{"title":"Political cycles in economic policies and outcome","authors":"Prosper M. Bernard","doi":"10.4324/9780429199462-5","DOIUrl":"https://doi.org/10.4324/9780429199462-5","url":null,"abstract":"","PeriodicalId":10548,"journal":{"name":"Comparative Political Economy: Monetary Policy eJournal","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73996908","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Introduction to the study of comparative political economy","authors":"Prosper M. Bernard","doi":"10.4324/9780429199462-1","DOIUrl":"https://doi.org/10.4324/9780429199462-1","url":null,"abstract":"","PeriodicalId":10548,"journal":{"name":"Comparative Political Economy: Monetary Policy eJournal","volume":"71 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88370794","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-07-26DOI: 10.4324/9780429199462-10
Prosper M. Bernard
{"title":"Conclusion—current directions in CPE","authors":"Prosper M. Bernard","doi":"10.4324/9780429199462-10","DOIUrl":"https://doi.org/10.4324/9780429199462-10","url":null,"abstract":"","PeriodicalId":10548,"journal":{"name":"Comparative Political Economy: Monetary Policy eJournal","volume":"39 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88154723","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Inequality","authors":"Prosper M. Bernard","doi":"10.4324/9780429199462-8","DOIUrl":"https://doi.org/10.4324/9780429199462-8","url":null,"abstract":"","PeriodicalId":10548,"journal":{"name":"Comparative Political Economy: Monetary Policy eJournal","volume":"52 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80792181","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Demetris Koursaros, Nektarios A. Michail, Christos S. Savva
This paper decomposes price into its 2 major constituents, namely markup (Mkp) and marginal cost (MC) with which a Markov-switching VAR with fixed transition probabilities is estimated. Since the proposed pair of variables has not been extensively analysed, a theoretical model that derives markups and marginal costs as functions of parameters and shocks is developed to extract identifying restrictions for the VAR. In the empirical exercise, a non-linear representation of GIRFs is obtained that allows the analysis of 3 different regimes the economy enters and observe any potential sign or size asymmetries in the responses for each regime. We document that due to the opposite movement of Mkp and Mc in all regimes, inflation is less volatile in the recessionary state than in the expansionary state. In addition, we find that larger shocks have a lower (as % of the magnitude of the shock) and less persistent effect on inflation than shocks of a lower magnitude.
{"title":"Price Decomposition and Asymmetry in Various Regimes of the Economy","authors":"Demetris Koursaros, Nektarios A. Michail, Christos S. Savva","doi":"10.2139/ssrn.3887471","DOIUrl":"https://doi.org/10.2139/ssrn.3887471","url":null,"abstract":"This paper decomposes price into its 2 major constituents, namely markup (Mkp) and marginal cost (MC) with which a Markov-switching VAR with fixed transition probabilities is estimated. Since the proposed pair of variables has not been extensively analysed, a theoretical model that derives markups and marginal costs as functions of parameters and shocks is developed to extract identifying restrictions for the VAR. In the empirical exercise, a non-linear representation of GIRFs is obtained that allows the analysis of 3 different regimes the economy enters and observe any potential sign or size asymmetries in the responses for each regime. We document that due to the opposite movement of Mkp and Mc in all regimes, inflation is less volatile in the recessionary state than in the expansionary state. In addition, we find that larger shocks have a lower (as % of the magnitude of the shock) and less persistent effect on inflation than shocks of a lower magnitude.","PeriodicalId":10548,"journal":{"name":"Comparative Political Economy: Monetary Policy eJournal","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89476603","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Oligopolistic competition in the banking sector and risk in the real economy are important characteristics of developed economies, but so far they have mostly been abstracted from monetary models. We build a dynamic general equilibrium model of monetary policy transmission that incorporates both of these features. We document that including them leads to important insights in our understanding of the transmission mechanism. Various equilibrium cases can occur, and policies have differing effects in these cases. We also calibrate the model to the U.S. economy during 2016-2019. We find that doubling banking competition would have increased welfare by 1.02%, but at the cost of increasing the probability of bank default from 0.02% to 0.44%. We show that bank profits are increasing in the policy rate, in particular when interest rates are low. Finally, we find that monetary policy pass-through is incomplete under imperfect competition in the banking sector.
