what explains recent changes in international monetary policy attitudes toward inflation evidence from developed countries abstract this paper identifies source s contributing to the recent international shift in monetary policy attitudes toward inflation data from 18 developed countries suggests that this shift is connected to the universal increase in policy responses to economic openness in the 1990s

a reexamination of purchasing power parity a multicountry and multiperiod study abstract this paper re examines the purchasing power parity ppp theory in a multiple exchange rate world owing to a lack of precision in estimating the parameters many authors concluded that ppp did not hold very well in the 1970s using a time series cross sectional estimation procedure we are unable to reject the hypothesis that ppp holds in several currencies simultaneously in addition the parameters are precisely estimated this result follows from the estimation procedure which allows us to exploit the cross sectional variation in the data and the contemporaneous correlation in the deviations from ppp

monetary accommodation exchange rate regimes and inflation persistence stable url http links jstor org sici sici 0013 0133 28199205 29102 3a412 3c461 3amaerra 3e2 0 co 3b2 lthe economic journal is currently published by royal economic society your use of the jstor archive indicates your acceptance of jstor s terms and conditions of use available athttp www jstor org about terms html jstor s terms and conditions of use provides in part that unless you have obtainedprior permission you may not download an entire issue of a journal or multiple copies of articles and you may use content inthe jstor archive only for your personal non commercial use please contact the publisher regarding any further use of this work publisher contact information may be obtained athttp www jstor org journals res html each copy of any part of a jstor transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission the jstor archive is a trusted digital repository providing for long term preservation and access to leading academicjournals and scholarly literature from around the world the archive is supported by libraries scholarly societies publishers and foundations it is an initiative of jstor a not for profit organization with a mission to help the scholarly community takeadvantage of advances in technology for more information regarding jstor please contact support jstor org http www jstor orgwed feb 13 07 34 49 2008

deviations from purchasing power parity in the long run this paper demonstrates that deviations from purchasing power parity reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible rate periods for a wide variety of countries and in both monthly and annual data since this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage the paper proposes an alternative explanation which instead relies on financial arbitrage in bonds as the underlying mechanism this paper will demonstrate that deviations from purchasing power parity ppp reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible exchange rate periods for a wide variety of countries and in both monthly and annual data this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage the paper therefore proposes an alternative explanation which does not presuppose free trade in goods but which instead relies on financial arbitrage in bonds as the underlying mechanism the major implication of the theory and the results is that ppp is as likely to be violated in the long as in the short run as an empirical matter deviations from ppp can be observed for most currencies at any instant see kravis et al 21 stockman 37 and genberg 15 among others these deviations are typically both cumulative and persistent the real exchange rate can remain on either side of parity for lengthy but variable time intervals of a year or more as a consequence the current consensus shared

the intergenerational earnings and income mobility of canadian men evidence from longitudinal income tax data our objective is to obtain an accurate estimate of the degree of intergenerational income mobility in canada we use income tax information on about 400 000 father son pairs and find intergenerational earnings elasticities to be about 0 2 earnings mobility tends to be slightly greater than income mobility but nonparametric techniques uncover significant nonlinearities in both of these relationships intergenerational earnings mobility is greater at the lower end of the income distribution than at the upper end and displays an inverted v shape elsewhere intergenerational income mobility follows roughly the same pattern but is much lower at the very top of the income distribution

birth order schooling and earnings birth order effects are posited by many to affect earnings and schooling we show how such effects can be interpreted to shift either the earnings possibility frontier for siblings or parental preferences we find empirical evidence for birth order effects on age adjusted schooling and on earnings for young u s adults though the latter is not robust for all specifications the examination of intrahousehold allocations suggests that these birth order differences occur despite parental preferences or prices by birth order favoring later borns apparently because of stronger endowment effects that favor firstborns

exchange rate rules and macroeconomic stability this paper discusses exchange rate rules in their role as macroeconomic instruments we abstract throughout from the trend part of exchange rate behaviour a crawling peg necessitated by differences in trend inflation and emphasise instead the implications of exchange rate rules in providing flexibility of real wages or in affecting the stability of output or prices

deficits money and inflation abstract this paper examines the interrelationships between monetary and fiscal policy specifically it seeks to determine whether government budget deficits influence monetary growth using a money supply model originally developed by barro we find that deficits have had a significant impact on the growth of the u s money supply throughout most of the period since 1961 such a relationship need not always hold it depends on whether government deficits place upward pressure on interest rates and whether the central bank monetizes the debt in an effort to stabilize interest rates

