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

sensitivity analysis of efficiency and malmquist productivity indices an application to spanish savings banks abstract hypothesis testing and statistical precision in the context of non parametric efficiency and productivity measurement have been investigated since the early 1990s recent contributions focus on this matter through the use of resampling methods i e bootstrapping techniques however empirical evidence is still practically non existent this gap is more noticeable in the case of banking efficiency studies where the literature is immense in this work we explore productivity growth and productive efficiency for spanish savings banks over the initial post deregulation period 1992 1998 using data envelopment analysis dea and bootstrapping techniques results show that productivity growth has occurred mainly due to improvement in production possibilities and that mean efficiency has remained fairly constant over time the bootstrap analysis yields further evidence as for many firms productivity growth or decline is not statistically significant with regard to efficiency measurement the bootstrap reveals that the disparities in the original efficiency scores of some firms are lessened to a great extent

scale economies x efficiency and convergence of productivity among bank holding companies abstract are the less productive banks catching up to the more productive ones and if so how quickly and by what means the objective of this study is to answer these questions by looking for convergence in productivity among bank holding companies bhcs in the us past research has identified two major factors governing productivity in the banking sector scale economies and x efficiency if the gains from scale economies decline with firm size and if the only difference between bhcs lies in their initial size then the initially smaller bhcs should eventually catch up to the initially larger ones because the former tend to grow more quickly however the findings from this study do not support this hypothesis of absolute convergence indeed the findings show strong evidence for conditional convergence which means that the steady state productivity to which a bhc is converging is conditional on the bhcs own level of x efficiency conditional convergence implies that initial differences in x efficiency among bhcs can between them create permanent differences in steady state productivity

a model of the financial firm with imperfect asset and deposit elasticities abstract the paper develops an intertemporal model to estimate the production technology of financial firms such as banks price taking is testable in each separate market for assets and liabilities and competitive price taking is a nested special case such tests are applied both to outputs and inputs empirical results for a sample of banks in new york and new jersey indicate that price taking applies only in markets for labor and time deposits in markets for loans demand deposits cash and materials the price taking hypothesis is not accepted

inflationary finance in an open economy abstract models of inflationary finance that consider trade and capital flows generally conclude that openness curtails the ability of governments to impose the inflation tax due to currency substitution this paper models two channels that allow central banks to increase inflation tax revenue by opening the economy first central banks can open the capital account subject to a reserve requirement on capital inflows revenue maximization produces a smaller reserve requirement on foreign capital inflows that on domestic deposits second central banks can impose prior import deposits to broaden the monetary base in order to use the inflation tax on imports as an alternative to tariff revenue

earnings inequality and mobility in the united states evidence from social security data since 1937 this paper uses social security administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the united states annual earnings inequality is u shaped decreasing sharply up to 1953 and increasing steadily afterward short term earnings mobility measures are stable over the full period except for a temporary surge during world war ii virtually all of the increase in the variance in annual log earnings since 1970 is due to increase in the variance of permanent earnings as opposed to transitory earnings mobility at the top of the earnings distribution is stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s long term mobility among all workers has increased since the 1950s but has slightly declined among men the decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women are the driving force behind the increase in long term mobility among all workers

time consistent collection of optimal seigniorage a unifying framework this paper reviews the existing literature on the time consistency problem of seigniorage collection when monetary policy is determined by optimal taxation considerations it develops a unifying accounting framework and suggests a general measure for seigniorage which encompasses the standard measures employed in the literature in addition the ex ante optimal solution to the optimal taxation problem is derived and interpreted in relation to the ramsey principle we show that the different recommendations of the public finance literature i e the friedman rule of optimal deflation moderately positive inflation and seigniorage maximizing inflation are specific solutions to the optimal taxation problem the paper continues with a formal illustration of the time consistency problem of the ex ante optimal policy and the characterization of the time consistent solution under discretion as possible solutions to the time consistency problem we consider reputational forces institutional reforms that establish central bank independence and specific ways of asset and debt management in particular it is formally shown that a modified version of the asset and debt management scheme suggested by persson persson and svensson is not only necessary but also sufficient for optimality although this did not hold in their model

