During the transition from a centrally planned economy to a market economy, many countries seem to have experienced some degree of macroeconomic instability. This paper attempts to provide a theoretical explanation of this phenomenon. The paper develops a simple monetary model and shows how...

The corporate governance problem of state enterprises in former socialist economies can give rise to excessive wage claims and/or capital decumulation. This paper focuses on these problems, highlighting the dynamic links between wage behavior, the fiscal deficit, inflation and the capital stock....

Based on a two-country model it is scrutinized how the structure of the unemployment benefit system affects the consequences of idiosyncratic labor market shocks on real wages and unemployment in other countries. International spillover effects are caused by changes in world real income. The...

This Occasional Paper provides an overview of the main challenges facing Hong Kong SAR as it continues to become more closely integrated with the mainland of China. Section I provides an overview of recent macroeconomic developments and the main policy issues in Hong Kong SAR. Section II...

This 2005 Article IV Consultation highlights that Slovenia’s real GDP growth accelerated to 4½ percent in 2004 driven by a large positive swing in the contribution of net foreign demand, while domestic demand growth maintained momentum. Private consumption strengthened, though to a...

Prices in Russia have been decontrolled in several steps since early 1991, after decades of near-fixity. Their behavior before and after the January 1992 price liberalization is analyzed here, as are the associated movements of wages and overall consumer incomes and expenditures. The emphasis is...

This paper presents and estimates a small open economy dynamic stochastic general-equilibrium model (DSGE) for the Jordanian economy. The model features nominal and real rigidities, imperfect competition and habit formation in the consumer’s utility function. Oil imports are explicitly...

This Selected Issues paper and Statistical Appendix examines inflation and wage dynamics in Finland. The paper discusses the data set used (quarterly data covering from 1975 to 1995) and the statistical properties of the relevant time series. It presents the model and the empirical estimates,...

For a sample of US industries, nominal wage and price inflation follow aggregate price inflation closely during economic expansions. Hence, fluctuations in profit markup and real output are moderate in the face of expansionary demand shocks. During recessions, however, industrial nominal wage...