Monetary Policy Rules, Policy Preferences, and Uncertainty: Recent Empirical Evidence

We survey recent empirical evidence on monetary policy rules, and find that the emphasis in the political economy literature on institutional design (e.g. central bank independence and inflation targeting) is exaggerated. Formal institutional reform seems neither a necessary nor a sufficient condition for the observation of shifts in monetary policy rules. However, there is no doubt that in some cases (e.g. the UK following the start of inflation targeting in 1992, and Bank of England Independence in 1997), a major shift in monetary policy conduct is detectable. We also highlight the problems in explicitly testing the predictions of the political economy literature. Semi-structural modelling approaches, such as time-varying VAR models may be more useful in understanding policy rules, and the interaction between policy shifts and changes in the transmission mechanism.     

The information content of M3 for future inflation in the Euro area

The Information Content of M3 for Future Inflation in the Euro Area. — The information content of M3 for future inflation in the euro area is investigated from a number of perspectives. Our results confirm that a significant positive association exists between the real money gap and future inflation up to five to six quarters ahead. It is also shown that, although the extended P-star model outperforms the rival model in some respect, the hypothesis that no useful information is contained in rival evidence can be rejected.     

Commentary: The corporate structure of financial conglomerates

Commentary: The corporate structure of financial conglomerates     

The role of indicator selection in nowcasting euro-area GDP in pseudo-real time

This paper studies the correlates of subjective assessments of how easy it would be for a worker to find another job as good as the present one and how easy it would be for an employer to replace a worker. First, I study the correlates of these two subjective assessments. Second, I study whether respondents who report better chances of reemployment receive higher wages and whether respondents who think they are easy to replace receive lower wages. The results are consistent with the standard job-matching model, which predicts that wages increase with better outside opportunity of the worker and fall with better outside opportunity of the employer.     

The cost and technological structure of aluminium smelters worldwide

A cost model is developed for the estimation of several technological parameters describing the production process of aluminium smelters worldwide. The model is similar to Baltagi and Griffin's ( 1988 ), but, instead of estimating technological change using a panel data set of firms, we estimate, among other things, the vintage effect, using a cross‐section of aluminium smelters in operation throughout 1994. The vintage effect is defined as the variable cost differential that may be attributed to the utilization of a specific technical vintage in the production of aluminium in relation to another. Other technological measurements are also discussed: the scale effect or returns to scale and technological characteristic effects, i.e. the variable cost elasticities with respect to pot size and current intensity. The results show that considerable cost reductions may be expected from the change of old technical vintages to more recent ones. Also, results show that for a majority of smelters in the sample, returns to scale seem to be exhausted. Finally, variable costs are very sensitive to pot size in the sense that large cost reductions can be expected from the increase in pot size, an important characteristic of the technology used by smelters. Copyright © 2000 John Wiley & Sons, Ltd.     

The impacts of local arts agencies on community placemaking and heritage tourism

The arts and culture have been shown to foster economic development by attracting workers and businesses in the knowledge industry, spurring tourism, and improving the housing market. However, beyond financial capital, they significantly impact other forms of capital in the community, as well. The Community Capital Framework (CCF) is an analytical tool widely used to observe and critique the relationships among various types of community assets: social, human, financial, creative, built, natural, and political. This study used the CCF to assess the impacts of community-based arts centers on their communities, particularly on heritage tourism. The results demonstrated effects on social, environmental, and business assets, primarily in the financial, social, cultural, and human capitals. The results can be used by community leaders as a starting point when discussing the costs and benefits of investing in a new local arts agency.     

Maastricht: New and Old Rules

Thanks to the Maastricht Treaty and similar arrangements, central banks nowadays enjoy considerable independence. This is generally believed to be the result of relatively recent debates, which led to the conclusion that sheltering monetary authorities from the pressures of fiscal policymakers is a prerequisite for monetary stability. However, in history this point has in fact been a recurrent tenet. We start with David Ricardo’s arguments in favour of central bank independence and against monetisation of public deficits. After WWI, the latter issue was at the heart of the 1920 International Financial Conference of the League of Nations, which fostered and guided the establishment of many new central banks, and shaped various policymaking arrangements of today’s monetary authorities. JEL Classification Numbers: B12, B22, E42, E58, E61     

Concordian Economics: Tools to Return Relevance to Economics

With the help of planes and solids, this paper presents an enlargement of the field of observation of economic theory. Through this transformation, the distribution of ownership rights to money and wealth assumes a central position in economic analysis. Thus social relevance is returned to economics. The validity of this operation is confirmed by the return of the millenarian field of economic justice to its traditional function as guidance to economic policy. The paper then presents four sets of economic rights and responsibilities that offer the potential of translating principles of economic justice into the complexities of the modern world.

Competition and Integration among Stock Exchanges in Europe: Network Effects, Implicit Mergers and Remote Access

The economic theory of network externalities and a simple-game theoretical framework are used to explore the issue of competition among stock exchanges and the possibility of consolidation in the European stock-exchange industry. The paper shows the existence of equilibria where exchanges may decide, even unilaterally, to achieve full compatibility through implicit mergers and remote access, specialising only in trading or listing services. Thus the consolidation of European exchanges into one may occur with a welfare-efficient outcome or with a lock-in to a Pareto-inferior equilibrium, due to the network externalities and the different starting points of the various exchanges. 'Implicit mergers' among exchanges together with remote access are always weakly (in half of the cases, strictly) more efficient than the actual competition. This finding also sheds light on the existence and efficacy, of ATS and rating agencies, which can be viewed respectfully as exchanges specialising in trading and listing services.     

Property rights,transaction costs,and the limits of the market

Economics of Governance - To clarify the determinants and interaction of property rights and transaction costs, I study the design of the property rights on either a good whose consensual transfer...