Extreme Inflation: Dynamics and Stabilization
Total Page:16
File Type:pdf, Size:1020Kb
Load more
Recommended publications
-
Devaluation, Wealth Effects, and Relative Prices Harvey Lapan Iowa State University, [email protected]
Economics Publications Economics 9-1978 Devaluation, Wealth Effects, and Relative Prices Harvey Lapan Iowa State University, [email protected] Walter Enders Iowa State University Follow this and additional works at: http://lib.dr.iastate.edu/econ_las_pubs Part of the Economic Theory Commons, International Economics Commons, and the Other Economics Commons The ompc lete bibliographic information for this item can be found at http://lib.dr.iastate.edu/ econ_las_pubs/152. For information on how to cite this item, please visit http://lib.dr.iastate.edu/ howtocite.html. This Article is brought to you for free and open access by the Economics at Iowa State University Digital Repository. It has been accepted for inclusion in Economics Publications by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. Devaluation, Wealth Effects, and Relative Prices Abstract The mee rgence of the portfolio balance approach 1 has led to a reformulation of the causes of balance-of-trade and payments disequilibria. According to this approach, balance-of-trade deficits and surpluses reflect discrepancies between desired and actual wealth holdings; while balance-of payments deficits and surpluses reflect discrepancies between desired and actual money holdings. Thus, balance-of-trade and payments disequilibria are viewed as representing disequilibria within the asset markets. Using this framework several authors2 have examined the self-correcting nature of disequilibria within the balance of-payments accounts and the ability of a devaluation to reduce the magnitude of a disequilibrium. Disciplines Economic Theory | International Economics | Other Economics Comments This is an article from The American Economic Review 68 (1978): 601. -
Monetary Policy in Economies with Little Or No Money
NBER WORKING PAPER SERIES MONETARY POLICY IN ECONOMIES WITH LITTLE OR NO MONEY Bennett T. McCallum Working Paper 9838 http://www.nber.org/papers/w9838 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 July 2003 This paper was prepared for presentation at the December 16-17, 2002, meeting of the Hong Kong Economic Association. I am indebted to Marvin Goodfriend, Lok Sang Ho, Allan Meltzer, and Edward Nelson for helpful comments and suggestions. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research ©2003 by Bennett T. McCallum. All rights reserved. Short sections of text not to exceed two paragraphs, may be quoted without explicit permission provided that full credit including © notice, is given to the source. Monetary Policy in Economies with Little or No Money Bennett T. McCallum NBER Working Paper No. 9838 July 2003 JEL No. E3, E4, E5 ABSTRACT The paper's arguments include: (1) Medium-of-exchange money will not disappear in the foreseeable future, although the quantity of base money may continue to decline. (2) In economies with very little money (e.g., no currency but bank settlement balances at the central bank), monetary policy will be conducted much as at present by activist adjustment of overnight interest rates. Operating procedures will be different, however, with payment of interest on reserves likely to become the norm. (3) In economies without any money there can be no monetary policy. The relevant notion of a general price level concerns some index of prices in terms of a medium of account. -
COVID-19 and Economic Policy Toward the New Normal: a Monetary-Fiscal Nexus After the Crisis?
IN-DEPTH ANALYSIS Requested by the ECON committee Monetar y Dialogue Papers, November 2020 COVID-19 and Economic Policy Toward the New Normal: A Monetary-Fiscal Nexus after the Crisis? Policy Department for Economic, Scientific and Quality of Life Policies Directorate-General for Internal Policies Author: Thomas MARMEFELT EN PE 658.193 - November 2020 COVID-19 and Economic Policy Toward the New Normal: A Monetary-Fiscal Nexus after the Crisis? Monetary Dialogue Papers, November 2020 Abstract Current developments during the COVID-19 pandemic involve strongly complementary monetary and fiscal policy, but both as responses to COVID-19 and not the outcome of an emergent monetary-fiscal nexus. Therefore, the ECB maintains its independence by using unconventional monetary policy measures to reach price stability, according to its mandate. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 19 November 2020. This document was requested by the European Parliament's committee on Economic and Monetary Affairs (ECON). AUTHOR Thomas MARMEFELT, CASE – Center for Social and Economic Research (Warsaw, Poland) and University of Södertörn (Huddinge, Sweden) ADMINISTRATOR RESPONSIBLE Drazen RAKIC EDITORIAL ASSISTANT Janetta CUJKOVA LINGUISTIC VERSIONS Original: EN ABOUT THE EDITOR Policy departments provide in-house and external expertise to support European Parliament committees -
The Decline of Neoliberalism: a Play in Three Acts* O Declínio Do Neoliberalismo: Uma Peça Em Três Atos
