Estimating A European Demand For Money

European Monetary Union will come into existence in 1999. This raises questions related to the monetary policy targets that will be adopted by the European Central Bank (ECB). For both likely candidates, targeting a money aggregate or an inflation target, the existence of a stable money demand function at a European level is important. In this paper estimates of such a European money demand for narrow and broad money for the actual 11 EMU countries based on quarterly aggregate data from 1964 to 1994 are presented. It is argued that statistically satisfactory and economically interpretable functions can be found. Moreover, the estimated models appear to be stable over a period of 20 quarters. This raises the hopes that the ECB will face a stable money demand and be able—at least for a certain time—to use past aggregate data for policy purposes.     

Pflegereform 2010: Karenzzeiten in der Sozialen Pflegeversicherung

As current research as well as current data reveal, the German long-term care insurance (LTCI) is expected to run a deficit in 2012. Additionally, further expenses will result due to the newly conceptualized definition of long-term care needs—in future, five instead of three care levels are to meet the needs of LTC patients. Accounting for the demographic turbulence ahead, the German LTCI is in urgent need of a broad reform. The paper suggests a reasonable transition from the current pay-as-you-go system to a partly funded strategy thereby accounting for the burden each generation is confronted with. With the help of generational accounting, we demonstrate that a certain waiting period (Karenzzeit) until LTC benefits are granted achieves an intergenerational balance. This reform proposal stems from the analysis of the length of stay in LTC.     

Industrial Relations, Social Pacts and Welfare Expenditures: A Cross-national Comparison

Industrial relations and welfare state are interrelated. On the basis of time‐series data for 20 OECD countries, this paper discusses and tests the impact of industrial relations on social expenditures, including ‘social pacts’ as a means of combining wage moderation and welfare state reforms. The findings suggest that industrial relations have an impact mainly through the differential effects of distinct bargaining systems: a minor impact results from their externalities. The major impact ensues from their differing degrees of politicization, leading to higher expenditures in the case of peak‐level arrangements, as compared to more decentralized systems. Hence, the widely assumed potential of social pacts for welfare state reforms has been exaggerated.     

Collective Bargaining,Inter‐Sectoral Heterogeneity and Competitiveness: A Cross‐National Comparison of Macroeconomic Performance

Research on the performance effects of bargaining remains inconclusive. One reason for this is neglect of heterogeneity of the bargainers, namely differences in exposure to world markets and their implications for international competitiveness. Since the effects of bargaining on competitiveness depend on coping with productivity differentials between the exposed and sheltered sector, we discuss how distinct bargaining structures interact with these differentials. Exposed‐sector pattern setting is predicted to be the only bargaining structure that is sensitive to productivity differentials. The findings from time series cross‐sectional analysis corroborate the expected impact on labour costs and the current balance, whereas no employment effects are discernible.     

The Federal Reserve’s balance sheet and overnight interest rates: Empirical modeling of exit strategies

This paper provides a comprehensive study of the interplay between the Federal Reserve’s balance sheet and overnight interest rates. We model both the supply of and the demand for excess reserves. Treating outright securities holdings of the Federal Reserve as a policy tool, we estimate the effects of unconventional monetary policy on overnight funding rates. Further, we offer the first empirical assessment of the FOMC’s principles of the exit strategy. Assuming a path for removing monetary policy accommodation that is consistent with the FOMC’s exit principles, we project that the federal funds rate increases to 70 basis points by 2016, settling in a corridor bracketed by the discount rate and the interest rate on excess reserves, as excess reserves of depository institutions decline to near zero.     

Should Asset Managers Hedge Their “Fees at Risk”?

Although the recent financial crisis afflicted all asset managers, the problem of general market exposure was in some respects worse for the long-only funds that rely almost completely on asset-based fees than for the “absolute return” and other kinds of hedge funds that also receive performance-based fees. While the revenue generated by performance-based fees is expected to be volatile, asset-based fees tend to be viewed as an “annuity” stream that involves little or no earnings risk. But, especially in the case of long-only funds, large shortfalls in asset fees were caused by the combination of significant redemptions and sharp reductions in assets under management that accompanied the plunge in asset prices. In this article, the author attempts to quantify the expected effect of market fluctuations on the asset fees and profitability of long-only asset managers. Having done so, he then argues that traditional long-only asset managers—managers whose only reason for being is their ability to generate above-market returns (or “alpha”) on a fairly consistent basis—routinely retain too much beta risk in their primarily asset-based fee structures. The author offers two main reasons for long-only asset managers to hedge beta risk: (1) it would reduce the need for fund management firms to hold liquid capital to ensure solvency and fund important projects during market downturns; (2) it would provide the firm's current and prospective clients with a clearer signal of whether its managers are succeeding in the firm's mission of generating alpha, as well as the possibility of more equity-like and cost-effective incentive compensation systems for those managers.     

The study of futures, and the analysis of power

This study attempts to find out in which direction global power distribution is shifting. This is expected to shed light on the chances we have to build a democratic, ecologically sustainable and socially just world future society. The paper raises and explores, to some extent, three questions: (1) Who is the emerging global ruling class, and does it develop some sort of class consciousness? (2) What are the means used by the global ruling class in the class struggle? and (3) What are likely consequences for the future of global society?     

Popular Reaction to the Intervention by the IMF in the Korean Economic Crisis

The International Monetary Fund (IMF) has played an important role in restructuring the Korean economy over the past three years. Relying upon survey data collected in 1998 and 1999, we explore the role of the IMF in Korea as perceived by its citizens. In the eyes of the Korean people, the IMF helped their economy to recover from the crisis. However, those Koreans who experience a decline in their income are critical of the IMF's role in their economy. Finally, our analysis reveals that the generally pro-IMF orientation of most Korean people has little to do with their support for a market-oriented reform program.