money growth output gaps and inflation at low and high frequency spectral estimates for switzerland abstract while central banks generally have abandoned monetary targeting many continue to attach weight to monetary aggregates in setting policy this raises the issue of how money can be combined with other variables when analysing inflation we decompose inflation in switzerland into two frequency bands and show that inflation is granger caused by monetary factors at low frequencies defined as those corresponding to periodicities of more than 4 years but is granger caused by the output gap at high frequencies we also estimate phillips curve models that are augmented by the low frequency components of the monetary factors

farm productivity and rural poverty in india armed with new data we return to an old question from the pages of this journal to what extent do india s rural poor share in agricultural growth combining data from 24 household sample surveys spanning 35 years with other sources we estimate a model of the joint determination of consumption poverty measures agricultural wages and food prices we find that higher farm productivity brought both absolute and relative gains to poor rural households a large share of the gains was via wages and prices though these effects took time the benefits to the poor were not confined to those near the poverty line

oil price inflation pass through in romania during the inflation targeting regime abstractin the wake of the inflation targeting strategy in romania we estimate the impact of international oil prices upon the consumer price index cpi and core inflation the inflation target was systematically missed by the monetary authorities who explain this failure by exogenous factors using a frequency domain framework we show that the oil price inflation pass through can be observed only for those components of inflation which include volatile prices and only in the medium run our results put forward that the constant missing of the target cannot be explained by the oil price inflation pass through and the credibility of the strategy is put into question

partisan governments the international economy and macroeconomic policies in advanced nations 1960 93 this article examines the impact of parties domestic institutions and the international economy on the conduct of monetary and fiscal policies using time series cross section data from nineteen oecd countries for the years between 1960 and the mid 1990s the results are as follows partisan governments have affected alone and in interaction with the organization of labor markets the pattern of macroeconomic management still their impact has varied over time partly as a function of economic conditions but fundamentally as a function of the degree of financial liberalization and the exchange rate system in place after following broadly similar macroeconomic policies in the 1960s oecd governments pursued divergent monetary and fiscal policies in response to the economic slowdown of the 1970s even when they initially adopted countercyclical measures conservative governments quickly favored tight monetary policies and strove to achieve fiscal discipline by contrast taking advantage of generalized capital controls and floating exchange rates socialist cabinets embraced demand management policies in a systematic fashion mostly through budget deficits in corporatist countries and through both loose monetary and loose fiscal measures in noncorporatist settings as financial liberalization progressed in the early 1980s partisan and institution led differences in macroeconomic policies waned across countries

oil price shocks and their short and long term effects on the chinese economy a considerable body of economic literature shows the adverse economic impacts of oil price shocks for the developed economies however there has been a lack of empirical study of this kind on china and other developing countries this paper attempts to fill this gap by answering how and to what extent oil price shocks impact china s economy emphasizing on the price transmission mechanisms to that end we develop a structural vector auto regressive model our results show that an oil price increase negatively affects output and investment but positively affects inflation rate and interest rate however with the differentiated price control policies for materials and intermediates on the one hand and final products on the other hand in china the impact on real economy represented by real output and real investment lasts much longer than that to price monetary variables our decomposition results also show that the short term impact namely output decrease induced by the cut of capacity utilization rate is greater in the first one to two years but the portion of the long term impact defined as the impact realized through an investment change increases steadily and exceeds that of short term impact at the end of the second year afterwards the long term impact dominates and maintains for quite some time

the effects of oil price shocks on expenditure category cpi in this study we apply a two block structural vector autoregressive var model proposed by kilian and park 2009 in order to investigate the dynamic effects of changes in oil price on the expenditure category consumer price index cpi in the united states and japan our results confirm that each expenditure category price index responded very differently to the same structural shock and that whether changes in oil price function as a positive stimulus or a negative shock for the individual expenditure category prices also depends on the kind of underlying shock that drives the changes in oil price finally our results also reveal that the manner in which changes in oil price affect each expenditure category price differs between the united states and japan and these detailed level differences may lead to aggregate level differences in the price response of both countries to changes in oil price