nontraditional activities and the efficiency of us commercial banks abstract in recent years an increasing portion of bank income has been generated through nontraditional activities most studies of bank efficiency do not include any measure of nontraditional activities when measuring outputs in this paper cost revenue and profit efficiency are estimated by using models with and without nontraditional output the results suggest that the standard model which omits nontraditional output understates bank efficiency evidence also surfaces that based on efficiency the relative ranking of individual banks changes when nontraditional activities are included as a type of output

the dominance of inefficiencies over scale and product mix economies in banking abstract this study measures and analyzes inefficiencies for all u s banks in 1984 inefficiencies are measured relative to a thick frontier cost function and are found to dominate measured scale and product mix economies most inefficiencies are operational in nature involving the overuse of physical inputs rather than financial involving overpayment of interest also technical inefficiencies proportionate overuse of all inputs dominate allocative inefficiencies improper mix of inputs these results suggest that competitive pressures in banking from deregulation will be focused primarily on banks that do not control costs rather than on those of a particular size or product mix

aggregate spending and the terms of trade is there a laursen metzler effect this paper investigates the spending and current account effects of terms of trade shifts in a model where households maximize utility over an infinite planning period in the framework developed here an economy specialized in production must experience a fall in aggregate spending and a current surplus as a result of an unanticipated permanent worsening in its terms of trade the paper s model thus provides a setting in which the current account deficit predicted by laursen and metzier harberger and others fails to materialize

the role of fixed costs and cost complementarities in determining scope economies and the cost of narrow banking proposals narrow banking proposals would separate insured deposits from most types of bank lending using data from large u s banks the authors examine the extent to which narrow banking proposals are likely to result in increased production costs production costs will rise for nonjoint provision of deposit and loan services if there are cost complementarities in producing the two outputs jointly or if joint production enables banks to spread their fixed costs more effectively unlike standard cost function approaches the authors methods allow them to estimate the fixed cost and cost complementarity effects separately they find the net production cost consequences of narrow banking to be negligible copyright 1993 by university of chicago press

x efficiency in banking looking beyond the balance sheet the distribution free and stochastic frontier estimation methods are used to derive bank specific measures of cost and profit xefficiency this is done to investigate the importance of including aggregate measures of off balance sheet obs activities the results indicate that economic cost and production cost x efficiency estimates increase with the inclusion of the obs measure profit xefficiency estimates are largely unaffected further the composition of bankso obs activities appears to help explain interbank differences in cost and profit x efficiency estimates whereas bank size and the mix between on and off balance sheet banking activities are largely uncorrelated with the x efficiency estimates

distribution of cost and profit efficiency evidence from indian banking this paper uses the nonparametric dea methodology to estimate cost and profit efficiency of indian banks during the post reform period the results show considerable variation in average levels of profit efficiency across various ownership categories of banks in general state owned banks are found to be more efficient than their private counter parts further efficiency tends to be low among the small banks assets up to rs 50 billion indicating that at the existing scale of operations these banks are operating far below the efficient frontier we also examine the distribution of efficiency using nonparametric kernel density estimates the analysis reveals a rightward shift of the efficiency distribution over the years a major part of this shift comes from the state owned banks based on the conditional distribution the study finds strong evidence of ownership explaining the efficiency differential of banks additionally bank size and product mix are also found to be important although to a lesser extent

the terms of trade and the current account the harberger laursen metzler effect the paper examines the effect of terms of trade changes on a small country s spending and current account assuming optimizing behavior in an intertemporal framework with perfect international capital mobility a temporary future terms of trade deterioration implies a deterioration improvement of the trade balance whereas a permanent terms of trade deterioration has an ambiguous effect depending on the rate of time preference nominal and real variables are considered via exact price indexes two periods and an infinite horizon are examined