real exchange rates under alternative nominal exchange rate systems abstract the paper develops an equilibrium model of the determination of exchange rates the relative price of nontraded goods and the current account the focus is on the effects of various real and nominal disturbances and the conditions under which the nominal exchange rate system is neutral with respect to real variables in the economy the model demonstrates an assymetry in the roles of trade and nontraded goods in affecting exchange rates an econometric investigation of the raltion between the exchange rate system and the variability of real exchange rates provides some evidence against the neutrality hypothesis

birth order family size and achievement family structure and wage determination do birth order and the size of one s childhood family influence environment thereby potentially affecting future achievement this article investigates the hypothesis that they do presenting two major empirical findings first neither birth order nor childhood family size significantly influences the level or growth rate of wages a result that is consistent with previous research second family size is both a statistically and economically significant determinant of women s employment status women from small families work less than women from large families when they are young and more than women from large families when they are more mature

intergenerational income mobility in permanent and separated families abstract we focus on the father definition in studies of intergenerational income mobility the association between sons income and their biological fathers income is weaker the less they lived together we also find weaker associations for nonbiological fathers than for biological

a time series approach to test a change in inflation persistence the mexican experience when a central bank commits credibly to a nonaccommodative monetary policy observed inflation should be a stationary process in countries where for a variety of reasons the determinants of inflation could lead it to follow a nonstationary process the adoption of a credible disinflationary programme should therefore induce a fundamental change in the stochastic process governing inflation and in particular should diminish its persistence this article studies the time series properties of both inflation and core inflation during the 1995 2006 period for the mexican economy using recently developed techniques to detect a change in the persistence of economic time series consistently with the adoption of an inflation targeting framework the results suggest that inflation in mexico seems to have indeed switched from a nonstationary to a stationary process around the end of year 2000 or the beginning of 2001

intergenerational correlations in labor market status a comparison of the united states and germany this paper uses data from the panel study of income dynamics and the german socioeconomic panel to calculate comparable measures of the intergenerational correlations of earnings hours and education in the us and germany the results indicate that there is remarkable similarity across the two countries in the correlations of earnings and of annual work hours of fathers and sons all of the correlations which involve women appear to be weaker in germany than the us perhaps due to the greater integration of women in the us into the labor market they find weak correlations in earnings and work hours for parent child pairs of different sexes in both countries they also find that intergenerational correlations in educational attainment are considerably stronger in the us authors

international evidence on the historical properties of business cycles we contrast properties of real quantities with those of price levels and stocks of money for ten countries over the last century although the magnitude of output fluctuations has varied across countries and periods relations among real quantities have been remarkably uniform properties of price levels however exhibit striking differences between periods inflation rates are more persistent after world war ii than before and price level fluctuations are typically procyclical before world war ii and countercyclical afterward fluctuations in money are less highly correlated with output in the postwar period but are no more persistent than in earlier periods jel e32 e31

birth order and the intrahousehold allocation of time and education this paper develops a model of intrahousehold allocation with endogenous fertility which captures the relationship between birth order and investment in children it shows that a birth order effect in intrahouse hold allocation can arise even without assumptions about parental preferences for specific birth orders of children or genetic endowments varying by birth order the important contribution is that fertility is treated as endogenous a possibility that other models of intrahousehold allocation have ignored the implications of the model are that children with higher birth orders that is who are born later have an advantage over siblings with lower birth orders and that parents who are inequality averse will not have more than one child the model furthermore shows that not taking account of the endogeneity of fertility when analyzing intrahousehold allocation may seriously bias the results the effects of a child s birth order on its human capital accumulation are analyzed using a longitudinal

regression toward mediocrity in economic stature this paper provides estimates of the correlation in lifetime earnings between fathers and sons intergenerational data from the national longitudinal survey are used earlier studies conducted for the united states report elasticities of children s earnings with respect to parent s earnings of 0 2 or less suggesting extensive integenerational mobility these estimates however are biased downward by error contaminated measures of lifetime economic status estimates presented in this paper correct for the problem of measurement error and find the intergenerational correlation in income to be on the order of 0 4 this suggests considerably less intergenerational mobility than previously believed jel j62

intergenerational income mobility in the united states social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the united states but remarkably little empirical evidence is available the few existing estimates of the intergenerational correlation in income have been biased downward by measurement error unrepresentative samples or both new estimates based on intergenerational data from the panel study of income dynamics imply that the intergenerational correlation in long run income is at least 0 4 indicating dramatically less mobility than suggested by earlier research copyright 1992 by american economic association