the egyptian farm labor market revisited abstract egyptian evidence loomed large in the old debate between proponents of surplus labor and their neo classical critics the paper uses the recent experience of this labor market to revisit the issues the unprecedented changes engendered by the oil boom basically confirm the neo classical view one may discern the following stylized facts of the egyptian farm labor market 1 both supply and demand for labor are inelastic with respect to the wage 2 real wages are very flexible rising and then falling sharply with international oil prices 3 supply shifts explain these real wage changes 4 these are in turn primarily the outcome of international labor migration 5 regional wage disparities remained roughly constant during the past decade the conclusion draws some implications for poverty alleviation and for the political economy question of how the benefits of the regional oil boom were shared

what caused the rise of conservatism a french view conservatism daniel cohen existing theories of political cycles fail to provide an adequate explanation for the widespread shift to conservative economic policies on one view political parties merely court the median voter but this theory is incomplete because it fails to explain why the median voter has become conservative other theories differentiate parties by their ideologies but they wholly fail to explain where changes of ideology come from this author proposes an explanation that does not need to rely on changes in the underlying preferences of voters or parties but in which changing economic conditions lead to different policy choices thus while ends remain unchanged the means to achieve these ends may vary over time the distinction between right and left is still portrayed by the classical trade off between economic efficiency and equity in order to promote equity the government can always redistribute wealth but in order to preserve economic efficiency wealth redistribution should not be expected to be repeated systematically hence the median voter will prefer a laissez faire to an interventionist government when the economy is understood to be affected by a persistent disturbance and the converse when disturbances are temporary thus the shift to conservatism is seen as the result of the sometimes belated realization by the electorate that the shocks of the 1970s were long lasting current forecasts that unemployment in europe is unlikely to fall suggest the continuation of conservative policies irrespective of whether they are implemented by the right or the left

economic and monetary union in europe the european council s maastricht agreement maps out a precise route to monetary union and the eventual introduction of a common currency my discussion begins with a look at the general arguments for and against monetary union i shall then discuss the proposed constitution of the european central bank and whether it is likely to be conducive to monetary stability together with some of the problems posed by the transition to the new regime finally i will turn to the issue of rules for the conduct of fiscal policy and the question of fiscal federalism

fiscal policy and the current account deficits and trade jose vinals does the balance of payments act as an external constraint on the design of domestic economic policy in practice most governments believe it does yet popular discussion is sometimes confused this paper begins by evaluating the nature of the external constraint and the extent to which it can adequately be measured by the current account of the balance of payments it is often argued that a fiscal expansion will increase employment it is also widely held that a fiscal expansion necessarily leads to a deterioration of the current account while these propositions may hold in specific circumstances neither is generally true the theoretical basis of the two propositions is examined and compared with recent international experience when important changes in fiscal stance occurred the popular presumptions are confirmed by recent experience in the us the uk and germany but france is a counterexample to the first and spain to the second the important policy implication is that one can identify both in theory and in practice clear circumstances in which expansionary fiscal policy is appropriate and will not be thwarted by external considerations

systemic conflict and regional monetary integration the case of europe existing explanations of european monetary integration emphasizing economic interdependence issue linkage institutions and domestic politics take a predominantly regional approach in the international monetary thesis developed here i argue that u s policy disturbances transmitted through the international monetary system created compelling incentives for european states to cooperate on exchange rate and monetary policy i develop a general theory of macroeconomic power based on open economy macroeconomics and show how the exercise of such influence can drive regional monetary integration this article then tests the international thesis with reference to monetary integration within the european union by examining four periods in which the united states acted to stabilize the international monetary system and seven episodes in which it disrupted the system european governments and central banks reduced regional monetary cooperation when the united states supported system stability and strengthened it after each episode of disruption the evidence thus strongly supports the inference that the link is causal