government revenue from monopoly supply of currency and deposits abstract this paper analyses the revenue maximising problem for a government with a monopoly over the entire money industry i e over the supply of bank deposits as well as currency in circulation in this case the government determines both the inflation rate and the nominal rate of interest on deposits provided currency and deposits are not perfect substitutes a positive nominal deposit rate is warranted illustrative estimates for turkey show that the revenue maximising deposit rate there would be 16 1 2 percent and the inflation rate 35 percentage points above the deposit rate i e 51 1 2 percent

seigniorage and the case for national money in countries with high rates of inflation there is typically movement away from the use of the local currency the paper analyzes the costs and benefits of using a local currency with emphasis on the seigniorage foregone by using a foreign money even if it should be desirable for a country to fix its exchange rate it still loses seigniorage if it does not use its own money the case for using a foreign money then turns largely on the superior discipline imposed on domestic policymakers by removing their control over the money supply alternative methods of imposing discipline are discussed estimates of the amount of seigniorage raised by different governments are presented seigniorage amounts in some cases to about 10 percent of government revenue estimates are also presented of both the annual flow and one time stock costs of giving up use of domestic currencies and instead using the dollar the flow cost is typically about 1 percent of gnp and the stock cost is around 10 percent of gnp

real output of bank services what counts is what banks do not what they own the measurement of bank output a difficult and contentious issue has become even more important in the aftermath of the devastating financial crisis of recent years in this paper we argue that models of banks as processors of information and transactions imply a quantity measure of bank service output based on transaction counts instead of balances of loans and deposits compiling new and comparable output measures for the united states and a range of european countries we show that our counts based output series exhibit significantly different growth patterns from those of our balances based output series over the years 1997 to 2009 since the u s official statistics rely on counts while european statistics rely on balances this implies a potentially considerable bias in the estimate of bank output growth in europe vis avis that in the united states

good bye financial repression hello financial crash some unintended consequences of financial liberalization in latin america are analyzed in this paper intrinsic imperfectious in financial markets and the policy dilemmas they pose are reviewed first the stylized facts of southern cone experiments in financial liberization are then presented alternative ways of organlzing domestic capital markets under latin american conditions are discussed and an eclectic reform mongering program is proposed

efficiency and economies of scale of large canadian banks the authors measure the economies of scale of canada s six largest banks and their costefficiency over time using a unique panel data set from 1983 to 2003 they estimate pooled translog cost functions and derive measures of relative efficiency and economies of scale

the output inflation trade off when prices are costly to change the output inflation trade off is investigated in a rational expectations equilibrium economy in which costly price setting makes it inefficient for agents to vary their prices at every instant it is shown that sticky prices are not some exogenous source of output fluctuation but result from the monetary policy process an economy with slow and counterinflationary money growth exhibits staggered changes in sticky prices as assumed in some new keynesian analyses an economy with fast money growth and a high degree of monetary accommodation exhibits either flexible prices or bunched frequently changing sticky prices

inferring market power from time series data abstract using bank specific data on deposit rates this paper tests for the existence of market power in banking by means of time series estimations a test is developed that can reject perfect competition on the basis of the observed relationship over time between deposit rates and security rates adjusted for operating costs the analysis also examines whether pricing behavior differs across markets and banking products in a manner consistent with hypothesized differences price taking behavior is rejected for the vast majority of banks for the deposit category that one would expect to be more geographically limited greater market power is found to be exercised by banks located in more concentrated markets

