Analysis of a monetary union enlargement in the framework of linear-quadratic differential games

This paper studies the effects of a monetary union enlargement using the techniques and outcomes from an extensive research project on macroeconomic policy coordination in the EMU. Our approach is characterized by two main pillars: (i) linear-quadratic differential games to capture externalities, spillovers and strategic behaviour of (fiscal and monetary) players; and (ii) endogenous coalition formation concepts which enable us to study a creation and stability of different cooperation arrangements. In this paper we focus on the first pillar and construct a multi-player linear-quadratic continuous-time model of 5 countries and 4 central banks to evaluate effects of accession of a new member to an existing MU. Our findings stress the importance of an asymmetric shock confirming basic results of the OCA theory. It comes out that in our setting it is never profitable to enlarge the monetary union when there is a risk of an asymmetric shock. What is more, the potential losses from accession are so high that it can be barely possible to design a transfer system to compensate for a worse situation of some countries.

Comment on “Lessons for Monetary Policy from the Euro-Area Crisis”

This comment discusses and extends the paper: “Lessons for Monetary Policy from the Euro Area Crisis,” by Charles Goodhart. The comment claims the Eurosystem was more sluggish in responding to the crisis than the Federal Reserve due to restrictions originating from its mandate. Yet today’s challenge runs deeper, as the absence of a banking union in the Euro Area has allowed a large fragmentation in financial intermediation. The critical question is: “Given that the Euro Area is not an Optimum Currency Area and a banking union will take a long time to materialize, can the Eurosystem find a way to alleviate the fragmentation in lending rates without compromising its independence?” The comment offers a solution, which would expand the monetary toolbox.     

Time varying integration of European stock markets and monetary drivers

This study analyzes time-varying integration of stock markets among fourteen European countries and its monetary drivers relevant to the two contrasting events — the introduction of Euro in 1999 and banking crisis of GIIPS in 2011. Our panel analysis reports evidence that monetary performance convergence, lower differentials in interest rates and inflation among EU countries, has been a key driver for the increase in integration of EU stock markets post EMU. Our qualitative analysis indicates that post EMU, the GDP differences among the EU countries have reverse relations with monetary performance convergence. This finding is in line with those of our quantitative study with a price-based indicator for integration.     

建立中国高速铁路技术体系的研究

介绍国外高速铁路发展概况，结合我国实际，对中国高速铁路工务工程、牵引供电、通信信号、高速动车组、信息系统及运用维修六大技术体系的主要技术条件、特点及其各项子技术体系进行论述，可为中国高速铁路的修建、运营作参考。     

Germany in crisis: the unification challenge,macroeconomic policy shocks and traditions,and EMU

Conventional wisdom blames Germany's ongoing economic and fiscal crisis on the unification shock of the early 1990s and structural problems in labour markets. Challenging this view, this paper offers a fresh assessment that focuses on macroeconomic demand management. It is shown that Germany's fiscal crisis cannot be attributed to unification per se; it arose as a consequence of ill‐guided macroeconomic policies pursued in response to that event. Many structural problems that popped up along the way were mere symptoms of persistent macroeconomic mismanagement and protracted domestic demand stagnation. Arguably, systematically ill‐guided macroeconomic policies of this type are potent enough to wreck any real world economy, no matter how flexible it may be. Because Germany provided the blueprint for Europe's stability‐oriented macroeconomic policy regime, it comes as no surprise that a peculiar repeat of certain symptoms that started to arise in Germany a decade ago may now be observed across the euro area—protracted domestic demand weakness and inflation stickiness because of ‘tax‐push inflation’ in particular.     