italy the real effects of inflation and disinflation over the past 15 years the italian economy has experienced rather uncommon developments by comparison with the rest of europe these developments have been described alternatively in terms of near collapses miracles or impending bankruptcy such dramatic characterizations are of little help in understanding what happened yet they somehow reflect a history of large and often unexpected changes and a sequence of policy turn arounds from a distance the italian experience still raises some issues of general interest regarding the means and the timing of an adjustment process in italy return to profitability was pursued before macroeconomic stabilization instead of resulting from it as happened elsewhere it is indeed our contention that this evolution is sometimes commendable adjustment in italy was quicker and less costly in terms of output investment and employment

effect of flood on agricultural wages in bangladesh an empirical analysis summary this paper analyzes the effects of riverine floods on agricultural wages in bangladesh drawing upon the district wise monthly data over 1979 2000 we model wages as a dynamic process we find that floods have positive implications for wages in the long run in flood months however agricultural wages decline in the inundated districts we obtain difference in difference estimates to show that the magnitude of impact of flood depends on the relative flood proneness of a district and the relative severity of flood conditions our results indicate that favorable demand and supply conditions in the agricultural labor market can mitigate the impact of disasters on wages in bangladesh

compensation and wealth transfers in the french nationalizations 1981 1982 abstract this paper studies the price reaction of french common stocks to the recent nationalization program and estimates the value that nationalized firms would have had if the nationalization program had not occurred it finds that expropriated holders of the nationalized portfolio received a government legislated takeover premium of about 20 percent premiums received for individual firms ranged from 3 to 44 percent industrial firm shareholders benefited most from the program the conditions surrounding the premium dispersion raise questions about equal treatment among expropriated shareholders

the egyptian food subsidy system operation and effects on income distribution abstract this paper examines the effect of the egyptian food subsidy system on income distribution the system now includes only bread wheat flour sugar and oil even though these four subsidized foods are basically available to all egyptians this study finds that the system is self targeted to the poor because it subsidizes inferior foods results of a new food characteristic demand system show that two of the four subsidized foods bread and sugar are inferior foods egyptian food subsidies thus have a positive impact on income distribution when food subsidies are not included in expenditures the gini coefficient rises by 3 7 in urban areas and by 1 2 in rural areas

industrial policy through the restriction of capital flows a test of several claims made about industrial policy we examine the extent and effect of an interest rate based industrial policy in japan france great britain and west germany while using the united states as a control case we argue that some governments have undertaken industrial policies that achieve a belowcompetitive market interest rate thereby allowing the redirection of financial flows to firms in the form of cheaper capital zysman shonfield and others believe these restrictions on interest rates cause additional firm investment change the time horizon of managers and transfer wealth from domestic savers to domestic firms we first examine the role of industrial policy by assessing the relationship between domestic interest rates and eurocurrency rates we argue that the degree of difference between these rates is an indication of the extent of one type of industrial policy we then evaluate the relative influences of domestic and external interest rates on stock prices as a way of measuring the consequences of these industrial policies if the policy were completely effective i e insulating the relevant interest rate from market forces only the domestic interest rate would influence stock prices we assess the conditions under which states demonstrate sufficient strength to undertake policies to insulate domestic markets we find that only france under the socialists succeeded in positively affecting economic activity through this type of industrial policy and that britain prior to thatcher s election demonstrated ineffective policies some evidence also indicates that japan s industrial policies were less effective than previously believed no evidence of such policies was found for west germany under either the socialists or the csu cdu alliance we tested for partisan political changes in government policies and except in great britain found none

energy consumption and economic growth for selected oecd countries further evidence from the granger causality test in the frequency domain abstract this paper aims to reexamine the causal relationship between energy consumption and economic growth for 20 oecd countries to that end we employ a granger causality test in the frequency domain which allows us to distinguish short temporary and long run permanent causality the empirical results could be summarized as following first in terms of causality running from gdp to energy consumption there is a temporary relationship for australia austria canada italy japan mexico the netherlands portugal the uk the usa and a permanent relationship for austria belgium denmark germany italy japan the netherlands norway and the usa second in terms of causality running from energy consumption to gdp there is a temporary relationship for austria denmark italy the netherlands norway and portugal and a permanent relationship for belgium finland greece italy japan and portugal the main implication of our finding is that the energy policies should take into consideration not only the causality direction between economic growth and energy consumption but also whether it is temporal or permanent and furthermore authorities must design policy actions accordingly