banks responses to deregulation profits technology and efficiency the deregulation of interest rates in the early 1980s raised bank funding costs and lowered profits in response banks raised fees for deposit services reduced branch operating costs and shifted to higher earning assets rates of return did not regain their prederegulation levels until the early 1990s our goal is to decompose the change in bank profits following deregulation into i intemal bank initiated adjustments to the new regulatory structure and ii external contemporaneous changes in banks business environment this decomposition will depend in part on the assumed competitive structure of the banking industry with perfect competition output and input prices are part of the external environment and banks responses are limited to changes in output and input quantities an alternative approach assumes imperfect competition where banks have some control over output prices deposit fees minimum balance requirements and interest rates on certain loans and output quantities and input prices comprise the external environment the altemative model is supported by the data using this model large banks but not smaller banks are found to have relied primarily on changing output prices and input use to mitigate and reverse the negative effects of deregulation on profits the adjustment to deregulation was essentially complete after four years following this additional changes in bank profitability during the late 1980s were primarily due to changes in banks business environment

the performance of universal banks evidence from switzerland abstract this paper examines the performance of swiss banks from 1996 to 1999 using a broad definition of bank output we find evidence of large relative cost and profit inefficiencies in swiss banks a more narrow definition that focuses on only traditional activities leads to efficiency estimates that are even lower we also find evidence of economies of scale for small and mid size banks but little evidence that significant scale economies remain for the very largest banks finally evidence on scope economies is weak for the largest banks that are involved in a wide variety of financial activities taken together these results suggest few obvious benefits from the trend toward larger universal banks in switzerland

inflationary rigidities and orthodox stabilization policies lessons from latin america orthodox stabilization programs in latin american countries have been notoriously unsuccessful in combating inflation despite the imposition of stringent cuts in government deficits in most cases inflation came down only slowly and temporarily with concomitant declines in growth and employment the bolivian program one of the only latin american successes is contrasted with those of argentina brazil chile and mexico the problems of dealing with chronic inflation are compared with those of hyperinflationary countries and the influence of price and wage rigidities expectations and credibility is explored the study shows that fiscal restraint is a necessary but not sufficient condition for success and that sound management of nominal variables the exchange rate and money supply are also necessary the critical role of credibility is linked with price and wage rigidities in the chronic inflation countries whereas the unsuitability of hyperinflation is seen to increase the credibility of and thus the potential for successful stabilization programs

the role of money supply shocks in the short run demand for money abstract previous money demand models are either inconsistent with contemporaneous adjustment of the price level to expected changes in the nominal money supply or imply implausible interest rate fluctuations in response to innovations in nominal money we propose a shock absorber money demand model in which money supply shocks affect the synchronization of asset transactions and so engender a temporary increase or decrease in desired money holdings expected changes do not engender such fluctuations in real money inventories in simultaneous estimates for eight industrial countries the shock absorber model proved empirically superior

credibility and changes in policy regime this paper addresses the issue of credibility from an econometric perspective it develops a rational expectations model of inflation in which the dynamics are driven by the level of government spending and by the effect of past inflation rates on the value of real taxes government expenditure is modeled as an exogenous autoregressive process subject to discrete changes in regime the regimes are defined by whether the level of spending is or is not consistent with the rate of inflation targeted by the government as part of a stabilization program in making their money demand decision the agents need to construct probability inferences regarding the state of the expenditure process credibility is quantified by the agents inferred probability that the joint observation of inflation the nominal interest rate and government spending is generated by the reformed expenditure regime in an application to israel results indicate that the failed stabilization program of november 1984 was less than fully c

enjoying the quiet life under deregulation not quite summary most empirical studies in the banking literature assume that the alternative profit function is linearly homogeneous in input prices we show that such an assumption is theoretically unwarranted and that its use may yield misleading results we use koetter et al review of economics and statistics 2012 94 2 462 480 as a benchmark to showcase how empirical results can be sensitive to the linear homogeneity assumption contrary to koetter et al we find a positive relation between market power and profit efficiency when this assumption is dropped this relation is slightly weakened after the wave of intrastate and interstate deregulation but not enough to support the quiet life hypothesis copyright 2014 john wiley sons ltd