real exchange rate behavior the recent float from the perspective of the past two centuries using annual data spanning two centuries for dollar sterling and franc sterling real exchange rates we find strong evidence of mean reverting real exchange rate behavior using simple stationary autoregressive models estimated on prefloat data we easily outperform nonstationary real exchange rate models in dynamic forecasting exercises over the recent float such stationary univariate equations explain 60 80 percent of the in sample variation in real exchange rates although the degree of short run persistence may be high the econometric estimates imply a half life of shocks to the real exchange rate of about 6 years for dollar sterling and a little under 3 years for franc sterling

monetary policy and central bank financing of government budget deficits we examine the relationship between monetary policy objectives and the central bank financing of the government deficit in eight countries under fixed and flexible exchange rates we find using seasonally adjusted data that only the bundesbank and the federal reserve do not accommodate the government deficit in either exchange rate period furthermore the movement to monetary targeting reduces the linkage between monetary policy and government deficits using seasonally adjusted data only the banca d italia and the nederlandse bank possess significant accommodation of the government deficit during flexible exchange rates additional results are derived for other monetary policy objectives

on non uniqueness in rational expectations models an attempt at perspective abstract many macroeconomic models involving rational expectations give rise to an infinity of solution paths even when the models are linear in all variables some writers have suggested that this non uniqueness constitutes a serious weakness for the rational expectations hypothesis one purpose of the present paper is to argue that the non uniqueness in question is not properly attributable to the rationality hypothesis but instead is a general feature of dynamic models involving expectations it is also argued that there typically exists in a very wide class of linear rational expectations models a single solution that excludes bubble or bootstrap effects one that occur only because they are arbitrarily expected to occur a systematic procedure for obtaining solutions free from such effects is introduced and discussed in addition this procedure is used to interpret and reconsider several prominent examples with solution multiplicities including ones developed by fischer black and john b taylor

macroeconomic effects of budget deficits further international evidence abstract this paper investigates the effects of budget deficits on money growth inflation investment and real output growth using annual data from a sample of 32 countries the findings can be summarized as follows i deficits are generally not monetized and therefore they do not produce inflation via monetary expansions ii deficits are not inflationary even through their alleged aggregate demand effects iii deficits are negatively correlated with the rate of growth of real output but this may just reflect their countercyclical nature and iv increased deficits do appear to retard investment usually after one or two years jel e63 h62

fortunate sons new estimates of intergenerational mobility in the united states using social security earnings data previous studies relying on short term averages of fathers earnings have estimated the intergenerational elasticity ige in earnings to be approximately 0 4 due to persistent transitory fluctuations these estimates have been biased down by approximately 30 or more using administrative data containing the earnings histories of parents and children the ige is estimated to be around 0 6 this suggests that the united states is substantially less mobile than previous research indicated estimates of intergenerational mobility are significantly lower for families with little or no wealth offering empirical support for theoretical models that predict differences due to borrowing constraints

persistence in real variables under alternative exchange rate regimes some multi country evidence abstract in this paper we try to establish empirically whether a different degree of persistence is found in real variables under alternative nominal exchange rate systems the measure of persistence employed is the modified rescaled range statistic proposed by lo econometrica 1991 59 1279 1313 which tests for the presence of long range dependence after having accounted for a wide class of short memory processes the empirical results indicate a systematic increase in persistence in real variables under floating

do birth order and family size matter for intergenerational income mobility evidence from sweden previous studies of intergenerational income mobility have not considered potential birth order or family size effects in the estimated income elasticity this article uses a large sample of individuals born between 1962 and 1964 income elasticities with respect to parents incomes are estimated for individuals with different birth order positions and family sizes results based on labour income and total income for sons and daughters are reported separately the elasticity tends to decrease with family size as well as with birth order for a given family size especially in the labour income analysis of fathers and sons

the trade off between child quantity and quality an empirical investigation of trade offs between number of children and their scholastic performance confirms that family size directly affects children s achievement though parents show no favori

the international convergence of inflation rates during fixed and floating exchange rate regimes abstract according to the assets approach to the balance of payments exchange rate under a fixed exchange rate regime inflation must grow at the same rate in each of the participating countries at least in the long run the model implies that reserve currency inflation causes world inflation the mechanism by which inflation is transmitted when currencies are allowed to float is more complex the long run international convergence of inflation is studied using modern time series techniques on post war data from the g 7 countries the evidence on the convergence of inflation during the fixed regime portion of the sample is strong and consistent with the notion of reserve currency causality i e from the us to the rest of the world the evidence of convergence over the floating portion of the sample is also quite strong but no single currency can be characterized as the common underlying source of world inflation implying the inflation rates are endogenous

