trade interdependence the international financial institutions and the recent evolution of sovereign debt renegotiations abstract this paper analyzes the effect of a debtor country s pattern of trade with commercial creditors home countries on the outcome of debt rescheduling negotiations the analysis reveals that a debtor country with more market power has greater leverage in a three way debt rescheduling negotiation that includes the debtor country its creditors and the international financial institutions ifis the paper also considers the effects of the ifi sovereign debt policy on the bargaining power of the parties in debt rescheduling negotiations two bargaining frameworks analyzed and compared in the paper represent the negotiation mechanism at different stages of the ifi sovereign debt policy evolution

rural transformation inequality and the origins of microfinance abstract what determines the development of rural financial markets starting from a simple theoretical framework we derive the factors shaping the market entry of rural microfinance institutions across time and space we provide empirical evidence for these determinants using the expansion of credit cooperatives in the 236 eastern counties of prussia between 1852 and 1913 this setting is attractive as it provides a free market benchmark scenario without public ownership subsidization or direct regulatory intervention furthermore we exploit features of our historical set up to identify causal effects the results show that declining agricultural staple prices as a feature of structural transformation leads to the emergence of credit cooperatives similarly declining bank lending rates contribute to their rise low asset sizes and land inequality inhibit the regional spread of cooperatives while ethnic heterogeneity has ambiguous effects we also offer empirical evidence suggesting that credit cooperatives accelerated rural transformation by diversifying farm outputs

structural change in an open economy we study the importance of international trade in structural change our framework has both productivity and trade cost shocks and allows for non unitary income and substitution elasticities we calibrate our model to investigate south korea s structural change between 1971 and 2005 we nd that the shock processes propagated through the model s two main transmission mechanisms non homothetic preferences and the open economy explain virtually all of the evolution of agriculture and services labor shares and the rising part of the hump shape in manufacturing counterfactual exercises show that the role of the open economy is quantitatively important for explaining south korea s structural change

why gaussian macro finance term structure models are nearly unconstrained factor vars this paper explores the impact of simultaneously enforcing the no arbitrage structure of a gaussian macro nance term structure model mtsm and accommodating measurement errors on bond yield through ltering on the maximum likelihood estimates of the model implied conditional distributions of the macro risk factors and bond yields for the typical yield curves and macro variables studied in this literature the estimated joint distribution within a canonical mtsm is nearly identical to the estimate from an economic model free factor vector autoregression factor var even when measurement errors are large it follows that a canonical mtsm does not oer any new insights into economic questions regarding the historical distribution of the macro risk factors and yields over and above what is learned from a factor var in particular the discipline of a canonical mtsm is empirically inconsequential for analyses of impulse response functions of bond yields and macro factors or empirical studies of term premiums these results are rotation invariant and therefore apply to many of the specications of risk factors in the literature in deriving these results we develop a new canonical form for mtsms that is particularly revealing about the nature of the over identifying restrictions implied by mtsms relative to yield based factor models

the drivers of structural change the main goal of this paper is to provide an integrated survey of the literature devoted to identifying the drivers of structural change broadly defined as the process of reallocation of economic activity across the three broad sectors agriculture manufacturing and services using the ggdc 10 sector database this paper first presents the empirical facts associated with structural change in different regions of the world that is europe and the usa asia latin america and africa then reviews four determinants of structural change i changes in income ii changes in relative sectoral prices iii changes in input output linkages and iv changes in comparative advantage s via globalization and trade

risk aversion uncertainty and monetary policy in zero lower bound environments bekaert et al 2013 show that a lax monetary policy decreases both risk aversion and uncertainty and that shocks to risk aversion and uncertainty induce changes in monetary policy we extend their analysis for the pre crisis period to the post crisis period by using a shadow short rate as a proxy for unconventional monetary policies in zero lower bound environments we find that the empirical link between monetary policy risk aversion and uncertainty found in bekaert et al 2013 persists even in the post crisis period but the link is uncovered only when the shadow short rates are used to measure the monetary policy stance

