the phillips curve back to the 60s abstract this paper reexamines the behavior of inflation and unemployment and reaches four conclusions 1 the u s phillips curve is alive and well at least as well as in the past 2 inflation expectations however have become steadily more anchored 3 the slope of the curve has substantially declined but the decline dates back to the 1980s rather than to the crisis 4 the standard error of the residual in the relation is large especially in comparison to the low level of inflation each of the four conclusions presents challenges for the conduct of monetary policy

inflation dynamics and the output inflation trade off international panel data evidence we explore the impact of inflation and its variability on the output inflation trade off using a unified single step approach in a panel data context a limitation of earlier empirical approaches is that they focus on either cross country or country by country time series analyses this paper employs a dynamic heterogeneous panel data specification and uses an all encompassing estimation framework that accounts for parameter heterogeneity cross sectional dependence dynamics and non stationarity our sample covers 60 countries from 1970 to 2010 while inflation variability reduces the trade off for specific periods and country groups an unambiguous and more pronounced negative relation emerges between the inflation rate and the responsiveness of real output to nominal shocks the findings are in line with the new keynesian view of a negative association between the rate of inflation and the output inflation trade off as well as with the observed flattening of the phillips curve over the past decades

a brain gain with a brain drain abstract we study human capital depletion and formation in an economy open to out migration as opposed to an economy which is closed under the assumption of asymmetric information the enlarged opportunities and the associated different structure of incentives can give rise to a brain gain in conjunction with a brain drain migration by high skill members of its workforce notwithstanding the home country can end up with a higher average level of human capital per worker

migration diversity and economic growth when migrants move from one country to another they carry a new range of skills and perspectives which nurture technological innovation and stimulate economic growth at the same time increased heterogeneity may undermine social cohesion create coordination and communication barriers and adversely affect economic development in this article we investigate the extent to which cultural diversity affects economic growth and whether this relation depends on the level of development of a country we use novel data on bilateral migration stocks that is the number of people living and working outside the countries of their birth over the period 1960 2010 and compute indices of fractionalization and polarization in so doing we explore the effect of immigration on development through its effect on the composition of the destination country we find that overall both indices have a distinct positive impact on real gdp per capita and that the effect of diversity seems to be more consistent in developing countries

the role of inflation target adjustment in stabilization policy we study optimal monetary policy in a new keynesian model in which the monetary authority faces a trade off between inflation and output gap stabilization due to cost push shocks in particular we highlight the role of the inflation target adjustment in stabilization policy by showing that it can mitigate this policy trade off and considerably improve welfare the main findings can be summarized as follows first we find that the welfare cost of a standard taylor rule is non trivial even with optimized policy coefficients second we propose an additional policy tool of a medium run inflation target mrit rule when combined with the standard taylor rule the optimal mrit significantly reduces fluctuations in inflation originating from the cost push shocks and results in a similar level of welfare to that associated with the ramsey optimal policy third the optimal mrit needs to be adjusted in a persistent manner and in the opposite direction to the realization of a cost push shock fourth the welfare implication of the mrit is more pronounced under a flatter phillips curve finally the main findings are relevant to the current economic environment of low inflation rates under a flat phillips curve implying that the monetary authority should increase the inflation target in such an environment

a global assessment of human capital mobility the role of non oecd destinations discussions of high skilled mobility typically evoke migration patterns from poorer to wealthier countries which ignore movements to and between developing countries this paper presents for the first time a global overview of human capital mobility through bilateral migration stocks by gender and education in 1990 and 2000 and calculation of nuanced brain drain indicators building on newly collated data the paper uses a novel estimation procedure based on a pseudo gravity model then identifies key determinants of international migration and subsequently uses estimated parameters to impute missing data non oecd destinations account for one third of skilled migration while oecd destinations are declining in relative importance

do job to job transitions drive wage fluctuations over the business cycle we investigate the importance of job to job jj transitions for cyclical wage dynamics by exploiting cross state variation we find that wage growth is tightly linked to variation in the jj transition probability and conditional on this the job finding probability of the unemployed has no explanatory power we investigate the robustness of our results to several caveats and find the result to hold finally we discuss the implications of our findings for competing theories of wage dynamics

migration and development research is moving far beyond remittances research on migration and development has recently changed in two ways first it has grown sharply in volume emerging as a proper subfield second while it once embraced principally rural urban migration and international remittances migration and development research has broadened to consider a range of international development processes these include human capital investment global diaspora networks circular or temporary migration and the transfer of technology and cultural norms for this special issue we present a selection of frontier migration and development research that instantiates these trends