a note on efficiency and productivity growth in the korean banking industry 1992 2002 abstract in this paper we present estimates of korean bank inefficiency and productivity change for the period 1992 2002 that are derived from the directional technology distance function our method controls for loan losses that are an undesirable by product arising from the production of loans and allows the aggregation of individual bank inefficiency and productivity growth to the industry level our findings indicate that technical progress during the period was more than enough to offset efficiency declines so that the banking industry experienced productivity growth

how did bank holding companies prosper in the 1990s abstract this paper examines the improved performance of us bank holding companies bhcs from 1991 to 1997 analysis of cost and profit functions using several alternative output specifications suggests that the gains were primarily due to productivity growth and changes in scale economies various econometric methodologies yield productivity growth of about 0 4 per year and the optimal size seems to have increased in the 1990s era of deregulation technological change and financial innovation estimates of both productivity growth and economies of scale are robust across traditional and non traditional output specifications despite the overall success however substantial cost and profit inefficiency existed for bhcs of all sizes in the 1990s these efficiency estimates are particularly sensitive to the output specification and failure to account for non traditional activities like off balance sheet obs items leads profit efficiency but not cost efficiency to be understated for the largest bhcs

mergers and technical efficiency in spanish savings banks a stochastic distance function approach abstract the aim of this paper is to test the temporal variation of technical efficiency of spanish savings banks during the period 1985 1998 furthermore we test whether merged and non merged firms have different levels and temporal patterns of technical efficiency a stochastic output distance function r w shephard theory of cost and production functions princeton university press princeton nj is employed to accommodate multiple output technology the distance function provides the advantage that it does not need information about prices so it can accommodate the multi product nature of the financial sector only using the quantities as data an important point when the assumptions about perfectly competitive markets are unlikely to be met the temporal variation of efficiency is modeled extending the battese and coelli journal of productivity analysis 3 1992 153 169 approach in two ways relaxing the monotonicity of the temporal variation pattern of the efficiency term and allowing for different patterns of efficiency change between merged and non merged firms

the drivers of income inequality in rich countries rising income inequality has recently come centre stage as a core societal concern for rich countries the diagnosis of the forces driving inequality upwards and their relative importance remains hotly contested notably with respect to the roles of globalization versus technology and of market forces versus institutions and policy choices this survey provides a critical review and synthesis of recent research the focus is on income inequality across the entire distribution rather than only on what has been happening at the very top we pay particular attention to including what has been learned from the analysis of micro data to ensuring that the coverage is not unduly us centric and to analyses of the interrelations between the different drivers of inequality the marked differences in inequality trends across countries and time periods reflect how global economic forces such as globalisation and technological change have interacted with differing national contexts and institutions major analytical challenges stand in the way of a consensus emerging on the relative importance of different drivers in how income inequality has evolved in recent decades

macroeconomic effects of a tax on bond interest rates the effect of taxes on interest earned upon capital accumulation and inflation is discussed within an overlapping generations model it is shown that an increase in such a tax is likely to reduce both the capital stock and the inflation rate the model is extended to include the case of a small open economy where the effect on the external debt is discussed some simulation results demonstrate the magnitude of the effects the model is used to discuss the macroeconomic effects of financial liberalization copyright 1991 by ohio state university press

the effect of risk based capital requirements on profit efficiency in banking the purpose of this paper is twofold to show how to measure profit efficiency in banking using a newly developed technique and to use that technique to determine the effect of risk based capital requirements on the profit performance of us banks the measure of profit efficiency used captures deviations from profit maximization arising from technical inefficiency caused by a lack of managerial oversight and allocative inefficiency which is caused by managers choosing a nonoptimal mix of inputs and outputs a leverage ratio constraint and a risk weighted capital ratio constraint are explicitly included in the model which allows identification of the effect on profits of those constraints the techniques are applied to random samples of us banks for 1990 1992 and 1994 the results indicate that allocative inefficiency is a larger source of profit loss than technical inefficiency and that the risk based capital standards have a significant effect on bank allocative efficiency

