Hyperinflation in a small open economy with a fixed exchange rate: A post Keynesian view

This paper examines the emergence of hyperinflation in a small open economy with a fixed exchange rate from a post Keynesian perspective. Three variables play key roles: distributive conflict, external debt, and expectations about the exchange rate. First, we propose a short-run Kaleckian macro model. Then, we study the long-run behavior of the model by endogenizing the price level and foreign indebtedness. We conclude that the existence of expectations about the nominal exchange rate is crucial to explaining the emergence of hyperinflation.     

Birth,death and public good provision

We explore the effect of fixed versus dynamic group membership on public good provision. In a novel experimental design, we modify the traditional voluntary contribution mechanism (VCM) by periodically replacing old members of a group with new members over time. Under this dynamic, overlapping generations matching protocol we find that average contributions experience significantly less decay over time relative to a traditional VCM environment with fixed group membership and a common termination date. These findings suggest that the traditional pattern of contribution and decay seen in many public goods experiments may not accurately reflect behavior in groups with changing membership, as is the case in many real-world environments.     

Forecasting interest rates with shifting endpoints

We consider forecasting the term structure of interest rates with the assumption that factors driving the yield curve are stationary around a slowly time‐varying mean or ‘shifting endpoint’. The shifting endpoints are captured using either (i) time series methods (exponential smoothing) or (ii) long‐range survey forecasts of either interest rates or inflation and output growth, or (iii) exponentially smoothed realizations of these macro variables. Allowing for shifting endpoints in yield curve factors provides substantial and significant gains in out‐of‐sample predictive accuracy, relative to stationary and random walk benchmarks. Forecast improvements are largest for long‐maturity interest rates and for long‐horizon forecasts. Copyright © 2013 John Wiley & Sons, Ltd.     

Planning in Turbulent Times: Exploring Planners' Agency in Jerusalem

This article explores the role of planning in the deeply divided and politically polarized context of Jerusalem. The overall argument developed throughout the article is that the relation between planning and politics is a non‐hierarchical set of interactions, negotiated within specific historical, geographical, legal and cultural contexts—in other words, orders don't come down from the politicians to be slavishly followed by planners. In this respect our findings, based on in‐depth interviews with Israeli planners, suggest that the case of Jerusalem represents a particularly dramatic illustration of the fact that the function of planning expertise can only be understood in relation to the surrounding socio‐political environment. Furthermore, contrary to conventional wisdom, planners in Jerusalem are not destined to either complicity or irrelevance in the face of political imperatives; planners' agency, however, does not simply reflect their mastery of specific professional knowledge and tools, but also their ability to act strategically in relation to the context in which they operate.     

Central bank haircut policy

We present a model of central bank collateralized lending to study the optimal choice of the haircut policy. We show that a lending facility provides a bundle of two types of insurance: insurance against liquidity risk as well as insurance against downside risk of the collateral. Setting a haircut therefore involves balancing the trade-off between relaxing the liquidity constraints of agents on one hand, and increasing potential inflation risk and distorting the portfolio choices of agents on the other. We argue that the optimal haircut is higher when the central bank is unable to lend exclusively to agents who actually need liquidity. Finally, for a temporary surprise drop in the haircut, the central bank can be more aggressive than when setting a permanent level of the haircut.     

Choose, Choose, Choose, Choose, Choose, Choose, Choose: Emerging and Prospective Research on the Deleterious Effects of Living in Consumer Hyperchoice

The ideology of consumption and the imperative of consumer choice have washed across the globe. In today's developed economies there is an ever-increasing amount of buying, amidst an ever-increasing amount of purchase options, amidst an ever-increasing amount of stress, amidst an ever-decreasing amount of discretionary time. This brief essay reviews research suggesting, for example, that hyperchoice confuses people and increases regret, that hyperchoice is initially attractive but ultimately unsatisfying, and that hyperchoice is psychologically draining. Future research is then discussed, including how and why hyperchoice may have other toxic effects on people, including the degrading of moral emotions and behavior.