agricultural development vs industrialization effects of trade the question addressed in this paper is how trade affects the composition of the national product thus having an effect on the overall growth rate of the economy the paper uses a dynamic general equilibrium model with three different consumption goods agriculture manufactures and services nontradable the main finding is that if the country produces only primaries and services the effects of trade on growth are mixed trade helps growth at low levels of income but at higher levels trade slows the country s growth if the country produces manufactures and services the effect of trade on growth is not substantial

asset market responses to conventional and unconventional monetary policy shocks in the united states abstract we quantify the responses of a wide range of united states financial market variables to domestic monetary policy shocks over conventional and unconventional monetary policy environments our results show that responses to policy shocks are in the same direction but generally larger and more significant in the unconventional period the larger responses are mostly due to larger shocks in the unconventional period but some variables show evidence of a larger transmission of shocks we separately use our framework to test shadow short rate estimates as a proxy for short maturity interest rates across conventional and unconventional periods

structural transformation and the deterioration of european labor market outcomes this paper examines hours worked in continental europe and the united states from 1956 to 2003 the empirical work establishes two results first hours worked in europe decline by almost 45 percent compared to the united states over this period second this decline is almost entirely accounted for by the fact that europe develops a much smaller market service sector than the united states a simple model of time allocation is used to understand these patterns i find that relative increases in taxes and technological catch up can account for most of the differences between the european and american time allocations over this period

sovereign debt structural adjustment and conditionality abstract the lack of a proper enforcement mechanism for sovereign debt generates a commitment failure as a result a sovereign may seek to improve its position in debt renegotiations and thus evade its debt obligations by reducing exports conditionality seeks to provide a solution to the incentive problem by addressing the commitment failure formalizing this argument we show that conditionality helps the repayment of sovereign debt in certain circumstances it can eliminate debt overhang especially when it is coupled with concessionary lending of sufficient magnitude it is however unable to restore first best when it is anticipated by lenders conditionality may get international financial institutions and sovereign debtors into a trap where the debt overhang persist debt rescheduling takes place periodically and conditionality continues indefinitely

industrial output fluctuations in developing countries general equilibrium consequences of agricultural productivity shocks abstract this paper shows that a negative shock to agricultural productivity may increase food prices and labor and capital can move away from manufacturing into agriculture to meet the subsistence requirement for food this effect depends on income levels and openness to trade using annual manufacturing data and rainfall shocks as the instrument for crop yields proxy for agricultural productivity i find that an exogenous decline in yield decreases manufacturing output as well as employment and capital investment in manufacturing overall crop yield variation can explain up to 44 of industrial output fluctuations in developing countries rainfall shocks cause 31 of the fluctuations lastly this paper shows that such perverse phenomena in which resources move toward the sector with declining productivity can lead to a significant reduction in aggregate productivity

the role of trade in structural transformation abstract low agriculture productivity is considered a key obstacle to economic development for many countries international trade in agricultural goods can help overcome this barrier and facilitate structural transformation because it allows countries to import part of their food needs this article quantifies the role of trade in this context through the examples of south korea during the last 50 years and great britain in the 19th century to do the analysis i calibrate and simulate a two sector neoclassical growth model to match the data and perform the policy experiments i find that agricultural imports played a crucial role in the early transformation of great britain while in south korea trade also had a positive impact on its structural transformation but it could have played a much larger role if the country had not introduced agricultural protection policies

term premia and inflation uncertainty empirical evidence from an international panel dataset this paper provides cross country empirical evidence on bond risk premia i construct a panel of zero coupon nominal government bond yields spanning ten industrialized countries and nearly two decades i hence compute forward rates and then use two different methods to decompose these forward rates into expected future short term interest rates and term premiums the first method uses an affine term structure model with macroeconomic variables as unspanned risk factors the second method uses surveys i find that term premium estimates declined across countries over the sample period especially in countries that appear to have reduced inflation uncertainty by making substantial changes in the monetary policy frameworks of their central banks during the recent financial crisis term premiums have remained flat and even declined further in some countries perhaps reflecting the effects of quantitative easing actions by many central banks

