the inflation tax in a real business cycle model money is incorporated into a real business cycle model using a cash in advance constraint the model economy is used to analyze whether the business cycle is different in high inflation and low inflation economies and to analyze the impact of variability in the growth rate of money in addition the welfare cost of the inflation tax is measured and the steady state properties of high and low inflation economies are compared

banking panics information and rational expectations equilibrium this paper shows that bank runs can be modeled as an equilibrium phenomenon we demonstrate that some aspects of the intuitive story that bank runs start with fears of insolvency of banks can be rigorously modeled if individuals observe long lines at the bank they correctly infer that there is a possibility that the bank is about to fail and precipitate a bank run however bank runs occur even when no one has any adverse information extra market constraints such as suspension of convertibility can prevent bank runs and result in superior allocations banking panics were a recurrent phenomenon in the united states until the 1930s they have re emerged as a source of public concern and much theoretical research recently in this paper we provide an information theoretic rationale for bank runs the traditional story is that contagion is an important aspect of bank runs the idea seems to be that when the general public observes large withdrawals from the banking system fears of insolvency grow resulting in even larger withdrawals of deposits in our model some individuals withdraw because they get information that future returns are likely to be low uninformed individuals observing this also have an incentive to liquidate their investments in addition some individuals need to withdraw deposits for other than informationally based reasons thus if the random realization of such a group of individuals is unusually large then the uninformed individuals will be misled and will precipitate a run on the bank the technology is such that a large volume of withdrawals involves liquidation costs consequently runs on the bank do impose social costs a mechanism that may reduce these costs in our model is to suspend convertibility if withdrawals are high however those individuals who need to withdraw their assets for liquidity reasons are worse off ex post our model provides a rationalization for restrictions in demand deposits that were widespread prior to 1929 friedman and schwartz 7 suggest that restrictions of payments ensured

optimality of the friedman rule in an overlapping generations model with spatial separation recent models with spatial separation and limited communication suggest that the friedman rule may not be optimal this is important in light of the disparity between theory and practice concerning optimal monetary policy we take a close look at these models and show that intergenerational transfers are key to the suboptimality of the friedman rule the friedman rule is a necessary condition for achieving the efficient allocation in equilibrium we also show that the friedman rule is chosen whenever agents can implement mutually beneficial arrangements

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

stock markets and development this paper asks if financial development especially stock market development affects the level and or the growth rate of economic activity it finds a substantial effect on both current wisdom suggests that the growth effects of financial intermediation could be either permanent or transitory for instance the greenwood jovanovic 1990 henceforth gj model has an ak stucture with no diminishing returns to the reproducible factor and a permanent exogenous improvement in financial structure would cause a permanent increase in the rate of growth on the other hand if the returns to the reproducible factor did diminish better intermediation could lead only to level effects since one should not a priori exclude either growth effects or level effects we shall look for both our search for growth effects will use the gj model our search for level effects will rely on an amended version of the mankiw romer and weil 1992 henceforth mrw structure

inflation financial markets and long run real activity abstract empirical evidence suggests that real activity the volume of bank lending activity and the volume of trading in equity markets are strongly positively correlated at the same time inflation and financial market activity are strongly negatively correlated in the long run as are inflation and the real rate of return on equity inflation and real activity are also negatively correlated in the long run particularly for economies with relatively high rates of inflation we present a monetary growth model in which banks and secondary capital markets play a crucial allocative function we show that at least under certain configurations of parameters the predictions of the model are consistent with these and several other observations about inflation finance and long run real activity

heterogeneity redistribution and the friedman rule we study monetary models with nondegenerate stationary distributions of money holdings we find that the friedman rule does not typically maximize ex post social welfare an increase in the rate of growth of the money supply has two effects the standard distortionary or rate of return effect makes money a less desirable asset for all moneyholders a second redistributive effect creates a transfer from one type of agent to the other an increase in the rate of growth of money away from the friedman rule can produce a rate of return effect that dominates the standard effect

