Geldpolitische Strategien im Umbruch
Diemo Dietrich, Albrecht F. Michler
Systeme monetärer Steuerung - Analyse und Vergleich geldpolitischer Strategien. Schriften zu Ordnungsfragen der Wirtschaft, Band 86,
No. 86,
2007
Abstract
In recent times the strategies of monetary policy, in particular that of the ECB, have been in the limelight of both scientific and public attention. After introducing into conceptual basics of monetary policy strategies, we compare inflation targeting and monetary targeting as the two prevalent strategies. The criteria established for this comparison are the way how the transmission of monetary policy is modeled, the role of expectations, the meaning of a nominal anchor as well as transparency and accountability. We conclude with a critical appraisal of the current ECB strategy.
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Die Lage der Weltwirtschaft und der deutschen Wirtschaft im Frühjahr 2007
Wirtschaft im Wandel,
1. Sonderausgabe
2007
Abstract
In spring 2007, the global economy remains robust. While growth rates have declined slightly from last year, as business activity in the US has slowed, they continue to reflect an upswing, which by now has held on for a notably long time. Especially the developing and emerging countries have been raising output very fast, due in part to their increasing role in the international division of labour. In the industrialised economies, on the other hand, the current recovery has not been remarkably strong. So far the slowdown in the US economy has not spilled over to other regions and the Euro Area as well as Japan continue to expand at a high pace. Here expansive monetary policy provided a notable support. Buoyant financial markets stimulated the world economy additionally, even though market volatility has increased since the end of February. The US central bank’s current concern with inflationary risks keeps it from loosening its slightly restrictive monetary policy. It will be the second half of the year – when price pressures have eased – until the Fed makes its first rate cut. The ECB, on the other hand, has been preparing financial markets for a further increase in interest rates by summer. In 2007 and 2008 the growth disparities in the industrialised countries will diminish. On one hand, the upswing in the Euro Area will start to moderate, as fiscal policy hampers business activity and monetary policy will not stimulate anymore. On the other hand, the US economy will slowly gain pace from summer onwards; the emerging markets will continue to develop in a highly dynamic fashion. World-GDP in this and next year will likely rise by about 3 ¼ % in 2007, which is still faster than in the average of the last ten years. World trade will rise by 7 ½ % in the coming two years. An oil price of 65 US-Dollar and an exchange rate between the Euro and the US-Dollar of 1.32 were assumed for both years 2007 and 2008. The real estate market in the USA continues to be a risk for...
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Inflation and relative price variability in the euro area: evidence from a panel threshold model
Dieter Nautz, Juliane Scharff
Bundesbank Discussion Paper, No. 14/2006,
2006
Abstract
In recent macroeconomic theory, relative price variability (RPV) generates the
central distortions of inflation. This paper provides first evidence on the empirical
relation between inflation and RPV in the euro area focusing on threshold effects
of inflation. We find that expected inflation significantly increases RPV if inflation
is either very low (below -1.38% p.a.) or very high (above 5.94% p.a.). In the
intermediate regime, however, expected inflation has no distorting effects which
supports price stability as an outcome of optimal monetary policy.
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Estimating Monetary Policy Rules for South Africa
Tobias Knedlik
South African Journal of Economics,
2006
Abstract
The paper combines the estimation of the Monetary Conditions Index (MCI) with the theoretic modelling of optimal monetary policy in South Africa. The idea that monetary policy is not only interested in optimal monetary conditions but also in external stability, provides the basis for the analysis. The paper introduces the concept of the MCI and estimates the relative influence of interest rates and exchange rates on the output gap. The estimated weights are 1.9:1. This estimation result is used to specify operating target rules for South African monetary policy.
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Signaling Currency Crises in South Africa
Tobias Knedlik
IWH Discussion Papers,
No. 19,
2006
Abstract
Currency crises episodes of 1996, 1998, and 2001 are used to identify common country specific causes of currency crises in South Africa. The paper identifies crises by the use of an Exchange Market Pressure (EMP) index as introduced by Eichengreen, Rose and Wyplosz (1996). It extends the Signals Approach introduced by Kaminsky and Reinhart (1996, 1998) by developing a composite indicator in order to measure the evolution of currency crisis risk in South Africa. The analysis considers the standard suspects from international currency crises and country specifics as identified by the Myburgh Commission (2002) and current literature as potentially relevant indicators.
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Signaling currency crises in South Africa
Tobias Knedlik
South African Reserve Bank: Macroeconomic Policy Challenges for South Africa Conference, South African Reserve Bank,
2006
Abstract
Currency crises episodes of 1996, 1998, and 2001 are used to identify common country specific causes of currency crises in South Africa. The paper identifies crises by the use of an Exchange Market Pressure (EMP) index as introduced by Eichengreen, Rose and Wyplosz (1996). It extends the Signals Approach introduced by Kaminsky and Reinhart (1996, 1998) by developing a composite indicator in order to measure the evolution of currency crisis risk in South Africa. The analysis considers the standard suspects from international currency crises and country specifics as identified by the Myburgh Commission (2002) and current literature as potentially relevant indicators.