Brazilian Journal of Political Economy, vol. 40, nº 4, pp. 587-603, October-December/2020 The decline of neoliberalism: a play in three acts* O declínio do neoliberalismo: uma peça em três atos FERNANDO RUGITSKY**,*** RESUMO: O objetivo deste artigo é examinar as consequências políticas e econômicas da pandemia causada pelo novo coronavírus, colocando-a no contexto de um interregno gram sciano. Primeiro, o desmonte da articulação triangular do mercado mundial que ca- racterizou a década anterior a 2008 é examinado. Segundo, a onda global de protestos e os deslocamentos eleitorais observados desde 2010 são interpretados como evidências de uma crise da hegemonia neoliberal. Juntas, as crises econômica e hegemônica representam o interregno. Por fim, argumenta-se que o combate à pandemia pode levar à superação do neoliberalismo. PALAVRAS-CHAVE: Crise econômica; hegemonia neoliberal; interregno; pandemia. ABSTRACT: This paper aims to examine the political and economic consequences of the pandemic caused by the new coronavirus, setting it in the context of a Gramscian interregnum. First, the dismantling of the triangular articulation of the world market that characterized the decade before 2008 is examined. Second, the global protest wave and the electoral shifts observed since 2010 are interpreted as evidence of a crisis of neoliberal hegemony. Together, the economic and hegemonic crises represent the interregnum. Last, it is argued that the fight against the pandemic may lead to the overcoming of neoliberalism. KEYWORDS: Economic crisis; neoliberal hegemony; interregnum; pandemic. JEL Classification: B51; E02; O57. * A previous version of this paper was published, in Portuguese, in the 1st edition (2nd series) of Revista Rosa. -
Is the International Role of the Dollar Changing?
Is the International Role of the Dollar Changing? Linda S. Goldberg Recently the U.S. dollar’s preeminence as an international currency has been questioned. The emergence of the euro, changes www.newyorkfed.org/research/current_issues ✦ in the dollar’s value, and the fi nancial market crisis have, in the view of many commentators, posed a signifi cant challenge to the currency’s long-standing position in world markets. However, a study of the dollar across critical areas of international trade January 2010 ✦ and fi nance suggests that the dollar has retained its standing in key roles. While changes in the global status of the dollar are possible, factors such as inertia in currency use, the large size and relative stability of the U.S. economy, and the dollar pricing of oil and other commodities will help perpetuate the dollar’s role as the dominant medium for international transactions. Volume 16, Number 1 Volume y many measures, the U.S. dollar is the most important currency in the world. IN ECONOMICS AND FINANCE It plays a central role in international trade and fi nance as both a store of value Band a medium of exchange. Many countries have adopted an exchange rate regime that anchors the value of their home currency to that of the dollar. Dollar holdings fi gure prominently in offi cial foreign exchange (FX) reserves—the foreign currency deposits and bonds maintained by monetary authorities and governments. And in international trade, the dollar is widely used for invoicing and settling import and export transactions around the world. -
Inflation and the Business Cycle
Inflation and the business cycle Michael McMahon Money and Banking (5): Inflation & Bus. Cycle 1 / 68 To Cover • Discuss the costs of inflation; • Investigate the relationship between money and inflation; • Introduce the Romer framework; • Discuss hyperinflations. • Shocks and the business cycle; • Monetary policy responses to business cycles. • Explain what the monetary transmission mechanism is; • Examine the link between inflation and GDP. Money and Banking (5): Inflation & Bus. Cycle 2 / 68 The Next Few Lectures Term structure, asset prices Exchange and capital rate market conditions Import prices Bank rate Net external demand CPI inflation Bank lending Monetary rates and credit Policy Asset purchase/ Corporate DGI conditions Framework sales demand loans Macro prudential Household policy demand deposits Inflation expectations Money and Banking (5): Inflation & Bus. Cycle 3 / 68 Inflation Definition Inflation is a sustained general rise in the price level in the economy. In reality we measure it using concepts such as: • Consumer Price Indices (CPI); • Producer Price Indices (PPI); • Deflators (GDP deflator, Consumption Expenditure Deflator) Money and Banking (5): Inflation & Bus. Cycle 4 / 68 Inflation: The Costs If all prices are rising at same rate, including wages and asset prices, what is the problem? • Information: Makes it harder to detect relative price changes and so hinders efficient operation of market; • Uncertainty: High inflation countries have very volatile inflation; • High inflation undermines role of money and encourages barter; • Growth - if inflation increases by 10%, reduce long term growth by 0.2% but only for countries with inflation higher than 15% (Barro); • Shoe leather costs/menu costs; • Interaction with tax system; • Because of fixed nominal contracts arbitrarily redistributes wealth; • Nominal contracts break down and long-term contracts avoided. -
Uncertainty and Hyperinflation: European Inflation Dynamics After World War I