environmental management accounting in lithuania exploratory study of current practices opportunities and strategic intents abstract there is a growing consensus among the lithuanian policy makers practitioners and industrialists that environmental policy must move from a reactive stance to a more proactive sustainable development approach as a result many companies are increasingly interested in the application of economic incentives at least as supplements or reinforcements of environmental standards the institute of environmental engineering eu centre of excellence in sustainable industrial development apini sid in 1992 2003 has been involved in introduction and implementation of preventive environmental strategy in industry in lithuania and in other countries in lithuania these efforts resulted in the implementation of more than 200 cleaner production innovations in more than 150 lithuanian companies it should be stressed that effective plant maintenance is becoming a higher priority to plant managers it is important to ensure cost savings at all levels that include maximizing productivity and implementing energy saving approaches effective and efficient maintenance are not just desirable but fundamental to profitable business operations therefore central to the environmental view of sustainable development is the concept that economic and social systems are sub systems of the global environment apini s experience shows that decision makers at the company level often fail to recognize the economic values of natural resources as assets as well as the business and financial value of good environmental performance therefore there is a need to upgrade the business decision making process by including information on material flows and related costs to account for efforts of sustainable development staniskis jk stasiskiene z promotion of cleaner production investments international experience journal of cleaner production 2002 11 6 619 28 issn 0959 6526 elsevier science decisions are increasingly affected by environmental costs application of environmental management accounting ema which integrates two of the main principles of sustainable development environment and economics can help to significantly improve corporate decision making ema is becoming increasingly important not only for environmental management decisions and development of environmental management systems ems but also for all types of routine management activities such as product and process design cost allocation and control capital budgeting purchasing product pricing and performance evaluation companies which use ema as a part of integrated management system are provided with accurate and comprehensive information for the measurement and reporting of environmental performance this paper investigates the current state of ema practices in lithuanian smes that have already been or are being implementing ems and which have implemented cp innovations in this case ema is analysed as an innovative assessment and evaluation method of ems and cp innovation s environmental impacts and economic benefits it should be stressed that there are obvious differences in case studies from different industries however review of the results shows that there are many similarities in what improvements can be suggested for environmentally concerned companies both in terms of environmentally sound operation and for reporting of environmental management accounting information

the long run relationship between inflation and output in postwar economies abstract we investigate the relationship between inflation and real output in a large sample of postwar economies our methodology is to use a structural vector autoregression to estimate the response of the level of real output to permanent inflation shocks separately for each country we find that a permanent shock to inflation is not associated with a permanent movement in the level of real output for most countries in our sample the main exceptions are certain low inflation countries in which permanent inflation shocks permanently increase the level of output we also find that permanent inflation shocks do not permanently influence real output growth rates in our sample

mfca extension from a circular economy perspective model modifications and case study abstract as an innovative method of environment management accounting ema a model of material flow cost accounting mfca is widely used in the field of cost calculation in the manufacturing process industry and it has obtained a level of achievement in recent years based on the existing literature in the field this report argues that the application of the current mfca model in the process industry has defects such as content restrictions a single accounting index simple methodology and one sided conclusions among others this paper combines the current mfca model with the 3r principle of a circular economy ce and the industry characteristics of high consumption and pollution the research focuses on the iron and steel industry as a representative of a process manufacturing industry and forms a modified mfca model for an iron and steel enterprise according to the perspective of ce the modifications we make to the model occur in the fields of model content the accounting index the methodology of application and the extension of functionality finally through a specific case study this report verifies the comprehensive utility of the proposed modified model in general the modified mfca may to a certain extent be considered innovative in its approach to information and data connections extension of methods and procedures modes of disclosing information construction of evaluation analysis and management of circular decision making each of these elements is conducive to realizing a triple win situation for the conservation of resources energy providing an economic value add reducing the environmental load and enhancing the sustainable development of a resource constrained process industry

how good are standard debt contracts stochastic versus nonstochastic monitoring in a costly state verification environment the authors investigate ex ante efficient contracts in an environment in which implementation is costless in this environment standard debt contracts will typically not be optimal optimal contracts may involve defaults even in states in which the borrower is fully able to repay the authors then examine the welfare costs of arbitrarily restricting the set of feasible contracts to standard debt contracts when model parameters are calibrated to realistic values the welfare loss from exogenously imposing this restriction is extremely small thus if implementation costs are actually nontrivial as seems likely standard debt contracts will be very close to optimal copyright 1994 by university of chicago press

inflation and asset returns sustained inflation is detrimental to long run growth and the financial system a recent theoretical literature suggests that high inflation implies low real returns on assets these low returns exacerbate informational frictions interfering with the functioning of financial markets and the allocation of investment we investigate the plausibility of an inverse relationship between inflation and real returns inflation and nominal equity returns are negatively correlated or uncorrelated for all low to moderate inflation economies examined safe nominal rates of return and inflation are only weakly positively correlated however for high inflation economies inflation and nominal returns are strongly positively correlated

