Currency devaluations,aggregate demand,and debt dynamics in economies with foreign currency liabilities

The article uses a post Kaleckian model to analyze how currency devaluations affect aggregate demand and capital accumulation in an economy with foreign currency liabilities in the short-run. In benchmark post Kaleckian open economy models, currency devaluations have two effects. First, they change international price competitiveness and thus affect net exports. Second, devaluations change income distribution and thereby affect consumption and investment demand. The overall effect on aggregate demand and investment is ambiguous and depends on parameter values. Existing models, however, disregard balance sheet effects that arise from foreign currency-denominated external debt. The article develops a novel post Kaleckian open economy model that introduces foreign currency-denominated external debt and balance sheet effects to examine the demand-effects of devaluations. Furthermore, the article models the dynamics of external and domestic corporate debt. It discusses how an economy may end up in a vicious cycle of foreign-currency indebtedness and derives the conditions under which indebtedness becomes stable or unstable. It shows that the existence of foreign currency-denominated debt means that contractionary devaluations are more likely, and that foreign interest rate hikes, and high illiquidity and risk premia compromise debt sustainability. Devaluations only stabilize debt ratios if they succeed in boosting domestic capital accumulation.     

Productivity,energy prices and the great moderation: A new link

We build upon recent research that attributes the moderation of output volatility since the 1980s to the reduced volatility of the Total Factor Productivity (TFP) by investigating the linkage between energy price fluctuations and the stochastic process for TFP. First, we estimate a joint stochastic process for the energy price and TFP and establish that until around 1982, energy prices negatively affected TFP. This spillover has since disappeared. Second, we show that within the framework of a Dynamic Stochastic General Equilibrium (DSGE) model, the disappearance of this energy-productivity spillover accounts for close to 68 percent of the moderation in output volatility.     

Managing international strategic alliance relationships

The objective of this study is to investigate the development of international strategic alliances (ISAs) and to identify the important factors for each phase of an alliance relationship. We have developed a framework about the process development of alliances that is based on an extensive literature study. The framework is used to study and analyze three cases of ISAs. The findings and conclusions are presented in a manner that can help managers to recognize the stages they have to go through and, more important, to be aware of the determinant variables in each stage of an alliance life cycle. This study found that the continuity of an alliance relationship is highly dependent on how partners manage their operational phase. © 2007 Wiley Periodicals, Inc.     

Return to work after cancer and pre-cancer job dissatisfaction

We investigate the association between pre-cancer job dissatisfaction and return-to-work probability 3 years after a cancer diagnosis. We use a Danish data set combining administrative data and a survey to breast and colon cancer survivors. We find that the return-to-work probability has a negative correlation with pre-cancer job dissatisfaction with mental demands (where the correlation is driven by the high-educated) and with physical demands and the superior (where the correlation is driven by the low-educated). Educational gradients in the probability of returning to work after cancer are not significantly affected by controlling for pre-cancer job dissatisfaction and pre-cancer ability to work.     

Nature in Economic Theories: Hans Immler Traces Recognition of the Environment—and Its Neglect—in Various Classics

Abstract . Labor and capital are usually considered as the primary factors of production, the costs of which are of utmost importance. In contrast, nature (including all natural resources), as the essential third factor, is disregarded. She is generally assumed to be always available, self-regenerating, and to be exploited without long-term costs. In other words, she is more or less viewed as a constant. Hans Immler's new treatise represents an important contribution in that he emphasizes the role and function of the natural environment, and its neglect, in the formulation of theories of value and their long-term consequences on contemporary economic theories and on the person and society. This essay traces Immler's evaluation with extensive quotations—especially with regard to Physiocracy and the classical economists— of nature's role and function, or their neglect, in the formulation of theories of value through the writings of Aristotle, St. Thomas Aquinas, William Petty, John Locke, Adam Smith, David Ricardo, Karl Marx, and others—all dealt with in Part 1 of his book—and Francois Quesnay and the Physiocrats—the topic of Part 2.     

Macroeconomic Factors in the Dynamics of Corporate and Household Saving: Evidence from Central and Eastern Europe

This article uses panel data estimations on annual data from 10 Central and Eastern European countries to assess the effect of different macroeconomic variables on the dynamics of corporate and household saving. The analyses show that changes in the macroeconomic environment affect the saving rates in both sectors, but with marked differences across the two sectors. The differences are most pronounced for the output gap, the real interest rate, the inflation rate, and the current account balance. Some variables, including the unemployment rate and changes in the real exchange rate, are unimportant in both sectors. The different results for the two sectors underscore the importance of analyzing the factors driving the dynamics of corporate and household saving separately.