Supply-Side Effects of Disinflation Programs PDF Download
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Author: Mr.Jorge Roldos
Publisher: International Monetary Fund
ISBN: 1451954425
Category : Business & Economics
Languages : en
Pages : 36
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Book Description
This paper focuses on the short-run and long-run supply-side effects of disinflation programs in a two-sector economy. Fixing the exchange rate reduces the wedge between the return on foreign assets and that on domestic capital, leading to an increase in the latter. After an initial real exchange rate appreciation and increase in the production of nontradables—due to a consumption boom—the new capital is gradually installed in the tradable sector. During this transitional period, further real appreciation takes place—as the expansion of the tradable sector pulls labor away from the nontradable sector—together with investment-driven deficits in the current account. We conclude that when appreciation and deficits are due to supply-side rigidities, rather than to credibility and/or price stickiness, no further policies (i.e., capital controls, incomes policies) are advisable.
Author: Mr.Jorge Roldos
Publisher: International Monetary Fund
ISBN: 1451954425
Category : Business & Economics
Languages : en
Pages : 36
Get Book Here
Book Description
This paper focuses on the short-run and long-run supply-side effects of disinflation programs in a two-sector economy. Fixing the exchange rate reduces the wedge between the return on foreign assets and that on domestic capital, leading to an increase in the latter. After an initial real exchange rate appreciation and increase in the production of nontradables—due to a consumption boom—the new capital is gradually installed in the tradable sector. During this transitional period, further real appreciation takes place—as the expansion of the tradable sector pulls labor away from the nontradable sector—together with investment-driven deficits in the current account. We conclude that when appreciation and deficits are due to supply-side rigidities, rather than to credibility and/or price stickiness, no further policies (i.e., capital controls, incomes policies) are advisable.
Author: Jorge Roldós
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
This paper focuses on the short-run and long-run supply-side effects of disinflation programs in a two-sector economy. Fixing the exchange rate reduces the wedge between the return on foreign assets and that on domestic capital, leading to an increase in the latter. After an initial real exchange rate appreciation and increase in the production of nontradables--due to a consumption boom--the new capital is gradually installed in the tradable sector. During this transitional period, further real appreciation takes place--as the expansion of the tradable sector pulls labor away from the nontradable sector--together with investment-driven deficits in the current account. We conclude that when appreciation and deficits are due to supply-side rigidities, rather than to credibility and/or price stickiness, no further policies (i.e., capital controls, incomes policies) are advisable.
Author: Lodovico Pizzati
Publisher:
ISBN:
Category :
Languages : en
Pages : 39
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Book Description
What role do supply-side factors play in the dynamics of output and absorption in exchange rate-based stabilization programs?AgEnor and Pizzati study the dynamics of output, consumption, and real wages induced by a disinflation program based on permanent and temporary reductions in the nominal devaluation rate.They use an intertemporal optimizing model of a small open economy in which domestic households face imperfect world capital markets, the labor supply is endogenous, and wages are flexible.The model predicts that, with a constant capital stock and no investment, there is an initial reduction in real wages and output expands. Consumption falls on impact but increases afterward.In addition, with a temporary shock, a current account deficit emerges and, later, a recession sets in, as documented in various studies.With endogenous capital accumulation, numerical simulations show that the model can also predict a boom in investment.This paper is a product of the Economic Policy and Poverty Reduction Division, World Bank Institute. The authors may be contacted at
[email protected] and
[email protected].
Author: Pierre-Richard Agénor
Publisher: World Bank Publications
ISBN: 4060532525
Category : Aggregate Demand
Languages : en
Pages : 38
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Book Description
What role do supply-side factors play in the dynamics of output and absorption in exchange rate-based stabilization programs?
