Liquidity Preference and Financial Intermediation

We examine the characteristics of optimal monetary policies in a general equilibrium model with incomplete markets. Markets are incomplete because of uninsured preference uncertainty, and because productive capital is traded infrequently. Rational individuals are willing to hold a liquid asset—"money"—at a premium. Monetary policy interacts with existing financial institutions to determine this premium, as well as the level of precautionary holdings. We show that inflation is expansionary, and that the optimal inflation rate is positive if there is no operative banking system (the Tobin effect). Otherwise, efficiency requires that money be undominated in its rate of return (the Friedman Rule).     

A BENEFIT-COST ANALYSIS OF DISINFLATION

This paper contains a benefit-cost analysis of disinflation. The analysis measures the costs of disinflation by "sacrifice ratios"—the output lost during a disinflation-induced recession. The benefits of disinflation are from recent research that associates lower inflation with higher GDP growth rates. The analysis calculates sacrifice ratios and the growth effects of disinflation and critiques the methods that economists typically use to calculate these benefits and costs. The estimates are quite fragile but nevertheless show that the lost output from a disinflation-induced recession typically will be recouped in 10 to 15 years.     

Fiscal and monetary interactions when wage-setters are large: is there a role for corporatist policies?

This paper studies the macroeconomic consequences of alternative policy regimes in a closed economy where a central bank, a fiscal authority and a monopoly union interact via their effects on output and inflation. The analysis compares macroeconomic outcomes in a non-cooperative setting, where players may move sequentially or simultaneously, and in a regime of cooperation between the government and wage-setters. The cooperative regime captures a climate of accord among social parties that is finalised at common macroeconomic targets in the tradition of corporatism, as in the recent experience of “social pacts” in many European countries. The paper makes two main contributions. First, it shows that macroeconomic outcomes are suboptimal in the non-cooperative regime and may deliver extreme (undesirable) results even when all players share common ideal targets for output and inflation. All players would be better off with a less extreme value for output or inflation, yet they fail to reach a more advantageous allocation as long as there is an inherent conflict among their further objectives. Moreover, the result is robust to a change in the degree of central bank’s conservatism. Second, I find that cooperation between the government and the monopoly union towards common ideal targets for inflation, output and taxes enhances social welfare even in the absence of explicit coordination with the central bank.     

世界经济的不确定性及其对中国经济可持续发展的影响

本文认为这次危机是近30年来最严重的金融危机,并且金融危机的影响远未结束。世界经济的不确定性会导致中国贸易顺差减少、增加货币调控的难度、输入型通胀的重大压力和其他问题。本文认为中国应实施的对策是：强化信息披露与金融监管制度;实施扩大内需政策,改变经济增长方式;以经济手段和配套政策综合治理通货膨胀;加强和国际社会的协调、合作。     

Macroeconomic Linkages and Regional Monetary Cooperation: Steps Ahead*

There is a growing appetite for economic cooperation in East Asia. Although the region has forums to facilitate this, economic cooperation has focussed largely on discussion of issues and policies ? cooperative action is confined to functional cooperation in finance. There is scope for further cooperation in strengthening markets and institutions, with a view to accelerating convergence and stability in the region and deepening shared preferences about policy objectives, including on monetary and exchange rate issues. Although monetary policy in East Asia is generally focussed on controlling inflation, differences remain in economic structure and preferences about policy trade‐offs, markets, and institutions.     

SEIGNIORAGE, DOMESTIC DEBT, AND FINANCIAL REFORM IN CHINA

This paper describes the institutional features of China's hybrid economy that have allowed the government to earn high levels of seigniorage. It quantifies both the financial benefits and implicit costs to the government of extracting seigniorage from the economy. The analysis, which is based on the inside/outside money model of Gurley and Shaw (1960), indicates that seigniorage earnings in the period 1987—1994 were large, but were earned at the cost of a rising implicit government debt and potential future inflation. The paper also outlines how the Chinese government's ability to earn seigniorage in the future may decline as the economy becomes fully monetized and as reform alters the economy's unique institutional structure.     

Monetary Policy Coordination and the Level of National Debt

This paper uses the Canzoneri-Henderson benchmark framework of monetary policy coordination in interdependent economies to analyze how high levels of national debt affect monetary policy interactions. Using a two-country model, I first study how central banks interact in a flexible exchange-rate regime. I find that a low-debt country is better off interacting with a country with high debt, when both economies are affected by an aggregate inflationary shock. I also consider a political dependence scenario, in which central banks are subject to political pressure. In the case of a debt-burdened country, the political incentive to reduce interest payments on debt will spur a Gordon–Barro like inflation bias. However, under a flexible exchange-rate regime, the low-debt country will not be affected. Under a monetary union instead, political pressure may affect the low-debt country as well, and possibly create an inflation bias even greaterthan in the flexible exchange-rate regime. This scenario presents another example of how Rogoff's counterproductive monetary cooperation may arise under European Monetary Union.     