costly monitoring financial intermediation and equilibrium credit rationing abstract this paper establishes a link between equilibrium credit rationing and financial intermediation in a model with asymmetrically informed lenders and borrowers costly monitoring and investment project indivisibilities intermediation is shown to dominate borrowing and lending between individuals and these financial intermediaries exhibit several of the important features of intermediaries as we know them equilibrium interest rates and the aggregate quantity of loans respond quite differently to changes in taste and technology parameters depending on whether or not there is rationing in equilibrium

banking crises and liquidity in a monetary economy abstract this study investigates banks liquidity provision using the lagos and wright model of monetary exchange with aggregate uncertainty we show that banks sometimes exhaust their cash reserves and fail to satisfy their depositors needs for consumption smoothing we also show that banking crises can be eliminated by a rate of return equalizing policy under perfect risk sharing but the first best outcome can be only achieved with the friedman rule these results cannot be obtained with other monetary models e g overlapping generations models we also derive a rich array of non trivial effects of inflation on equilibrium deposits the probability of banking crises and banks portfolios

the rise and fall of the dollar a comment if readers of this paper were to ask themselves what the rates for the world s major currencies are likely to be in say three years time it is doubtful whether they would have much confidence in their predictions even conditional forecasts on the basis of particular assumptions about policy would be hard to make this state of ignorance and our admission of it owes much to the recent behaviour of the dollar which as koromzay llewellyn and potter so usefully discuss largely defies explanation in terms of conventional economic analysis even when full use is made of the luxury of hindsight that ignorance itself may however have important policy implications these comments relate to both the theoretical and policy aspects of the paper though the focus as in the paper itself is on the implications for policy a general difficulty may be stated at the outset the paper reasonably enough concentrates on the dollar in the i98os but though this is much the most dramatic illustration of the difficulties in explaining exchange rate movements it is not the only one thus ideally an explanation of dollar strength should be consistent with explanations given for previous dollar weakness see for example bliss i986 and for other recent major movements of exchange rates such as the apparently similar gravity defying rise in sterling in the late i970s and early 198os where theory and empirical analysis fail explanations tend to become ad hoc with a danger that false or over strong policy conclusions are drawn even a casual comparison with the united kingdom raises some questions as well as supporting the general thrust of this paper thus the monetary fiscal mix in the united kingdom was very different from that in the united states according to oecd figures the structural budget moved to surplus by some 6 of gdp between i979 and i982 which must at least suggest a cautious approach to some of the simpler stories that trace the rise in the dollar to united states fiscal irresponsibility the united states experience which as the paper demonstrates does not accord with conventional models of the overshootingtype also throws doubt in the other direction about applications of that kind of model to the united kingdom for example by buiter and miller i98i of course the united kingdom s situation was special because of north sea oil but if north sea oil was important the obvious reason would be due to its effect on relative current account positions which does not seem to work well for the united states and in any case most estimates suggest that oil should account for only a part of the rise in sterling see powell and horton i985 for a survey and as in the united states empirical models were notably unsuccessful in predicting the exchange rate haache and townend i98i

the optimal inflation tax when money reduces transactions costs abstract it has been argued that if money acts as an intermediate good the optimal inflation tax is zero this paper reexamines such a claim in the context of a model in which money reduces transactions costs it is shown that modeling money as an intermediate good does not necessarily imply that the optimal inflation tax is zero the optimality of a zero inflation tax depends on the properties of the transactions costs technology in particular if the transactions costs technology does not exhibit constant returns to scale it is optimal to resort to the inflation tax

the conduct of monetary policy with a shrinking stock of government debt this article considers the consequences for a central bank of a declining stock of government debt the model has a treasury that taxes spends and issues debt a central bank that conducts open market operations in treasury debt and banks that intermediate private savings it suggests that a sufficiently small stock of debt can put an economy on the pareto inferior side of the seigniorage laffer curve implying unnecessarily high inflation if there is also a primary budget deficit equilibrium might not exist discount window lending is a potentially desirable alternative to open market operations especially if the loans are not subsidized

