Inflation und Schuldenabbau

The European Central Bank (ECB) recently announced its willingness to do whatever is needed to save the euro. This has raised the question whether such a role of the ECB must lead to higher rates of infl ation. Under current recessive macroeconomic conditions in the eurozone, the ECB’s expansionary monetary policy will not lead to higher infl ation. On the contrary, there is a serious danger of defl ation. Higher infl ation would likely occur only if a permanent stabilisation function were assigned to the ECB. Yet historical examples show that mistakes can be made. During the stagnation in Japan, US economists heavily criticised the Bank of Japan’s timid monetary policy response. But in some sense, current Fed policy seems to be a direct copy of that strategy, caused by uncertainty about the proper communication channel. An infl ation tax could help to bring down the mounting public debt in the wake of the fi nancial crisis, but higher wealth taxes have more transparent distributional effects.     

Macroeconomic forecasting in Austria an agnostic viewpoint

Zusammenfassung In der vorliegenden Arbeit wird ein relativ einfaches Prognoseverfahren, nämlich Holt-Winters Exponential Smoothing, zur Vorhersage wichtiger makroökonomischer Größen, wie des Brutto-Inlandsproduktes und seiner Verwendungskomponenten, der Verbraucherpreise und der Arbeitslosenrate herangezogen. Es zeigt sich dabei, daß diese Technik —mit Ausnahme der Investitions- und Verbraucherpreisprognose — Vorhersagen liefert, die denen des WIFO mindestens gleichwertig sind.

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Helpful comments of Johannes Ledolter, Kurt Rothschild, Fritz Schebeck, Erich Streißler and Gunther Tichy are gratefully acknowledged.     

The dynamic behavior of business loans and the prime rate : Reply

In a comment in this issue of the Journal, Angeloni demonstrates via example some problems that can possibly result from analysis with vector autoregressions. In this reply I show with the same example that the alternative approach, analysis with econometric structural models, can suffer from problems that are at least as severe as those of the vector autoregressive approach.     

On the Multi-Country Version of the Solow–Swan Model

I study a multi-country version of the Solow–Swan model of capital accumulation. Capital is perfectly mobile and flows instantaneously to countries providing the highest return. I show that, in general, the model possesses infinitely many stationary equilibria that differ from each other in terms of the world interest rate and world output. Analysing the dynamics of the model, I find that multiple equilibria exist for any given initial allocation of capital. Finally, I discuss a generalization of the golden rule to the multi-country version of the Solow–Swan model and show that it satisfies a Nash equilibrium property.
JEL Classification Numbers: F20, O41     

Der Relaunch des Journals für Betriebswirtschaft

Ohne Zusammenfassung     

Book Review: A German treatment of Business ethics

Karl Homann & Franz Blome-Drees (1992). Wirtschafts- und Unternehmensethik . Vandenhoeck & Ruprecht. Göttingen. pp. 207. paperback, 19.80 DM. ISBN 3-8252-1721-3     

Sold Below Value? Why Takeover Offers Can Have Negative Premiums

Many studies have acknowledged the existence of negative offer premiums where the initial bid undercuts the target's preannouncement market price. However, this phenomenon has not been explained. Negative premiums occur frequently and are no measurement error. We demonstrate theoretically and empirically that “hidden earnouts,” where target shareholders participate in the bidder's share of joint synergies, and corrections of overvaluation explain negative premiums. We find that target shareholders profit from the consummation of a takeover even if the announced offer has a negative premium. Our theory generalizes to low positive premiums with predictive power for the bottom 25% of all premiums.