Europäischer Zinslastenausgleich — eine sinnvolle Alternative zu EZB-Anleihekäufen

The eurozone’s public debt crisis is not over yet - as displayed in the still substantial yield spreads between “northern” and “southern” euro government bonds. Whereas the ECB tried to tackle this problem by announcing (in Sept. 2012) its willingness to conduct unlimited “outright monetary transactions” to the benefit of the southern countries, the German “Institut für Weltwirtschaft (IfW)” offered a less risky option in its “Kiel policy brief” (Jan. 2013): it suggested narrowing this yield spread by establishing a “yield spread compensation fund”, which would balance out interest payments among euro countries. Though this may sound like the first concrete eurozone bailout mechanism, the idea really is a risk-free debt alleviation tool, matching windfall gains with windfall profits without too much of a bailout.     

Targetsalden: Viel mehr als nur ein Haftungsrisiko

The Target2 balances of the ESCB have become a focus of scholarly discussion. Triggered by a loss of international competitiveness and subsequent current account deficits in the EMU’s periphery states, they now constitute a default risk for the core states. But there is more to it: balance of payment disequilibria in a currency union are supposed to trigger money supply flows from surplus countries to deficit countries. Since they form the basis for readjustments in relative prices and competitiveness, they must not be neutralised by monetary policy. The ECB’s Target2 balances create precisely this neutralisation and thus undermine the self-adjusting mechanism of the EMU.     

Throwing the Books at Them: Amazon's Puzzling Long Run Pricing Strategy

Firms competing for consumers to adopt new platforms have incentives to charge low prices to promote adoption, followed by higher prices later on. This study explores Amazon's dynamic pricing strategy by comparing its contemporary pricing on e‐books, a relatively new product with complementary hardware and switching costs, with its pricing on physical books, a now‐mature product without complementary hardware or switching costs. Using over 150,000 hourly observations on prices and sales ranks for electronic and physical bestseller books between 2012 and 2013, in conjunction with actual quantity data, we estimate the price elasticities of demand for books at Amazon. Despite inherent challenges in data availability and measurement, we find it surprising that both electronic and physical book prices fall substantially short of the static profit maximizing level two decades after Amazon's launch. These findings raise questions for both policymakers and shareholders.     

Dealing with Benchmark Revisions in Real‐Time Data: The Case of German Production and Orders Statistics*

Benchmark revisions in non‐stationary real‐time data may adversely affect the results of regular revision analysis and the estimates of long‐run economic relationships. Cointegration analysis can reveal the nature of vintage heterogeneity and guide the adjustment of real‐time data for benchmark revisions. Affine vintage transformation functions estimated by cointegration regressions are a flexible tool, whereas differencing and rebasing work well only under certain circumstances. Inappropriate vintage transformation may cause observed revision statistics to be affected by nuisance parameters. Using real‐time data of German industrial production and orders, the econometric techniques are exemplified and the theoretical claims are examined empirically.     

Long-Run Links among Money, Prices and Output: Worldwide Evidence

Abstract. Starting from the quantity theory of money we analyse the dynamic relationships between money, real output and prices for an unbalanced panel of 110 economies. Complementary to trivariate analyses we also adopt a P-star model explaining inflation via an equilibrium price level (P-star), which in turn depends on potential output and money. A key issue of the paper is the cross-sectional stability of estimation and inference results. We find cointegration among the considered variables. Particularly for high inflation countries homogeneity between prices and money cannot be rejected. Given homogeneity we find evidence for an error-correction mechanism linking current price changes and the lagged price gap. Parameter estimates indicating the adjustment towards the price equilibrium are larger in absolute value for high inflation countries. The latter results indicate that central banks, even in high inflation countries, can improve price stability by controlling monetary growth.     

Seasonal cointegration analysis of German consumption function

The main purpose of this paper is to investigate the West-German consumption process depending on wealth and income with seasonal cointegration techniques using the framework of vector autoregressive models to capture the seasonal pattern of the series. The vector autoregressive models are the basis of a dynamic analysis by impulse response functions where the asymptotic distributions of the estimators are given. In the empirical part of the paper evidence is found for seasonal and nonseasonal cointegration relations among the variables. The response functions of consumption and income show a strong influence of wealth innovations. Moreover, income and consumption reactions present outstanding seasonal pattern.     

Kann Deutschland den Krisenländern der Eurozone helfen?

Wirtschaftsdienst - Trotz der guten wirtschaftlichen Lage in der Eurozone verzeichnen einige Krisenländer nach wie vor ein geringes Wachstum und eine hohe Arbeitslosigkeit. Diese Länder...     

Hysteresis in the development of unemployment: the EU and US experience

We examine hysteresis in EU and US unemployment by panel unit root tests. First generation tests indicate that unemployment is stationary. Second generation tests show mixed results. Idiosyncratic components are stationary in the US. A unit root in the US common component depends on the starting point of the sample. While the common component is nonstationary over the whole period, it is mean-reverting after initial observations are dropped. Hysteresis in EU unemployment is attributed to idiosyncratic, but not to common components. The findings might reflect a different regulation of labour markets and a lower degree of migration in the EU.