Evaluating FOMC forecast ranges: an interval data approach

The Federal Open Market Committee (FOMC) of the U.S. Federal Reserve publishes the range of members’ forecasts for key macroeconomic variables, but not the distribution of forecasts within this range. To evaluate these projections, previous papers compare the midpoint of the range with the realized outcome. This paper proposes an alternative approach to forecast evaluation that takes account of the interval nature of projections. It is shown that using the conventional Mincer–Zarnowitz approach to evaluate FOMC forecasts misses important information contained in the width of the forecast interval. This additional information plays a minor role at short forecast horizons but turns out to be of sometimes crucial importance for longer-horizon forecasts. For 18-month-ahead forecasts, the variation of members’ projections contains information that is more relevant for explaining future inflation than information embodied in the midpoint. Likewise, when longer-range forecasts for real GDP growth and the unemployment rate are considered, the width of the forecast interval comprises information over and above the one given by the midpoint alone.     

Globalisation,trade, and growth: A macroeconomic perspective

On the basis of economic theory, what effects can globalisation be expected to have on trade and growth? Does the empirical evidence support this? What developments will the next phase of globalisation bring?     

Ein Arbeitsmarktprogramm für Europa

The European Employment Strategy is the subject of controversial discussion. It is hard to find an economic justification for transnational responsibility since European labour markets are heterogenous and spillover effects of national employment policies are almost negligible. In its latest communication, the European Commission fails to provide a masterplan for a recovery of the struggling labour markets, although it provides convincing and less convincing proposals for tackling unemployment in EU member states. There is a suspicion that the package mainly serves as a first step towards transferring employment policy responsibilities from the national to the EU level. But the EU labour market policy lacks appropriate instruments and competences. Finally, it is questionable whether the package fits in an economic growth plan.     

Die Schuldenmechanik in einer nicht-optimalen Währungsunion

Die Griechenland-Krise gibt Anlass, den grunds?tzlichen Zusammenhang zwischen Staatsschulden, Zinsen und Wachstum zu untersuchen. Anhand dieser Schuldenmechanik wird deutlich, dass ein hohes nominales Wachstum bei niedrigen Zinsen die sogenannten PIGS-L?nder zu Beginn der W?hrungsunion in eine komfortable Situation brachte. Erst mit rückl?ufigem nominalen Wachstum und steigenden Zinsen kam es zu der Schuldenkrise, die besonders stark die L?nder betraf, deren Staatskredite in konsumtive Verwendungen flossen.     

Imposing regional monotonicity on translog stochastic production frontiers with a simple three-step procedure

We show that the monotonicity condition is conceptually important in Stochastic Frontier Analysis (SFA). Despite its importance, most empirical studies do not impose monotonicity—probably because existing approaches are rather complex and laborious. Therefore, we propose a three-step procedure that is much simpler than existing approaches. We demonstrate how monotonicity of a translog function can be imposed regionally at a connected set (region) of input quantities. Our method can be applied not only to impose monotonicity on translog production frontiers but also to impose other restrictions on cost, distance, or profit frontiers.     

Stakeholder theory: A deliberative perspective

Organizations routinely make choices when addressing conflicting stakes of their stakeholders. As stakeholder theory continues to mature, scholars continue to seek ways to make it more usable (and relevant), yet proponents continue to debate its legitimacy. Various scholarly attempts to ground stakeholder theory (empirically, instrumentally, or normatively) have not narrowed down this debate. We draw from the work of Juergen Habermas to theoretically advance stakeholder theory, and to provide practical examples to illustrate our approach. Specifically, we apply Habermas’ language-pragmatic approach (which places strong emphasis on dialogue, participation, and procedural justice) to extend stakeholder theory by advancing seven sets of normative axioms (10 axioms in total). We conclude that a deliberative approach, with its focus on the conditions of legitimation and deliberative democracy, has the potential to become a cornerstone of stakeholder theory. The need for global stakeholder discourse and its internalization in corporate structures and institutions is exemplified by a multitude of CSR and stakeholder initiatives that have mushroomed in response to global risk scenarios such as climate change, nuclear warfare, or terrorism. Further research may help to build a functioning global governance system in order to provide guidance for management in the 21st century.