budget deficits stability and the monetary dynamics of hyperinflation hyperinflationary processes usually occur in countries with extremely large budget deficits in models of inflationary finance with rational expectations e g buiter 1987 large budget deficits cannot lead to hyperinflation the purpose of this paper is to reconcile the standard theoretical model with the stylized facts it shows that by introducing a lag in the adjustment of the money market into the standard inflationary finance model large budget deficits are indeed the main reason for hyperinflation the paper also provides an explanation for the ineffectiveness of moderate reductions in the deficit in reducing inflation and argues that fiscal lags can be destabilizing copyright 1989 by ohio state university press

banking in computable general equilibrium economies abstract in this paper we develop a computable general equilibrium economy that models the banking sector explicitly banks intermediate between households and between the household sector and the government sector households borrow from banks to finance their purchases of houses and they lend to banks to save for retirement banks pool households savings and they purchase interest bearing government debt and non interest bearing reserves we use this structure to answer two sets of questions one normative in nature that evaluates the welfare costs of alternative monetary and tax policies and one positive in nature that studies the real effects of following a procyclical interest rate policy rule

money demand and seigniorage maximizing inflation conventional estimates of the seigniorage maximizing inflation rate often make use of the cagan form which implies a constant semielasticity of money demand with respect to inflation this paper shows that the elasticity of substitution in transactions between money and bonds determines how the inflation semielasticity of money demand changes as inflation rises allowing for a variable semielasticity estimates of seigniorage maximizing inflation for a panel of eleven high inflation countries are lower than those obtained by using the cagan form estimates based on the correct measure of the opportunity cost of money also differ sharply from those obtained when using conventional inflation measures copyright 1995 by ohio state university press

some empirical evidence on the effects of shocks to monetary policy on exchange rates this paper investigates the effects of shocks to u s monetary policy on exchange rates we consider three measures of these shocks orthogonalized shocks to the federal funds rate orthogonalized shocks to the ratio of nonborrowed to total reserves and changes in the romer and romer index of monetary policy in sharp contrast to the literature we find substantial evidence of a link between monetary policy and exchange rates specifically according to our results a contractionary shock to u s monetary policy leads to i persistent significant appreciations in u s nominal and real exchange rates and ii significant persistent deviations from uncovered interest rate parity in favor of u s interest rates

fighting inflation with high interest rates the small open economy case under flexible prices in high inflation countries policymakers often end up paying interest on part of the money supply higher interest rates on money have been used both to reduce inflation and to defend the domestic currency this paper analyzes the effectiveness of such a policy in the context of an open economy with flexible prices and exchange rates a temporary increase in the interest rate on money reduces the price level on impact but inflation follows an explosive path afterwards the domestic currency appreciates on impact but begins to depreciate immediately thereafter hence the analysis does not support the use of high interest rates in disinflationary programs copyright 1995 by ohio state university press

interest rates and the exchange rate a non monotonic tale abstract for over 30 years the empirical international finance literature has been unable to detect a clear systematic relationship between interest rates and the nominal exchange rate we take a fresh look at the data and uncover a new stylized fact for a cross section of countries the relationship between the exchange rate and short term interest rates is non monotonic small increases in the nominal interest rate appreciate the currency whereas larger increases depreciate the currency we develop a model that explains this stylized fact based on the interaction of three effects higher interest rates increase money demand and hence appreciate the currency but also raise the fiscal deficit and depress output both of which tend to depreciate the currency we provide cross country evidence for the presence of these effects in the data