the optimum quantity of money rule in the theory of public finance this paper examines optimal tax policy in a monetary economy in which money serves as an intermediate good that helps facilitate the conversion of scarce resources into tinal consumption goods by enabling consumers to economize on the costs of transacting it is shown that in such an environment even though distorting taxes must be levied for revenue purposes the optimal tax structure calls for abstaining from inflationary finance and adopting the optimum quantity of money rule

asset trading mechanisms and expansionary policy abstract previous authors have argued that the otimal monetary policy is contractionary if buyers value consumption substantially more than sellers there is some randomness and informational constraints make asset trading useful we show that there is an incentive compatible expansionary policy that dominates all incentive compatible contractionary policies

distinguishing panics and information based bank runs welfare and policy implications in this paper we contrast panics and information based bank runs in an effort to provide a robust and empirically plausible model of how bank runs are triggered the model of information based runs is characterized by two sided asymmetric information the bank cannot observe the true liquidity needs of the depositors while depositors are asymmetrically informed about bank asset quality we also examine the relative degrees of risk sharing provided by bank deposit contracts and traded equity contracts we show that the choice of deposit or equity depends on the attributes of and information about the underlying investment returns

financial intermediation and regime switching in business cycles the authors study a one sector growth model where capital investment is credit financed and there is an adverse selection problem in credit markets the presence of adverse selection creates an indeterminacy of equilibrium many equilibria display permanent fluctuations characterized by transitions between walrasian regimes and regimes of credit rationing cyclical contractions involve declines in real interest rates increases in credit rationing and withdrawals of savings from banks for some configurations of parameters all equilibria display cyclical fluctuations the authors provide sufficient conditions for deterministic cycles consisting of m periods of expansion followed by n periods of contraction to exist copyright 1998 by american economic association

material flow cost accounting and existing management perspectives abstract material flow cost accounting mfca has been developed worldwide as a major tool in environmental management accounting the international standard on mfca was published as iso 14051 in 2011 in japan the ministry of economy trade and industry meti has been strongly supporting the promotion of mfca and the number of companies introducing this tool has been steadily increasing however in order to apply mfca in companies continuously it is necessary to overcome conflicts between mfca and existing management perspectives this paper argues that such conflicts are likely to be caused by the essential features of mfca and indicates some theoretical solutions based on organizational design then by looking at three example cases of companies that have succeeded in the continuous use of mfca specific countermeasures for dealing with conflicts are investigated

financial intermediation business failures and real business cycles in this paper a general equilibrium business cycle model is construct ed that when subjected to real disturbances mimics observed qualita tive comovements among real output money business failures risk pr emia intermediary loans and prices in contrast monetary disturban ces generate cycles that have several inconsistencies with empirical evidence thus providing support for real business cycle theory at th e expense of monetary theories of the business cycle financial inter mediation arises endogenously in the model and intermediation matters for business cycle behavior a credit supply mechanism acts in tande m with an intertemporal substitution effect in propagating stochastic disturbances copyright 1987 by university of chicago press

is the friedman rule optimal when money is an intermediate good in contrast to the recent literature on the optimal inflation tax we show that in models where money reduces transactions costs it is optimal to set the inflation tax to zero when seigniorage is replaced by revenue from distortionary taxes the main reasons for this result are that the variable costs of supplying real balances are negligible and the inflation tax is a unit tax we also show that the intermediate good optimal taxation rules in the public finance literature cannot be directly applied both when money is costless and when it requires resources to be produced

currency elasticity and banking panics theory and evidence existing models of banking panics contain no role for monetary factors and fail to explain why some banking systems experienced panics while others did not a monetary model is constructed where seasonal variations in the demand for liquidity and credit play a critical role in generating banking panics these panics occur when there are restrictions on the issue of currency in private banks but they do not occur if banks are unrestricted empirical evidence from canada and the united states for the period 1880 1910 is largely consistent with the predictions of the model

economic organization with limited communication this paper presents formal stylized representations of communication accounting systems oral assignment portable object written message and telecommunication systems are considered the environments that allow this formalization are characterized by spatial separation private information and a need to keep track of past actions transfers and shocks in environments that have spatial separation and private information beneficial multilateral arrangements can depend critically on agents ability to communicate to one another values of contemporary shocks and to keep track of histories of past transfers or past announced shocks this paper formalizes this idea and focuses on com