高速动车组制动盘热力耦合分析

高速动车在紧急制动工况下,制动盘表面温度分布不均致使制动盘热胀冷缩产生热应力,进而导致制动盘出现热裂纹失效,针对上述问题,以某型号高速动车组拖车制动盘为研究对象,对其在300 km/h紧急制动工况过程开展热力耦合特性研究。综合考虑制动盘材料随温度变化而变化,且制动闸片与制动盘接触面的几何形状和分布对热流密度的影响,建立了基于微元法的摩擦面热流密度计算模型;结合热传导、对流换热和热辐射模型,建立了制动盘的应力计算模型,并对制动盘进行热力耦合分析,得到制动盘的温度和应力分布规律。结果表明,制动过程中制动盘最高温度出现摩擦区域靠近外圈位置处,需采取必要的散热措施;最大应力出现在靠近内圈的散热筋部位,设计时需优化此处结构。新方法构建了基于多物理参数和变梯度微元法的热力耦合模型,有效模拟了高速动车组的紧急制动过程,研究结果可为高速动车组制动盘的选材和结构设计优化提供理论依据。     

Monetary policy design and transmission asymmetry in EMU: Does uncertainty matter?

In this paper, we consider how uncertainty affects the choice between federal monetary policy based on national and union-wide aggregate data under conditions of asymmetry in the transmission of monetary policy. We find that the uncertainty about the transmission process sustains (and, in some cases, even reinforces) the need to take into account information about national economies in the formulation of monetary policy. Also the forecasting process matters when uncertainty is additive: in particular, when union-wide forecasting is more accurate than national-based forecasting, this advantage can compensate for the welfare loss from using union-wide aggregation. There is, however, a strong case for using national information in the optimal design of common monetary policy.     

The Attractiveness of the EMU Exchange Rate Stabilization Program

One of the arguments for a monetary union is that it reduces the variability of exchange rates. This paper demonstrates that the welfare gain that EU countries can expect to gain from the move to a single currency is moderate. The gains from exchange rate stabilization are limited by imports of foreign consumption goods and borrowing by governments. Furthermore, exchange rate stabilization may imply a welfare loss as the removal of non-zero exchange rate expectations deprives investors of the opportunity to speculate on expected-rate-of-return differentials. Numerical simulations suggest that the welfare gain from exchange rate stabilization for the average EU country is equivalent to a 0.9 percent rate of return on portfolio wealth.     

Towards a Political Economy of Zero Budgeting in Austria

The EMU sets new standards for public finance. In particular, the Stability and Growth Pact aims at a budget ``close-to-balance or in surplus'. Austria is lagging behind in this respect. First, this paper discusses the reasons for that. Then, two scenarios of budget consolidation are analyzed with the Wifo macroeconomic model. In the case of the crash-scenario, which balances the budget already in 2002, the pure Keynesian solution would result in a decline of real GDP of 1% after six years. The precautionary consolidation scenario (balanced budget in ten years) would result in a real GDP loss of only 1/2%. With supply-side effects (incentives for investment due to privatization and UMTS licences sales or credibility effects), real GDP declines only by 1/3% in both scenario. Taking a consolidated view of the tax reform 2000 and the budget consolidation, on balance, the overall effects are rather positive than negative.     

EMU fiscal indicators: a misleading compass?

The effectiveness of any device for fiscal discipline crucially depends on the indicators it refers to. This paper assesses the indicators adopted for fiscal rules in the European Economic and Monetary Union (EMU) with respect to their relevance for EMU’s objective of fiscal soundness and to the adequacy of the underlying statistical framework in providing conditions for enforcement. The paper argues that EMU’s deficit and debt indicators present several shortcomings with respect to both sustainability analysis and monitoring requirements. The debt indicator allows the achievement of targets via operations that do not improve fiscal sustainability and tends to underestimate overall outstanding liabilities. The deficit indicator cannot be monitored in a timely manner, allows too much room for discretion, and is subject to significant revisions. While acknowledging that any single indicator can be distorted when used as a policy target, the paper argues that the weaknesses of EMU’s indicators would be much reduced if consistency cross-checks played a larger role than they currently do.The authors wish to thank Claudia Braz, Carlo Cottarelli, Jorge Cunha, Mark De Broek, Albert␣Jaeger, Mohan Kumar, Joao Nogueira, Ethan Wiseman and the anonymous referees for helpful comments.