Money, endogenous fertility and economic growth

This paper analyzes the issue of money superneutrality through an intertemporal optimizing model of capital accumulation with endogenous fertility, i.e. endogenous population growth. Two elements of this setup invalidate money superneutrality: (i) a demand for fertility that depends on real money balances, and (ii) an inverse relation between capital–labor ratio and population growth. Higher monetary growth increases fertility, since it reduces its opportunity cost, and hence diminishes capital intensity, and per capita output. This reverse Tobin effect is matched by an increase in aggregate capital and output growth rates. In this framework, the optimal monetary growth rule is a “distorted Friedman rule”.     

Financial Inflows to Poland, 1990–96

Foreign exchange flows in Poland in the 1990s, especially during 1994–96, resulted from two developments. First, there was a current account surplus, as growth revived due to efficiency improvements, while macroeconomic policy limited domestic demand. Second, Poland had rejoined international capital markets and regained favorable credit ratings, triggering investment inflows. We can classify the effects of these inflows into three groups: changes in the institutional framework; changes in the stabilization path; and changes in the real economy. The crawling band introduced in May 1995, rapid development of the money market, and improvement of the central bank's capacity to intervene on that market are in the first group. As to the second, relative currency appreciation and import competition, constraining domestic price increases, contributed to the strong disinflationary push which began in 1995. Under the third heading, foreign direct investment and portfolio inflows helped to maintain rapid growth of investment and output.     

Relative Capital Shortage and Potential Output Constraint: A Gap Approach

Focusing on core‐infrastructure capital vis‐à‐vis productive capital, we propose a macroeconomic method to estimate their optimal utilisation ratio in production and their relative shortage in any period. The method is based on an adapted two‐gap model, estimated via linear programming, with application to Chile and Mexico over the 1950–2000 period. Core infrastructure appears to support a variable level of productive investment, relative capital shortage alternating and imposing constraints on potential output over time. This suggests an optimal investment trade off, based on a social opportunity cost that derives from the prevailing gap in any period.     

Strategic use of futures and options by commodity processors

The impacts of input–output price relationships on end-users' demands for positions in futures and options are analyzed using a mean-variance portfolio model and applied to price risk management in the bread manufacturing industry. A production relationship was assumed between the input and resultant output, and correlation between the input and output prices were introduced into the portfolio model. The optimal hedge ratio can be either positive or negative depending upon the relationship between the input and output price standard deviation adjusted for production technology and input–output price correlation. Introduction of a call option into the portfolio (in addition to the futures) does not change the hedging demand for futures; however, the speculative component changes. The results show that the addition of input–output linear production and price correlation relationships would not justify a hedging role for options unless there is bias in the futures and/or options markets.     

Capacity expansion and dynamic monopoly pricing

We substitute to the plant size problem, as investigated by Chenery [Chenery, H., 1952. Overcapacity and the acceleration principle. Econometrica], a new version in which a profit-maximizing monopolist may combine its investment policy with a price policy adjusting demand upwards or downwards over time. We characterize the optimal price and investment policies. The optimal price policy determines an investment pattern either with constant increments of capacity over time, or becoming constant after a finite time. The existing capacity is either fully used at each instant between two investment dates; or the monopolist first quotes the instantaneous monopoly price and, thereafter, the price dampening instantaneous demand at the optimal installed capacity level.     

Endogenous rationing,price dispersion and collusion in capacity constrained supergames

This paper examines the feasibility of collusion in capacity constrained duopoly supergames. In each period firms simultaneously set a price–quantity pair specifying the price for the period and the maximum quantity the firm is willing to sell at this price. Under price–quantity competition firms are able to ration their output below capacity. For a wide range of capacity pairs, the equilibrium path providing the smaller firm with its highest stationary perfect equilibrium payoff requires that it undercut its rival’s price and ration demand. Furthermore, for some capacities and discount factors supporting security level punishments, price shading and rationing arise everywhere on the set of stationary perfect equilibrium paths yielding (constrained) Pareto optimal payoffs. That is, price shading may not only be consistent with optimal collusion, it may be a requirement of optimal collusion.     

Pollution Accumulation and Firm Incentives to Accelerate Technological Change Under Uncertain Private Benefits

The paper explores the relationships between the design of public incentives and the policy-maker's desired timing of abandonment of a polluting technology, when this requires an irreversible private investment and the firm faces uncertain appropriable benefits from the technological change. Two regulatory approaches are examined. Firstly, we consider the quite common one of lowering the private investment cost, through a subsidy, in order to bridge the gap between the private and the policy-maker's desired timing of environmental innovation. Secondly, we consider a policy scenario where the regulator, instead of simply lowering the investment's rental price, also stimulates abandonment of the polluting technology by reducing – through appropriate announcements – the uncertainty surrounding the technological switch's private profitability. We then compare the two approaches and show the latter's benefits, in terms of the policy's effectiveness and/or budgetary savings.     