macroprudential and monetary policies the need to dance the tango in harmony abstract considering a sample of 37 emerging and advanced economies from 2000q1 to 2014q4 we empirically assess how effective macroprudential policies are in curbing domestic credit growth and whether their effectiveness is affected by monetary policy conditions we obtain three important results first our findings suggest in line with previous research that an overall tightening in macroprudential policies is associated with a reduction in credit growth second we show that a restrictive monetary policy enhances the impact of macroprudential tightening on credit growth third our results seem to suggest that monetary policy helps to reduce the transmission delay of macroprudential policy actions consequently our results confirm the need for coordination between the two policies

evaluating central banks tool kit past present and future abstract we develop a structural dsge model to systematically study the principal tools of unconventional monetary policy quantitative easing qe forward guidance and negative interest rate policy nirp as well as the interactions between them to generate the same output response the requisite nirp and forward guidance interventions are twice as large as a conventional policy shock which seems implausible in practice in contrast qe via an endogenous feedback rule can alleviate the constraints on conventional policy posed by the zero lower bound quantitatively qe1 qe3 can account for two thirds of the observed decline in the shadow federal funds rate in spite of its usefulness qe does not come without cost a large balance sheet has consequences for different normalization plans the efficacy of nirp and the effective lower bound on the policy rate

structural change and economic growth this paper presents a model in which a country s measured average propensity to save endogenously rises when its economy industrializes the model has agricultural and manufacturing sectors only agriculture uses land if at early dates income per capita is low agricultural consumption is important land is valuable and capital gains on land may constitute most wealth accumulation leaving the country s nipa aps low if exogenous technological progress raises incomes over time engel s law shifts demand to manufactured goods then land s portfolio importance relative to reproducible capital diminishes and the national income and products account saving rate can rise this paper presents a model illustrating that structural change due to the operation of engel s law can systematically affect an economy s measured saving rate according to the model a country s national income and product account average propensity to save will rise naturally if and when technological progress sufficiently lifts its income per capita this suggests a new interpretation of time series evidence while saving rates historically tend to be higher after industrialization than before one cannot automatically infer that changing wealth accumulation behaviour led to modernization rather structural change accompanying growth may have caused the rise in saving rates this paper also warns that international trade could lead to a contrasting pattern in cross sectional data highincome nations might contemporaneously have lower measured saving rates than poor countries recent work by mankiw romer and weil 1992 islam 1995 mankiw 1995 and others investigates long run patterns the analyses assume that each economy has attained or is moving toward a steady state equilibrium as in solow 1956 a country s steady state level of per capita gdp depends on its average propensity to save aps its rate of population growth the efficiency of its production sector etc regression outcomes seem consistent with the solow model s prediction that a higher aps will ceteris paribus lead to a higher level of income per capita the idea is that heterogeneity of exogenous preferences leads to international differences in aps s and in turn to long run differences

trade dependency bargaining and external debt abstract this paper analyzes the welfare effects of a conditional debt relief in the presence of partial defaults even for an economy in a state of partial default external finance for investment in highly trade dependent sectors may be warranted a marginal relief of the present debt service conditional on an equivalent increase in investment in the trade dependent sectors will benefit the debtor and will increase the future repayment investment targeted towards highly productive trade dependent sectors will benefit both creditors and debtors the investment can be implemented by a marginal relief of the present debt service or through direct investment

