INFLATION AND STABILIZATION IN YUGOSLAVIA

This paper examines the main causes of the acceleration of inflation in Yugoslavia during the 1980s and Yugoslavia's last attempt at stabilization in 1990. Yugoslav inflation shares common elements with inflation in other highly indebted countries despite appearances otherwise. Like these other countries, Yugoslavia failed to make internal adjustments to match a large transfer to resources abroad, resulting in a large internal redistribution to real resources through inflation. However, in Yugoslavia these internal conditions were not transparent. Instead of an open fiscal deficit, complex interactions took place among enterprises, banks, and the central bank, involving the central bank's absorption and servicing of a large stock of foreign exchange liabilities.
Failure to correct hidden losses in the economy was the main reason that various stabilization attempts failed during the 1980s. The 1990 program was the first to recognize the existence of those hidden losses and the need for a fiscal correction. The program succeeded in eliminating the central bank's own deficit and was initially successful infighting inflation, but pressures to finance enterprises and avoid a liquidity crisis in the financial system resulted in a relaxation of monetary policy and a revival of inflation. Seen from this angle, the Yugoslav program of 1990 resembles other heterodox programs that had initial success in reducing inflation but later faltered because of an insufficient fiscal adjustment.     

Cyclical Changes in Firm Volatility

We characterize trends and cycles in the volatility of U.S. firms using a measure that we argue more cleanly captures firm‐specific volatility in sales and earnings growth than standard measures do. While earlier literature has emphasized a trend increase in the volatility of publicly traded firms, we find that a typical publicly traded firm has become more stable. We find that the negative association between firm‐specific volatility and the business cycle is weaker than earlier research based on dispersion measures suggests. We find that during the Great Recession of 2007–2009, firm‐specific volatility increased moderately but never substantially exceeded its sample mean. Our results are inconsistent with the hypothesis that firm‐specific volatility is an important driver of the business cycle, as it theoretically could be through an effect of default risk on credit spreads.     

Counterexamples on the Superiority of Approval versus Plurality

We present a simple voting environment with three candidates where the Condorcet winner exists. Under plurality rule, the derived game has a stable set where such a candidate is elected with probability one. However, no stable set of the approval game elects the Condorcet winner with positive probability. We also analyze the robustness of such an example to changes in the number of voters and their preferences. To conclude, we present a generic four‐candidate voting environment with the same properties.     

Why is Austria’s Pension System So Much Better Than Germany’s?

The pension systems in both Germany and Austria have undergone substantial reforms, though only one of the countries appears to have had success. Average earners in Austria will receive gross pensions equivalent to 78.1% of their average earnings, whereas in Germany they will receive just 37.5%. The authors argue that Germany has been left with a system that has abandoned the goal of protecting people's standard of living.     

Do Public Banks Compete with Private Banks? Evidence from Concentrated Local Markets in Brazil

We measure the competitive effect of public banks in concentrated local markets in Brazil using branch location patterns. We employ variation in market size, number, and identity of competitors to determine how the conduct of private banks is affected by the entry of a public bank. We find that the market size needed to sustain a private bank branch is 35% larger if a private competitor is present and is not significantly affected by the presence of a public bank. These results suggest that the presence of a public bank does not affect conduct of private banks.