Has International Trade in Saving Improved US Economic Welfare?

Over the past decade international policy-makers have perceived the current account deficit of the world's largest foreign borrower economy, the United States, as a threat to global economic and financial stability. Yet, by bridging the US domestic saving-investment gap, capital inflow that matched the huge US current account deficit also enabled a faster rate of domestic capital accumulation than home saving alone would have permitted. Consistent with the theory of international capital movements, this study identifies and compares the respective contributions of domestic and foreign saving to US gross domestic product per worker over the two decades prior to the onset of the US banking crisis. By revealing that foreign borrowing contributed significantly to raising US output and hence living standards over this period, it adds a new dimension to the debate about global imbalances.     

Macroeconomic Stability or Cycles? The Role of the Wage‐Price Spiral

We formulate a small and stylised dynamic macroeconomic model, and study how different specifications of the supply side affect the model's dynamic properties. The wage‐price equilibrium‐correction model (ECM) and the Phillips curve model (PCM) that both can be used to represent the supply side of a New Keynesian macro model, are synthesised in a generalised model of the wage‐price spiral. We show that the choice of ECM or PCM has implications for the long‐run stability of the macro model, without need of a NAIRU. We also find that the range of theoretically admissible dynamics is wide. For example, both the ECM and PCM may display endogenous cyclical fluctuations in inflation and unemployment, showing that even simple structures can give rise to complex dynamics. In practice that may entail that forecasting the effects of shocks and policy changes is difficult even in the best of circumstances.     

Publish or Perish? The Increasing Importance of Publications for Prospective Economics Professors in Austria,Germany and Switzerland

Abstract. Tenure decisions depend, among other factors, on a candidate's career age and publication record. We associate publications with journal articles indexed in EconLit and measure publication output in equivalents of both top‐five journal articles and European Economic Review (EER) articles. We find that the average age of a professor in the year of his/her first appointment is 38, i.e. he or she is appointed approximately eight years after completing the PhD. Between 1970 and 2006, the average publication record at the time of the first appointment is equivalent to 1.5 standardized top‐five articles or 2.3 standardized EER articles. Publication records vary across subfields and have become more substantial over time. We predict that someone aspiring to a tenured position after 2011 should aim at an equivalent of four standardized top‐five articles or six standardized EER articles.     

Is Knowledge Cursed When Forecasting the Forecasts of Others?

Financial decision makers (lenders, insurers, advisees) often need to estimate how well others make decisions. Is knowledge a blessing or a curse when forecasting others' forecast accuracy? The authors show that this depends on its type. Within a single experimental setting, they identify and test 4 distinct information types that have different effects on forecast accuracy. First, the authors revisit the well-known “curse of knowledge” and show that it may have resulted from entirely arbitrary, uninformative anchors. Second, we show that in contrast, genuinely informative cues purged of anchoring potential enhance estimation accuracy. Third, richer, more detailed financial information has no effect even for participants better able to interpret it. Fourth, domain experts do not overimpute others' forecast ability. The authors conclude that in financial settings knowledge may be a blessing or a curse, or have no effect depending on its type.     

International Macroeconomic Policy Coordination: Any Lessons for EMU? A Selective Survey of the Literature

The theoretical case for international coordination was well established, and presumed settled, in the 1970s. In the mid-1980s, the focus of research shifted to intertemporal aspects of economic interdependence. In the early 1990s, the subject no longer generated as much interest among economists as it might have deserved from an economic policy perspective. With EMU, the topic of coordination has once again found its way onto the political and scientific agenda. In fact, the EMU regime not only raises a number of new and important questions concerning policy coordination, it might also be interpreted as a surrogate for far-reaching forms of policy coordination. At the same time, more ambitious forms of coordination are confronted in any case with coordination constraints imposed by the EMU – regime itself, such as the independence provision of the ESCB and the supreme monetary policy goal of maintaining price stability. Without doubt, economists' and political scientists studies on coordination will not be suited to serve as blueprints of policy coordination for policymakers to follow at summit meetings. But even if the key question - how much relevance the abundant literature on coordination may hold for the real world – could not be answered definitely, it – at least – provides useful analytical insights in the structure of coordination problems. And an improved analytical understanding of macroeconomic interaction is a necessary prerequisite for more successful efforts at policy coordination.     

