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The Optimal Inflation Rate and Firm-Level Productivity Growth

Weber, Henning - Institut für Weltwirtschaft (IfW) - 2012

Empirical data show that firms tend to improve their ranking in the productivity distribution over time. A sticky-price model with firm-level productivity growth fits this data and predicts that the optimal long-run inflation rate is positive and between 1.5% and 2% per year. In contrast, the...

Persistent link: https://www.econbiz.de/10010886886

(In)determinacy, bargaining, and R&D policies in an economy with endogenous technological change

Lai, Chung-hui - Institut für Weltwirtschaft (IfW) - 2013

growth model can be a potential source of local indeterminacy. He also shows that on a high-growth path, the government, by …

Persistent link: https://www.econbiz.de/10010956031

News versus sunspot shocks in a New Keynesian model

Karnizova, Lilia - Institut für Weltwirtschaft (IfW) - 2010

Separately, news and sunspot shocks have been shown empirically to be determinants of changes in expectations. This paper considers both of them together in a simple New Keynesian monetary business cycle model. A full set of rational expectations solutions is derived analytically. The analytical...

Persistent link: https://www.econbiz.de/10008522643

Liquidity Traps, Learning and Stagnation

Evans, George; Guse, Eran; Honkapohja, Seppo - Institut für Weltwirtschaft (IfW) - 2007

We examine global economic dynamics under learning in a New Keynesian model in which the interest-rate rule is subject to the zero lower bound. Under normal monetary and fiscal policy, the intended steady state is locally but not globally stable. Large pessimistic shocks to expectations can lead...

Persistent link: https://www.econbiz.de/10005700647

Distance to Frontier and the Big Swings of the Unemployment Rate: What Room is Left for Monetary Policy?

Huang, Kevin X.D.; Meng, Qinglai - Institut für Weltwirtschaft (IfW) - 2007

in response solely to future in°ation induce real indeterminacy of equilibrium. Applying the Samuelson … by itself has a quantitatively negligible effect and almost all strict inflation-targeting rules lead to indeterminacy … stickiness, indeterminacy is much less likely to occur as policy also responds to output. With estimated labor supply elasticity …

Persistent link: https://www.econbiz.de/10005755151

International transmission of financial stress: evidence from a GVAR

Dovern, Jonas; Roye, Björn van - Institut für Weltwirtschaft (IfW) - 2013

We analyze the international transmission of financial stress and its effects on economic activity. We construct country specific monthly financial stress indexes (FSI) using dynamic factor models from 1970 until 2012 for 20 countries. We show that there is a strong co-movement of the FSI during...

Persistent link: https://www.econbiz.de/10010886840

Does Short-Time Work Save Jobs? A Business Cycle Analysis

Balleer, Almut; Gehrke, Britta; Lechthaler, Wolfgang; … - Institut für Weltwirtschaft (IfW) - 2013

This paper analyzes the effects of short-time work (i.e., government subsidized working time reductions) on unemployment and output fluctuations. The central question is whether the rule based component (i.e., the existence of the institution short-time work) and the discretionary component...

Persistent link: https://www.econbiz.de/10010886965

Business Cycles and FDI: Evidence from German Sectoral Data

Buch, Claudia M.; Lipponer, Alexander - Institut für Weltwirtschaft (IfW) - 2005

Globalization has effected business cycle developments in OECD countries and has increased activities of firms across national borders. This paper analyzes whether these two developments are linked. We use a new firm-level dataset on the foreign activities of German firms to test whether foreign...

Persistent link: https://www.econbiz.de/10010887024

A reappraisal of the inflation-unemployment tradeoff

Karanassou, Marika; Sala, Héctor; Snower, Dennis J. - Institut für Weltwirtschaft (IfW) - 2005

This paper offers a reappraisal of the inflation-unemployment tradeoff, based on ?frictional growth,? describing the interplay between nominal frictions and money growth. When the money supply grows in the presence of price inertia (due to staggered wage contracts with time discounting), the...

Persistent link: https://www.econbiz.de/10010955553

On the power and weakness of rational expectations: Logical fallacies, periodic bubbles and business cycles

Gracia, Eduard - Institut für Weltwirtschaft (IfW) - 2012

A popular interpretation of the Rational Expectations/Efficient Markets hypothesis states that, if the hypothesis holds, then market valuations must follow a random walk. This postulate has frequently been criticized on the basis of empirical evidence. Yet the assertion itself incurs what we...

Persistent link: https://www.econbiz.de/10010956093