price inertia and policy ineffectiveness in the united states 1890 1980 this paper introduces a new approach to the empirical testing of the lucas sargent wallace lsw policy ineffectiveness proposition which compares the lsw hypothesis with an alternative that states that prices respond fully in the long run but only gradually in the short run to nominal aggregate demand disturbances the empirical equations estimated for a new set of quarterly data extending back to 1890 exhibit uniformly high responses of real output and low responses of price changes to anticipated changes in nominal gnp the paper compares and tests three alternative methods of introducing persistence effects into the lsw framework

dominant real exchange rate movements abstract principal component analysis is used to investigate two types of questions about the behavior of real exchange rates first what group of currencies display the same empirical regularities can we attribute dominant movements in real exchange rates to a specific country e g the united states or a group of countries second does the prevailing nominal exchange rate regime affect the long run properties of real exchange rates in the empirical analysis we use real exchange rates between 15 industrial countries for the sample period 1957 to 1986 the standard principal component analysis is modified such that results are independent of the numeraire currency

the real interest rate a multi country empirical study how real interest rates behave over time is critical to our understanding of many macroeconomic issues and much recent research has pursued this question very little of the research however has focused on real interest rates outside the united states this paper is an empirical exploration of real interest rate movements in seven oecd countries from 1967 ii to 1979 ii further research is needed on real rates in other countries for several reasons not only are measures of foreign real rates of interest in their ownright but extending an analysis of real rates to other countries also has the following additional benefits it can generate more powerful statistical tests of propositions previously tested on u s data and yield information on whether results found for the u s hold up in other countries this study pursues several questions that have arisen naturally from this earlier work is the hypothesis that the real rate is constant rejected when the analysis is extended to other countries does the real rate decline with increased inflation and money growth in other countries besides the united states how reliable is the fisher effect in which nominal interestrates reflect changes in expected inflation are movements in nominal interest rates a reliable indicator of movements in real rates what kind of variationsin real interest rates are there in different countries have real rates declined from the 60s to the 70s for other countries besides the u s this abstract was borrowed from another version of this item

the clash of central bankers with labour market insiders and the persistence of inflation and unemployment this paper analyses the implications of monetary policy for the dynamic behaviour of inflation in a natural rate model characterized by endogenous unemployment persistence we present evidence for the main industrial economies that suggests that inflation displays persistence which is of the same order of magnitude as the persistence of deviations of unemployment from its natural rate we provide a theoretical explanation of this fact based on a model of the dynamic interactions between central bankers and labour market insiders the clash in the objectives of central bankers and labour market insiders is what causes both inflation and unemployment to display the same persistence in this model the analysis suggests that inflation persistence could be addressed in a welfare improving way if central banks adopted monetary policy rules that targeted unanticipated changes in unemployment rates instead of deviations of unemployment from its natural rate

the rules of the game international money in historical perspective no world central bank issues a separate currency for commerce across national boundaries instead a system of national monies works more or less well in providing a medium of exchange and unit of account for current international transactions as well as a store of value and standard of deferred payment for longer term borrowing and lending how do national governments and banking institutions interact to provide international money for merchants and investors by necessity this monetary interaction changes with time place political circumstances and financial technology to better understand its historical evolution let us follow robert mundell and distinguish between a monetary system and a monetary order

inflation real returns and capital investment we find evidence for the hypothesis of mundell 1963 and tobin 1965 that the expected real return component of interest rates is negatively related to the expected inflation component in the mundell tobin model the variation in expected real returns is caused by the variation in expected inflation our evidence suggests however that the variation in expected real returns is more fundamentally an outcome of the capital expenditures process equilibrium expected real returns vary directly with capital expenditures in order to induce equilibrium allocations of resources between consumption and investment this positive relation between expected real returns and real activity which comes out of the real sector combines with a negative relation between expected inflation and real activity which is traced to the monetary sector thus inducing the negative relation between expected inflation and expected real returns predicted by mundell and tobin but explained in terms of a model much different from theirs

international transmission of us macroeconomic policy and the inflation record of western europe abstract the interaction between monetary policy government budget deficits and inflation is examined for the four largest western european economies comprising france italy the united kingdom and west germany in order to assess the possible impact of us macroeconomic policy past us monetary base growth deficits and inflation rates are included in the set of explanatory variables for each of the european countries empirical results for the 1962 2 1985 4 sample period reveal interplay between domestic monetary and fiscal policy to be augmented by a significant impact of the us variables across all four countries in the sample