comparative advantage and the welfare impact of european integration this paper investigates the welfare gains from european trade integration and the role of comparative advantage in determining the magnitude of those gains we use a multi sector ricardian model implemented on 79 countries and compare welfare in the 2000s to a counterfactual scenario in which east european countries are closed to trade for west european countries the mean welfare gain from trade integration with eastern europe is 0 16 ranging from zero for portugal to 0 4 for austria for east european countries gains from trade are 9 23 at the mean ranging from 2 85 for russia to 20 for estonia for eastern europe comparative advantage is a key determinant of the variation in the welfare gains countries whose comparative advantage is most similar to western europe tend to gain less while countries with technology most different from western europe gain the most andrei a levchenko and jing zhang

on the heterogeneous welfare gains and losses from trade how are the gains and losses from trade distributed across individuals within a country first we document that tradable goods constitute a larger fraction of expenditures for poor households second we build a trade model with nonhomothetic preferences to generate the documented relationship between tradable expenditure shares income and wealth and uninsurable earnings risk to generate heterogeneity in income and wealth third we use the calibrated model to quantify the differential welfare gains and losses from trade along the income and wealth distribution in a numerical exercise we permanently reduce trade costs so as to generate a rise in import share of gdp commensurate with that seen in the data from 2001 to 2014 we find that households in the lowest wealth decile experience welfare gains over the transition measured by permanent consumption equivalents that are 67 percent larger than those in the highest wealth decile

the role of the structural transformation in aggregate productivity we investigate the role of sectoral differences in labor productivity in explaining the process of structural transformation the secular reallocation of labor across sectors and the time path of aggregate productivity across countries using a simple model of the structural transformation that is calibrated to the growth experience of the united states we measure sectoral labor productivity differences across countries productivity differences between rich and poor countries are large in agriculture and services and smaller in manufacturing moreover over time productivity gaps have been substantially reduced in agriculture and industry but not nearly as much in services in the model these sectoral productivity patterns generate implications that are broadly consistent with the cross country evidence on the structural transformation aggregate productivity paths and relative prices we show that productivity catch up in industry explains about 50 percent of the gains in aggregate productivity across countries while low relative productivity in services and the lack of catch up explains all the experiences of slowdown stagnation and decline observed across countries

structural change accounting with labor market distortions abstract this paper quantifies the relative importance of sectoral productivity and labor market distortions for structural change in the u s india mexico and brazil between 1960 and 2005 i use census data to compute human capital by sector and infer labor market distortions as sectoral gaps in wage per unit of human capital i incorporate these distortions into a model of structural change and calibrate the model to reproduce the time paths of sectoral shares of labor and value added for each country counterfactuals reveal that 1 tfp growth in agriculture drives most of the decline in its share of labor 2 the role of labor market distortions is limited

the quantitative importance of openness in development this paper deals with a classic development question how can the process of economic development transition from stagnation in a traditional technology to industrialization and prosperity with a modern technology be accelerated lewis 1954 and rostow 1956 argue that the pace of industrialization is limited by the rate of capital formation which in turn is limited by the savings rate of workers close to subsistence we argue that access to capital goods in the world market can be quantitatively important in speeding up the transition we develop a parsimonious open economy model where traditional and modern technologies coexist a dual economy in the sense of lewis 1954 we show that a decline in the world price of capital goods in an open economy increases the rate of capital formation and speeds up the pace of industrialization relative to a closed economy that lacks access to cheaper capital goods in the long run the investment rate in the open economy is twice as high as in the closed economy and the per capita income is 23 higher jel o11 f43 o14

the role of transportation in u s economic development 1840 1860 we return to two questions concerning the 19th century u s transportation revolution first to what extent were transportation improvements responsible for the large changes in the regional distribution of population in the united states and within regions for the changes in industry structure second how important were transportation improvements for welfare gains we find that transport improvements were the key factor driving where people lived and what industry they worked in we also find that transport improvements were important for welfare gains gains over 1840 1860 would have been only half as large if there had been no transportation improvements