The inflation tax in an open economy with imperfect competition

This paper studies the national welfare maximizing inflation tax in an open economy with imperfect competition. It shows that the presence of a monopolistic distortion dampens the incentive to engage in strategic use of the inflation tax. If this dampening effect is strong enough, monetary policy becomes completely inward-looking, restoring the Friedman rule as an equilibrium strategy regardless of the actions of the foreign government. This aspect of the policy interaction—driven entirely by the presence of imperfect competition—is important because it determines the underlying structure of the policy game and is therefore crucial for determining whether or not there exist welfare gains from international monetary cooperation.     

A critical assessment of existing estimates of US core inflation

Core inflation rates are widely calculated. The perceived benefit of core inflation rates is that they help to inform monetary policy. This is achieved by uncovering the underlying trend in inflation or by helping to forecast inflation. Studies which compare core inflation rates frequently assess candidate core rates on these two criteria. Using US data, the two standard tests of core inflation – the ability to track trend inflation and the ability to forecast inflation – are applied to a more comprehensive set of core inflation rates than has been the case in the literature to date. Furthermore, the tests are applied in a more rigorous fashion. A key difference in this paper is the inclusion of benchmarks to the tests, which is non-standard in the literature. Two problems with core inflation rates emerge. Firstly, it is very difficult to distinguish between different core rates according to these tests, as they tend to perform to a very similar level. Secondly, once the benchmarks are introduced to the tests, the core inflation rates fail to outperform the benchmarks. This failure suggests that core inflation rates are of less practical usefulness than previously thought.     

东亚货币合作可行性的经济数据检验——基于OCA理论的分析

在最优货币区理论构筑的分析框架下,东亚区域在经济开放度、出口产品结构相似性、经济冲击对称性方面达到了OCA理论的标准,而在生产要素的流动性、金融市场一体化等方面距离最优货币区的标准尚有差距,但是这种差距正在缩小。通货膨胀相似性方面东亚整体虽未满足OCA标准的要求,但是有次区域已经符合这一标准。考虑到最优货币区标准的内生性,而且大量文献通过对东亚地区进行分组并采用不同的研究方法,证明东亚地区存在形成最优货币区的潜力,因而对次区域的货币合作可行性分析依然乐观。     

The properties of survey-based inflation expectations in Sweden

This article assesses the properties of survey-based inflation expectations in Sweden. The survey in question is conducted by Prospera once every quarter and consists of respondents from businesses and labour-market organisations. The article shows that inflation expectations measured in this survey tend to be biased and inefficient forecasts of future inflation. Moreover, evaluations of forecast accuracy show that these inflation expectations are worse predictors of inflation than those of a professional forecasting institution and also typically outperformed by a simple autoregressive model. Given that the true inflation expectations are captured by the survey, our results indicate that economic agents’ expectations formation process is suboptimal.     

PACIFIC RIM TRADE AND DEVELOPMENT: HISTORICAL ENVIRONMENT AND FUTURE PROSPECTS

Pacific Asia is deep rooted in its cultural heritage and historical background, which have set the tone for regions success. These same factors also have created rather different trading practices, compared with those of the West — practices that are less transparent and full of hidden private trade barriers.
Interdependence within the region suggests integration, but Pacific Asia has taken a course of non-exclusive cooperation rather than following the exclusive course of the European Community (EC) and of the North American Free Trade Agreement (NAFTA). The latter two trade blocs threaten the continued success and development of Pacific Asia. Although the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) sends relief, fostering a cooperative rather than a retaliative Asian Pacific Economic Cooperation (APEC) organization offers the most promise.     

Services inflation dynamics and persistence puzzle in Brazil: a time-varying parameter approach

This article analyses services inflation dynamics in Brazil, focusing on the Services Inflation Persistence Puzzle, for monthly data from January 2004 to February 2016. We apply a time-varying parameter (TVP) approach, via a Kalman filter, to estimate hybrid Phillips curves and compare inflation inertia for tradable goods and services inflation. Aggregate Brazilian Extended Consumer Price Index inflation serves as a benchmark. To justify the TVP analysis, parameter instability and structural change tests are implemented, based on OLS and Generalized Method of Moments (GMM) frameworks. The main results are as follows: (i) the TVP approach is relevant due to observed instability in some parameters estimated; (ii) inflation expectation coefficients are higher than lagged inflation in all calculations, but inflation inertia is not negligible at all; (iii) services inflation persistence ranges from 27 to 36%, whereas tradable goods inflation persistence ranges from 36 to 47%, providing evidence of the Services Inflation Persistence Puzzle in Brazil; (iv) from 2009 onwards an increase in one percentage point in real wages raises monthly services inflation rate by 0.02 to 0.03 percentage point; (v) there is evidence that cost-push pressures, due to wage increases in the service sector, are more important to explain services inflation than demand pressures from early 2009 to mid-2014.     

