The gain from commitment in a two-country economy with inflation persistence

In recent years, the worldwide inflation rate appears to be converging to a low stable level. Moreover, the Phillips curve is flattening in many countries. These facts indicate that the output gap fluctuations associated with inflation persistence in one country influence other countries and suggest that the central bank consider the effect of inflation persistence on the real economy in an open economy framework. The objective of this paper is to explore optimal monetary policy in a two-country economy with inflation persistence. To consider the case in which inflation persistence is present in both countries, we assume that a fraction of firms that change their prices follows the rule-of-thumb pricing rule. In this case, the new Keynesian Phillips curve (NKPC) in each country becomes flatter as the fraction of firms employing the rule-of-thumb pricing rule increases in both countries. Our results show gains from commitment in a two-country economy with inflation persistence. This paper addresses that the presence of a severe deflationary bias is the main source of the large gain from a commitment policy in a two-country economy with inflation persistence.     

Monetary policy of the Bank of Japan—inflation target versus exchange rate target

This paper reviews the empirical evidence on the monetary policy of the Bank of Japan (BOJ). The main findings confirm [McKinnon, R., Ohno, K., Dollar and Yen, Resolving Economic Conflict between the United States and Japan. MIT Press, Cambridge, MA, USA, 1997] thesis that the BOJ has tried to stabilize exchange rate. The interest rate is counter-cyclical to the exchange rate and the coefficient of inflation, which is not weakly exogenous, is significantly smaller than 1. Impulse response analysis confirms the BOJ’s sensitivity not only to inflation and output gap but also to exchange rate. Finally, historical decomposition reveals a major role for exchange rate in explaining cyclical patterns of the interest rate, especially during the bubble period.     

China's trilemma: monetary policy autonomy in an economy with a managed floating exchange rate

Mundell's trilemma theory says that capital flow, exchange rate stability, and monetary policy autonomy cannot be achieved simultaneously. Using monthly data from the People's Bank of China from 1999 to 2019, we find that the trilemma theory is not nearly as tight in China's practice as in theory, and the central bank can internally offset the effect of exchange rate volatility by ways other than the monetary base (such as central bank securities). Our results also indicate that, before 2012, monetary policy autonomy in China was weak due to the problem of ‘funds outstanding for foreign exchange’. With the reform of the Renminbi (RMB) exchange rate system in 2005, the effectiveness of central bank securities in compensating for the flow of foreign exchange reserves has gradually been strengthened in China.     

Amortization policy as a factor in the investment policy of an economy

The article is based on the Concept and a draft law on amortization policy in the Russian Federation prepared by the Association of Mining and Metallurgical Industrialists of Russia (Russian abbreviation: AMROS). It examines the role and place of amortization policies in Russia and around the world as well as their essential differences in terms of the economic mechanisms of capital reproduction. Measures to improve Russia’s amortization policy are suggested.     

中国轻度通货膨胀有利于边疆经济发展

中国实行市场经济后取得的各项成绩使世界震惊.随着社会的发展,各种不同方式的通货膨胀也在所难免,特别是边疆地区由于受到区域性的经济、产业、思想认识和政策的滞后影响,发展速度相对缓慢.边疆地区和发达地区相比较,适当的通货膨胀有助于该地区经济发展.     

通货膨胀目标制的实证研究

通货膨胀目标制作为一个货币政策框架已经在很多国家得到实施,总体而言是比较成功的,国外不少学者对通货膨胀目标制的实施状况进行了实证研究,本文从影响一国通货膨胀目标制决策的因素以及支持和反对通货膨胀目标制3个角度对目前的实证研究状况进行概括。     

A nonlinear ARDL model of inflation dynamics in the Philippine economy

This study investigated whether global oil price changes, exchange rate, interest rate, and economic output exert symmetric or asymmetric pass-through effects on inflation in the Philippines. A Nonlinear Autoregressive Distributed Lag (NARDL) model was fitted to the observable data using quarterly observations from 1998 to 2019. Knowledge of these relationships is important in monetary policy setting in achieving targeted inflation; the Philippines adopted inflation targeting in 2002. The finding shows that world oil price shocks are still prominent and the most important determinants of inflation variations in the country. There is prima facie evidence on the short-run asymmetry of oil price changes to inflation. Exchange rate pass-through to inflation was very minimal in the short-run, and there is no long-run effect. Evidence that interest rate and demand shocks have a long-run asymmetric effect on inflation was found. These findings imply that monetary policy setting should account for the asymmetric effects of inflation determinants. Study results provide a deeper understanding of how positive and negative changes of inflation determinants affect actual inflation, which aids policymakers in achieving targeted inflation.     