the impact of government deficits on money growth in developing countries abstract this paper investigates the relationship between government budget deficits and money growth in the developing countries for which reliabile data exist it is sometimes suggested that it is more likely that money growth follows debt growth in developing countries due to the embryonic state of capital markets and because the central bank generally comes under direct control of the minister of finance our results provide only mixed support for this contention however in the majority of countries in our sample there is no evidence that government deficits affect money growth for high inflation years there seems to be more support for a relationship between deficits and money growth

flexible exchange rates prices and the role of news lessons from the 1970s recent experience with flexible exchange rate systems has led to renewed interest in the operation of foreign exchange markets as reflected in many recent studies of the principal determinants of exchange rates the 1970s witnessed the dramatic alteration of the international monetary system from a regime of pegged exchange rates which prevailed for about a quarter of a century since the bretton woods conference into a regime of flexible though managed rates as a consequence of the emergence of the new legal and economic system traders national governments and international organisations were confronted with new economic problems choices and instruments during the 1970s ex change rates fluctuated widely and inflation rates accelerated the international monetary system had to accommodate extraordinarily large oil related shocks which affected trade flows in goods and assets huge oil payments had to be recycled uncertainties concerning future developments in international politics reached new heights and the prospects for the world economy got gloomier these developments placed unprecedented pressures on the markets for foreign exchange as well as on other asset markets they were associated with a large slide in the value of the us dollar and resulted in speeding up the creation of new institutions like the european monetary system which provided the formal framework for the management of exchange rates among members

catching up the educational mobility of migrants and natives children in europe migrants into european countries are often less educated than european natives we analyse whether migrants children are more or less likely than natives children to achieve upward educational mobility across generations and study differences in the factors which contribute to differences in mobility for the two groups we find that migrants descendants are more often upwardly mobile and less often downwardly mobile than their native peers in the majority of countries studied and show that the main factor contributing to these patterns is the education level of parents although a lower parental education means that their children are less likely to access the same amount of human social and financial capital as children of more highly educated parents migrants descendants over the last two generations were able to make significant progress in reducing education gaps with natives

intergenerational mobility in britain in this paper we use longitudinal data on children and their parents to assess the extent of intergenerational mobility in britain based on data from the national child development survey a cohort of all individuals born in a week of march 1958 we find that the extent of intergenerational mobility is limited we report an intergenerational correlation of the order 40 to 60 for fathers and sons and 45 to 70 for fathers and daughters in terms of labour market earnings and years of schooling an examination of quartile transition matrices between parental and child earnings outcomes reveals a similar pattern finally it seems on the basis of these transition matrices that there is an important asymmetry in intergenerational earnings mobility with upward mobility from the bottom of the earnings distribution being more likely than downward mobility from the top

mussa redux and conditional ppp abstract the extreme persistence of real exchange rates found commonly in post bretton woods data does not hold in the preceding fixed exchange rate period when the half life was roughly half as large in our sample this finding supports sticky price models as an explanation for real exchange rate behavior extending the classic argument of mussa 1986 from a focus on short run volatility to long run dynamics two thirds of the rise in real exchange rate variance observed across exchange rate regimes is attributable to greater persistence of responses to shocks including greater price stickiness rather than to greater variance of shocks themselves

investigating the multivariate granger causality between energy consumption economic growth and co2 emissions in ghana abstract the economy of ghana continues to witness a rising demand for energy coupled with growth in gross domestic product that follows a wavy trajectory in the midst of this economic phenomenon there is a trend of increasing greenhouse gas emissions with attendant economic health and environmental consequences this paper examines the causal interdependence between energy consumption economic growth and co 2 emissions in ghana from 1960 to 2015 by using the toda yamamoto and granger causality tests the johansen and johansen juselius cointegration approach and the autoregressive distributed lag bounds test approach are employed to test for cointegration relationship the results show that the variables are cointegrated the causality tests reveal that there is feedback granger causality between energy consumption and co 2 emissions since there is a causal link between energy consumption and economic growth with its concomitant effect on co 2 emissions any energy conservation oriented policy not derived from energy efficiency and technological progress may hurt the ghanaian economy in effect more effort should be aimed at improving energy efficiency through technological progress and investment should be made in renewable energy to reduce over reliance on fossil fuels