The transition of people’s preferences for the intervention of the government in the economy of re-unified Germany

Covering the first fifteen years immediately after German reunification, this paper analyzes the people??s support to the transition. The focus is on individuals?? preferences for the intervention of the government in the economy and on the opinion about competition per se. Eastern German data are compared with Western German data. Using suitable data that allow for interpersonal comparisons, the paper shows that Eastern Germans have always preferred an intervention of the public hand in the economy deeper than Western Germans; these different positions have hardly converged during the examined period of time. However there are no significant differences with respect to how Germans perceive competition per se: it is considered as a good by the people living in both parts of the country.     

Do Macroeconomic Structures and Policies Shape the Employment Intensity of Growth Differently for Women and Men?

Since all macroeconomic policies are enacted within a certain set of distributive relations and institutional structures, the employment intensity of growth is likely to vary for men and women depending on the nature and context of output growth. I examine the gendered nature of this growth-employment nexus by analyzing the differential impacts that macroeconomic policies and structures have on growth’s employment intensity by gender for eighty countries in the period from 1990 to 2012. Such an understanding is of particular relevance to policymakers concerned with the linkages between growth and human development, as the question of whether the benefits of economic growth are broadly shared is one that centers on the capacity of economies to generate high-quality employment. Although education levels and non-agricultural sectors are associated with more employment intensive growth for men and women, policies supporting reductions in non-wage care work, prioritizing public expenditures on education, and promoting secondary school enrollment for girls are especially linked with growth that is more employment intensive for women. The results I obtain here illuminate broad trends through a very wide lens and should be applied in conjunction with more intimate knowledge of how cultural, technological, legal, political, and economic activities uniquely affect one another in particular countries.     

Financial Analysts’ Forecasts and Unprecedented Events: The Case of German Reunification

We use the chain of events from the fall of the Berlin Wall to the reunification of Germany to examine how capital market participants respond to momentous and unprecedented events. Our examination measures the impact of these events on analysts’ forecasts for the earnings of West German firms. Our results show a significant decrease in analysts’ ability to accurately forecast earnings. Contrary to the public’s euphoria, the sense of the market was generally negative about the implications of unification for West German firms. This negative sentiment was spread across most of the broad sectors, but within those sectors the results were significantly positive for select groups of industries. It appears that, in the face of this extraordinary event, financial analysts were detached from the emotions it engendered and were discriminating in their assessment of its impact.

The Emergence of Concentrated Ownership Structures in East Germany: the implications for enterprise restructuring ∗

In the transitional economies of East and Central Europe, privatization is widely considered essential for transforming the large state-owned enterprises. However, eager to expose the public enterprises to ‘hard budget constraints’, economists have neglected the importance of who the owners are. Studies of ownership structures and post-privatization restructuring in east Germany provide evidence that ownership matters for transformation success. The adoption of west German institutions in the east and the sale of state industrial property in concentrated shares to ‘insider’ investors seem to have created good conditions for the long-term committed investments essential for the rebuilding of tangible and intangible assets in east German enterprises. However, the control structures of a sample of enterprises reveal a wide range of investment strategies between types of corporate investors. Just as legal and financial institutions set constraints on ownership structure, the ownership structure sets constraints on the range of investment choices. Whether committed investments occur will depend on constrained strategic decisions of the new private owners.     

Bidding for nothing? The pitfalls of overly neutral framing

Neutral framing is a standard tool of experimental economics. However, overly neutral instructions, which lack any contextual clues, can lead to strange behaviour. In a contextless second-price auction for a meaningless good, a majority of subjects enter positive bids – likely a case of cognitive experimenter demand effect. Subjects may interpret the lack of context as being tasked with bidding in the experiment. Adding another auction that has a context drastically reduces the positive bids in the meaningless auction.     