Author: Ben S. Bernanke
Publisher: MIT Press
ISBN: 9780262522052
Category : Business & Economics
Languages : en
Pages : 364
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Book Description
Contents : Wage Inequality and Regional Unemployment Persistence: U.S. vs. Europe, Guiseppe BErtola and Andreas Ichino. Capital Utilization and Returns to Scale, Craig Burnside, Martin Eichenbaum, and Sergio Rebelo. Banks and Derivatives, Gary Gorton and Richard Rosen. Exchange-Rate-Based Stabilizations: Theory and Evidence, Sergio Rebelo and Carlos Vegh. Inflation Indicators and Inflation Policy, Stephen Cecchetti. Recent Central Bank Reforms and the Role of Price Stability as the Sole Objective of Monetary Policy, Carl Walsh. Is Central Bank Independence (and Low Inflation) the Result of Effective Financial Opposition to Inflation?, Adam Posen. The Unending Quest for Monetary Salvation, Stanley Fischer.
Author: International Monetary Fund. Research Dept.
Publisher: International Monetary Fund
ISBN: 1451957068
Category : Business & Economics
Languages : en
Pages : 244
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Book Description
This paper provides a critical survey of the literature on politico-institutional determinants of the government budget. We organize our discussion around two questions: Why did certain OECD countries, but not others, accumulate large public debts? Why did these fiscal imbalances appear in the last twenty years rather than sooner? We begin by discussing the “tax smoothing” model and conclude that this approach alone cannot provide complete answers to these questions. We then proceed to a discussion of political economy models, which we organize into six groups: (1) models based upon opportunistic policy makers and naive voters with “fiscal illusion”; (2) models of intergenerational redistributions; (3) models of debt as a strategic variable, linking the current government with the next one; (4) models of coalition governments; (5) models of geographically dispersed interests; and (6) models emphasizing the effects of budgetary institutions. We conclude by briefly discussing policy implications.
Author: Faruk Selcuk
Publisher: Routledge
ISBN: 1351739271
Category : Social Science
Languages : en
Pages : 190
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Book Description
This title was first published in 2002. Since the 1990s Turkey has experienced a number of disasters, both physical and economic. The result has been a decrease in economic performance compared to other European states. This study addresses the country's ongoing economic struggles.
Author: Alan S. Blinder
Publisher: Elsevier
ISBN: 1483264564
Category : Business & Economics
Languages : en
Pages : 244
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Book Description
Economic Policy and the Great Stagflation discusses the national economic policy and economics as a policy-oriented science. This book summarizes what economists do and do not know about the inflation and recession that affected the U.S. economy during the years of the Great Stagflation in the mid-1970s. The topics discussed include the basic concepts of stagflation, turbulent economic history of 1971-1976, anatomy of the great recession and inflation, and legacy of the Great Stagflation. The relation of wage-price controls, fiscal policy, and monetary policy to the Great Stagflation is also elaborated. This publication is beneficial to economists and students researching on the history of the Great Stagflation and policy errors of the 1970s.
Author: International Monetary Fund. Research Dept.
Publisher: International Monetary Fund
ISBN: 1451974515
Category : Business & Economics
Languages : en
Pages : 216
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Book Description
This paper analyzes some leading indicators of currency crises, and proposes a specific early warning system. This system involves monitoring the evolution of several indicators that tend to exhibit an unusual behavior in the periods preceding a crisis. When an indicator exceeds a certain threshold value, this is interpreted as a warning “signal” that a currency crisis may take place. The variables that have the best track record within this approach include exports, deviations of the real exchange rate from trend, and the ratio of broad money to gross international reserves, output, and equity prices.
Author: Laurent Ferrara
Publisher: Springer
ISBN: 3319790757
Category : Business & Economics
Languages : en
Pages : 298
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Book Description
This book collects selected articles addressing several currently debated issues in the field of international macroeconomics. They focus on the role of the central banks in the debate on how to come to terms with the long-term decline in productivity growth, insufficient aggregate demand, high economic uncertainty and growing inequalities following the global financial crisis. Central banks are of considerable importance in this debate since understanding the sluggishness of the recovery process as well as its implications for the natural interest rate are key to assessing output gaps and the monetary policy stance. The authors argue that a more dynamic domestic and external aggregate demand helps to raise the inflation rate, easing the constraint deriving from the zero lower bound and allowing monetary policy to depart from its current ultra-accommodative position. Beyond macroeconomic factors, the book also discusses a supportive financial environment as a precondition for the rebound of global economic activity, stressing that understanding capital flows is a prerequisite for economic-policy decisions.