我国城镇化发展与土地集约利用的时空耦合及调控格局*

本文基于城镇化与土地集约利用的耦合机理，分析了2005—2015年我国各省份的城镇化发展和土地集约利用水平、同步状态以及变化协调关系。研究表明：（1）我国各省份综合城镇化水平均平稳上升，动态变化呈一定的收敛性，土地集约化水平有所下降，省际差异较大。（2）各省份整体表现为城镇化超前于土地集约化，同步状态具有空间分布的不均衡性。有50%省份的同步类型保持不变。（3）城镇化发展与土地集约利用变化的耦合关系表现为正向的挂钩协调，并具有一定的空间集聚性和地域时效差异性。（4）东部发达省份的土地集约利用出现退化现象，中西部地区部分省份的城镇化进程则相对缓慢。未来东部地区应加大存量土地开发力度并提高供地门槛，中西部地区需要加快产业优化升级并加强资本和技术的替代与互补效应。     

我国通货膨胀与货币供给和经济增长的关系研究

基于协整检验和VAR模型选取1984～2010年的年度数据研究了通货膨胀与货币供给和经济增长之间的关系,研究表明:货币供给和经济增长都会导致通货膨胀,但通货膨胀不会引发货币超发,且一定的通货膨胀对经济增长具有正向刺激作用;货币供应量扩张对通货膨胀有促进作用,但影响程度逐步减弱,经济增长也会促使物价水平的上涨,但影响程度明显小于货币供给水平的影响;经济增长对物价水平的影响小于货币供应量对物价水平的影响,即货币供应量诱发通货膨胀,抑制通货膨胀的最好途径是解决货币供给问题;经济系统中存在"通货膨胀螺旋"效应。     

股票市场正相关影响通货膨胀的路径分析

股票市场与通货膨胀的变动关系主要有四种：通货膨胀正相关影响股市;通货膨胀负相关影响股市;股市负相关影响通货膨胀;股市正相关影响通货膨胀。之前对于两者的变动研究得出的结论主要是负相关。1992—2008年中国股票市场与通货膨胀的数据显示,06年以前二者在趋势上基本呈负相关。但是,06年至今两者呈现出了滞后正相关的变动关系,并且是CPI滞后于股票市场同向波动。本文通过对股票市场参与结构的历史比较,总结出了股票市场正相关影响通货膨胀的路径。     

Competing for a duopoly: international trade and tax competition

Abstract We analyse the tax/subsidy competition between two potential host governments to attract the plants of firms in a duopolistic industry. While competition between identical countries for a monopolist's investment is known to result in subsidy inflation, two firms can be taxed in equilibrium with the host countries appropriating the entire social surplus generated within the industry, despite explicit non‐cooperation between governments. Trade costs mean that the firms prefer dispersed to co‐located production, creating these taxation opportunities for the host countries. We determine the country‐size asymmetry that changes the nature of the equilibrium, inducing concentration of production in the larger country.     

Time-varying U.S. inflation dynamics and the New Keynesian Phillips curve

This paper introduces a form of boundedly-rational inflation expectations in the New Keynesian Phillips curve. The representative agent is assumed to behave as an econometrician, employing a time series model for inflation that allows for both permanent and temporary shocks. The near-unity coefficient on expected inflation in the Phillips curve causes the agent's perception of a unit root in inflation to become close to self-fulfilling. In a “consistent expectations equilibrium,” the value of the Kalman gain parameter in the agent's forecast rule is pinned down using the observed autocorrelation of inflation changes. The forecast errors observed by the agent are close to white noise, making it difficult for the agent to detect a misspecification of the forecast rule. I show that this simple model of inflation expectations can generate time-varying persistence and volatility that is broadly similar to that observed in long-run U.S. data. Model-based values for expected inflation track well with movements in survey-based measures of U.S. expected inflation. In numerical simulations, the model can generate pronounced low-frequency swings in the level of inflation that are driven solely by expectational feedback, not by changes in monetary policy.     

Selecting Your Inflation Targeters: Background and Performance of Monetary Policy Committee Members

Abstract. This paper starts by describing the composition of monetary policy committees (MPCs) in inflation‐targeting and non‐targeting countries. The experience of MPC members on their inflation performance is then compared, opposing inflation targeters with non‐targeters. Our sample covers the major Organization for Economic Cooperation and Development countries, in the period 1999–2008. Our results first show that MPCs are different in inflation‐targeting (versus non‐targeting) countries. They also reveal that policy‐makers' backgrounds influence inflation, and that the influence of MPCs' experience is much greater in inflation‐targeting countries, while size effects are more important for committees that do not target inflation.     

The effect of inflation uncertainty on inflation: Stochastic volatility in mean model within a dynamic framework

This paper investigates the effect of inflation uncertainty innovations on inflation over time by considering the monthly United States data for the time period 1976–2006. In order to investigate the effect of inflation uncertainty innovation on inflation, a Stochastic Volatility in Mean model (SVM) has been employed. SVM models are generally used to capture the innovation to inflation uncertainty, which cannot be achieved in the framework of popular deterministic ARCH type of models. Empirical evidence provided here suggests that innovations in inflation volatility increases inflation persistently. This evidence is robust across various definitions of inflation and different sub-periods.