House prices,credit and the effect of monetary policy in Norway: evidence from structural VAR models

This paper investigates the responses of house prices and household credit to monetary policy shocks in Norway, using Bayesian structural VAR models. The analysis indicates that the effect of a monetary policy shock on house prices is large, while the effect on household credit is muted. This is consistent with a relatively small refinancing rate (refinancing rate refers to the share of outstanding mortgages that are refinanced each period due to changes in, for example, house prices or interest rate) of the mortgage stock each quarter. Using monetary policy to guard against financial instability by mitigating property-price movements may prove effective, but trying to mitigate household credit may prove costly in terms of GDP and inflation variation.     

Optimal monetary and fiscal policies in a search theoretic model of monetary exchange

Search models of monetary exchange commonly assume that terms of trade in anonymous markets are determined via Nash bargaining, which generally causes monetary equilibrium to be inefficient. Bargaining frictions add to the classical intertemporal distortion present in most monetary models, whereby agents work today to obtain cash that can be used only in future transactions. In this paper, we study the properties of optimal fiscal and monetary policy within the framework of Lagos and Wright (2005). We show that fiscal policy can be implemented to alleviate underproduction while money is still essential. If lump sum monetary transfers are available, a production subsidy can restore the efficiency of monetary equilibria. The Friedman rule belongs to the optimal policy set, but higher inflation rates are also possible. When lump-sum monetary transfers are not available, equilibrium allocations are generally not first-best. Nevertheless, fiscal policy still results in substantial welfare gains. Money can be extracted from circulation via a sales tax on decentralized market activities, and the Friedman rule is only optimal if the buyer has relatively low bargaining power.     

Labor immobility and the transmission mechanism of monetary policy in a monetary union

It is believed that a common monetary policy in a monetary union will have identical effects on different countries as long as these countries have identical fundamentals. We show that, when there is specialization in production, the terms of trade react to the shock. The transmission mechanism of a monetary shock has in this case an additional channel, the terms of trade. This is the case even if state contingent assets can be traded across countries. For a reasonable parametrization, the differential on the transmission across countries is quantitatively significant when compared with the effect on the union's aggregates. Monetary shocks create cycles with higher volatility in “poor” countries than in “richer” ones.     

Towards monetary constitutionalism in Italy

Various facts which belong to the past, present, and future of Italy, which concern both politics and economics, and which are relevant within a broad discussion of monetary policy support the request for a constitutionalization of the target of monetary stability. The authors are grateful to James M. Buchanan for his encouragement in carrying out the research and to an anonymous referee of this journal for his helpful comments on an earlier version of the paper.     

Competitive-search equilibrium in monetary economies

Competitive search was recently introduced in monetary economics by Rocheteau and Wright [Money in search equilibrium, in competitive equilibrium, and in competitive search equilibrium, Econometrica 73 (2005) 175-203]. We extend their work by eliminating the restriction that the fees market makers charge to enter a submarket must be either non-negative or identical for buyers and sellers. Without this restriction, buyers pay a positive fee to enter the submarket they visit and nothing else when they meet a seller. Sellers are remunerated by the market makers from the entry fees collected from the buyers. This trading arrangement allows buyers to perfectly predict their expenses, so the opportunity cost of holding idle money balances is eliminated.     

Banking crises in monetary economies

Abstract.  This paper analyzes the effect of inflation on banking crises in a model in which money and banks play essential roles. The model's equilibrium replicates some key features of actual banking crises, namely, the partial suspension of payments and the desire to hold cash even in the absence of pressing liquidity needs. When banks have access to a stable foreign currency, inflation has a threshold effect on banking crises: higher inflation reduces the likelihood of crises when inflation is below the threshold; the reverse happens when inflation exceeds the threshold. This result appears to be broadly consistent with available evidence.     

Finland's monetary autonomy

A time-series analysis of Japanese data for the period 1966–85 estimates the effectiveness of seat belt and government safety policies on various types of traffic-related fatalities. The results indicate that these policies reduce the risk of death for both motor vehicle occupants and non-occupants.     

Endogenous monetary commitment

We develop an asynchronous framework in which each player can optimally select the frequency of his moves based on cost-benefit considerations. To demonstrate how such ability to commit can alleviate coordination problems, we apply the framework to monetary policy.     

