubation research, there is a predominant focus on incubator organizations located in industrialized or developed economies. Knowledge regarding the evolution of incubators located in transition economies is almost non-existent. However, meanwhile a significant number of incubators have been established since the fall of the iron curtain in many Central and Eastern European (CEE) countries as well. Here, the present paper sets in through providing evidence on the development, distribution and structural characteristics of incubators in six selected CEE countries (Poland, Czech Republic, Slovakia, Lithuania, Estonia and Latvia). We show that incubator organizations have become a central element of support infrastructure for SME and entrepreneurship in CEE countries during the past 20 years. We further argue that by drawing upon the accumulated experience with incubators in developed Western (European) economies, there are important lessons to be learned for incubator stakeholders in transition economies. We, therefore, outline particular suggestions considered to be vital for long-term successful incubation processes in transition economies.
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A Macroeconomist’s View on EU Governance Reform: Why and How to Establish Policy Coordination?
Hubert Gabrisch
Economic Annals,
No. 191,
2011
Abstract
This paper discusses the need for macroeconomic policy coordination in the E(M)U. Coordination of national policies with cross-border effects does not exist at the macroeconomic level, although requested by the EU Treaty. The need for coordination stems from current account imbalances, which origin in market-induced capital flows, destabilizing the real exchange rates between low and high wage countries. The recent attempts of the Commission and the European Council to reform E(M)U governance do not address this problem and thus remain incapable to protect against future instability.
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New Energies in Peripheral Areas - Creation and Development of Photovoltaic Industry in Freiberg, Saxony
Matthias Brachert, Christoph Hornych
D. Keppler, B. Nölting, C. Schröder (Hrsg.), Neue Energie im Osten - Gestaltung des Umbruchs, Perspektiven für eine zukunftsfähige sozial-ökologische Energiewende,
2011
Abstract
Der Beitrag beschreibt die Transformation der Freiberger Wirtschaft ausgehend vom dem auf die DDR-Halbleiterindustrie orientierten „VEB Spurenmetalle Freiberg“ hin zur heutigen Photovoltaik-Industrie und analysiert, welche Rolle lokale und regionale Rahmenbedingungen bei der Entwicklung der Photovoltaik-Industrie am Standort gespielt haben. Er zeigt ferner, wie die Photovoltaik-Industrie mit lokalen Akteuren zusammenarbeitet, und beschreibt die Effekte aus der Interaktion der Photovoltaik-Industrie mit der Region.
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How does Institutional Setting Affect the Impact of EU Structural Funds on Economic Cohesion? New Evidence from Central and Eastern Europe
Marina Grusevaja, Toralf Pusch
Abstract
Structural Funds are the main instrument of the EU cohesion policy. Their effective use is subject to an ongoing debate in political and scientific circles. European fiscal assistance under this heading should promote economic and social cohesion in the member states of the European Union. Recently, the domestic institutional capacity to absorb, to distribute and to invest Structural Funds effectively has become a crucial determinant of the cohesion process and has attracted attention of the scientific community. The aim of this study is to shed light on the effectiveness of Structural Funds in the countries of the first Central and Eastern European enlargement round in 2004. Using regional data for these countries, we have a look on the impact of several institutional governance variables on the effectiveness of Structural Funds. In the interpretation of results, reference is
made to regional economics. Results of the empirical analysis indicate an influence of certain institutional variables on the effectiveness of Structural Funds in the new member states.
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A Systemic View on Knowledge-based Development Metrics
Mirko Titze, Michael Schwartz, Matthias Brachert
International Journal of Knowledge-Based Development,
No. 1,
2012
Abstract
Drawing on the systems perspective of innovation processes, this article proposes a conceptual approach for a comprehensive analysis of regional knowledge generation and transfer. Instead of focusing on one single indicator, the approach emphasizes the importance to take multiple channels of knowledge transfer into account. This provides valuable insights into the spatial structure of innovation processes on different levels. We disentangle the innovation process and consider four different layers: i.) publications in peer-reviewed journals, ii.) patent applications, iii.) formal R&D collaboration projects, the iv.) localized input-output relations. Further, we demonstrate the relevance of the „multi-layer approach‟ by applying it empirically to a specific regional innovation system: The Free State of Saxony – a federal state in Germany. We argue that the approach could be a valuable tool to inform policy-makers about knowledge-based regional development strategies.
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Government Interventions in Banking Crises: Effects of Alternative Schemes on Bank Lending and Risk-taking
Diemo Dietrich, Achim Hauck
Scottish Journal of Political Economy,
No. 2,
2012
Abstract
We analyse the effects of policy measures to stop the fall in loan supply following a banking crisis. We apply a dynamic framework in which a debt overhang induces banks to curtail lending or to choose a fragile capital structure. Government assistance conditional on new banking activities, like on new lending or on debt and equity issues, allows banks to influence the scale of the assistance and to externalise risks, implying overinvestment or excessive risk taking or both. Assistance without reference to new activities, like granting lump sum transfers or establishing bad banks, does not generate adverse incentives but may have higher fiscal costs.
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