Economic Fluctuations in the U.S. and Euro Area: Quantifying the Contribution of Technical Change

This article aims at quantifying the contribution of technical change to cyclical fluctuations in the U.S. and euro area. We distinguish technical progress in labor-augmenting and capital-augmenting change. To this end, we derive and estimate a New Keynesian DSGE model embodying a constant elasticity of substitution (CES) production function for both areas. Our main findings are: (i) capital-augmenting progress is the main source of technical change volatility; (ii) labor-augmenting shocks give a negligible contribution to the variance of output; (iii) technical change (of both types) explains more economic fluctuations in the U.S. than in the euro area; and (iv) historical decomposition of GDP growth over our sample period (1980–2008) shows that capital-augmenting progress is one of the key drivers of the business cycle.     

欧元兑美元后市难乐观

从中短期走势来看,欧元兑美元短期关键支撑在1.3520,汇价如果经过震荡调整后最终跌破这个支撑,进入中期调整的可能性将进一步加大     

The Euro and Other Major Currencies Floating Against the U.S. Dollar

This paper discusses the interdependent effects of conditional volatilities in returns of the Euro and other major currencies against U.S. dollar exchange rates (spot rates) since the launch of the Euro, using, for this purpose, the daily data and dynamic conditional correlation (DCC)–GARCH model with country-specific effects. The following conclusions are drawn: there are volatility spillovers (contemporaneous and lagged) in the Euro, Yen, and British pound, the degree of the correlation is high between the Euro and British pound against the U.S. dollar, there is a very strong association between the ECB Euro reference rate (fixing rates) and U.S.-traded spot rates, and finally, the impulse-response of volatility (after the accession of new Member States to the European Union) rapidly diminishes in the spot markets, indicating a short-run dynamic effect.     

Convergence (divergence) and the U.S. states

The purpose of this paper is to examine whether established trends in labor productivity convergence have continued among the contiguous states of the U.S. from 1969 to 1990. This paper brings new and additional state data to bear on the question of productivity convergence among the U.S. states. The findings indicate that when the state value-added is deflated by the state-specific price deflator, a dramatically different picture of productivity convergence emerges. The study also finds that there is less evidence of state productivity convergence once the peculiar behavior of mining or extraction industries is taken into account.     

Specialization and Business Cycle Co-Movement in the Euro Area

Atlantic Economic Journal - This paper explores whether similarities in production structures have been an important determinant of business cycle co-movement in the Euro Area. We constructed an...     

External Imbalances and Fiscal Fragility in the Euro Area

This paper presents two views of the European sovereign debt crisis. The first is that countries in the South of the Eurozone were fiscally irresponsible and failed to implement pro-competitive supply side policies. The second view holds that the crisis reflects a deep divide between the external surpluses of the North and external deficits of the South. Basic stylized facts cast doubt on the explanation based on the first thesis alone. A relatively simple model shows how poor fundamentals can create a debt problem independently of fiscal responsibility. The empirical analysis of the determinants of government bond yield spreads relative to Germany suggests that both views in fact provide useful insights into the roots of the current sovereign crisis. However, differences in growth and competitiveness and capital flows between North and South have assumed a much more dominant role since the onset of the global crisis.     

Cooperative Monetary and Fiscal Policies in the Euro Area

This article discusses the interaction of fiscal and monetary policy in the euro area. Though many observers suggest a fiscal union as the next step of euro-area constitutional reform, a federal fiscal union does not appear politically feasible in the short run. We suggest moving forward with cooperative monetary and fiscal institutions and policies that allow for decentralized fiscal decisions, while taking federal stabilization policies into account. This approach will increase the probability of survival of the euro area compared with the current fiscal arrangements. Using a dynamic macro model, counterfactual simulation paths of our cooperative solution are contrasted with time-series data for the euro area.     

The Effects of Monetary Policy in the Euro Area

This paper presents evidence on the monetary transmission processin the euro area, based on macroeconomic data and on micro dataon banks. According to the estimations of macro vector autoregressionand macroeconometric models, a monetary policy tightening significantlyreduces output and—after a time lag—also prices.The effect on output is temporary, while that on prices is permanent.Clear patterns of significant asymmetries in the monetary policyeffects across countries do not emerge. The estimations basedon micro data on banks show that the main factor that determinesthe average bank's response to monetary policy is its degreeof liquidity: the lower its share of liquid assets in totalassets, the more strongly does a bank reduce its lending inresponse to a monetary tightening. Bank size does not emergeas an important factor for a bank's reaction to monetary policy.These results hold for virtually all member countries of theEuropean Monetary Union, despite the differences in their bankingsystems.     