The choice of exchange rate regimes in the MENA countries: a probit analysis

This paper analyses empirically the determinants of exchange rate regime choice in 17 MENA countries. For this purpose, we use both de jure and de facto regime classifications test and estimate a series of binomial and multinomial probit models. Regressions results highlight the important influence of two factors: trade openness and oil export capacity.     

关于后经济危机时期度量我国通货膨胀指标研究

在评估通货膨胀风险前,需要选择一个能够反映多结构的价格指标作为通货膨胀的度量指标。而构建合理的通货膨胀先行指标体系是许多中央银行预测通货膨胀的重要手段,也是我国中央银行面临的重要任务之一。本文分别从微观和宏观两类指标度量了我国通货膨胀程度。     

转轨时期的中国汇率制度选择

在一个开放经济体中,汇率是处于核心地位的经济变量;汇率制度是一国经济实现内外均衡的桥梁。文章通过对各种汇率选择理论的分析,结合转轨时期中国经济的特点,讨论了人民币汇率制度的选择,提出爬行钉住美元制是较为合适的汇率安排。     

An analysis of the black market exchange rate in a developing economy — The case of Turkey

Zusammenfassung Eine Analyse des Schwarzmarkt-Wechselkurses in Entwicklungsl?ndern — Das Beispiel der Türkei. — Die Schwarzmarkt-Wechselkurse in Entwicklungsl?ndern sind nicht unabh?ngig davon, welche Politik betrieben wird und wie sich die anderen ?konomischen Variablen (wie Einkommen, Preisniveau und Inflationserwartungen) entwickeln. In diesem Aufsatz wird mit Hilfe türkischer Daten ein einfaches Modell entwickelt und gesch?tzt, das gleichzeitig Schwarzmarkt-Wechselkurse, Preisniveau, Realeinkommen und reale Geldmenge bestimmt. Die Ergebnisse dynamischer Simulationen zeigen, daΒ sich dann, wenn Rückwirkungen aus den übrigen Teilen der Wirtschaft zugelassen werden, die Wirkungen wirtschaftspolitischer MaΒnahmen auf die Schwarzmarkt-Wechselkurse erheblich von denen unterscheiden, die man in einem Ein-Gleichungs-Modell beobachten würde, in dem alle erkl?renden Variablen als exogen angesehen werden.

---

Résumé Une analyse du taux de change sur le marché noir dans une économie développante. — Les taux de change sur le marché noir dans les pays en voie de développement ne sont pas indépendants des politiques appliquées ou des autres variables économiques comme par exemple le revenu, le niveau des prix ou les expectatives d’inflation. Cet article a construit, estimé et simulé, en utilisant des données de la Turquie, un modèle simple qui simultanément détermine le taux de change sur le marché noir, le niveau des prix, le revenue réel et l’encaisse réelle. Les résultats des simulations dynamiques démontrent que, si l’on permet des rétro-actions du reste de l’économie, les effets d’un changement de politique sur le taux de change sur le marché noir sont substantiellement différents á ceux qu’on observerait avec un modèle á une seule équation dans laquelle toutes les variables explicatives sont supposément exogènes.

---

Resumen Un análisis del tipo de cambio negro en una economfa en desarrollo. — Tipos de cambio de mercado negro en pai’ses en desarrollo no son independientes de las polfticas aplicadas o de otras variables econ?micas tales como el ingreso, nivel de precios o expectativas de inflation. En este articulo se ha construido, estimado y simulado, sobre la base de datos de Turquia, un modelo simple que détermina simultáneamente el tipo de cambio de mercado negro, nivel de precios, ingreso real y balances monetarios reaies. Los resultados de simulaciones dinámicas muestran que, cuando se permiten realimentaciones del resto de la economia, los efectos de un cambio de pol?tica dado sobre el tipo de cambio de mercado negro son sustancialmente diferentes de aquéllos que habrian sido observados con un modelo de ecuación única que asume que todas las variables explicativas son exógenas y no permite ninguna realimentación.

     

The current account as a dynamic portfolio choice problem

The current account can be understood as the outcome of investment decisions made by domestic and foreign investors. These decisions can be decomposed into portfolio rebalancing and portfolio growth components, as highlighted by theoretical models. The empirical literature draws attention to the relative importance of portfolio rebalancing to explain fluctuations in capital flows, although they do not shed light on the mechanisms behind these rebalancing effects. In this paper, we provide empirical evidence of the importance of portfolio rebalancing driven by changes in investment opportunities for the dynamics of the current account. In particular, we evaluate the predictions of a partial-equilibrium model of the current account with dynamic portfolio choices, in which portfolio rebalancing is driven by changes in expected asset returns. Focusing on the dynamics of the current account between Japan and the US, we find evidence supporting innovations in investment opportunities as an important mechanism to explain international capital flows.     

