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International transmission of shocks, money illusion and the velocity of money
Sousa, Teresa - Institut für Weltwirtschaft (IfW) - 2011
economy. Furthermore we introduce a velocity of money shock revisiting the Quantity Theory of Money within the open economy … paradigm of microeconomic theory and invoked since a tendency to think in nominal rather than real terms becomes evident in the … a productivity shock are increasing in the degree of money illusion and decreasing in the degree of openness of the …
Persistent link: https://www.econbiz.de/10009370687
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Global Inflation
Ciccarelli, Matteo; Mojon, Benoît - Institut für Weltwirtschaft (IfW) - 2007
This paper shows that ination in industrialized countries is largely a global phenom- enon. First, inations of (22) OECD countries have a common factor that alone accounts for nearly 70% of their variance. This large variance share that is associated to Global Ination is not only due to the...
Persistent link: https://www.econbiz.de/10005700550
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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
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Testing the New Keynesian Model on U.S. and Euro Area Data
Juselius, Mikael - Institut für Weltwirtschaft (IfW) - 2008
I apply the Johansen and Swensen (1999, 2004) method of testing exact rational expectations within the cointegrated VAR (Vector Auto-Regressive) model, to testing the New Keynesian (NK) model. This method permits the testing of rational expectation systems, while allowing for non-stationary...
Persistent link: https://www.econbiz.de/10005083406
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Hidden Economies and the Socially Optimal Fiscal-Tax to Liquidity-Tax Ratio
Ercolani, Marco G. - Institut für Weltwirtschaft (IfW) - 2007
Differential tax analysis is used to show how the socially optimal fiscal-tax to liquidity-tax ratio changes with the relative size of the tax-evading hidden economy. The smaller the relative size of the hidden economy, the larger the optimal fiscal-tax to liquidity-tax ratio. The empirical...
Persistent link: https://www.econbiz.de/10005083413
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Expectations, Monetary Policy, and Labor Markets: Lessons from the Great Depression
Reicher, Christopher P. - Institut für Weltwirtschaft (IfW) - 2009
This paper estimates a series of shocks to hit the US economy during the Great Depression, using a New Keynesian model with unemployment and bargaining frictions. Shocks to long-run inflation expectations appear to account for much of the cyclical behavior of employment, while an increase in...
Persistent link: https://www.econbiz.de/10005017500
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The effect of inflation on real commodity prices
Reicher, Christopher; Utlaut, Johannes - Institut für Weltwirtschaft (IfW) - 2011
Recent research has shown that economic conditions have an important effect on real commodity prices. We quantify the contribution of fluctuations in inflation to this particular link. In the data, a temporary rise in inflation causes real commodity prices to rise, as does a rise in trend...
Persistent link: https://www.econbiz.de/10009292398
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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 sticky price models with endogenous investment, virtually all monetary policy rules that set a nominal interest rate in response solely to future in°ation induce real indeterminacy of equilibrium. Applying the Samuelson-Farebrother conditions, we obtain a necessary and suffcient condition...
Persistent link: https://www.econbiz.de/10005755151
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Strategic Complementarities and Optimal Monetary Policy
Levin, Andrew T.; Lopez-Salido, J. David; Yun, Tack - Institut für Weltwirtschaft (IfW) - 2007
In this paper, we show that strategic complementarities–such as firm-specific factors or quasikinked demand–have crucial implications for the design of monetary policy and for the welfare costs of output and inflation variability. Recent research has mainly used log-linear approximations to...
Persistent link: https://www.econbiz.de/10005818787
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Regular Adjustment. Theory and Evidence
Konieczny, Jerzy; Rumler, Fabio - Institut für Weltwirtschaft (IfW) - 2007
We ask why, in many circumstances and many environments, decision-makers choose to act on a time-regular basis (e.g. adjust every six weeks) or on a stateregular basis (e.g. set prices ending in a 9), even though such an approach appears suboptimal. The paper attributes regular behaviour to...
Persistent link: https://www.econbiz.de/10005818800