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

operational research in education operational research or techniques have been applied from the early stages of the discipline to a wide variety of issues in education at the government level these include questions of what resources should be allocated to education as a whole and how these should be divided amongst the individual sectors of education and the institutions within the sectors another pertinent issue concerns the efficient operation of institutions how to measure it and whether resource allocation can be used to incentivise efficiency savings local governments as well as being concerned with issues of resource allocation may also need to make decisions regarding for example the creation and location of new institutions or closure of existing ones as well as the day to day logistics of getting pupils to schools issues of concern for managers within schools and colleges include allocating the budgets scheduling lessons and the assignment of students to courses this survey provides an overview of the diverse problems faced by government managers and consumers of education and the or techniques which have typically been applied in an effort to improve operations and provide solutions

currency fluctuations in the post bretton woods era the international monetary landscape that has emerged since the felling of bretton woods is characterized by a hybrid exchange rate system that lies somewhere between the textbook polar cases of a gold standard and a pure float this system has relatively flexible exchange rates between major countries active central bank intervention in the market for the major currencies and predominantly fixed exchange rates relative to the dollar or to some basket of currencies for less developed countries and newly industrializing nations the majority of research on currency markets since the early 1970s has focused on the characteristics of flexible exchange rates under this hybrid regime my thesis is that this research has been unsuccessful the proportion of monthly or quarterly exchange rate changes that current models can explain is essentially zero even after the fact forecasts that use actual values instead of forecasted values of the explanatory variables cannot explain major currency movements over the post bretton woods era this result is quite surprising since exchange rate changes would be entirely unpredictable only in very special cases of the theoretical models discussed as the discussion below will argue it is not a general implication of market efficiency that exchange rates follow a random walk process 1

anticipating the consequences of school reform a new use of dea we use dea type linear programming techniques to simulate a basic component of educational reform eliminating restrictions on the allocation of school personnel our technique allows us to identify potential output gains or equivalently potential cost savings from reform we can also identify which personnel groups are likely to gain and lose under this reform when we apply our model to a sample of texas school districts we find evidence that the educational establishment has substantial economic rents to protect from school reform and that the primary beneficiaries of reform are likely to be affluent school districts with few minority students the technique which relies on the relationship between the direct and indirect distance functions can be easily generalized to measure the potential gains from removing other input restrictions such as union work rules environmental regulations or deed restrictions

combining the assumptions of variable and constant returns to scale in the efficiency evaluation of secondary schools our paper reports on the use of data envelopment analysis dea for the assessment of performance of secondary schools in malaysia during the implementation of the policy of teaching and learning mathematics and science subjects in the english language ppsmi the novelty of our application is that it makes use of the hybrid returns to scale hrs dea model this combines the assumption of constant returns to scale with respect to quantity inputs and outputs teaching provision and students and variable returns to scale vrs with respect to quality factors attainment levels on entry and exit and socio economic status of student families we argue that the hrs model is a better informed model than the conventional vrs model in the described application because the hrs technology is larger than the vrs technology the new model provides a tangibly better discrimination on efficiency than could be obtained by the vrs model to assess the productivity change of secondary schools over the years surrounding the introduction of the ppsmi policy we adapt the malmquist productivity index and its decomposition to the case of hrs model

a parallel production frontiers approach for intertemporal efficiency analysis the case of taiwanese commercial banks abstract a comparison of the efficiency of a production unit at one period with those of other units at another period is challenging because the bases for calculating efficiency are usually different the malmquist productivity index mpi is an effective measure that can overcome this difficulty however the existing measures of this index have various weaknesses with regard to feasibility circularity decomposability and consistency this paper thus develops a model to construct parallel production frontiers for the units at different periods to measure the mpi this model is always feasible the calculated mpi has the property of circularity it can be decomposed into the product of efficiency change and technical change and the results are consistent an application of this model to taiwanese commercial banks for the period 2008 2013 confirms these merits the results also indicate that in general the mpis of these banks increased from 2008 to 2013 and this was attributed to improvements in technology since the efficiencies measured from the parallel model are comparable among different units and different periods they can be used for intertemporal analysis to identify the banks with unsatisfactory performance in different periods