government revenue from money creation with government and private money abstract for a stationary state we show that if the government is as efficient as a competitive banking industry in producing money then the substitution of private for government money does not alter the revenue from money creation or the present value maximizing holding cost of money if households and non banking firms hold both government and private money then maximum present value requires that the reserve ratio maximize the monetary base and that the base nominal interest elasticity equal minus one with perfect foresight zero money balances and zero revenue from money creation is the only time consistent revenue maximizing solution

deposit insurance market discipline and off balance sheet banking risk of large u s commercial banks abstract the market discipline of off balance sheet banking activities obsas is examined by employing contingent claims valuation techniques to derive implied asset variances from bank equity and from risk premia for bank subordinated debt specifically implied asset variances have been calculated from market and on and off balance sheet information using options pricing techniques theoretically these implied asset variances are better than equity variance or risk premia in proxying bank risk because they capture portfolio effects as well as the non linear nature of contingent claims model and the impact of closure rules empirical results suggest the existence of market discipline of obsas market participants price these obsas as risk reducing

volatile top income shares in switzerland reassessing the evolution between 1981 and 2010 in the past twenty years the share of top incomes in switzerland has risen while exhibiting large variations switzerland is similar to european countries for the top 1 but closer to the united states for higher top income groups with the synthetic control method we close a time gap in the tax data exploiting the fact that swiss cantons changed their tax system at different points in time using social security data which cover all top labor incomes we document the growing importance of labor compared to capital incomes among top income earners in switzerland

an alternative conditioning scheme to explain efficiency differentials in banking abstract we investigate whether specialization ownership type or size bias bank efficiency the approach we apply focusing on the entire distributions of efficiency scores sheds light on the firms precise relative positions when controlling for these firms characteristics results suggest that conclusions related to this topic should consider these techniques given efficiency scores generated by nonparametric techniques are clearly dependent on each other in the statistical sense

core deposits and physical capital a reexamination of bank scale economies and efficiency with quasi fixed inputs this paper compares measures of bank production efficiency assuming all bank inputs are completely variable with measures obtained from specifications which take account of the quasi fixed nature of core deposits and bank physical capital and the treatment of certain deposits as outputs the empirical results imply that scale economy measures vary substantially for small to medium sized banks whereas those for the largest banks are fairly robust to the different specifications estimates of economies of scope were found to be invariant to different input output specifications whereas efficiency measures varied significantly with changes in the specification of the cost function and with the definition of outputs and inputs copyright 1995 by ohio state university press

trademarking status and economic efficiency among commercial banks some evidence for the uk as competition in the banking sector has intensified over the last two decades commercial banks have started to use trademarks to differentiate their products and services from those offered by their competitors less clear are the implications of the trademarking activities on the commercial banks performance in this paper we compare the cost and profit efficiency of trademarking and non trademarking banks in the uk over the period 2001 2013 using stochastic frontier methods we use propensity score matching techniques to identify a sample of non trademarking banks which share the same characteristics as the trademarking banks to ensure that variations in the efficiency between the commercial banks in our sample can be attributed to their trademarking status only we then explicitly test the hypothesis that trademarking and non trademarking banks share the same cost and profit frontiers we cannot reject the hypothesis of a common cost and profit frontier we also find that trademarking banks tend to be more profit efficient than non trademarking banks while there is no significant difference between the cost efficiency scores of trademarking and non trademarking banks

income inequality mobility and turnover at the top in the us 1987 2010 abstract while cross sectional data show increasing income inequality in the united states it is also important to examine how incomes change over time using income tax data this paper provides new evidence on long term and intergenerational mobility and persistence at the top of the income distribution half of those aged 35 40 in the top or bottom quintile in 1987 remain there in 2007 the others have moved up or down while 30 percent of dependents aged 15 18 from bottom quintile households are themselves in the bottom quintile after 20 years most have moved up persistence is lower in the highest income groups

