WELFARE AND MONETARY PRECOMMITMENT IN AN ECONOMY WITH MENU COSTS AND UNIONIZED WAGE SETTING

The paper shows that monetary precommitment can be advantageous to the government in a macroeconomic policy game where (i) the government's objectives are explicitly derived from those of the citizens, (ii) inflation has a real cost and (iii) the suboptimality of the output level arises from the structure of the private sector rather than from fiscal policy. It suggests that, to this extent, welfare interpretations of game theoretic monetary policy models are coherent.     

DISCOUNT RATE FOR PUBLIC INVESTMENT IN A MONETARY DISEQUILIBRIUM ECONOMY*

In this paper, we explore the social rate of discount for public investment in a monetary overlapping generations model which allows for market disequilibria arising from price and wage rigidities. Financing public investment with a lump-sum tax on the younger generation, borrowing and money supply, the government maximizes the sum of generational utilities discounted by a social rate of time preference. For the social welfare optimum, it is required to take the boundary-maintaining policy by making demand for output equal to supply. In a stationary state, we show that (i) the social rate of discount on the Keynesian-repressed inflation boundary should be the weighted average of the social rate of time preference and the market rate of interest, the weights depending on the amount of private investment crowded out by public investment, and (ii) on the Keynesian-classical boundary it should be a modified version of the weighted average rule, containing an extra term which represents the marginal opportunity cost of public investment through its impact on labour employment.     

DIMENSIONS,TRANSACTIONS COSTS AND COALITIONS IN LEGISLATIVE VOTING*

Dimensional studies of Congressional voting have found a single dominant “ideological” dimension, while regression estimates find that constituency variables and party are dominant. Koford (1989b) recalibrated the dimensional studies, and found that several dimensions are important. This study reviews those findings, and then considers additional reasons why dimensional studies might understate the number of dimensions. It then examines the regression estimates for biases that overstate the number of dimensions. Overall, fewer dimensions are found than seem consistent with the wide variety of constituents' preferences on issues. A model is developed in which the transactions costs of building coalitions reduces the number of dimensions visible on roll-call votes below the underlying dimensionality of preferences in the issue space. When legislative parties build internal coalitions to pass and defeat bills, voting on randomly drawn bills has a single party-oriented dimension. Natural ideological dimensions are reinforced when parties write bills and logroll along natural lines of cohesion. Numerical examples suggest that these effects could be important, and suggest lines for empirical investigation of the underlying issue space.     

与中国经济共同成长专访恒生银行副董事长兼行政总裁柯清辉

从汇丰银行见习行政人员到恒生银行副董事长兼行政总裁,柯清辉走入了人生最辉煌的阶段。年少时的柯清辉加入汇丰银行成为见习行政人员时,并没有想到他在2005年能成为汇丰银行的18名高层管理人员之一。时至2005年5月25日,56岁的柯清辉接任汇丰集团成员恒生银行的副董事长兼行政总裁,成为这家拥有72年历史和7500名员工的银行领头人。     

UNEMPLOYMENT IN AN EQUILIBRIUM MODEL WITH BARGAINING*

This paper develops a model which embeds the Nash-equilibrium version of McDonald and Solow's (1981) wage-bargaining model into an otherwise standard static equilibrium macro model. Equilibrium unemployment is possible. Real shocks to demand result in pro-cyclical employment and anti-cyclical real wage movements while money shocks are neutral. This is in some contrast to the results obtained by McDonald and Solow.     

MONETARY AND FISCAL POLICY EFFICIENCY AND COORDINATION IN A MULTI‐SECTOR OPEN‐ECONOMY GENERAL EQUILIBRIUM MODEL

The paper analyzes monetary and fiscal stabilization and coordination in a multi‐sector stochastic new open economy macroeconomics (NOEM) model. It first aims to assess the capacity of fiscal and monetary policy to reduce or eliminate the negative welfare effects of an unanticipated productivity shock affecting some or all of the sectors in each country. Second, it evaluates the possible gains from international monetary cooperation as well as the impact of active fiscal policy on the welfare performance of monetary policy. The setup also allows for international asymmetry concerning the uncertainty over the shocks. The results show that monetary and fiscal policies are efficient tools of stabilization and under several conditions they can replicate the flexible‐price equilibrium. However, their welfare performance is not necessarily increased when both monetary and fiscal policies react to shocks at the national level. The existence of bilateral gains from monetary cooperation depends on the degree of asymmetry concerning the uncertainty over the shocks.     

