The Relationship between Federal Deficits and Real Interest Rates

Real interest rates fluctuated a great deal since the 1970s. In the 1980s federal deficits accelerated and their impact on both nominal and real interest rates gained lots of attention. Based on monthly and quarterly data from January 1971 to December 1997 it is found that federal deficits had significant positive effect on the real interest rates: Personal income or consumption are found to have significant positive impact on the real interest rates, whereas expected inflation and money supply are found to have negative impact on the real interest rates. These findings are consistent with the conventional economic theory.     

Economic stagnation and development aid

The main objectors to a link being established between special drawing rights (SDRs) and the financing of development have in the past been the industrial countries. They have been pointing out that SDRs were created for other purposes — more effective control over international liquidity — and that a link with development finance would have an inflationary effect. If however the present unemployment situation in the industrial countries should become at least partly a permanent feature the idea of such a link would become more attractive than hitherto — to the industrial countries.     

Combination schemes for turning point predictions

We propose new forecast combination schemes for predicting turning points of business cycles. The proposed combination schemes are based on the forecasting performances of a given set of models with the aim to provide better turning point predictions. In particular, we consider predictions generated by autoregressive (AR) and Markov-switching AR models, which are commonly used for business cycle analysis. In order to account for parameter uncertainty we consider a Bayesian approach for both estimation and prediction and compare, in terms of statistical accuracy, the individual models and the combined turning point predictions for the United States and the Euro area business cycles.     

Interest rate clustering in UK financial services markets

This study forwards an explanation and empirical investigation of price clustering in retail banking markets. It is proposed that price or interest rate clustering forms in retail markets as firms wish to maximise returns from customers, some of whom have difficulties in recalling and processing price information. This theory is developed and tested using a dataset of retail interest rates from the UK which enables interest rate clustering to be viewed in both lending and investment markets, and at different levels of financial involvement. It is found that interest rate clustering occurs in a manner consistent with firms maximising returns from customers. These findings are viewed to be a key policy concern for financial regulators and firms concerned with consumer protection.     

INFLATION,NONOPTIMAL MONETARY ARRANGEMENTS AND THE BANKING IMPUTATION IN THE NATIONAL ACCOUNTS*

This paper demonstrates, with the use of some recent developments in neoclassical monetary theory, that the banking imputation problem in the national accounts arises because of the regulation of banks by Authorities. It demonstrates as well that the banking imputation problem is a manifestation of the failure of the Authorities to provide optimal monetary arrangements. Some comments on existing imputations, in the light of this theory, are provided.     

Managing absence in an NHS hospital

Absence studies often pay little attention to institutional settings. This study of a large hospital looks at factors affecting absence, and worker attitudes to time off. It reveals a highly committed workforce, but one with low morale, deeply distrustful of a management initiating rapid changes.