Modeling changes in monetary policy regimes

Following the work of Poole and others, changes in monetary policy regimes are hypothesized to be the result of the reaction of policymakers to changes in the distribution of shocks buffeting the economy. First, a time-varying estimation procedure is employed to parameterize the degree to which the policy rule has changed over time. Second, estimated changes in the policy rule are modeled explicitly, utilizing proxies for the disturbances which theory and practice suggest are relevant determinants of such variations. The results suggest changes in monetary policy regimes do not appear to be exogenous events.     

Communication in repeated monetary policy games

A central bank and the public are engaged in an infinitely repeated monetary policy game with communication. For reasonable discount factors, there exists an equilibrium in which the central bank fully reveals its private information. The fully revealing equilibrium is superior to the uninformative equilibrium. The welfare gain of transparency increases with the slope of the Phillips curve, the natural rate of unemployment, and the degree of heterogeneity in the population. Transparency results in lower inflation but a higher variability of inflation.     

Collateral fluctuations in a monetary economy

This paper studies economy-wide fluctuations that occur endogenously in the presence of monetary and real assets. Using a standard monetary search model, we consider an economy in which agents can increase consumption, over and above what their liquid monetary asset holdings would allow, pledging real assets as collateral for monetary loans. It is shown that, if the liquidation value of real assets is below full market value, a stable cyclical equilibrium can emerge in consumption and capital around the unstable steady state. We also provide conditions for the existence of cycles of higher order, chaos and sunspot equilibria.     

A classroom experiment in monetary policy

The authors propose a classroom experiment implementing a simple version of a New Keynesian model suitable for courses in intermediate macroeconomics and money and banking. Students play as either the central bank or members of the private sector. The central banker sets interest rates to meet twin objectives for inflation and the output gap or to meet only an inflation target. In both settings, private sector agents are concerned with correctly forecasting the inflation rate. The authors show that an experiment implementing this setup is feasible and yields results that enhance understanding of the New Keynesian model of monetary policy. They propose alternative versions where the central bank is replaced by a policy rule and provide suggestions for discussing the experimental results with students.     

事业单位内部控制问题及对策

随着国内社会经济的持续稳定发展,事业单位外部的经营环境和内部管理环境也会产生一定的变化。事业单位是为社会公众提供公益性服务的机构,并且,也有部分事业单位参与到社会经济建设。随着社会事业单位管理职能范围的扩大,也给事业单位带来较大的管理风险。因而,事业单位要加强对内部各个活动的控制力度,建立完善的内部控制体系,增强事业单位的控制能力,针对事业单位内部内控存在的问题,制定相应的解决策略。     

Tests of different monetary aggregates for the monetary models of the exchange rate in five ASEAN countries

Although the real interest rate parity (RIRP) hypothesis has been extensively tested, there are no conclusive findings. We argue that the mixed findings are a result of the different methods used to calculate the real interest rate. In this article, we examine whether the RIRP holds for four OECD countries using five different methods for computing the real interest rate. The results indicate that the connection between real interest rates tends to be sensitive to the computational method of the real interest rate. Thus, authors have to be careful when comparing results across existing studies, since the type of computational method might be responsible for differences in conclusions of the validity of the RIRP.     

Buchanan on monetary constitutions

Buchanan’s reflections on monetary issues have been mostly neglected, despite their great interest both per se and for a deeper understanding of his general constitutional endeavour. We will thus propose a comprehensive assessment of Buchanan’s writings on this topic, focusing in particular on the different political models that have been developed to argue in favour of constitutional constraints on the governmental power to create money and on the implications that one can draw from our author’s monetary papers for the structure and the objectives of his constitutional discourse more generally.

Property taxation as incentive for cost control: Empirical evidence for utility services in Norway

Recent theoretical research suggests that property taxation has incentive effects that can help control cost problems in the public sector. The institutional setting in Norway allows this first empirical investigation of the incentive effect of property taxation, since we can separate between local governments with and without property tax. The raw data of the variation in the unit cost level for utilities show that local governments with property tax have 20% lower unit cost. Using both linear regression and propensity score matching, we are not able to wash out the difference in unit costs. Our interpretation is that having a visible and controversial local tax related to property stimulates voter interest in local government activities and thereby may help cost control.