capital market imperfections international credit markets and nonconvergence abstract we consider a two country growth model with international capital markets these markets fund capital investment in both countries and operate subject to a costly state verification csv problem investors in each country require some external finance but also provide internal finance which mitigates the csv problem when two identical except for their initial capital stocks economies are closed they necessarily convergemonotonicallyto the same steady state output level unrestricted international financial tradeprecludesotherwise identical economies from converging and poor countries are necessarily net lenders to rich countries oscillation in real activity and international capital flows can occur journal of economic literatureclassification numbers e00 f00 f34 g14

money intermediation and banking the business of money creation is conceptually distinct from that of intermediation yet these two activities are frequently but not always combined together in the form of a banking system we develop a simple model to examine the question when is banking essential there is a role for money due to a lack of record keeping and a role for intermediation due to the existence of private information both money and intermediation are essential when monitoring costs associated with intermediation are sufficiently low the two activities can be separated from one another however when monitoring costs are sufficiently high a banking system that combines these two activities is essential

banking crises in monetary economies this paper analyzes the effect of inflation on banking crises in a model in which money and banks play essential roles the model s equilibrium replicates some key features of actual banking crises namely the partial suspension of payments and the desire to hold cash even in the absence of pressing liquidity needs when banks have access to a stable foreign currency inflation has a threshold effect on banking crises higher inflation reduces the likelihood of crises when inflation is below the threshold the reverse happens when inflation exceeds the threshold this result appears to be broadly consistent with available evidence jel category e40 e50

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

money banking and capital formation we consider a monetary growth model in which banks arise to provide liquidity in addition there is a government that issues not only money but interest bearing bonds these bonds compete with capital in private portfolios when the government fixes a constant growth rate for the money stock we show that there can exist multiple nontrivial monetary steady states one of these steady states is a saddle while the other can be a sink moreover paths approaching a steady state can display damped endogenous fluctuations and development trap phenomena are common across different steady states low capital stocks are associated with high nominal interest rates the latter signal the comparative inefficiency of the financial system also increases in the steady state inflation rate can easily reduce the steady state capital stock journal of economic literatureclassification numbers e13 e44 e50 g20 o16

the effects of open market operations in a model of intermediation and growth we examine an otherwise standard model of capital accumulation to which spatial separation and limited communication create a role for money and shocks to portfolio needs create a role for banks in this context we examine the existence multiplicity and dynamical properties of monetary equilibria with positive nominal interest rates moderate levels of risk aversion can lead to the existence of multiple monetary steady states all of which can be approached from a given set of initial conditions in addition even if there is a unique monetary steady state monetary equilibria can be indeterminate and oscillatory equilibrium paths can be observed thus financial market frictions are a potential source of both indeterminacies and endogenously arising economic volatility we also consider the consequences of monetary policy actions that rearrange the composition of government liabilities contractionary monetary policy activities can have complicated consequences depending especially on the nature of the steady state equilibrium that obtains when there are multiple steady states under plausible conditions however a permanent contractionary change in monetary policy raises both the nominal rate of interest and the rate of inflation and reduces long run output levels thus liquidity provision by a central bank just as by the banking system as a whole can be growth promoting loose monetary policy also is conducive to avoiding development trap phenomena

incomplete markets labor supply and capital accumulation we explore the accumulation of capital in the presence of limited insurance against idiosyncratic shocks borrowing constraints and endogenous labor supply in the exogenous labor supply case e g aiyagari 1994 huggett 1997 the presence of limited insurance increases the demand for savings for precautionary reasons as a consequence capital and output are higher under incomplete markets we show that if labor hours are endogenous labor supply is likely to be lower under incomplete markets because those agents who experience a high shock to productivity are ex post richer and they work fewer hours in some cases this wealth effect can overcome the aggregate precautionary savings and give rise to lower savings and output under incomplete

demandable debts as a means of payment banknotes versus checks we examine whether transactable forms of privately issued demandable debt are better used as banknotes or checks the distinction between the two is that a check must be redeemed by the issuing bank with each use whereas a banknote can circulate we find that the answer to the question depends on the cost of early redemption if this cost is small banknotes will not circulate so the question is moot if this cost is large incentive problems may prevent the circulation of banknotes for intermediate values of the early redemption cost banknotes will be preferred over checks