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Are Botswana and Mozambique ready for CMA enlargement?
Tobias Knedlik
Botswana Journal of Economics,
No. 3,
2006
Abstract
The paper elaborates on the appropriateness of a potentially enlarged Common Monetary Area in Southern Africa including Botswana and Mozambique. The theory of optimum currency areas including some extensions by accounting for costs of non-integration and considering the external relations of currency areas are presented. Various indicators such as the structure of the economies, interest rates, inflation rates, exchange rates, factor mobility and trading partners are observed empirically. The paper concludes that current changes in the exchange rate policy of Botswana are expected to lead to increasing, though already high, convergence with CMA countries. Botswana is therefore an appropriate candidate for CMA enlargement. Mozambique is converging towards South Africa but still remains on a lower level. Taking into account the costs of non-integration, however, the target of integration should be formulated for the medium term.
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Original Sin - Analysing Its Mechanics and a proposed Remedy in a Simple Macroeconomic Model
Axel Lindner
IWH Discussion Papers,
No. 11,
2006
Abstract
This paper analyses the problem of “original sin“ (the fact that the currency of an emerging market economy usually cannot be used to borrow abroad) in a simple thirdgeneration model of currency crises. The approach differs from alternative frameworks by explicitly modeling the price setting behavior of firms if prices are sticky and the future exchange rate is uncertain. Monetary policy optimally trades off effects on price competitiveness and on debt burdens of firms. It is shown that the proposal by Eichengreen and Hausmann of creating an artificial basket currency as denominator of debt is attractive as a provision against contagion.
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Optimierung der Geldpolitik in Schwellenländern durch einen International-Lender-of-Last-Resort
Tobias Knedlik
Europäische Hochschulschriften, Reihe 5 Volks- und Betriebswirtschaft, Band 3202,
2006
Abstract
Current currency crises in emerging market economies show the insufficiency of preventive measures on national, regional and international level. The task of the book is therefore to analyze systematically which conditions monetary policy has to fulfill in order to prevent currency crises. In a first step optimal, crises-preventing monetary policy is modeled. Further the chances for overcoming the limitations of national policy are discussed on the regional and international level. The main result of the descriptive, theoretical and econometric analysis is the construction of an instrument for international monetary policy: the International Lender of Last Resort.
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Determinants of employment - the macroeconomic view
Christian Dreger, Heinz P. Galler, Ulrich (eds) Walwai
Schriften des IWH,
No. 22,
2005
Abstract
The weak performance of the German labour market over the past years has led to a significant unemployment problem. Currently, on average 4.5 mio. people are without a job contract, and a large part of them are long-term unemployed. A longer period of unemployment reduces their employability and aggravates the problem of social exclusion.
The factors driving the evolution of employment have been recently discussed on the workshop Determinanten der Beschäftigung – die makroökonomische Sicht organized jointly by the IAB, Nuremberg, and the IWH, Halle. The present volume contains the papers and proceedings to the policy oriented workshop held in November 2004, 15-16th. The main focus of the contributions is twofold. First, macroeconomic conditions to stimulate output and employment are considered. Second, the impacts of the increasing tax wedge between labour costs and the take home pay are emphasized. In particular, the role of the contributions to the social security system is investigated.
In his introductory address, Ulrich Walwei (IAB) links the unemployment experience to the modest path of economic growth in Germany. In addition, the low employment intensity of GDP growth and the temporary standstill of the convergence process of the East German economy have contributed to the weak labour market performance. In his analysis, Gebhard Flaig (ifo Institute, München) stresses the importance of relative factor price developments. A higher rate of wage growth leads to a decrease of the employment intensity of production, and correspondingly to an increase of the threshold of employment. Christian Dreger (IWH) discusses the relevance of labour market institutions like employment protection legislation and the structure of the wage bargaining process on the labour market outcome. Compared to the current setting, policies should try to introduce more flexibility in labour markets to improve the employment record. The impact of interest rate shocks on production is examined by the paper of Boris Hofmann (Deutsche Bundesbank, Frankfurt). According to the empirical evidence, monetary policy cannot explain the modest economic performance in Germany. György Barabas and Roland Döhrn (RWI Essen) have simulated the effects of a world trade shock on output and employment. The relationships have been fairly stable over the past years, even in light of the increasing globalization. Income and employment effects of the German tax reform in 2000 are discussed by Peter Haan and Viktor Steiner (DIW Berlin). On the base of a microsimulation model, household gains are determined. Also, a positive relationship between wages and labour supply can be established. Michael Feil und Gerd Zika (IAB) have examined the employment effects of a reduction of the contribution rates to the social security system. To obtain robust results, the analysis is done under alternative financing scenarios and with different macroeconometric models. The impacts of allowances of social security contributions on the incentives to work are discussed by Wolfgang Meister and Wolfgang Ochel (ifo München). According to their study, willingness to work is expected to increase especially at the lower end of the income distribution. The implied loss of contributions could be financed by higher taxes.
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