Inflation and the wage lag during the American Civil War

This paper examines the role of inflation in financing the American Civil War, and the effects of that inflation on the level of real wages in the North. A wage determination model is specified in which the equilibrium real wage is determined by real forces and the money wage is allowed to adjust to its equilibrium value with lags. Econometric estimates of the model support Wesley Clair Mitchell's contention that wage movements lagged price movements during the war. Comparison of the estimated equilibrium money wage and the estimated current money wage makes it possible to assess the magnitude and importance of the wartime redistribution of income attributable to inflation.     

Wages and wage policy: Australia in the Depression, 1924–34

The starting–point for this examination of the Australian wage–fixing system during the Great Depression is the recent conclusion by Gregory, Ho, and McDermott that the Commonwealth Court was ineffective in its attempt to impose a 10 per cent reduction in real wages. They argue that labour markets, centralized and decentralized, resisted the 10 per cent cut, so that wage policy played no part in the recovery from the Depression. By surveying the decisions and influence of the Commonwealth Court, and the wage–fixing institutions and wage outcomes in Victoria and New South Wales, this article concludes that the hypothesis of Gregory et al. cannot be supported. Contemporary views were closer to the mark.     

Political instability, policy uncertainty, and economic growth: An empirical investigation

This paper elaborates upon the effect of political stability on economic growth using a novel approach. Unlike the literature on growth that emphasizes the turnover of decision makers, this paper focuses on the volatility of economic policies as the relevant indicator of stability. The literature on growth ignores the microeconomic instability associated with frequent changes of government policies. The empirical results of this paper indicate that the effect of political instability on economic growth is not conclusive. Most of the commonly used proxies for political instability have failed to explain growth differences across countries. The political instability indices have no significant effect on growth when a reasonable set of core variables is also included in the regression equation. The results also show that almost all of the policy uncertainty variables are significantly and negatively correlated with economic growth. However, the instability of economic policies has no significant impact on the accumulation of capital.     

Monetary policy, central bank objectives, and social welfare with strategic wage setting

The paper examines the implications of strategic wage-settingbehaviour by an inflation-averse monopoly union for the appropriatespecification of central bank objectives. Our principal findingsare as follows. First, the optimal setting of the parametersof the central bank's objective function differ in a significantway according to the relative timing of monetary policy andwage determination. Second, the ability of the central bankto precommit to a particular setting of monetary policy doesnot confer any welfare benefits. Third, we find little supportin this context for the notion that placing monetary policyin the hands of a conservative central bank will improve socialwelfare.     

Goods Inflation,Asset Inflation,and the Greatest Peacetime Inflation in the US

In every episode of global monetary inflation originating in the Federal Reserve, we find both asset price inflation and goods inflation. The interrelationship between these two types of inflation depends both on cycle-specific factors and more general factors which transcend the cycle and stem from essential aspects of monetary disorder. The purpose of this article is to analyse the nature of this interrelationship and elaborate on the concepts of monetary disorder, goods inflation, and asset inflation. In today’s world of monetary systems where there is no stable demand for high-powered money (which itself is no longer a highly distinct asset) monetary disorder can be hard to recognize until quite late in the inflationary process. Asset price inflation now has a popular meaning quite different from the original found in Austrian business cycle theory. Two decades of widespread inflation targeting at around 2% per annum have encouraged us to ignore an old lesson. In a well-functioning capitalist economy under a sound money order, prices would fluctuate considerably upwards and downwards with a tendency to revert to the mean over the very long run. Finally the principles and hypotheses developed here are analysed in the laboratory of history, specifically for the greatest peacetime inflation in the U.S. (1963–80).     

International mobility of capital,wage indexation,and the cost of policy mistakes under ambiguity: a CGE evaluation

In this paper we focus on the role institutions and structural parameters play in macroeconomic policy design and test the differential effects of tax policies on two structural parameters: the degree of international capital mobility and the rules of wage indexation practiced in the economy. We evaluate counterfactual changes in taxation in the Argentine economy using a Computable General Equilibrium (CGE) Model with unemployment, calibrated with 2006 data, showing that policy mistakes (diagnosis failures) are costlier when the degree of capital mobility is greater and the rules to determine salaries could amplify the losses. Among other taxes, we evaluate the choice of export taxation, historically one of the preferred revenue sources of Argentine governments. We discuss the choice of taxes that an optimistic and a pessimistic policymaker will make under Knightian uncertainty and find that, in the case of our CGE, an optimistic policymaker prefers to tax export goods, while a more pessimistic one tends to tax imports or non-tradable goods.     