Optimal pricing and capacity choice for a public service under risk of interruption

We develop rules for pricing and capacity choice for an interruptible service that recognize the interdependence between consumers’ perceptions of system reliability and their market behavior. Consumers post ex ante demands, based on their expectations on aggregate demand. Posted demands are met if ex post supply capacity is sufficient. However, if supply is inadequate all ex ante demands are proportionally interrupted. Consumers’ expectations of aggregate demand are assumed to be rational. Under reasonable values for the consumer’s degrees of relative risk aversion and prudence, demand is decreasing in supply reliability. We derive operational expressions for the optimal pricing rule and the capacity expansion rule. We show that the optimal price under uncertainty consists of the optimal price under certainty plus a markup that positively depends on the degrees of relative risk aversion, relative prudence and system reliability. We also show that any reliability enhancing investment—though lowering the operating surplus of the public utility—is socially desirable as long as it covers the cost of investment.     

On the relations between demand creation and growth in a monopolistic firm

This paper deals with the allocation of resources over time by a monopolistic firm between growth of the productive capacity and growth of the market-demand capacity. As the demand-creation relations follow an S-shaped curve, different phases in the behavior of the growing firm are conceived in which investment cycles occur both in productive and demand-creation activities.The paper analyzes the case of homogeneous resources as well as nonhomogeneous resources. It is shown that in general the phases in the behavior of the growing firm are preserved in both cases. In the homogeneous case, when there are investment activities in both types of capital, it is shown that the firm will allocate its resources between the two activities in such a way that the ratio of the rate of growth of demand price (with respect to demand-creation capital) and the rate of growth of output (with respect to productive capital) will be equal to one plus the reciprocal of the elasticity of demand and will, therefore, be bounded between zero and one.     

产出缺口和货币缺口对中国通货膨胀的影响分析

通货膨胀形成的两个重要原因是总需求的过度膨胀和货币供应量的过快增长。利用HP滤波衡量产出缺口和货币缺口,并利用1999—2007年的季度时间数据检验两者对中国通货膨胀的影响。结果表明,产出缺12和货币缺口都是中国通货膨胀的重要原因,且货币缺口对中国通货膨胀的影响远远大于产出缺口影响。     

Transition and the output fall

We present a model to explain why in the transition economies of Central andEastern Europe an important output fall has been associated with price liberalization. Its key ingredients are search frictions and Williamsonian relation-specific investment, implying that new investments are made only after having found a new long-term partner. When all firms search for new partners, output may fall because of three effects: a) disruption of previous production links, b) a fall in investment, and c) capital depreciation due to the absence of replacement investment. We show that forms of gradual liberalization like the Chinese 'dual-track' price liberalization may avoid the transitory output fall.
JEL classification: D21, D50, E30, E61, P41, P51.     

A model of the socialist firm in transition to a market economy

This paper models the dynamic adjustment path of a socialist firm in transition to a market economy by a price shock that renders old capital obsolete. The firm can adjust with investment in more productive capital equipments. The optimal time paths of investment, output, and employment are analyzed and the impact of fiscal incentives like investment subsidies and a reduced corporate income tax rate are studied. Like output, the aggregate capital stock follows a J-curve. The conditions for viability of firms and the impact of variables such as wage increases on the value of the firm are discussed.     

前瞻性货币政策的微观传导机制有效吗*——来自中国上市企业资产负债表的证据

本文根据新古典资本需求理论和实际余额效应理论建立了一个包含投资需求和投资效率的前瞻性泰勒规则模型,并构造了一个反映企业投融资需求状况的企业综合状况指数,将其引入扩展的前瞻性泰勒规则模型,然后从宏观和行业两个层面对加入企业综合状况指数的前瞻性泰勒规则进行了检验和比较。研究发现：（1）前瞻性利率传导的企业资产负债表渠道基本有效,短期名义利率对于超过80%行业的企业综合状况指数缺口的反应系数显著,但对不同行业的反应差异较大;（2）短期利率对企业综合状况的反应系数较小,而对通胀缺口和产出缺口的反应系数相对较高,显示货币当局调整利率可能更多的是针对通胀缺口和产出缺口反应;（3）货币政策对资产价格“反应不足”,其对股价的反应系数非常小,对房价的反应系数不显著。     