payments systems design in deterministic and private information environments abstract the first setup we study is a deterministic model with spatial separation where we consider alternative payments systems institutions and their implications for allocation and welfare a payments system with period by period settlement in outside money improves on decentralized exchange an efficient allocation is supported by a payments system where settlement is not imposed in the second model there is random matching and unobserved productivity shocks and preference shocks we explore how risk should be shared optimally in this economy and interpret the results in terms of how actual payments systems should operate journal of economic literature classification numbers e4 e5

financial development growth and the distribution of income a paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined financial intermediation promotes growth because it allows a higher rate of return to be earned on capital and growth in turn provides the means to implement costly financial structures thus financial intermediation and economic growth are inextricably linked in accord with the goldsmith mckinnon shaw view on economic development the model also generates a development cycle reminiscent of the kuznet hypothesis in particular in the transition from a primitive slow growing economy to a developed fast growing one a nation passes through a stage in which the distribution of wealth across the rich and poor widens

financial market participation financial intermediation and monetary policy abstract it is not uncommon for the friedman rule to be optimal in neoclassical models with money notably previous studies also find that financial intermediation is not welfare improving when money is costless to hold this paper departs from previous studies by highlighting the importance of participation costs in financial markets for the participation in financial intermediation and monetary policy as in previous work the friedman rule is optimal however i demonstrate that the welfare gains from disinflation are much higher when savings are intermediated if direct participation costs in financial markets are significant consequently financial intermediation can still be optimal at the friedman rule

costly monitoring loan contracts and equilibrium credit rationing this paper develops a model with asymmetrically informed agents and costly monitoring of loan contracts where an equilibrium can exhibit credit rationing borrowers are identical ex ante but some receive loans and others do not in contrast to existing credit rationing theories rationing does not occur here due to inflexible prices adverse selection or moral hazard optimizing behaviour produces a standard debt contract in equilibrium the aggregate quantity of loans and equilibrium interest rates respond differently depending on whether there is rationing in equilibrium

debt deficits and dollars the world economy in 3 d abstract the world economy in the 1980s was dominated by problems of international debt balance of payments and fiscal deficits and exchange rate instability analyzing these three problems this paper attempts to demonstrate how changes in both the international financial regime and the conduct of macroeconomic policy at the global level are required if they are to be avoided in the 1990s recognizing the bureaucratic and political constraints on far reaching reform the paper spells out a number of less ambitious options which could nonetheless have a beneficial effect on the world economy an implication of all the reforms discussed touching on both financing and adjustment is an increase in the relative importance of the official sector in the form of the international monetary fund imf and the world bank as compared with the private sector in the form of the international commercial banks in this regard as well as in terms of some of their specifics the proposals find a strong antecedent in the keynes plan that was presented to the bretton woods conference in 1944 as then the argument here is that international financial reform based on a coherent perspective of the world economy can make an important contribution toward bringing about balanced and sustainable world economic expansion

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

material flow cost accounting looking back and ahead abstract material flow cost accounting mfca combines physical flows and monetary units and is located between energy and material efficiency analyses environmental management and managerial accounting procedures since the development of iso 14051 2011 research and application in industry increased but still some theoretical methodological and practical gaps exist this special volume addresses some of the existing deficits and shows the fertile contribution of mfca on resource efficiency as can been seen by the articles and case studies in this special volume mfca still is continuously spreading into further countries and the methodology is extended refined and elaborated and increasingly applied in combination with various other tools and concepts the main challenges are still the continuous implementation of the method in industry and the public dissemination of the results

optimality of the friedman rule in economies with distorting taxes abstract we find conditions for the friedman rule to be optimal in three standard monetary models our main contribution is to shed light on two issues in the literature first the conventional view maintains that when money is a final good its services should be taxed moreover if money demand is interest inelastic its services should be taxed heavily we show that this view is incorrect second there is an ongoing controversy about whether the optimality of the friedman rule is connected to the intermediate goods result from public finance we resolve this controversy by showing a deep connection between these results

the role of countercyclical monetary policy when firms set nominal prices in advance optimal monetary policy insulates aggregate output against shocks to demand it can do so however by following the constant money growth rule advocated by milton friedman it need not respond to the shocks in an actively countercyclical way in addition to the extent that output fluctuations are driven by shocks to supply money growth should be procyclical

