Fixed Exchange Rates and Disinflation in Emerging Markets: How Large Is the Effect?

We examine developing countries which have institutional quality ratings for the effects of exchange rate rigidity on inflation. The level of institutional development exerts no effect on the impact of currency regimes. However, the interaction of institutional quality and exchange rates has, in the most plausible specifications, a negative impact on inflation. This suggests that fixed exchange rates exert at most a contingent effect on inflation, and indicates that countries in Eastern Europe and Latin America contemplating currency pegs would be better off improving institutional quality prior to adopting the euro or dollar and expecting a large subsequent disinflationary effect. JEL no.  F31, O11     

Adjustment Costs,Inventories and Output

This paper analyzes the optimal adjustment strategy of an inventory‐holding firm facing price‐ and quantity‐adjustment costs in an inflationary environment. The model nests both the original menu‐cost model that allows production to be costlessly adjusted, and the later model that includes price‐ and quantity‐adjustment costs, but rules out inventory holdings. It is shown that the firm's optimal adjustment strategy may involve stockouts. At low inflation rates, output is inversely related to the inflation rate, and the length of time demand is satisfied increases with the demand elasticity but decreases with the storage cost and the real interest rate.     

Changes in the Finnish Wage Structure: Will Demand and Supply Do?

This study addresses changes in the wage structure in Finland between 1977 and 1995, and provides a simple explanation based on the demand for and supply of skills. The single index model of Card and Lemieux (1996) is augmented by incorporating changes in the supply of skills. The augmented model adequately accounts for the changes in relative wages between groups of different education and experience, but does not capture the changes in the within-group distribution.
JEL classification : J 31     

Modelling the inflation process in transition economies: Empirical comparison of Poland, Hungary and Czech Republic

This paper starts from the observation that inflation in transition economies appears to be persistently high and volatile and attempts to provide some empirical characterisation of the inflation process in three such transition economies: Poland, Hungary and Czech Republic. We first consider the role of monetary growth as a major causal factor for inflation in these economies, and argue that the evidence provides rather weak support for the causal relationship. We then propose a transition economy cost-plus model and estimate this using the equilibrium-correction modelling (ECM) strategy augmented by introduction of a number of transitory factors and changes in the internal structure of the real economy which we believe may have had a significant impact on inflation in these economies. We show that this approach enables us to account for long-run inflation in these economies from the early 1980s to the present despite the turbulence of the latter part of the sample period. Our results support wage and exchange rate based inflation policies.     

Optimal Contracts for Central Bankers: Inflation versus Money Supply and Exchange Rate Targets

Some recent papers have shown how a simple contract can eliminate the inflationary bias of discretionary monetary policy. This paper shows that if the central banker is risk averse, a contract in terms of money is superior to one in terms of inflation. The paper also shows that, if the central banker cares about his reappointment, an exchange rate target might always leads to the implementation of the optimal policy.     

Price Rigidity and the Selection of the Exchange Rate Regime

We evaluate and qualify Friedman's, 1953, “case for flexible exchange rates” in the presence of sticky prices in a two country model. We find that a flexible regime performs indeed better when the degree of nominal price rigidity is high while a bilateral peg does better when prices are fairly flexible. This result obtains independent of whether monetary policy is activistic or not and is mostly due to the negative relationship between employment and productivity shocks when prices are relatively sluggish (Gali, 1999). A unilateral peg tends to produce the lowest level of world welfare but it sometimes represents the best monetary arrangement for the pegger. JEL Classification Numbers: E32, E52, F33, F42     

Wage drift and minimum contractual wage: Theoretical interrelationship and empirical evidence for Italy

A two-stage wage setting process whose outcomes are identified in the wage drift, at the local level, and in the tariff wage, at the central level, is analyzed. The impact of insider and outsider factors in each stage of the bargaining process is investigated both theoretically and empirically for Italy. In the light of its extreme policy relevance, particular attention is devoted to the analysis of the interrelationships between the wage drift and the tariff wage. Panel data estimation carried out on a sample of 105 Italian three-digit industries and 41 contract groups, reveals that: (1) Insider factors (productivity, inventories and the insider workers power) are important determinants of the wage drift while outsider factors (aggregate wage and unemployment) have a prominent role in determining the tariff wage. (2) Wage drift and tariff wage are closely interrelated.     

中国通货膨胀成因的实证分析

通过对可能影响我国通货膨胀的因素,包括经济增长、货币供应量、居民消费水平和工资的格兰杰因果分析和自回归分布滞后模型的拟合,可知我国通货膨胀和货币供应量、居民预期有密切关系,而和其他因素没有显著关系.     

Human–capital investment and the wage gap

Summary. According to empirical studies, the wage differential by skills evolved non–monotonically in the past decades although the relative supply of skilled labor steadily increased. The present paper provides a theoretical explanation for this finding. In our setting, technological change intertemporally alters the human–capital investment incentives of heterogeneous individuals. As a consequence of changing incentives, the time path of the relative wage is U–shaped while there is a rise in the share of skilled workers. Received: November 28, 2000; revised version: January 30, 2001     

公共投资就业效应的一个解释——基于CES生产函数的分析及其检验

本文在分析CES生产函数过程中引入劳动力市场,探讨了公共投资与就业的联系.本文认为,公共投资是通过劳动工资弹性来影响就业的.公共投资增加会引起劳动需求的工资弹性提高,而公共投资的溢出效应则会导致企业实际工资支出水平降低,两方面原因的共同作用引起就业的增长.在此分析基础上,本文用ARDL方法构建了一个多方程模型,并用中国的数据进行了检验.为提高分析的有效性,我们用SUR方法对模型做了系统估计,并进一步通过方程转化对变量的短期波动和长期均衡关系进行了探讨.实证研究发现,中国的公共投资增长在短期减少就业,但长期内对就业有显著的正效应.