rescheduling of sovereign debt forgiveness precommitment and new money to meet contractual obligations on their external debt lenders generally responded by rescheduling these debts rather than declaring them to be in default but further commercial lending to these sovereigns has virtually ceased these borrowers now face an enormous debt overhang while their lenders face substantial losses on their international loan portfolios among the many proposals for addressing this crisis the relative desirability of debt forgiveness and new lending has been the focus of considerable debate the baker plan of 1985 emphasized additional funding coupled with growth oriented domestic policies rather than debt reduction lenders were encouraged to provide additional funds new money to help the impaired and indebted economies grow their way back to creditworthiness however lenders were reluctant to offer new funds that would increase the sovereign s debt burden without some assurance that future repayment would be likely with debt generally recognized as providing borrowers with a disincentive for investment 1 the emphasis has now shifted to the need for debt forgiveness on the part of the lenders and a commitment to internal adjustment by the borrowers both parties are viewed as benefitting by a reduction of the inherited debt and possibly the provision of additional funds if the sovereign borrower can commit itself to adopting policies that reduce internal consumption and

structural transformation and comparative advantage implications for small open economies data from the last half century show that revealed comparative advantage in agriculture manufacturing is negatively positively associated with the rate of decline in labour share in agriculture motivated by this finding the author constructs and calibrates a simple open economy model where there is learning by doing in manufacturing and industry supplied inputs to agricultural production this paper focuses on the effects of comparative advantage and learning by doing on structural transformation and calibrate the model to the us and the uk data to estimate key parameters of the model quantitative experiments show that holding constant other factors a small difference in a country s comparative advantage can account for a large variation in structural transformation for open economies which does not require nearly as much differential productivity growth as in closed economy models

endowment structures industrial dynamics and economic growth this paper develops a dynamic general equilibrium model to explore industrial evolution and economic growth in a closed developing economy the authors show that industries will endogenously upgrade toward the more capital intensive ones as the capital endowment becomes more abundant the model features a continuous inverse v shaped pattern of industrial evolution driven by capital accumulation as the capital endowment reaches a certain threshold a new industry appears prospers then declines and finally disappears while the industry is declining a more capital intensive industry appears and booms ad infinitum explicit solutions are obtained to fully characterize the whole dynamics of perpetual structural change and economic growth implications for industrial policies are discussed

monetary policy expectations at the zero lower bound we show that conventional dynamic term structure models dtsms estimated on recent u s data severely violate the zero lower bound zlb on nominal interest rates and deliver poor forecasts of future short rates in contrast shadow rate dtsms account for the zlb by construction capture the resulting distributional asymmetry of future short rates and achieve good forecast performance these models provide more accurate estimates of the most likely path for future monetary policy including the timing of policy liftoff from the zlb and the pace of subsequent policy tightening we also demonstrate the benefits of including macroeconomic factors in a shadow rate dtsm when yields are constrained near the zlb

structural change in a multisector model of growth we study a multi sector model of growth with differences in tfp growth rates across sectors and derive sufficient conditions for the coexistence of structural change characterized by sectoral labour reallocation and constant aggregate growth path the conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists we present evidence from us two digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services we show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model

beyond balanced growth balanced growth models are commonly used in macroeconomics because they are consistent with the well known kaldor facts regarding economic growth these models however are inconsistent with one of the most striking regularities of the growth process the massive reallocation of labour from agriculture into manufacturing and services this paper presents a simple model consistent with both the kaldor facts and the dynamics of sectoral labour reallocation

restrictions on risk prices in dynamic term structure models restrictions on the risk pricing in dynamic term structure models dtsms tighten the link between cross sectional and time series variation of interest rates and make absence of arbitrage useful for inference about expectations this article presents a new econometric framework for estimation of affine gaussian dtsms under restrictions on risk prices which addresses the issues of a large model space and of model uncertainty using a bayesian approach a simulation study demonstrates the good performance of the proposed method data for u s treasury yields calls for tight restrictions on risk pricing only level risk is priced and only changes in the slope affect term premia incorporating the restrictions changes the model implied short rate expectations and term premia interest rate persistence is higher than in a maximally flexible model hence expectations of future short rates are more variable restrictions on risk prices help resolve the puzzle of implausibly stable short rate expectations in th