monopsony with nominal rigidities an inverted phillips curve with nominal wage rigidities it is crucial to distinguish whether wages are set by workers or firms whether we have monopoly or monopsony power this paper provides a model of monopsony power in the labour market and a monopsonistic phillips curve if wages are set by firms who face nominal rigidities and there is inflation firms cannot adjust their wages fully the real wage falls and labour supply hence output decreases this provides a phillips curve where the output gap is negatively correlated with wage inflation in such a world monetary policy affects the intertemporal labour supply while the phillips curve is a labour demand curve interest rate cuts reduce the labour supply instead of boosting demand they are contractionary

international migration transfers of norms and home country fertility this paper examines the relationship between international migration and source country fertility the impact of international migration on source country fertility may have a number of causes including a transfer of destination countries fertility norms and an incentive to acquire more education it provides provide a rigorous test of the diffusion on of fertility norms using original and detailed data on migration the results provide evidence of a significant transfer of fertility norms from migrants to their country of origin a one percent decrease in the fertility norm to which migrants are exposed reduces home country fertility by about 0 3 percent for origin countries

does the chinese diaspora speed up growth in host countries summary we compiled a new enhanced data set on the population share of overseas chinese covering 147 countries over the period 1970 2010 linking the migration and economic growth literature this article attempts to estimate the impact of the chinese diaspora on economic growth in host countries regression results from both barro type and dynamic panel data models suggest that a country s initial relative endowment with overseas chinese is positively related to subsequent growth results are robust to a number of sensitivity tests the effect is transmitted via increased trade openness enhanced investment and general tfp effects

can a brain drain be good for growth in the source economy this paper analyzes the interaction between income distribution human capital accumulation and migration it shows that when migration is not a certainty a brain drain may increase average productivity and equality in the source economy even though average productivity is a positive function of past average levels of human capital in an economy it is also shown how the temporary possibility of emigration may permanently increase the average level of productivity of an economy

a model of monetary policy shocks for financial crises and normal conditions in their classic 1999 paper monetary policy shocks what have we learned and to what end christiano eichenbaum and evans cee investigate one of the most widely used methods for identifying monetary policy shocks of its time unfortunately their approach is no longer viable at least not in its original form a major problem stems from the recent behavior of two key variables in their model the fed funds rate and non borrowed reserves we develop a new identification scheme that remedies these diculties but maintains the basic cee framework our empirical specification is motivated by a standard new keynesian dsge model augmented by a simple financial structure the model provides theoretical support for variables we use in place of certain variables that were used in the classic var approach outlined in cee one significant innovation is our use of divisia m4 the broadest monetary aggregate currently available for the united states as the policy indicator variable we obtain four major empirical results that support the use of a properly measured broad monetary aggregate as the policy variable first policy shocks have significant eects on output and on the price level even when an interest rate is included in our model contradicting the new keynesian argument that monetary aggregates are redundant second we develop a model that is not subject to the output price or liquidity puzzles common to this literature contradicting the view that using the interest rate as the policy indicator generally yields more reasonable responses than a monetary aggregate third during normal conditions policy shocks from our divisia based model have similar eects on variables to those found in the fed funds model of monetary policy and where there are dierences our model with divisia m4 obtains results that are more consistent with standard economic theory fourth our preferred specification produces plausible responses to a monetary policy shock in samples that include or exclude the recent financial crisis

average inflation targeting and interest rate smoothing abstract we study the welfare implication of average inflation targeting as a simple interest rate rule in which the monetary authority adjusts its short term policy rate in response to the output gap as well as average inflation deviation from its target instead of reacting to the contemporaneous inflation rate as in a taylor type rule we find that the welfare improvement achieved by switching to average inflation targeting from a standard taylor rule is modest with a high degree of interest rate smoothing whereas it is significant without interest rate smoothing we show that average inflation targeting is welfare improving in the same way as interest rate smoothing by making the conduct of monetary policy history dependent thus the high degree of monetary policy inertia in the estimated interest rate rules in many advanced economies implies that the welfare gain from adopting the average inflation targeting rule would be minimal

of religion and redemption evidence from default on islamic loans we compare default rates on conventional and islamic loans using a comprehensive monthly dataset from pakistan that follows more than 150 000 loans over the period 2006 04 to 2008 12 we find robust evidence that the default rate on islamic loans is less than half the default rate on conventional loans islamic loans are less likely to default during ramadan and in big cities if the share of votes to religious political parties increases suggesting that religion either through individual piousness or network effects may play a role in determining loan default