The political economy of gambling in a neocolonial economy

Conclusion This study has attempted to show the entrenched character of parasitic capitalism in the form of gambling in the Jamaican economy on a scale that massively but painlessly redistributes income from the working class to the petite bourgeoisie. It speaks to a dimension of class exploitation that is often ignored in the focus on large multinational corporations and has parallels in the parasitic forms of capitalism that exploit the black community in the United States. Parasitic capitalism is seen as promoting a form of false class consciousness that seeks outlets to class frustrations in precapitalist illusions of luck and chance that feed the coffers of the grasping petite bourgeoisie with hard-earned working class wage incomes. The data and findings point clearly to the need to either eliminate parasitic capitalist activities such as gambling or alternatively remove it from the control of the petite bourgeoisie and convert the capital accumulated to community and mass-oriented development and social projects.     

The European economy in an expanding world

Summary Postwar economic development in Europe can be subdivided in two periods. In the first subperiod 1950–1973 growth is determined by catching up vis-d-vis the US. The second subperiod 1973–1993 is characterised by a reorientation with respect to the international division of labour. This sets the stage for future developments, which are presented in the form of three different scenarios. In the European Decline scenario Europe cannot match developments in the US and Japan. As appears from a scenario called Fortress Europe import protection provides no sensible solution. To compete on a world scale Europe needs more technological dynamics as sketched in the European Recovery scenario. Calculations of future paths are based on the WorldScan model of the Central Planning Bureau.Theo van de Klundert is Professor of Economics at Tilburg University. Ben Geurts and Hans Timmer are staff members of the Central Planning Bureau, The Hague. We are indebted to Martin Fase and Simon Kuipers for useful comments on an earlier version of the paper.     

A stochastic macroequilibrium approach to a floating exchange rate economy with interest-bearing assets

Zusammenfassung Ein stochastischer Ansatz des makro?konomischen Gleichgewichts für eine Volkswirtschaft mit floatenden Wechselkursen und zinstragenden Wertpapieren. — Der Aufsatz enth?lt ein stochastisches Modell des allgemeinen Gleichgewichts für eine offene Volkswirtschaft mit floatenden Wechselkursen. Analysiert werden die Reaktionen der Volkswirtschaft auf verschiedene dauerhafte und vorübergehende (unerwartete) Schocks. Es wird gezeigt, da\ vorübergehende St?rungen grunds?tzlich reale Wirkungen haben k?nnen, selbst wenn dies für entsprechende dauerhafte St?rungen nicht gilt. Dieser Modellansatz erm?glicht ein Zusammenwirken von realen und monet?ren Faktoren bei der Bestimmung des Wechselkurses und ist deshalb eine Verallgemeinerung von früheren stochastischen Modellen einer offenen Volkswirtschaft mit nur einem Markt.

---

Résumé Une approche stochastique de macroéquilibre pour une économie du taux de change flottant et des actifs rapportant des intérêts. — Cet article contient un modèle stochastique d’équilibre général pour une économie ouverte avec des taux de change flottants. Les réponses de l’économie aux chocs permanents et transitoires (pas anticipés) sont analysées. L’auteur démontre que, en général, les chocs transitoires peuvent produire des effets réels même dans les cas où les chocs correspondants permanents ne le font pas. Ce modèle permet l’interaction des facteurs réels et monétaires dans la détermination du taux de change, et c’est pourquoi il est une généralisation des antérieurs modèles stochastiques de l’économie ouverte avec un seul marché.

---

Resumen Un enfoque estocástico de macro-equilibrio de una economía con tipo de cambio flotante y activos que producen intereses. — En este artículo se construye un modelo estocástico de equilibrio general para una economía abierta bajo tipos de cambio flotantes. Se analiza la respuesta de la economía con respecto a distintos shocks permanentes y transitorios no anticipados. Se muestra que en general perturbaciones transitorias pueden producir efectos reales aunque las perturbaciones permanentes correspondientes no lo hacen. Este marco permite que fenómenos reales y monetarios interactúen en la determinación del tipo de cambio y es de esta manera una generalización de modelos anteriores estocásticos (de unmercado) de una economía abierta.