Retail Payments in the Netherlands: Facts and Theory

Summary Over the last decade, the Netherlands observed a rapid shift from cash and paper-based payment instruments toward electronic payment instruments. Banks are well aware that transaction pricing can speed up the shift to low-cost electronic payments. But payment pricing is a complex matter, due to strong network externalities. Recent theory on two-sided markets has led to a better understanding of the payment industry, in terms of optimal payment pricing and payment network competition. Under two-sidedness, it is shown that payment pricing is not just a question of choosing the right price level but rather of choosing the right price structure.The author would like to thank Lex Hoogduin, Rein Kieviet, Carlo Winder and two anonymous referees for critical comments and valuable remarks. Obviously, the usual disclaimer applies. Views expressed are those of the author and do not necessarily reflect official positions of De Nederlandsche Bank or the European System of Central Banks.     

Employment hardship and rural minorities: Theory,research, and policy

Rural racial and ethnic minorities are among the poorest of all Americans. This article situates their plight both theoretically and empirically in the context of employment hardship. Defined by access to employment and job quality, employment hardship is more prevalent among nonmetropolitan African Americans, Hispanics, and Native Americans than it is among either their central city counterparts or non-Hispanic whites. The strengths and limitations of both individuallevel frameworks (e.g., human capital) and macro-level theories (e.g., uneven development) in explaining the economic double jeopardy faced by rural minorities are discussed. Policy recommendations designed to ameliorate employment hardship are presented. This paper was prepared as the author’s contribution to the Rural Minorities Working Group of the Rural Sociological Society Task Force on Persistent Rural Poverty. The Working Group’s report appears as chapter 6 inPersistent Poverty in Rural America (Boulder, CO: Westview Press, 1993).     

Women's relative wage rate in The Netherlands, 1950–1983: A test of alternative discrimination theories

Summary This article presents the results of an inquiry into the relationship that is to be expected on theoretical grounds between women's wage rate compared to men's on the one hand and some macroeconomic variables on the other. Becker's discrimination theory is confronted with alternative theories. On the base of data for the Netherlands the authors investigate which theory is most suited to explain the development of women's relative wage rate for the period 1950–1983. They conclude that the results of the empirical analysis predominantly support Becker's theory.The authors wish to thank Mr. R. Haagsma and Professor C.K.F. Nieuwenburg for their comments on an earlier draft of this article. Furthermore, they are grateful to Miss M.J.R. Key for computational assistance.     

Monetary policy under fixed exchange rates: Lessons from the Netherlands,Belgium, and Austria, 1973–1992

Summary The impact of domestic monetary policy in The Netherlands, Belgium and Austria on offsetting capital flows, interest rates and exchange rates is empirically investigated for the period 1973–1992. Offsetting capital flows are found to be incomplete for each country and lead to marginal interest and exchange rate effects only. A significant direct channel from excessive domestic creation to interest rises is present in Austria and to both interest and exchange rate rises in Belgium. No such effects are found for The Netherlands, possibly due to its adherence to targets for domestic money creation during the sample.This paper was written while the author was a visiting scholar at the Federal Reserve Bank of St. Louis. Manon den Dunnen provided excellent research assistance in collecting and summarizing available sources on actual monetary policy and instruments in Austria, Belgium, and The Netherlands. Useful comments on an earlier draft from Bill DeWald, Lex Hoogduin, Kees Koedijk, Ron van Rooden, Jack Tatom, Dan Thornton, Tom van Veen, and two anonymous referees are acknowledged. I am indebted to Paul Hilbers of the Dutch Central Bank for providing data on the exchange rate parities of the guilder and the Belgian franc during the 1970s. The usual disclaimer applies.     

Inflation,interest rate policy,and currency substitutions in developing economies: A discussion of some major issues

This paper deals with the management of interest rates in an open economy under rapid inflation and reviews the links between interest and exchange rate policies.To prevent current substitution the rate of interest paid to lenders must equal the equivalent rate after adjusting for differential taxation and intermediation costs. This would probably induce capital inflows and consequent monetary growth. Exchange risks are also considered in this context.The paper concludes that under inflationary conditions it is difficult to use only interest rates to achieve both proper resource allocation and prevention of currency substitution. Some policy measures to cope with this problem are discussed.     

