In this paper, we estimate fundamental bilateral real exchange rates for a group of eight accession countries using a panel-cointegration approach for the period 1993-2003. We document a significant positive link between productivity levels and the corresponding real exchange rate levels. Future...

Empirical evidence shows that government spending crowds in private consumption, a Keynesian phenomenon. The current state of the art, New Keynesian models based on optimising households and _rms, is not able to predict such a result. We show with a graphical framework as well as a formal model...

According to Dalton's Law it does not matter which side of the market is taxed. This holds for a model of the labour market as well. Nevertheless, it is often maintained that shifting the wedge from employers to employees has favourable effects on employment. That is, a shift from employers' to...

This paper focusses on the relation between external imbalances and domestic money and credit growth in the euro area. We compute money and credit overhang both for the euro area as a whole and for individual member countries. Our results show that both aggregate money and credit overhang have...

Empirical evidence shows that government spending crowds in private consumption, a Keynesian phenomenon. The current, state of the art, New Keynesian models based on optimizing households and firms are not able to predict such a result. In this paper, we critically analyse fiscal policy in these...

In this paper, we estimate fundamental bilateral real exchange rates for a group of eight accession countries using a panel-cointegration approach for the period 1993-2003. We document a significant positive link between productivity levels and the corresponding real exchange rate levels. Future...

In the literature on wage drift, it is often argued that strikes or work-to-rule practices are used to force employers to pay a wage rate that exceeds the contract wage. Here, the authors introduce the efficiency wage argument as a foundation for bargaining about wage drift. Contrary to the view...