globalization brain drain and development this paper reviews four decades of economics research on the brain drain with a focus on recent contributions and on development issues we first assess the magnitude intensity and determinants of the brain drain showing that brain drain or high skill migration is becoming a dominant pattern of international migration and a major aspect of globalization we then use a stylized growth model to analyze the various channels through which a brain drain affects the sending countries and review the evidence on these channels the recent empirical literature shows that high skill emigration need not deplete a country s human capital stock and can generate positive network externalities three case studies are also considered the african medical brain drain the exodus of european scientists to the united states and the role of the indian diaspora in the development of india s information technology sector we conclude with a discussion of the implications of the analysis for education immigration and international taxation policies in a global context

bringing it all back home return migration and fertility choices summary return migration exerts a wide ranging influence upon the countries of origin of the migrants we analyze whether returnees adjust their fertility choices to the norms that prevail in their previous countries of destination using egyptian household level data egyptian men migrate predominantly toward other arab countries characterized by a higher number of children per woman relying on a two step instrumental variable approach to control for the endogeneity of the migration decisions we show that return migration has a positive and significant influence on marital childbearing

a phillips curve with anchored expectations and short term unemployment this paper examines the behavior of u s core inflation as measured by the weighted median of industry price changes we find that core inflation since 1985 is well explained by an expectations augmented phillips curve in which expected inflation is measured with professional forecasts and labor market slack is captured by the short term unemployment rate we also find that expected inflation was backward looking until the late 1990s but then became strongly anchored at the federal reserve s target this shift in expectations changed the relationship between inflation and unemployment from an accelerationist phillips curve to a level level phillips curve our specification explains why high unemployment during the great recession did not reduce inflation greatly partly because inflation expectations were anchored and partly because short term unemployment rose less sharply than total unemployment

the effect of skilled emigration on real exchange rates through the wage channel abstract building on an analytical model we provide cross country empirical evidence that net skilled emigration appreciates bilateral real exchange rates through the wage channel in source countries chains of causality in the presence of the law of one price run through the spending effect and the resource allocation effect analogous to the remittance based dutch disease effect a pricing to market model allows pass through for both traded and nontraded prices when the law of one price is violated the skilled emigration elasticity of real exchange rate is estimated to be in the range of between 0 6 and 0 8 with internal prices playing a dominant role alternative model specifications show robust outcomes

overshooting the savings target temporary migration investment in housing and development summary there are two seemingly competing branches of the literature on saving and duration of stay decisions of temporary migrants one relies on the target saving explanation and the other on utility maximization over a life cycle we attempt to reconcile the two approaches within a framework where a migrant has a well defined savings target in planning to purchase a new home at origin but also chooses the time of return and the consumption path to maximize lifetime utility our analysis highlights the role of property investment and savings repatriation in the relationship between temporary migration and development

eight questions about brain drain high skilled emigration is an emotive issue that in popular discourse is often referred to as brain drain conjuring images of extremely negative impacts on developing countries recent discussions of brain gain diaspora effects and other advantages of migration have been used to argue against this but much of the discussion has been absent of evidence this paper builds upon a new wave of empirical research to answer eight key questions underlying much of the brain drain debate 1 what is brain drain 2 why should economists care about it 3 is brain drain increasing 4 is there a positive relationship between skilled and unskilled migration 5 what makes brain drain more likely 6 does brain gain exist 7 do high skilled workers remit invest and share knowledge back home and 8 what do we know about the fiscal and production externalities of brain drain

measuring international skilled migration a new database controlling for age of entry recent data on international migration of skilled workers define skilled migrants by education level without distinguishing whether they acquired their education in the home or the host country this article uses immigrants age of entry as a proxy for where they acquired their education data on age of entry are available from a subset of receiving countries that together represent 77 percent of total skilled immigration to countries of the oecd organization for economic co operation and development using these data and a simple gravity model to estimate the age of entry structure of the remaining 23 percent alternative brain drain measures are proposed that exclude immigrants who arrived before ages 12 18 and 22

is the unemployment inflation trade off still alive in the euro area and its member countries it seems so the unemployment inflation trade off can be interpreted as a proposition concerning the response of these two variables to aggregate demand shocks in this paper we study the possible presence of the trade off in the euro area and in a wide group of euroarea countries in the last 20 years i e since the start of emu we use the structural var methodology that allows the separation between supply and demand shocks our main finding is that the existence of a trade off is largely confirmed both at the euro area and at the national level nevertheless the size of the trade off measured at different horizons shows some heterogeneity among countries no less important when we augment the var model by introducing monetary policy in the context of an open economy we find that monetary policy shocks push inflation and unemployment in opposite directions in the currency area another interesting result concerns the evidence of a relatively flat relation between unemployment and inflation conditionally to monetary policy shocks