信贷政策对江苏产业结构优化问题的探讨

本文在对产业结构与信贷政策相关性进行研究的基础上,提出了制定合理的信贷政策,优化产业结构的对策。     

Inflation,economic activity and the operation of fiscal,foreign and monetary impulses in the Netherlands — A preliminary analysis, 1953–1973

Summary This paper tests both the strong and weak versions of the fiscal, foreign and monetary impulse hypotheses holding that each of these impulses is either a sufficient or a necessary condition for fluctuations in price and output to occur.Four impulses are distinguished: a fiscal impulse being a linear combination of autonomous changes in government expenditures and taxes, two foreign impulses measured by the growth rates of world trade and import prices, and a monetary impulse measured by (changes in) the growth rate of the stock of domestic or world money.When tested against the Dutch post-war experience of inflation and output fluctuations, all strong impulse hypotheses have to be rejected, as do the weak fiscal and foreign world trade hypotheses with respect to inflation and the weak fiscal hypotheses with respect to output growth. The weak foreign and monetary impulse hypotheses of output fluctuations, however, and the weak foreign import price and monetarist hypotheses of inflation are not rejected.     

Multinational enterprises, regional economic integration, and export-platform production in the host countries: An empirical analysis for the US and Japanese corporations

Multinational Enterprises, Regional Economic Integration and Export-Platform Production in the Host Countries: An Empirical Analysis for the US and Japanese Corporations. — This paper analyzes determinants of export orientation of overseas affiliates of US and Japanese MNEs for the 1982–1994 period. The author contends that production geared to MNEs’ home market and that production oriented to third-country markets are determined by different factors. The empirical analysis finds the home-market-oriented production concentrated in countries that offer low-cost workforce, enjoy geographical proximity or preferential access to the home market. The location of third-country-market-oriented exports is influenced more by strategic factors such as participation in regional trading blocs and preferential access to major markets than factor costs considerations.     

An empirical assessment of the relationship between competition policy and investment

The relationship between competition policy and investment is empirically examined. Empirical findings suggest that increasing market competition has a positive and robust impact on the share of total investment in GDP per capita. Developing countries enjoy benefits from competition legislation efficiency improvement, whereas the reduction of government anti-competitive price control intervention enhances the good investment environment in developed countries. In relation to the potential impacts of ASEAN competition policies, if ASEAN-4 countries (Indonesia, Malaysia, Philippines, and Thailand) become as competitive as Singapore, the investment shares are expected to increase to approximately 2–4%. Further, foreign direct investment inflows from the 30 OECD countries are expected to increase roughly 0.6–1.2%.     

Skill compression, wage differentials, and employment: Germany vs the US

Germany's more compressed wage structure is widely viewed asthe main cause of the German-US difference in employment andunemployment, but part of the compression is due to Germanyhaving a narrower distribution of skills than the US. Even adjustedfor skills, however, we find that Germany has a more compressedwage distribution than the US. But relatively little of theUS-German employment difference can be attributed to the compressedwage distribution. We find that jobless Germans have nearlythe same skills as employed Germans and look more like averageAmericans than like low skilled Americans, which runs counterto the wage compression hypothesis. Given these patterns, thepay and employment experience of low skilled Americans is apoor counterfactual for assessing how reductions in pay mightaffect jobless Germans.     

Hiring functions and a new index for measuring mismatch: Some empirical results for european countries

Conclusion This paper investigates the relation between mismatch and sectoral hiring functions. Traditionally, the indices used to measure structural mismatch were constructed by assuming that the hiring functions are identical across sectors. However, both theoretically and empirically, there is no reason to believe that the hiring behavior of the firms or the search methods of the workers are identical across sectors. Evidence for this is provided in the Appendix of this paper where it is shown that theUV curves for the different regions in Great Britain and different sectors in Switzerland are not identical. Brunello [1990] also shows that the hiring functions do not have to be identical. This paper also demonstrates that it may not be possible to eliminate structural unemployment totally when the hiring functions across sectors are non-identical. In other words, total hiring may be maximized even if theV/U ratios are not equalized across sectors. This conclusion is important as it highlights that the indices used in empirical work to measure structural mismatch may be seriously flawed.This paper develops an index for measuring mismatch which is rooted in the theory of hiring functions and utilizes the approach of measuring angle between vectors by the use of cos() functions. The FH index presented in this paper is based on a simple arithmetic mean of regional or sectoral cos() functions. It has been estimated for several European countries, and the empirical results highlight some interesting conclusions concerning regional mismatch in these countries.     

货币错配与通货膨胀目标制的不可行性：针对我国现实

现阶段我国正面临人民币汇率稳定与物价稳定的"两难冲突",国内外一些学者主张我国应该采用通货膨胀目标制。从货币错配的角度探讨通货膨胀目标制在我国的可行性表明,由于存在较严重的货币错配及特殊的国情,现阶段我国尚不具备实行通货膨胀目标制的条件,短期内,通货膨胀目标制在我国并不具有可行性,货币政策适合以货币供应数量和价格作为混合使用的政策调控目标。