factors affecting the transmission of earnings across generations a quantile regression approach in this paper we estimate intergenerational earnings mobility models using quantile regressions quantile regression is a less restrictive estimation approach than more commonly used methods such as ordinary least squares and instrumental variables which only estimate the mean effects of intergenerational earnings correlation further we investigate the role of education as an intergenerational transmission mechanism for earnings we find that the intergenerational earnings correlation is greater at the bottom of the son s conditional earnings distribution than at the top and that controlling for son s education reduces the intergenerational earnings correlation we also find that education is relatively more valuable at the bottom of the conditional earnings distribution and thus tends to compress the distribution

nominal exchange rate regimes and the stochastic behavior of real variables abstract this paper examines the behavior of some key macroeconomic variables under alternative exchange rate regimes by looking at persistence volatility and the relative importance of symmetric worldwide versus asymmetric nation specific shocks as a driving force of business cycles the empirical evidence is not supportive of the nominal exchange rate neutrality hypothesis unemployment and real interest rates are more persistent under floating whereas industrial production and real exchange rates are less persistent also the conditional variance of the two latter variables and of the unemployment rate exhibits higher variability in the post bretton woods era furthermore principal components analysis shows that the flexible rate regime is characterized by increased international correlation of business cycles and that cyclic movements have become less country specific

intergenerational income mobility among daughters new evidence on daughters intergenerational mobility in a framework that encompasses women not in the labor force using broader measures of economic status than just the women s own earnings is presented and the role of husbands earnings is highlighted a parallel analysis of sons mobility is performed intergenerational transmission of income status may be weaker for daughters than for sons but is still quite substantial assortative mating is an important element in the intergenerational transmission process

the more the merrier the effect of family size and birth order on children s education there is an extensive theoretical literature that postulates a tradeoff between child quantity and quality within a family however there is little causal evidence that speaks to this theory using a rich dataset on the entire population of norway over an extended period of time we examine the effects of family size and birth order on the educational attainment of children while we find a negative correlation between family size and children s education when we include indicators for birth order and or use twin births as an instrument family size effects become negligible in addition birth order has a significant and large negative effect on children s education we also study adult earnings employment and teenage childbearing and find strong evidence for birth order effects with these outcomes particularly among women these findings suggest the need to revisit economic models of fertility and child production focusing not only on differences across families but differences within families as well

factors affecting monetary policy in an era of inflation abstract a money supply reaction function is developed and estimated within the context of an is lm framework to test the responsiveness of the federal reserve to the government budget restraint and certain parameters of the model the results reveal that a large portion of the recent expansion of the monetary base may be attributed to increases in government debt and provide an essential first step in quantifying the inflationary impact of deficits the monetary base is also expanded in response to increases in inflationary expectations and previous increases in the monetary base but is not statistically correlated to changes in the unemployment rate or potential national income or to rises in interest rates caused by sources other than higher inflationary expectations previous monetary policy or the treasury borrowing requirement

the phillips curve the persistence of inflation and the lucas critique evidence from exchange rate regimes comment we present evidence from the united states and the united kingdom that the persistence of price inflation is significantly higher under managed exchange rate regimes than under gold based fixed exchange rate regimes these differences are also reflected in expectations augmented phillips curves we use a two country macro model with forward looking price setters to demonstrate that higher monetary accommodation of inflation and exchange rate accommodation of inflation differentials increase inflation persistence the evidence does not contradict this hypothesis it supports the hypothesis of forward looking price setters and highlights the empirical significance of the lucas critique jel e31 e42 f33

price flexiblity and output volatility the case for flexible exchange rates abstract this paper uses descriptive statistics and regression analyses to examine the relationship between exchange rate variability and output volatility in developed countries based on 1961 to 1984 data the result indicate that a flexible exchange rate system is associated with less not more dispersion in output growth across industrialized countries despite a more turbulent global environment also countries which have more exchange rate volatility experience less output volatility the relationship appears not to be spurious the results are consistent with the idea that an increase in price flexibility does not destabilize output

family background and economic status in finland the importance of family background for economic outcomes is analyzed using a finnish data set the estimates for intergenerational and sibling correlations in earnings are comparatively low by estimating the magnitude of family influence conditional on parental earnings children with poor parents are found to have lower intergenerational elasticities while the sibling resemblance is higher children with rich parents have higher intergenerational elasticities and the sibling resemblance is also higher except for daughters the results also indicate that the largest share of the intergenerational correlation is transmitted through observed characteristics such as education and in particular occupation jel classification d1 d3 j6