INFLATION TARGETING AND THE STATIONARITY OF INFLATION: NEW RESULTS FROM AN ESTAR UNIT ROOT TEST

In this paper, we examine the time series properties of inflation in seven countries that have adopted inflation targeting. Unlike previous studies, we utilize a non‐linear mean reverting adjustment mechanism for inflation and we discover that, although deviations of inflation from the target can exhibit a region of non‐stationary behaviour, overall they are stationary indicating successful targeting implementation.     

REFORMING THE FED: ITS INDEPENDENCE AND LESSONS FROM HUMPHREY-HAWKINS

The last session of Congress witnessed renewed calls for reforming the Federal Reserve System so as to better coordinate monetary and fiscal policies. This paper examines how the current institutional structure, established by the Humphrey-Hawkins Act of 1978, performed when the supply-side tax cuts were implemented during 1981 and 1982. The findings reveal that authorities barely discussed the necessary policy coordination at the Humphrey-Hawkins hearings. Further, the record reveals that Fed Chairman Volcker refused to utilize the Fed's independence to publicly oppose the supply-side tax cuts.     

THE ECONOMICS AND POLITICS OF INDUSTRIAL POLICY: SOME LESSONS FROM THE U.S. AND ABROAD

The accelerating United States trade deficit has again focused widespread political attention on industrial policy issues. However, given the breadth and complexity of the industrial policy issues, we can be confident that strengthening the U.S. international trade position will not be sufficient to quell concern over this area of economic policy.     

MASSIVE DIVESTITURE AND PRIVATIZATION LESSONS FROM CHILE

Between 1974 and 1989, the Chilean government privatized 550 state-owned enterprises (SOEs). Before 1974, all but a handful of major corporations were SOEs. About 50 of the largest enterprises privatized during the 1970s fell into government hands again, only to be re-privatized later. This was due partly to the economic and financial crisis affecting most Latin American countries during the early 1980s but also was a consequence of the privatization modes used. This paper analyzes that unique privatization experience so as to extract policy lessons. The analysis focuses on economic conditions, objectives of government policy, privatization modes, and the divestiture effects on employment, fiscal revenues, public sector wealth, spread of ownership, and capital market development.     

THE TIME‐SERIES PROPERTIES OF UK INFLATION: EVIDENCE FROM AGGREGATE AND DISAGGREGATE DATA

This paper contrasts the time‐series properties of aggregate and disaggregate UK inflation. While aggregate inflation is found to be non‐stationary, unit root rejection frequencies are increasing when we use more disaggregate data. Structural break analysis suggests that structural shifts in monetary policy could alter inflation persistence. Additionally, panel evidence indicates that the unit root hypothesis can be rejected for sectoral inflation rates. Finally, we compare the persistence properties of UK inflation, finding statistically significant differences between aggregate and disaggregate series. Our analysis suggests that aggregation matters, which has important implications for econometric analysis and the conduct of monetary policy.     

THE EVOLUTION OF INFLATION AND UNEMPLOYMENT: EXPLAINING THE ROARING NINETIES

This paper analyses the relation between US inflation and unemployment from the perspective of ‘frictional growth,’ a phenomenon arising from the interplay between growth and frictions. In particular, we focus on the interaction between money growth and nominal frictions. In this context we show that monetary policy has not only persistent, but permanent real effects, giving rise to a long‐run inflation‐unemployment tradeoff. We evaluate this tradeoff empirically and assess the impact of productivity, money growth, budget deficit, and trade deficit on the US unemployment and inflation trajectories during the nineties.     

