Performance of Core Inflation Measures

This paper assesses the performance of core inflation measures based on the structural VAR approach. Since core or monetary inflation is not directly observable, we develop a monetary general equilibrium model that fits real aggregated European data and we use this model to generate time series for headline as well as core inflation. For five different schemes which attempt to identify core inflation within a VAR framework it is investigated whether the estimated core inflation series recover the true series sufficiently precise in order to be useful for monetary policy.     

A simple test of the effect of interest rate defense

High interest rates to defend the exchange rate signal that a government is committed to fixed exchange rates, but may also signal weak fundamentals. We test the effectiveness of the interest rate defense by disaggregating into the effects on future interest rates differentials, expectations of future exchange rates, and risk premia. While much previous empirical work has been inconclusive due to offsetting effects, tests that “disaggregate” the effects provide significant information. Raising overnight interest rates strengthens the exchange rate over the short-term, but also leads to an expected depreciation at a horizon of a year and longer and an increase in the risk premium, consistent with the argument that it also signals weak fundamentals. J. Japanese Int. Economies 20 (4) (2006) 612–636.     

Work-team implementation

The authors describe the implementation of the Work-Team Concept at the Frigidaire plans in Jefferson, Iowa. By forming teams, plant staff have made significant improvements in worker safety, product quality, customer service, cost-effectiveness, and overall employee well-being.     

A predictability test for a small number of nested models

We introduce quasi-likelihood ratio tests for one sided multivariate hypotheses to evaluate the null that a parsimonious model performs equally well as a small number of models which nest the benchmark. The limiting distributions of the test statistics are non-standard. For critical values we consider: (i) bootstrapping and (ii) simulations assuming normality of the mean square prediction error difference. The proposed tests have good size and power properties compared with existing equal and superior predictive ability tests for multiple model comparison. We apply our tests to study the predictive ability of a Phillips curve type for the US core inflation.     

“So Much Technology,So Little Talent”? Skills for Harnessing Technology for Leadership Outcomes

Advanced information and communication technologies are impacting the ways groups and individuals collaborate, communicate, and engage. Such changes also have impacts on the leadership process. By reviewing the literature on e‐leadership and technology‐centered fields, the current article provides recommendations and implications for leading in online environments.     

Monetary transmission in Germany: Lessons for the Euro area

This study analyses the transmission of monetary policy in Germany for the EMS period in the framework of a structural vector error correction model (S-VECM).Three stable cointegration relationships are found: a money demand relation, an interest rate spread and a stationary real interest rate. Based on both contemporaneous and long-run restrictions, five structural shocks to the economy are identified. In contrast to analyses for the euro area, we find that output and inflation are not independent in the long run for Germany. In accordance with results previously found for Europe, we do not find strong support for monetary targeting for Germany. Our analysis indicates that uncertainties remain concerning the controllability of money and its usefulness as a leading indicator with respect to inflation. Stability of the money demand relationship does not seem to be problematic.Jel classification:C32, C52, E41, E43, E52We would like to thank Jörg Breitung, Bertrand Candelon, Peter van Els, Carsten Folkertsma, Helmut Lütkepohl, Dieter Nautz, Hans-Eggert Reimers, Nikolaus Siegfried and Jürgen Wolters, two anonymous referees as well as participants of the 8th World Congress of the Econometric Society in Seattle and the Annual Meeting of the Verein für Sozialpolitik in Berlin for helpful comments. The views expressed in this paper do not necessarily reflect those of the European Central Bank or De Nederlandsche Bank.Both authors were working at the research department of De Nederlandsche Bank at the time of writing.First revision received: April 2002/Final revision received: January 2003     

On the Importance of Sectoral and Regional Shocks for Price‐Setting

We use novel disaggregate sectoral‐regional euro‐area data to investigate the sources of price changes, introducing a new method to extract factors from overlapping data blocks that allows for estimation of aggregate, sectoral, country‐specific and regional components of price changes. Our sectoral component explains much less variation in disaggregate inflation rates and exhibits much less volatility and more persistence than previous findings for the US indicate. Country‐ and region‐specific factors play an important role, emphasizing heterogeneity of inflation dynamics along both sectoral and geographical dimensions. Our results are incompatible with basic sticky‐information or Calvo‐type price‐setting models, but require multi‐sector, multi‐country models. Copyright © 2015 John Wiley & Sons, Ltd.