Exchange rate pass-through and credit constraints

The macroeconomic evidence of the short-term impact of exchange rates on exports and prices is notoriously weak. This paper examines the microfoundations of this disconnect. I study the response of firms' export and price setting decisions to fluctuations in exchange rates and credit conditions using firm-level survey data. Financially constrained firms pass through exchange rate changes to prices at almost twice the rate of unconstrained firms. Similarly, their export volumes are about twice as sensitive to exchange rate fluctuations. The effect of borrowing constraints is particularly strong during the recent financial crisis.     

Forecasting metal prices: Do forecasters herd?

We analyze more than 20,000 forecasts of nine metal prices at four different forecast horizons. We document that forecasts are heterogeneous and report that anti-herding appears to be a source of this heterogeneity. Forecaster anti-herding reflects strategic interactions among forecasters that foster incentives to scatter forecasts around a consensus forecast.     

Lothar Späth zum Honorarprofessor in Jena ernannt

Ohne Zusammenfassung     

The case for rules in the conduct of monetary policy: A critique on a paper by B.T. McCallum

Conclusion Certainly these last comments lead to the question what should be targeted: the growth rate [as for example in Gordon’s 1985 work] or the level as in Hall [1983] or McCallum [1988] or no targeting at all [like in Friedman 1960; 1968; 1985] or Meltzer [1984; 1987]. Since targeting GNP growth rates might lead to instability and overshooting effects as Taylor [1985] points out, altering rule (1) in that way is not appropriate. But targeting on the levels may not reduce fluctuations in growth rates or prevent cycles at all. If the latter are, however, more important in public opinion, a policy problem emerges. To summarize the last comment in a figurative way: McCallum’s rule prevents inflation in the long run and may prevent fluctuations in terms of half a Kondratieff cycle, but it preserves and intensifies Juglar and shorter cycles.