the costs of losing monetary independence the case of mexico this paper develops a two country monetary model calibrated to data from the united states and mexico to address the question of whether dollarization is welfare improving for the two countries our findings suggest that dollarization is not necessarily pareto superior to monetary independence for mexico there are two persuasive arguments that are often put foleth in support of the idea that many countries would benefit from the adoption of the u s dollar as their national cultency one is the standard argument often made in favor of a common currency that it promotes economic and financial integration and reduces tleansaction costs the other argument is that dollarization would solve the credibility and commitment problem and impose monetary discipline the idea is that many countries particularly in latin america have long histories of high inflation and a record of breaking promises to pursue monetary policies that lead to low inflation taking monetary policy out of the hands of domestic central banks is one way to addleess this issue thus one of the conjectured benefits of adopting the u s dollar hinges on the prospect that this would eliminate an inflationary bias among the participating countries these benefits have to be balanced against the costs associated with the loss of monetary independence that eithele dollarization or a cultency area necessarily implies this loss of monetary independence means that the country can no longer use the instruments of monetary policy to adjust to internal or external shocks these considerations suggest two main questions that should be addressed in thinking about the proposal to adopt the u s dollar in mexico first is the higher inflation rate in mexico necessarily the result of the lack of monetaley discipline ole it can be justified by some principle of optimality in the conduct of monetary policy second is the welfare loss from not being able to use monetary policy to react optimally to shocks quantitatively important

financial consumption and the cost of finance measuring financial efficiency in europe 1950 2007 this paper proposes to assess financial intermediation efficiency in germany france the uk and europe more broadly over the past 60 years i rely on philippon s 2012 methodology which calculates the unit cost of financial intermediation through the ratio of financial consumption measured by financial income to financial output approximated by the sum of outstanding assets intermediated the contribution of this paper is threefold first because financial industry va ignores banks capital income capital gains dividends and interest on securities it is an imperfect measure of the consumption of financial intermediation so long as capital income generates wages and profits to financial intermediaries it is akin to an implicit consumption of financial services using banking income instead of banking va to measure the consumption of banking services i show that the gdp share of finance has increased continuously in germany france the uk and europe as a whole second the unit cost of financial intermediation increased over the past 40 years except in france where overall it stagnated in addition the european unit cost matches the us unit cost calculated by philippon 2012 finally because financial intermediaries deal with nominal stocks and ows and because the unit cost increases during periods of monetary troubles i focus here on nominal rates of interest to explain the evolution of unit cost i show that a rise in nominal rates of interest increases the spread of bank interest so that 1970s and 1980s high unit costs are statistically explained by increases in short term interest rates on the other hand post 1990s high unit cost seems to coincide with the development of new market based activities

private and public circulating liabilities abstract legal and technological changes have made private banknote issue or its electronic equivalent possible we construct a model where private liabilities circulate either by themselves or alongside outside money we provide results on existence and multiplicity of equilibria and characterize dynamics near steady states our results support friedman in that circulating private liabilities are associated with endogenous volatility but implementing friedman s advice the government should ban private currency substitutes causes significant inefficiency the proposal of hayek that the government should leave currency creation to the market also is often constrained suboptimal both public and private circulating liabilities are required for optimality journal of economic literature classification numbers e3 e4 e5

sub optimality of the friedman rule in townsend s turnpike and stochastic relocation models of money do finite lives and initial dates matter abstract the friedman rule a widely studied prescription for monetary policy is optimal in townsend s turnpike model of money it is not so in the overlapping generations version of his stochastic relocation model of money we investigate these monetary models in the light of this disparity to this end we create a modified version of the turnpike model that generates the same stationary monetary equilibria as does the two period overlapping generations model with random relocation we exploit this equivalence to explain the aforementioned disparity we also discuss the importance of whether or not the economy has an initial date

two illustrations of the quantity theory of money of two central implications of the quantity theory of money that a given change in the rate of change in the quantity of money induces i an equal change in the rate of price inflation and ii an equal change in nominal rates of interest the illustrations were obtained by comparing moving averages of the three variables in question using quarterly u s time series for the period 1953 77 readers may find the results of interest as additional confirmation of the quantity theory as an example of one way in which the quantity theoretic relationships can be uncovered via atheoretical methods from time series which are subject to a variety of other forces or as a measure of the extent to which the inflation and interest rate experience of the postwar period can be understood in terms of purely classical monetary forces the theoretical background of the study is reviewed very briefly as it is familiar material in the next section the data processing methods are described and rationalized in section ii the illustrations