Asymmetric size-dependent effects of the output gap on inflation: US evidence from the last half a century

This article examines asymmetric size- and sign-dependent effects of the output gap on the US quarterly inflation rate using data from the last half a century (1959Q2–2013Q1). Consistent with previous studies, it is found that the consumer price index is cointegrated with the unit labour cost and the price of oil. A short-run dynamic model is then estimated in which variations in the output gap are divided into three groups: large-positive; large-negative; and small-medium positive/negative. The results provide convincing evidence that only sufficiently large (positive or negative) variations of the output gap can significantly influence inflation. Put otherwise, relatively small to medium changes in the output gap exert no significant impact on inflation and if not separated, they can somewhat obscure the significant effects associated with large variations of the output gap. This study can lead to greater consensus on the inflation–output gap nexus. The findings remain robust despite the use of different measures of output gap and they are consistent with the modern doctrine but with a new caveat: inflation responds to both positive and negative changes in the output gap as long as such variations are of sizable magnitudes.     

Investment and the persistence of price uncertainty

Do permanent and transitory price uncertainty have a differential impact on investment? In a sample of Italian industries, a negative relationship between the accumulation of fixed capital and the persistence of price uncertainty is indicated by a measure of the size of the random walk associated to the price forecast errors computed from auxiliary regressions. This empirical finding confirms the existence of moderate costs of inflation related to the investment response and suggests that persistent price shocks dynamics affect the accumulation process more than relatively transitory impulses, a result which is not in contrast with irreversibility theories: accordingly, agents are waiting for more information, until temporary uncertainty is resolved.     

Industrial development in Malaysia and Singapore: Empirical analysis with multiple‐cone Heckscher–Ohlin Model

This paper employs the multiple‐cone Heckscher–Ohlin model to analyze industrial development in Malaysia and Singapore. In particular, we focus on industrial upgrading along with capital accumulation as a key determinant for the cross‐country difference in production technology and income. By pooling two countries’ data on factor endowment and sectoral output in manufacturing from 1990 to 2008, we estimate the common industrial development paths of the two‐cone Heckscher–Ohlin model, the Rybczynski linear relationship between capital–labor ratio and sectoral output per capita. Our results demonstrate that, after controlling for quality of workers (by educational attainment), the two countries resided in different cones during our sample period, implying that Singapore succeeded in accumulating capital steadily with the support of foreign investment and upgrading its industry mix to make it more capital‐intensive. The separation of cones is also consistent with the observed gap in gross domestic product per capita between the two countries. Furthermore, we implement a factor‐augmenting productivity test to see the gaps in efficiency of capital and human‐capital‐augmented labor and confirm no significant difference between the two countries.     

Accounting for Growth and Output Gaps: Evidence from New Zealand

We evaluate New Zealand's macroeconomic performance over the 1967–1996 period, which witnessed numerous economic reforms. Using both index–number and econometric techniques, we decompose nominal GDP growth and the output gap into contributions from price level changes, productivity growth and changes in factor utilisation. Changes in domestic prices accounted for four–fifths of the growth in nominal GDP, while capital accumulation and employment growth were the most important factors determining real–output growth. Deviations in the domestic price level around its long–run trend contributed most heavily to changes in the nominal output gap. The real gap was influenced in any year variously by deviations of the terms of trade and labour input from their long–run trends, as well as by productivity shocks.     

Classical and Keynesian unemployment in Austria

The labor market in a macroeconometric model of Austria is used to determine the natural unemployment rate, full-employment (F.E.) output, and the F.E. real wage for 1966–92. Gaps between actual and F.E. variables are examined analytically and historically. Observed unemployment is decomposed into natural, hidden, classical, and Keynesian components. Classical unemployment is associated with the real wage gap, while Keynesian unemployment depends on the output gap. A rise in the natural rate is found to account for almost all of the increase in unemployment between 1966–74 and 1975–81, but an increase in Keynesian unemployment is the major factor in the rise of unemployment between 1975–81 and 1982–92. A fiscal shock to the complete model is found to increase real GDP for a year or two, reducing Keynesian unemployment without an appreciable rise in classical unemployment; the wage gap is eventually increased, however, producing a modest rise in classical unemployment.A lengthier version of this paper was presented at the Annual Meeting of the Austrian Economic Association, Graz, April 14–16, 1993. The generous finacial support of the Jubiläumsfonds of the Austrian National Bank for the research of which this paper is a part is gratefully acknowledged.