how risky are recessions for top earners how sensitive to business cycles are the earnings of top earners and how does the business cycle sensitivity of top earners vary by industry we use a confidential dataset on earnings histories of us males from the social security administration on average individuals in the top 1 percent of the earnings distribution are slightly more cyclical than the population average but there are large differences across sectors top earners in finance insurance and real estate fire and construction face substantial business cycle volatility whereas those in services who make up 40 percent of individuals in the top 1 percent have earnings that are less cyclical than the average worker

the buffer stock notion in monetary economics not the least of harry johnson s contributions to our discipline was the series of survey papers on aspects of monetary economics which he produced during the 1960s and 1970s it is no exaggeration to say that the way in which the literature of monetary economics is organised even now follows the design which johnson first set out in 1962 and built on in the subsequent decade nevertheless the subject has not stood still and one of the more interesting developments of the last few years has involved the introduction of what has been variously described as the disequilibrium money shock absorber or as i prefer to call it the buffer stock notion into monetary economics the development of this line of thought was getting underway before johnson s untimely death much of it indeed under the auspices of his own research programme at the lse even so this did not happen early enough for the relevant ideas to be put in their proper niche by johnson himself and the buffer stock approach is not yet fully integrated into the mainstream of monetary economics much of the relevant literature is empirical concerned with modelling particular aspects of the monetary experience of specific countries hence it is fragmented and contains few papers which attempt a coherent account of just what this approach is and how it relates to other approaches to monetary analysis although essays by goodhart 1982a b and judd and scadding 1982a contain important discussions of these issues to the best of my knowledge only jonson 1976a and knoester 1979a have devoted entire papers solely to this central issue and these are relatively inaccessible and hence less widely known than they deserve to be in this lecture i shall attempt to give a brief account of the essentials of this approach first i shall sketch out its microeconomic background and then i shall discuss those theoretical characteristics which differentiate it from the neo austrian analysis of robert e lucas jr and his associates as well as from the conventional keynesian approach to monetary economics last but by no means least i shall argue that it yields simple theoretical insights into important empirical and policy related issues which are troublesome for alternative approaches in short my tribute to harry

macroeconomic policy exchange rate dynamics and optimal asset accumulation the paper develops a model of exchange rate and current account determination for a small economy peopled by infinitely lived utility maximizing households in this setting a central bank purchase of foreign exchange has no real effects when central bank foreign reserves earn interest at the world rate and proceeds are returned to the public in contrast an increase in the monetary growth rate does have real effects even in the long run the model developed here implies that an increase in government spending may lead to a surplus on current account the external adjustment process predicted by the model is one in which consumption real balances and external assets all rise or fall simultaneously

evolution of banking efficiency within an unstable macroeconomic environment the case of turkish commercial banks this paper analyses the efficiency performance of the turkish banking sector between 1988 and 1999 a period characterized by increasing macroeconomic instability the technical and scale efficiencies of turkish commercial banks are measured with the use of nonparametric data envelopment analysis the empirical results suggest that over the sample period both pure technical and scale efficiency measures show a great variation and the sector did not achieve sustained efficiency gains it is also reported that the sector suffers mainly from scale inefficiency and scale inefficiency in turn is due to decreasing returns to scale there are also reported differences in the efficiency performance of commercial banks with different ownership status in addition the relationships between profitability asset quality size and the two definitions of efficiency are considered efficient banks are more profitable and pure technical efficiency and scale inefficiency are positively related to size the trend in th

banks non traditional activities under regulatory changes impact on risk performance and capital adequacy using the big six canadian chartered banks quarterly financial statements and daily stock market data from 1982 to 2018 we examine the impact of non interest income on canadian banks risk perfor