changes in sectoral composition associated with economic growth in this paper the author uses dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth she shows that growth is affected by sectoral composition and vice versa the model is basically a solow model of sustained growth with multiple consumption goods and nonhomothetic preferences each consumption good is produced using different factor intensities the rate of exogenous technological change is different in each sector nonhomotheticity of preferences drives the result that sectoral composition affects growth rates copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the evolution of comparative advantage measurement and welfare implications using an industry level dataset of production and trade spanning 75 countries and 5 decades and a fully specied multi sector ricardian model we estimate productivities at sector level and examine how they evolve over time in both developed and developing countries we nd that in both country groups comparative advantage has become weaker productivity grew systematically faster in sectors that were initially at the greater comparative disadvantage the global welfare implications of this phenomenon are signicant relative to the counterfactual scenario in which an individual country s comparative advantage remained the same as in the 1960s and technology in all sectors grew at the same country specic average rate welfare today is 1 9 lower at the median the welfare impact varies greatly across countries ranging from 0 5 to 6 among oecd countries and from 9 to 27 among non oecd countries remarkably for the oecd countries nearly all of the welfare impact is driven by changes in technology in oecd countries and for the non oecd countries nearly all of the welfare impact is driven by changes in technology in non oecd countries

can traditional theories of structural change fit the data two traditional explanations for structural changes are sector biased technological progress and non homothetic preferences this paper integrates both into an otherwise standard growth model and quantitatively evaluates them vis a vis time series the exercise identifies a set of puzzles for standard theories i the model cannot account for the steep decline in manufacturing and rise in services in the later data ii the standard model requires implausibly low elasticity of substitution across goods to match the consumption and output data and iii the behavior of consumption and output shares differs significantly from that of employment shares we argue that models that incorporate home production sector specific factor distortions and differences across sectors in the accumulation of human capital are promising avenues to amend the standard models jel o11 o14 o41

how strongly can industrial structural transformation affect gdp abstractit is well known that when a country develops its leading industry shifts from agriculture to non agriculture this industrial structural transformation has recently attracted considerable attention from scholars then how strongly can this industrial structural transformation affect a country s income in this study we shed light on this research question more specifically we measure magnitudes of the industrial structural transformation s influence on gdp by examining the following counterfactual gdp we calculate a country s counterfactual gdp when the country specializes in agriculture if the counterfactual gdp is considerably small without the non agricultural sector this suggests that the industrial structural transformation from agriculture to non agriculture is considerably important in terms of gdp we use japan as our sample economy consequently we find that the counterfactual gdp is surprisingly small which suggests that the industrial structural transformation s influence o

financing vs forgiving a debt overhang abstract this paper examines the tradeoffs facing creditors of a country whose debt is large enough that the country cannot attract voluntary new lending if the country is unable to meet its debt service requirements out of current income the creditors have two choices they can finance the country lending at an expected loss in the hope that the country will eventually be able to repay its debt after all or they can forgive reducing the debt level to one that the country can repay the post 1983 debt strategy of the imf and the us has relied on financing but many current calls for debt reform call for forgiveness instead the paper shows that the choice between financing and forgiveness represents a tradeoff financing gives the creditors an option value if the country turns out to do relatively well creditors will not have written down their claims unnecessarily however the burden of debt distorts the country s incentives since the benefits of good performance go largely to creditors rather than itself the paper also shows that the tradeoff itself can be improved if both financing and forgiveness are made contingent on states of nature that the country cannot affect such as oil prices world interest rates etc

structural change in an interdependent world a global view of manufacturing decline this paper presents a simple model of the world economy in which productivity gains in manufacturing are responsible for the global trend of manufacturing decline and yet in a cross section of countries faster productivity gains in manufacturing do not necessarily imply faster declines in manufacturing in doing so it aims to draw attention to the common pitfall of using the cross country evidence to test a closed economy model and argues for a global perspective in order to understand cross country patterns of structural change one needs a world economy model in which the interdependence across countries is explicitly spelled out jel f43 o11 o14 o19