{"title":"Oligopoly Banking, Risky Investment, and Monetary Policy","authors":"Lukas Altermatt, Zijian Wang","doi":"10.2139/ssrn.3885673","DOIUrl":"https://doi.org/10.2139/ssrn.3885673","url":null,"abstract":"Oligopolistic competition in the banking sector and risk in the real economy are important characteristics of developed economies, but so far they have mostly been abstracted from monetary models. We build a dynamic general equilibrium model of monetary policy transmission that incorporates both of these features. We document that including them leads to important insights in our understanding of the transmission mechanism. Various equilibrium cases can occur, and policies have differing effects in these cases. We also calibrate the model to the U.S. economy during 2016-2019. We find that doubling banking competition would have increased welfare by 1.02%, but at the cost of increasing the probability of bank default from 0.02% to 0.44%. We show that bank profits are increasing in the policy rate, in particular when interest rates are low. Finally, we find that monetary policy pass-through is incomplete under imperfect competition in the banking sector.","PeriodicalId":10548,"journal":{"name":"Comparative Political Economy: Monetary Policy eJournal","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82052340","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper we use a unique dataset to study how awareness of the formulation of the ECB’s inflation aim, defined as "below, but close to, 2%", shapes the inflation expectations of a representative set of Italian firms. In particular, we show that in the period under consideration such awareness raises firms’ inflation expectations by about 25 basis points at all time horizons with respect to the control group. In the recent period of low inflation, this finding implies that being informed about the ECB’s aim stabilizes firms’ inflation expectations at higher levels, closer to its target. However, this occurs at the expense of a lower correspondence of such expectations with ex-post realized inflation, especially on short-term horizons. When explicitly asked, the majority of firms indicates the ECB inflation aim as being between 1.0% and 1.5%, while just a few of them see it as between 1.7% and 1.9%. This result might be related to the difficulty of interpreting the “below, but close to” formulation, and suggests that a precise definition of the ECB’s inflation aim could be easier to communicate and more likely to be properly understood.
{"title":"Inflation Expectations and the ECB’s Perceived Inflation Objective: Novel Evidence from Firm-Level Data","authors":"Marco Bottone, A. Tagliabracci, G. Zevi","doi":"10.2139/ssrn.3891612","DOIUrl":"https://doi.org/10.2139/ssrn.3891612","url":null,"abstract":"In this paper we use a unique dataset to study how awareness of the formulation of the ECB’s inflation aim, defined as \"below, but close to, 2%\", shapes the inflation expectations of a representative set of Italian firms. In particular, we show that in the period under consideration such awareness raises firms’ inflation expectations by about 25 basis points at all time horizons with respect to the control group. In the recent period of low inflation, this finding implies that being informed about the ECB’s aim stabilizes firms’ inflation expectations at higher levels, closer to its target. However, this occurs at the expense of a lower correspondence of such expectations with ex-post realized inflation, especially on short-term horizons. When explicitly asked, the majority of firms indicates the ECB inflation aim as being between 1.0% and 1.5%, while just a few of them see it as between 1.7% and 1.9%. This result might be related to the difficulty of interpreting the “below, but close to” formulation, and suggests that a precise definition of the ECB’s inflation aim could be easier to communicate and more likely to be properly understood.","PeriodicalId":10548,"journal":{"name":"Comparative Political Economy: Monetary Policy eJournal","volume":"8 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79711661","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper shows that monetary policy produces real effects in the steady state by impacting banks' liquidity constraint, in the absence of frictions that have been used to generate non-neutrality, such as nominal rigidity and search frictions. Moreover, the effects for different types of banks are different, even opposite. Each bank sees a fraction of money that it lends out circulates into other banks and this fraction defines the bank's type. The greater the outflow fraction, the tighter the liquidity constraint. Lastly, if technological advancement eliminates depositor withdrawals, fiat money will stop circulating and a bullion standard might return.
{"title":"The Liquidity Constraint of Banks and Monetary Non-Neutrality in the Steady State","authors":"Tianxi Wang","doi":"10.2139/ssrn.3857062","DOIUrl":"https://doi.org/10.2139/ssrn.3857062","url":null,"abstract":"This paper shows that monetary policy produces real effects in the steady state by impacting banks' liquidity constraint, in the absence of frictions that have been used to generate non-neutrality, such as nominal rigidity and search frictions. Moreover, the effects for different types of banks are different, even opposite. Each bank sees a fraction of money that it lends out circulates into other banks and this fraction defines the bank's type. The greater the outflow fraction, the tighter the liquidity constraint. Lastly, if technological advancement eliminates depositor withdrawals, fiat money will stop circulating and a bullion standard might return.","PeriodicalId":10548,"journal":{"name":"Comparative Political Economy: Monetary Policy eJournal","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91175702","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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