美国纺织服装区域性生产网络与中美纺织品协议的效应评估

为了应对全球化的挑战,美国与周边的墨西哥和加勒比海地区(CBI)国家合作,形成了一条以纵向一体化为核心的区域性纺织服装生产网络(regional production network,RPN)。由于RPN合作国家是美国纺织产业重要的出口市场,因此后者在该网络中具有既得利益。美国政府进而签订的《中芙纺织品协议》(以下简称"协议")旨在抑制后配额时代中国输美服装类产品对该RPN的冲击。本文就"协议"的实施对相关贸易流量的影响进行了评估。结果显示,"协议"已经对中国输美服装类产品产生贸易破坏效应,而墨西哥和CBI国家对美国的服装出口则从中受益。然而,研究并未显示"协议"的实施有助于美国增加纱线、面料等纺织类产品向RPN合作国家的出口,因而"协议"对美国纺织产业的实际保护效应有必要予以反思。本文的研究结论对于2008年"协议"到期后相关政策的制定和调整具有重要的借鉴意义。     

The dynamic macroeconomic effects of tax policy in an overlapping generations model

The paper studies the dynamic allocation effects of tax policywithin the context of an overlapping-generations model of theBlanchard-Yaari type. The model is extended to allow for endogenouslabour supply and three tax instruments, viz. a capital tax,labour income tax, and consumption tax. Both analytical expressionsand simple diagrams are used to analyze the impact, transition,and long-run effects of tax policy changes. It is shown thata part of the long-run incidence of capital and consumptiontaxes falls on capital when households' horizons are finitewhereas labour would fully bear the burden of these taxes inan infinite-horizon model.     

The Tragedy of the Commons and Inflation Bias in the Euro Area

Central bank credit has expanded dramatically in some of the Euro Area member countries since the beginning of the financial crisis. This paper makes two contributions to understand this stylized fact. First, we discuss a simple model of monetary policy that includes (i) a credit channel and (ii) a common pool problem in a monetary union. We illustrate that the interaction of the two elements leads to an inflation bias that is independent of the standard time-inconsistency bias. Secondly, we present an institutional analysis that is consistent with the view of fragmented monetary policy and empirical evidence that illustrates the heterogeneity of central bank credit expansion.     

Central Bank Communication and Financial Market Comovements in the Euro Area

Open Economies Review - We examine whether unscheduled communication of members of the European Central Bank’s (ECB) Governing Council affects financial market comovements. To assess...     

International factor migration and the U.S.

Conclusion The model employed is sufficiently realistic to provide conclusions regarding income distribution due to factor migration. While more disaggregation and other models would be revealing, these results correspond to observed positions on migration issues. Owners of a productive factor can be expected to favor migration policy, either the making or enforcing of laws, favorable to themselves. A factor owner's sentiments can be predicted by identifying patterns of friendship. While each productive factor is its own enemy, empirical results for the U.S. identify two pairs of enemies as well: capital/skilled and semiskilled/unskilled labor. Unskilled labor is a friend of capitalists and skilled labor, both of which can be expected to favor their free immigration.     

Inflation and Business Cycle Convergence in the Euro Area: Empirical Analysis Using an Unobserved Component Model

The literature on optimum currency areas states that large inflation differentials can undermine monetary union. In the euro area, inflation rates diverged after the creation of the single currency, but started to converge again from mid-2002. Against this background, we assess the convergence of inflation rates and business cycles and study the relationship between them. The analysis is made using an unobserved component model estimated with the Kalman filter. In general, from 1980 to 2008 inflation rates and business cycles became more aligned in the euro area, but inflation rates converged more quickly than business cycles. The output gap is found to be a better indicator of the business cycle than unit labour cost when studying convergence. By looking at the causality between the convergence of inflation and output gap, it is found that inflation divergence has a limited destabilising economic impact.     

美利坚之魂

华盛顿故居位于弗吉尼亚州的波多马可河岸边。临近故居还有几公里时,路两边的树木就看出一种异乎寻常的茂盛。树都很粗,树叶乌黑黑的,树林很密,看不到边际。故居在一个小山包的山顶上,叫弗农山庄。弗农山庄是华盛顿同父异母的哥哥劳伦斯在其父亲所盖的一处房子基础上改建的,起名叫弗农山庄是为纪念哥哥心目中的一位偶像、一位英国海军上将。