ricardian productivity differences and the gains from trade abstract this paper evaluates the role of sectoral heterogeneity in determining the gains from trade we first show analytically that in the presence of sectoral ricardian comparative advantage a one sector sufficient statistic formula that uses total trade volumes as a share of total absorption systematically understates the true gains from trade greater relative sectoral productivity differences lead to larger disparities between the gains implied by the one sector formula and the true gains using data on overall and sectoral trade shares in a sample of 79 countries and 19 sectors we show that the multi sector formula implies on average 30 higher gains from trade than the one sector formula and as much as 100 higher gains for some countries we then set up and estimate a quantitative ricardian heckscher ohlin model in which no version of the formula applies exactly and compare a range of sufficient statistic formulas to the true gains in this model confirming the earlier results formulas that do not take into account the sectoral heterogeneity understate the true gains from trade in the model by as much as two thirds the one sector formulas understate the gains by more in countries with greater dispersion in sectoral productivities

on the spatial economic impact of global warming we propose a dynamic spatial theory to analyze the geographic impact of climate change agricultural and manufacturing firms locate on a hemisphere trade is costly firms innovate and technology diffuses over space emissions from energy used in production contribute to the atmospheric stock of carbon which increases temperature warming differs across latitudes and its effect on productivity varies across sectors we calibrate the model to analyze how climate change affects the spatial distribution of economic activity trade migration growth and welfare we assess quantitatively the impact of migration and trade restrictions energy taxes and innovation subsidies

the interest rate effects of government bond purchases away from the lower bound abstract i analyze the recent experience of unconventional monetary policy in sweden to study the interest rate transmission mechanisms of government bond purchases when interest rates are away from the lower bound using dynamic term structure models and event study regressions i find that government bond purchases have important portfolio balance and signaling effects the signaling channel operates mainly by lowering short rate expectations in the intermediate segment of the yield curve while the portfolio balance channel is effective in lowering longer maturity term premia in addition i find that target interest rate policy and government bond purchases operate in different segments of the yield curve this suggests that a combination of the two policies can be used to lower interest rates across the whole maturity spectrum making monetary policy more expansionary

can total factor productivity explain value added growth in services abstract this paper examines the factors responsible for generating the services led growth witnessed in the indian economy during 1980 2005 a sectoral growth accounting exercise shows that total factor productivity tfp growth was the fastest for services moreover this tfp increase was significant in accounting for service sector value added growth a growth model with agriculture industry and services as three principal sectors is calibrated to indian data using sectoral tfp growth rates the baseline model performs well in accounting for the evolution of value added shares and their growth rates but is unable to capture sectoral employment share trends the performance of the model with respect to value added shares improves when the post 1991 increase in service sector tfp growth following the inception of market based liberalization reforms is accounted for a modified version of the model with public capital can better track trends in sectoral employment shares

the effects of asset purchases and normalization of u s monetary policy this paper examines changes in the effects of unconventional monetary policies in the united states to this end we estimate a markov switching var model with absorbing regimes to capture possible structural changes our results detect regime changes around the beginning of 2011 and the middle of 2013 before 2011 the u s large scale asset purchases lsaps had relatively large impacts on the real economy and prices but after the middle of 2013 their effects were weaker and less persistent in addition after the middle of 2013 which includes the monetary policy normalization period the asset purchase or balance sheet shocks had slightly weaker effects than during the early stage of the lsaps but stronger effects than during the late stage of the lsaps while interest rate shocks had insignificant effects on the real economy and prices finally our results suggest that the positive responses of durables and capital goods expenditures to interest rate shocks weakened the negative impacts of interest rate hikes after the middle of 2013 including the period of monetary policy normalization jel c32 e21 e52