假日经济对旅游业的影响及旅游发展因应对策

本文阐述了假日经济的含义和产生原因,分析了假日经济对旅游业发展的影响及假日经济中旅游业发展存在的主要问题,最后,文章从旅游交通、旅游住宿、旅游景点、旅游社及旅游主管部门五方面提出了旅游业因应假日经济的主要措施。     

UNIVERSITIES AND ECONOMY:THE INTERNATIONAL DIMENSION

Dr.MauritsvanRooijenVice－President(internaional),LeidenUniversityTheNetherlands.Vice－President(internathonal),UniversityofWestminster,LondonIfweconsideruniversitiesasnationalinstitutions,itisratherpeculiartoworkinaseniormanagerialroleattwoU-niversitiesindifferentcountries,asIdo.Butinmyview,u-niversities－oratleasttheleadinguniversitiesintheworld－arefirstandforemostinternational.Thisinternation-aldimensionisnotinconflictwiththeirnationalposi-tion.Onthecontrary,itinteractseffectivelywit…     

WEALTH AND CONSUMER HORIZON: EVIDENCE FROM A DEVELOPING ECONOMY

This paper presents new evidence on the length of consumer horizon, which represents an important aspect of the Permanent Income Hypothesis. It uses data on private wealth of India for 1949–50 to 1974–75. Time varying parameter estimation is used to derive annual values of consumer discount rate and horizon. The findings support Friedman's view that horizon is approximately three years long. The author discusses the plausibility of his findings.     

MEASURING THE ECONOMIC PERFORMANCE OF TRANSITION ECONOMIES: SOME LESSONS FROM CHINESE EXPERIENCE

This article quantifies the comparative performance of China in several dimensions. Firstly, it shows that China's move from a command to a market economy was less abrupt and more successful than that of 29 other economies making a similar transition. Secondly, while official estimates show annual GDP growth of 9.6 percent in 1978–2003, this is reduced to 7.9 percent after adjustment for exaggeration of industrial performance and growth in non-material services. Thirdly, as the exchange rate understates China's achievement, a purchasing power parity (PPP) converter is necessary to measure comparative level of performance. Our PPP converter shows that China in 2005 was the world's second largest economy, with a GDP about 80 percent of the U.S. It is assumed that China will have overtaken the U.S. as the world's biggest economy before 2015. Until recently, the World Bank estimate of the PPP for China was close to that of Maddison, but the Bank's new estimate for 2005 shows Chinese GDP about half this level. The Bank's new estimates for China and other Asian countries are not plausible, and this paper advances several reasons for rejecting them. Finally, energy use per head of population is a good deal smaller than that of the U.S., and its total energy use for a much bigger population is likely to be somewhat smaller than that of the U.S. in 2030. However, heavy dependence on dirty coal means that it will have bigger carbon emissions than the U.S. This is a major problem as Beijing and other big cities already have severe pollution problems.     

TRANSITION FROM A COMMAND ECONOMY: RATIONAL EXPECTATIONS AND COLD TURKEY

This paper attempts to convey to representatives of the erstwhile Soviet bloc an understanding of the problems they face in achieving a market economy. Although the transition from a command economy to a market economy is perilous, the author advises policymakers that retarding the tempo of change will invite economic and political disaster.     

ON THE SOURCES OF THE INFLATION BIAS AND OUTPUT VARIABILITY

Why do dynamic inconsistencies in monetary policy exist? In this paper, a traditional model with output inefficiencies is introduced, but monetary policy is allowed to be influenced by the various constituencies in the economy that pressure Congress in turn to pressure the Central Bank to adopt a particular policy stance. This paper shows that in this economy an inflation bias arises because of the lobbying pressures of outsiders. Furthermore, it shows that if lobbying pressures are high enough, an inflation bias cannot be avoided for any finite level of Central Bank independence. It also shows that introducing the realistic feature of lobbying pressures has an impact on the stabilization properties of monetary policy. When a supply shock occurs, the shock is totally absorbed by a non‐myopic trade union, which has no lobbying costs. This is independent of any finite degree of conservativeness of the central banker, who has to accept an extreme increase in price instability. It is shown that monetary policy delegation is therefore sub‐optimal in achieving price stability compared with labor‐market reforms meant to remove monopsonistic elements. However, the same structural policies will induce greater output instability by strengthening the power of conservative central bankers.