FEDERAL RESERVE BANK OF SAN FRANCISCO WORKING PAPER SERIES Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER June 2018 Working Paper 2018-06 https://www.frbsf.org/economic-research/publications/working-papers/2018/06/ Suggested citation: Lopez, Jose A., Kris James Mitchener. 2018. “Uncertainty and Hyperinflation: European Inflation Dynamics after World War I,” Federal Reserve Bank of San Francisco Working Paper 2018-06. https://doi.org/10.24148/wp2018-06 The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Federal Reserve Bank of San Francisco or the Board of Governors of the Federal Reserve System. Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER* May 9, 2018 ABSTRACT. Fiscal deficits, elevated debt-to-GDP ratios, and high inflation rates suggest hyperinflation could have potentially emerged in many European countries after World War I. We demonstrate that economic policy uncertainty was instrumental in pushing a subset of European countries into hyperinflation shortly after the end of the war. Germany, Austria, Poland, and Hungary (GAPH) suffered from frequent uncertainty shocks – and correspondingly high levels of uncertainty – caused by protracted political negotiations over reparations payments, the apportionment of the Austro-Hungarian debt, and border disputes. In contrast, other European countries exhibited lower levels of measured uncertainty between 1919 and 1925, allowing them more capacity with which to implement credible commitments to their fiscal and monetary policies. -
This Version: July 6, 2017 MY PAPERS in ECONOMICS: an ANNOTATED BIBLIOGRAPHY Edmar Bacha1
1 This version: July 6, 2017 MY PAPERS IN ECONOMICS: AN ANNOTATED BIBLIOGRAPHY Edmar Bacha1 1. Introduction Since the mid-1960s, I have written extensively on development economics, the economics of Latin America and Brazil’s economic problems. My papers include essays on persuasion and reflections on economic policy-making experiences. I review these contributions roughly in chronological order not only because of the variety of topics but also because they tend to come together in specific periods. There are seven periods to consider, identified according to my main institutional affiliations: Yale University, 1964- 1968; ODEPLAN, Chile, 1969; IPEA-Rio, 1970-71; University of Brasilia and Harvard University, 1972-1978; PUC-Rio, 1979-1993; Academic research interregnum, 1994-2002; and IEPE/Casa das Garças since 2003. 2. Yale University, 1964-1968 My first published text was originally a term paper for a Master’s level class in international economics at Yale University. In The Strategy of Economic Development, Albert Hirschman suggested that less developed countries would be relatively more efficient at producing goods that required “machine-paced” operations. Carlos Diaz-Alejandro interpreted machine-paced as meaning capital-intensive 1 Founding partner and director of the Casa das Garças Institute of Economic Policy Studies, Rio de Janeiro, Brazil. With the usual caveats, I am indebted for comments to André Lara- Resende, Alkimar Moura, Luiz Chrysostomo de Oliveira-Filho, and Roberto Zahga. 2 technologies, and tested the hypothesis that relative labor productivity in a developing country would be higher in more capital-intensive industries. He found some evidence for this. I disagreed with his argument. -
Incomes Policies As Tools to Promote Strong, Sustainable and Balanced Growth
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT UNCTAD contribution to the G20 Framework Working Group BACKGROUND NOTE: IncOMES POLICIES AS TOOLS TO PROMOTE STROng, SUStaINABLE AND BALANCED GROWTH Extract from the Trade and Development Report, 2011 September 2011 UNITED NATIONS UNCTAD contribution to the G20 Framework Working Group iii Table of contents Page I. THE ROLE OF WAGES IN ECONOMIC GROWTH ................................................................................. 1 II. INCOMES POLICY AND INFLATION CONTROL ................................................................................... 5 III. THE EUROPEAN CRISIS AND THE NEED FOR PROACTIVE INCOMES POLICIES ..................... 7 References ................................................................................................................................................................... 8 Charts 1 Share of wages in national income, selected economies, 1980–2010 ................................................................ 2 2 Total wage bill and private consumption at constant prices, selected countries, 1996–2010 ............................. 4 Table 1 Real wage growth, selected regions and economies, 2001–2010 ................................................................3 UNCTAD contribution to the G20 Framework Working Group 1 BACKGROUND NOTE: INCOMES POLICIES AS TOOLS TO PROMOTE STRONG, SUStaINABLE AND BALANCED GROWTH Over the past year, the instruments available other hand, higher public-debt-to-GDP ratios have to policymakers for supporting -
The Oppressive Pressures of Globalization and Neoliberalism on Mexican Maquiladora Garment Workers