MONETARY EXPANSION AND PRODUCTIVE PUBLIC EXPENDITURE IN A CASH‐IN‐ADVANCE ECONOMY*

Using a dynamic optimization model that incorporates a cash‐in‐advance constraint on both consumption and investment and productive public capital financed by a lump‐sum tax and seigniorage, this paper analyses the steady‐state effects of an increase in the inflation rate (the money growth rate) on output, private capital and welfare. The effects are negative at high inflation rates. However, at low inflation rates, the effects depend on the amount of lump‐sum tax revenue collected and therefore are either positive or negative.     

ON THE INEFFICACY OF TEMPORARY POLICY IN A DYNAMIC GENERAL EQUILIBRIUM WITH MONEY*

We construct a dynamic economy with many consumers with money in their utilities. Two main results—a turnpike theorem and inefficacy of temporary policy—are established in a dynamic general equilibrium framework in which price effects generated through markets are explicitly factored in. Turnpike, which is perfectly independent from wealth distribution among the heterogeneous consumers, will be globally attractive. Temporary policy is not effective not only for the future but for the current economy if the long‐run interest rate level is low. The inefficacy result coincides with an intuitive explanation by the standard permanent income hypothesis.     

UNIQUENESS OF EQUILIBRIUM PAYOFFS IN FINITELY REPEATED GAMES WITH IMPERFECT MONITORING*

This paper examines when a finitely repeated game with imperfect monitoring has a unique equilibrium payoff vector. This problem is nontrivial under imperfect monitoring, because uniqueness of equilibrium (outcome) in the stage game does not extend to finitely repeated games. A (correlated) equilibrium is equilibrium minimaxing if any player's equilibrium payoff is her minimax value when the other players choose a correlated action profile from the actions played in the equilibrium. The uniqueness result holds if all stage game correlated equilibria are equilibrium minimaxing and have the same payoffs. The uniqueness result does not hold under weaker conditions.     

SECTORAL AND MACROECONOMIC EFFECTS IN A TWO GOOD OPEN ECONOMY WITH AN INTERMEDIATE INPUT*

A model of an open economy, in which two goods, a tradeable and a non-tradeable, are distinguished, is constructed. There is also an intermediate input (oil) which is both produced domestically and traded, and which is used as an input in the traded sector. There are two assets, money and internationally traded bonds. In the model the effects of various changes, including an increase in the money supply, and increases in both the world price of, and the domestic output of, oil, are analysed.     

PRODUCTIVITY GROWTH IN THE HUNGARIAN ECONOMY1

This paper analyses productivity growth in the Hungarian economy over the two decades between 1950 and 1970 with the aim of establishing what help can be provided in such analyses by the use of total factor productivity index numbers. After the introductory sections the paper deals first with the rates and factors of Hungarian productivity growth, and then with some methodological lessons of the investigation.     

MONEY AND BANKING IN SEARCH EQUILIBRIUM*

We develop a new theory of money and banking based on the old story in which goldsmiths start accepting deposits for safe keeping, then their liabilities begin circulating as media of exchange, then they begin making loans. We first discuss the history. We then present a model where agents can open bank accounts and write checks. The equilibrium means of payment may be cash, checks, or both. Sometimes multiple equilibria exist. Introducing banks increases the set of parameters for which money is valued–thus, money and banking are complements. We also derive a microfounded version of the usual money multiplier.     

REVENUE MAXIMISING SALES TAXES IN OLIGOPOLISTIC EQUILIBRIUM WHEN COSTS VARY BETWEEN FIRMS

This paper considers taxation of firms in oligopolistic equilibrium. It shows that sales taxes which maximise government revenues will be differential and progressive when costs vary between firms.     

BILATERALISM IN THE INTERWAR WORLD ECONOMY*

Discriminatory protectionist policies in the 1930s are assumed to have led to a collapse of multilateral trading patterns. This paper examines the trends in bilateralism during the interwar period for a sample of ten countries. The findings show that, with the exception of Germany between 1934 and 1938, the level of bilateralism fluctuated but did not see a significant trend increase in the period of increased protectionism during the 1930s.     

COMPETITIVE PRICING AND EFFICIENCY IN SEARCH EQUILIBRIUM*

We consolidate and generalize some results on price determination and efficiency in search equilibrium. Extending models by Rubinstein and Wolinsky and by Gale, heterogeneous buyers and sellers meet according to a general matching technology and prices are determined by a general bargaining condition. When the discount rate r and search costs converge to 0, we show that prices in all exchanges are the same and equal the competitive, market clearing, price. Given positive search costs, efficiency obtains iff bargaining satisfies Hosios' condition and r=0. When prices are set by third‐party market makers, however, we show that search equilibrium is necessarily efficient.