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Exchange Rate Stability, Inflation, and Growth in (South) Eastern and Central Europe

The authors analyze the impact of the exchange rate regime on inflation and output in (South) Eastern and Central Europe. For the whole observation period the estimations reveal a significant impact of exchange rate stability on low inflation as well as a highly significant positive impact of exchange stability on real growth. When subdividing the period into a "high-inflation" period (1994–97) and a "low-inflation period" (1998–2004), and when removing outliers from the sample, the evidence in favor of a positive association between exchange rate stability and inflation disappears. The association of exchange rate stability with higher real growth remains robust. These findings suggest that membership of the (South) Eastern and Central European countries in the European Monetary Union would have a positive impact on these countries' growth rates.     

A structural break in the effects of Japanese foreign exchange intervention on yen/dollar exchange rate volatility

We study the impact of Japanese foreign exchange intervention on the volatility of the yen/dollar exchange rate since the early 1990’s in a GARCH framework with interventions as exogenous variables. Using daily intervention data provided by the Japanese Ministry of Finance, we show that the effect of interventions varies over time. From 1991 up to the late 1990’s, Japanese foreign exchange intervention is associated with an increase in volatility of the yen/dollar exchange rate. After the year 1997, Japanese foreign exchange intervention correlates with reductions in exchange rate volatility. This can be explained by the fact that Japanese foreign exchange intervention remained quasi unsterilized in the liquidity trap.

China's Overinvestment and International Trade Conflicts

For a long time, China's impressive growth performance has been driven by investment and high productivity gains. Based on a discussion of possible overcapacities and overinvestment in China, this paper investigates the sustainability of China's investment and export‐driven growth model. Since the turn of the millennium, buoyant capital inflows and low interest rates have been at the root of overinvestment and misallocation of capital, which necessitated export subsidies to clear markets. The overinvestment boom is argued to have ended around 2014. Since then, the overcapacities have weakened China's bargaining position in the US–Chinese trade conflict and have tempted Chinese authorities to postpone the restructuring of the Chinese economy by providing low‐interest credit. The gradual reemergence of quasi‐soft budget constraints is seen to undermine China's long‐term growth potential.     

Die Bedeutung der Lager für die Konjunktur

Summary The aim of this paper is to collect disaggregated data on inventories in Austria. This information is used to study the role of inventory investment in business cycles. It seemed especially interesting to investigate whether entrepreneurs plan a stable inventory-sales ratio and whether inventories of purchased goods, goods in production and goods for sale are influenced by the same factors.It turns out that the aggregate inventory-sales ratio (in current prices) decreased considerably during the past twenty years. This decrease was caused only by different rates of price increases; measured in constant prices, the rate remained almost constant. Inventories exhibit a procyclical behavior, with inventory investment leading and inventory stocks lagging.For industry investment in stocks of purchased goods depends on outstanding orders and on imports, for goods in process on orders, production and on stocks of finished goods (positively). eterminants of finished goods inventories are sales and capacity utilisation (positive sign); entrepreneurs therefore increase their stocks in boom phases and decrease them in times of slower demand. This is exactly the behavior which a previous theoretical paper expected: Inventories don't act as a buffer over the cycle, quite the contrary, inventory planning reinforces economic fluctuations.     

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MarketBusting: strategies for exceptional business growth

If company leaders were granted a single wish, it would surely be for a reliable way to create new growth businesses. Business practitioners'overwhelming interest in this subject prompted the authors to conduct a three-year study of organizational growth--specifically, to find out which growth strategies were most successful. They discovered, somewhat to their surprise, that even companies in mature industries found rich new sources of growth when they reconfigured their unit of business (what they bill customers for) or their key metrics (how they measure success). In this article, the authors outline these and other moves companies can make to redefine their profit drivers and realize low-risk growth. They offer plenty of real-world examples. For instance: CHANGING YOUR UNIT OF BUSINESS: Once a conventional printing house, Madden Communications not only prints promotional materials for customers but also manages the distribution and installation of those materials on-site. Its revenues grew from dollars 1o million in 1990 to dollars 133 million in 2004, in an industry that many had come to regard as hopelessly mature. IMPROVING YOUR KEY METRICS-PARTICULARLY PRODUCTIVITY: Lamons Gasket, with dollars 80 million in revenues, built a Web site that radically improved its customers' ability to find, order, and pay for goods. The firm's market share rose along with its customer retention rate. The authors also suggest ways to identify your unit of business and associated key metrics and recognize the obstacles to changing them; review the key customer segments you serve; assess the need for new capabilities and the potential for internal resistance to change; and communicate to internal and external constituencies the changes you wish to make in your unit of business or key metrics.