impact of oil price shocks on output inflation and the real exchange rate evidence from selected asean countries this article analyses the impact of oil price shocks on real output inflation and the real exchange rate in thailand malaysia singapore the philippines and indonesia asean 5 using a structural var model the cointegration tests indicate that the macroeconomic variables of these countries are cointegrated and share common trends in the long run the impulse response functions reveal that oil price fluctuations do not impact the asean 5 economies in the long run and much of its effect is absorbed within five to six quarters the variance decomposition results further assert that with a few exceptions oil price shocks do not explain a significant variation in any of the variables under consideration we also identify a very unique pattern of response to oil price fluctuations between malaysia and singapore and between the philippines and thailand the pairs exhibit a high degree of similarity in their responses they do not share any commonalities across the group

the economic consequences of president mitterrand france under mitterrand jeffrey sachs and charles wyplosz while french economic performance has not conformed to the enthusiastic promises of early 1981 this paper argues that the widely held view that it has been an unmitigated failure is unwarranted first the general deterioration can largely be dated back to the early seventies second the early and unfortunate attempt at a demand led expansion was both moderate in size and quickly reversed finally the post 1983 anti inflationary policies have been successful so that overall the disappointing french performance has been on a par with and in some ways better than the rest of europe but the main theme of the paper is the emphasis on the supply side the analysis is organized around the nairu the threshold rate of unemployment below which inflation rises in an attempt to explain the factors which have led to a continuous rise of the nairu since 1973 the paper focuses on labour costs particularly on the wedge between the costs borne by employers and net take home pay to achieve and sustain a significantly lower level of unemployment labour taxes must be cut thus reducing the wedge and the nairu and there must be a corresponding demand stimulus so that actual unemployment can fall to this level

induced wage effects of changes in food prices in egypt the trend in real agricultural wages in egypt over the two decades since the mid 1970s is well described by an inverted u shaped curve with a peak around 1985 but the rise and fall of real wages masks a complex dynamic process by which nominal wages adjust in response to changes in food prices we use governorate level panel data for 1976 93 to explore the nature of this adjustment process our results indicate that nominal wages adjust slowly there is a significant negative initial impact of rising food prices on real wages though wages do catch up in the long run

dominant interest and inflation differentials within the ems abstract this paper investigates nominal interest and inflation behavior in the ems between march 1979 and september 1989 using a modified version of principal components analysis neither over the whole period nor after march 1983 has the ems functioned as a dmark zone deviating movements in inflation and interest rates between ems countries still persist most important is the division between germany the netherlands and the united kingdom on the one hand and belgium france and italy on the other differences in deflationary policies between countries inside and outside the ems appear to be the most important determinant of this result

estimation of a quarterly macroeconomic model with quantity rationing we specify and estimate a small fix price model with quantity rationing on both the goods and labor markets the side of the market which is rationed is random the model is able to generate a productivity cycle and the degree of capacity utilization is endogenous the rationing scheme allocating supply between the various components of demand is estimated the probabilities of being in the various regimes the intensity of the dispquilibrium on the markets and the results of policy exercises are discussed

price scissors and the structure of the economy this paper undertakes three sets of tasks i it analyzes positive and normative aspects of price scissors the domestic terms of trade between agriculture and industry within nonsocialist as well as socialist ldcs the critical role of the economy s institutional features e g external trade environment wage and income determination and wage productivity effects is emphasized certain aspects of the soviet industrialization debate and subsequent collectivization are interpreted ii it develops simple rules to delineate who gains and who loses within agriculture from changes in terms of trade iii it presents powerful and informationally parsimonious rules for pareto improving price reforms for cash crops and agricultural inputs