Has Anything Changed in the Past Century? Revisiting Graue's The Social Cost of Bad Debt

In a seminal paper, Erwin Graue (1939) provides an institutional analysis of the causes and consequences of personal bankruptcy protection in the United States during the period 1900-1937 when bankruptcy procedures were guided by the Federal Bankruptcy Act of 1898 (the Law was revised in 1938). This paper revisits the Graue study in the context of the current recession using a simple institutional economic framework. Consistent with Graue, we begin shortly after the implementation of the Bankruptcy Abuse Protection and Consumer Protection Act of 2005 (BAPCPA) and follow its evolution to the present time. Our analysis suggests that, since passage of BAPCPA, both total filings and Chapter 7 filings decreased significantly, however temporarily. Moreover, Chapter 7 filings as a percentage of Chapter 13 filings also temporarily decreased. These results are not only consistent with Graue's analysis, but also demonstrate that the institutional characteristics of bankruptcy law have a profound impact on the decision to file for bankruptcy and the chapter under which a petitioner files.     

Is PMI Useful in Quarterly GDP Growth Forecasts for India? An Exploratory Note

This paper examines the relationship between India’s quarterly overall GDP, manufacturing GDP and services GDP and the corresponding monthly data on overall manufacturing and services PMI for the period January 2006 to July 2014. The objective is to see if the two overall PMIs are related to the level and quarterly growth rate of overall GDP and its chosen components. Considering the quarterly time series nature of the data set, the HEGY equation of Hylleberg et al. (J Econom 44:215–238, 1990) extended by adding the PMI variables as exogenous regressors is used as the regression mode to relate a GDP level/growth rate variable to the two overall PMI variables. The results show that the three GDP level variables, but none of the GDP growth rate variables, have significant positive correlation with services PMI, but not with manufacturing PMI. Finally, the marginal effect of services PMI on manufacturing GDP level is found to be the largest, followed by that for overall GDP level and services GDP level.

     

Who is saving privately for retirement and how much? New evidence for Germany

Due to demographic change, the replacement rates of the German statutory pension scheme will decrease over the next decades. Voluntary savings for retirement will therefore increase in relevance as a method of maintaining one’s standard of living during retirement. This article examines the savings behavior for retirement on an individual level in Germany at the extensive as well as the intensive margin. First, the decision to save in general is analyzed, showing that the main determinants for saving are personal income and disposable household income. Furthermore, it is shown that migrants and individuals living in the Eastern part of Germany turn out to be less likely to have additional private savings. Second, the chosen gross saving rates are analyzed using a Tobit model, a log-normal hurdle model and a Type II Tobit model. The results suggest that the decision to save in general, as well as the saving rate, are independent of each other, leading to a loss of information if only a standard Tobit model is used. For example, higher personal income increases the probability to save for retirement, but decreases the resulting saving rate. Modeling both decisions separately thus, leads to a better understanding of the determinants of saving for old-age.     

Is export diversification good for profitability? First evidence for manufacturing enterprises in Germany

This article uses a tailor-made newly available data set for enterprises from manufacturing industries in Germany to investigate for the first time the links between export diversification over destination countries and goods on the one hand and the profitability of the exporting firms on the other hand. We find that profits tend to be larger in firms with less diversified export sales over goods and in firms with more diversified export sales over destination countries.     

Has deregulation decreased the risk of NYSE seat ownership?

It is well known that regulatory change led to large capital losses for owners of New York Stock Exchange seats. I show here that deregulation may also have led to a decrease in the risk of seat-holding.     

The puzzle of aid and growth: any role for investment?

This paper explores the relationship between aid and growth, through the explicit inclusion of the investment component. We construct a new database, which adds to the previous papers’ variables (policy, institutional quality and civil unrest) some capital accumulation indicators. Partly based on the main literature, a simultaneous equations model is constructed to account for endogeneity and different methods are applied for a robustness check. Although in line with previous literature, in this paper we find that the capital accumulation process is a significant and fundamental channel to understand the link between development assistance and growth. In low-income countries aid effectiveness seems to be significantly lower.     

Are remittances good for economic growth? The role of political institutions

Within a sample of 109 developing countries for the period 1975–2014 and controlling for country and time-fixed effects, this article presents evidence that workers’ remittances are more effective in promoting growth in developing countries with strong democratic institutions. The evidence is robust to alternative samples and different measures of democratic institutions.