does inflation increase after a monetary policy tightening answers based on an estimated dsge model abstract this paper estimates the importance of the cost channel of monetary policy in a new keynesian model of the business cycle a model with nominal and real rigidities is extended by assuming that a fraction of firms need to borrow money to pay their wage bill hence a monetary policy tightening increases effective unit labor costs of production and might imply an increase in inflation the paper examines the conditions under which the model can generate a positive response of inflation to a monetary contraction and estimates the model s parameters using bayesian methods the paper shows that the estimated demand side effects of monetary policy dominate the estimated supply side effect even if restrictions are imposed that make occurrence of a positive inflation response to a monetary contraction more likely

returns to scale in convex production technologies the notion of returns to scale rts is well established in data envelopment analysis dea in the variable returns to scale production technology the rts characterization is closely related to other scale characteristics such as the scale elasticity most productive scale size mpss and global rts types indicative of the direction to mpss in recent years a number of alternative production technologies have been developed in the dea literature most of these technologies are polyhedral and hence are closed and convex sets examples include technologies with weakly disposable undesirable outputs models with weight restrictions and production trade offs technologies that include several component production processes and network dea models for most of these technologies the relationship between rts and other scale characteristics has remained unexplored the theoretical results obtained in this paper establish such relationships for a very large class of closed convex technologies of which polyhedral technologies are an important example

cost and learning efficiency drivers in australian schools a two stage network dea approach this article explore performance issues in australian public schools using a two stage dea network model which accounts simultaneously for both cost and learning efficiency levels in the cost efficiency stage different types of expenses and investments are employed to support a given number of students teachers and administrative staff in the learning efficiency stage these groups of individuals help to produce important outputs related to performance in student tests and school rankings results indicate that australian public schools are heterogeneous policy implications are also discussed

the effect of competition on the efficiency of secondary schools in england abstract in this paper we calculate the technical efficiencies based upon multiple outputs school exam performance and attendance rates of all secondary schools in england over the period 1993 1998 we then estimate models to examine the determinants of efficiency in a particular year and the determinants of the change in efficiency over the period our results suggest that the greater the degree of competition between schools the more efficient they are the strength of this effect has also increased over time which is consistent with the evolution of the quasi market in secondary education competition is also found to be an important determinant of the change in efficiency over time there is however some evidence of conditional convergence between schools

asset prices and public information abstract this paper examines the impact of public quality information on the structure of equilibrium prices in a consumer durables market we model the link between prices and an observable quality index on the basis of the user cost approach using cross section data of the west german automobile market we show that the hypothesis of information efficiency cannot be rejected

deregulation and productivity decline the case of spanish savings banks abstract during the 1980s many regulatory constraints limiting competition in spanish banking were relaxed or removed although deregulation came later to savings banks than to the rest of the banking sector two consequences of partial deregulation of savings banks have been a rapid growth in branching activity much of it geographically dispersed and a burst of merger activity in this paper we investigate productive efficiency and total factor productivity change in spanish savings banks over the 1986 1991 post deregulation period neither branching nor mergers provide an adequate explanation for the magnitude or the nature of the productivity decline we observe over the period

do high interest rates defend currencies during speculative attacks abstract do high interest rates defend currencies during speculative attacks or do they have the perverse effect of increasing the probability of a devaluation of the currency under attack drawing on evidence from a large sample of speculative attacks in developed and developing economies this paper argues that the answer to both questions is no in particular this paper documents a striking lack of any systematic association whatsoever between interest rates and the outcome of speculative attacks the lack of clear empirical evidence on the effects of high interest rates during speculative attacks mirrors the theoretical ambiguities on this issue

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

reserve requirements and the inflation tax the inflation tax on currency and required bank reserves is modeled in a general equilibrium setting by specifying a transactions technology in which currency and demand deposits allow agents to economize on time spent transacting in the goods market revenue maximizing conditions for the nominal interest rate and reserve ratio are analyzed for any given revenue requirement less than the revenue maximizing level minimization of the welfare costs of inflationary finance results in the choice of a combination of the interest rate and reserve ratio that lies on a set of tangency points formed by iso revenue and iso welfare curves copyright 1989 by ohio state university press