Pursuit - The Journal of Undergraduate Research at The University of Tennessee Volume 9 Issue 1 Article 7 July 2019 The Oppressive Pressures of Globalization and Neoliberalism on Mexican Maquiladora Garment Workers Jenna Demeter The University of Tennessee, Knoxville, [email protected] Follow this and additional works at: https://trace.tennessee.edu/pursuit Part of the Business Administration, Management, and Operations Commons, Business Law, Public Responsibility, and Ethics Commons, Economic History Commons, Gender and Sexuality Commons, Growth and Development Commons, Income Distribution Commons, Industrial Organization Commons, Inequality and Stratification Commons, International and Comparative Labor Relations Commons, International Economics Commons, International Relations Commons, International Trade Law Commons, Labor and Employment Law Commons, Labor Economics Commons, Latin American Studies Commons, Law and Economics Commons, Macroeconomics Commons, Political Economy Commons, Politics and Social Change Commons, Public Economics Commons, Regional Economics Commons, Rural Sociology Commons, Unions Commons, and the Work, Economy and Organizations Commons Recommended Citation Demeter, Jenna (2019) "The Oppressive Pressures of Globalization and Neoliberalism on Mexican Maquiladora Garment Workers," Pursuit - The Journal of Undergraduate Research at The University of Tennessee: Vol. 9 : Iss. 1 , Article 7. Available at: https://trace.tennessee.edu/pursuit/vol9/iss1/7 This Article is brought to you for free and open access by -
Hyperinflationary Economies
Issue 175/October 2020 IFRS Developments Hyperinflationary economies (Updated October 2020) What you need to know Overview • We believe that IAS 29 should Accounting standards are applied on the assumption that the value of money (the be applied in 2020 by entities unit of measurement) is constant over time. However, when the rate of inflation is whose functional currency is the no longer negligible, a number of issues arise impacting the true and fair nature of currency of one of the following the accounts of entities that prepare their financial statements on a historical cost countries: basis, for example: • Argentina • Historical cost figures are less meaningful than they are in a low inflation • Islamic Republic of Iran environment • Lebanon • Holding gains on non-monetary assets that are reported as operating profits do not represent real economic gains • South Sudan • Current and prior period financial information is not comparable • Sudan • ‘Real’ capital can be reduced because profits reported do not take account of • Venezuela the higher replacement costs of resources used in the period • Zimbabwe To address such concerns, entities should apply IAS 29 Financial Reporting in Hyperinflationary Economies from the beginning of the period in which the • We believe the following existence of hyperinflation is identified. countries are not currently hyperinflationary, but should be IAS 29 does not establish an absolute inflation rate at which an economy is monitored in 2020: considered hyperinflationary. Instead, it considers a variety of non-exhaustive characteristics of the economic environment of a country that are seen as strong Angola • indicators of the existence of hyperinflation.This publication only considers the • Liberia absolute inflation rates. -
UNEMPLOYMENT and LABOR FORCE PARTICIPATION: a PANEL COINTEGRATION ANALYSIS for EUROPEAN COUNTRIES OZERKEK, Yasemin Abstract This
Applied Econometrics and International Development Vol. 13-1 (2013) UNEMPLOYMENT AND LABOR FORCE PARTICIPATION: A PANEL COINTEGRATION ANALYSIS FOR EUROPEAN COUNTRIES OZERKEK, Yasemin* Abstract This paper investigates the long-run relationship between unemployment and labor force participation and analyzes the existence of added/discouraged worker effect, which has potential impact on economic growth and development. Using panel cointegration techniques for a panel of European countries (1983-2009), the empirical results show that this long-term relation exists for only females and there is discouraged worker effect for them. Thus, female unemployment is undercount. Keywords: labor-force participation rate, unemployment rate, discouraged worker effect, panel cointegration, economic development JEL Codes: J20, J60, O15, O52 1. Introduction The link between labor force participation and unemployment has long been a key concern in the literature. There is general agreement that unemployment tends to cause workers to leave the labor force (Schwietzer and Smith, 1974). A discouraged worker is one who stopped actively searching for jobs because he does not think he can find work. Discouraged workers are out of the labor force and hence are not taken into account in the calculation of unemployment rate. Since unemployment rate disguises discouraged workers, labor-force participation rate has a central role in giving clues about the employment market and the overall health of the economy.1 Murphy and Topel (1997) and Gustavsson and Österholm (2006) mention that discouraged workers, who have withdrawn from labor force for market-driven reasons, can considerably affect the informational value of the unemployment rate as a macroeconomic indicator. The relationship between unemployment and labor-force participation is an important concern in the fields of labor economics and development economics as well.