Auswahl der wissenschaftlichen Literatur zum Thema „Macroeconomics (incl. Monetary and Fiscal Theory)“

The problems faced by the American economy in the second half of 2007, which intensified in 2008, have once again asked economic science, and even more so economic policy, questions relating to business cycles - the reasons for cyclical fluctuations, the character of business cycles and, naturally, economic policy measures that can be implemented to alleviate and overcome an economic recession. Since the 1970s, business cycle theories have been intensively developed - ranging from monetary theories, developed within monetarism and the first phase of New Classical Macroeconomics, to the real business cycle theory of New Classical Macroeconomics. Consequently, the triggers for the beginning of a cycle can be monetary (monetary theories) or real in the form of technological shocks (real business cycles). In essence economic policy conducted since the 1970s, has rejected the Keynesian explanations of the functioning of the economic system, and thus the policy of aggregate demand management. However, the measures that are now being implemented in the USA point to a return to Keynesianism. This refers, above all, to attempts to compensate for the inefficiency of monetary policy with fiscal expansion. All three psychological propensities (propensity to consume, propensity to invest and liquidity preference) in Keynes's theory and applied in Keynesian economic policy, are still the significant determinants of monetary and fiscal policies. The return to Keynesianism points to the depth of the crisis faced by the USA, but also confirms the vitality of Keynesian economics and affirms the view that - although Keynes wished to present his theory as being "general" - it is actually the theory of economic depression.

This paper surveys some of the main developments in macroeconomics since the anti-Keynesian counter-revolution 40 years ago. It covers both mainstream and heterodox economics. Amongst the topics discussed are: New Keynesian economics, Modern Monetary Theory, expansionary fiscal contraction, unconventional monetary policy, the Phillips curve, hysteresis, and heterodox theories of growth and distribution. The conclusion is that Keynesian economics is alive and well, and that there has been a degree of convergence between heterodox and mainstream economics.

In 2019, a textbook “Macroeconomics” was published in London, on the pages of which the authors presented a new monetary doctrine — Modern Monetary Theory, MMT, — an unorthodox concept based on the postulates of Post-Keynesianism, New Institutionalism, and the theory of Marxism. The attitude to this scientific concept in the scientific community is ambiguous. A smaller part of scientists actively support this doctrine, which is directly related to state monetary and fiscal stimulation of full employment, public debt servicing and economic growth. Others, the majority of economists, on the contrary, strongly criticize MMT, arguing that the new theory hides simple left-wing populism, designed for a temporary and short-term effect. This article considers the origins and the main provisions of MMT, its discussions with the mainstream, criticism of the basic tenets of MMT, and also assesses possible prospects for the development of MMT in the medium term.

István Csillag - Péter Mihályi: Kettős kötés: A stabilizáció és a reformok 18 hónapja [Double Bandage: The 18 Months of Stabilisation and Reforms] (Budapest: Globális Tudás Alapítvány, 2006, 144 pp.) Reviewed by Zoltán Ádám; Marco Buti - Daniele Franco: Fiscal Policy in Economic and Monetary Union. Theory, Evidence and Institutions (Cheltenham/UK - Northampton/MA/USA: Edward Elgar Publishing Co., 2005, 320 pp.) Reviewed by László Csaba; Piotr Jaworski - Tomasz Mickiewicz (eds): Polish EU Accession in Comparative Perspective: Macroeconomics, Finance and the Government (School of Slavonic and East European Studies, University College of London, 2006, 171 pp.) Reviewed by András Bakács; Is FDI Based R&D Really Growing in Developing Countries? The World Investment Report 2005. Reviewed by Zoltán Pogátsa

This article explores the concept of macroeconomic stability originated from the theory of general economic equilibrium (GEE) by L. Walras. Modern macroeconomic models that do not contradict the GEE, a implement the principles of consistency of micro- and macroeconomic analysis, the interrelation of markets, and the effectiveness of market mechanism. Economic fluctuations generated by shocks are in dialectical unity with the state of equilibrium. The aim of macroeconomic policy is to maintain equilibrium (macroeconomic stability) through inflation targeting and effective public debt management. Within the framework of this policy a number of goals are met including the control over inflationary expectations, strengthening confidence in the central bank, and overcoming inflation. However, low inflation rates can produce liquidity traps, thus causing a need to adjust monetary policy and develop its new instruments. At the same time, the global crises of the 21st century, the Great Recession of 2008 and the COVID-19 pandemic, prompts to re-evaluate the contradictions between the theoretical concept of equilibrium and the real state of the economy, as well as measures needed to stabilize it during a recession. The policy of overcoming the crisis in 2020 includes large-scale discretionary fiscal and monetary stimulus according to Keynesian recipes, in the absence of which the loss of jobs, closure of enterprises, and lack of financial stability are inevitable. The gap between theory and reality, as it happened during the Great Depression almost a hundred years ago, once again raises the questions of further development of macroeconomics. The article may be of interest to teachers and students interested in the prospects for the development of scientific knowledge in this area.

“His views have had as much, if not more, impact on the way we think about monetary policy and many other important economic issues as those of any person in the last half of the twentieth century.” These words in praise of Milton Friedman are from economist and Federal Reserve Chair Alan Greenspan. They are spoken from a vantage point of experience and knowledge of what really matters for policy decisions in the real world. And they are no exaggeration. Many would say they do not go far enough.It is a rare monetary policy conference today in which Milton Friedman's ideas do not come up. It is a rare paper in macroeconomics in which some economic, mathematical, or statistical idea cannot be traced to Milton Friedman's early work. It is a rare student of macroeconomics who has not been impressed by reading Milton Friedman's crystal-clear expositions. It is a rare democrat from a formerly communist country who was not inspired by Milton Friedman's defense of a market economy written in the heydays of central planning. And it is a rare day that some popular newspaper or magazine around the world does not mention Milton Friedman as the originator of a seminal idea or point of view.Any one of his many contributions to macroeconomics (or rather to monetary theory, for he detests the term macroeconomics) would be an extraordinary achievement. Taken together they are daunting:[bull ] permanent income theory;[bull ] natural rate theory;[bull ] the case for floating exchange rates;[bull ] money growth rules;[bull ] the optimal quantity of money;[bull ] the monetary history of the United States, especially the Fed in the Great Depression, not to mention contributions to mathematical statistics on rank-order tests, sequential sampling, and risk aversion, and a host of novel government reform proposals from the negative income tax, to school vouchers, to the flat-rate tax, to the legalization of drugs.Milton Friedman is an economist's economist who laid out a specific methodology of positive economic research. Economic experts know that many current ideas and policies—from monetary policy rules to the earned-income tax credit—can be traced to his original proposals. He won the Nobel Prize in economics in 1976 for “his achievements in the field of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.” Preferring to stay away from formal policy-making jobs, he has been asked for his advice by presidents, prime ministers, and top economic officials for many years. It is in the nature of Milton Friedman's unequivocally stated views that many disagree with at least some of them, and he has engaged in heated debates since graduate school days at the University of Chicago. He is an awesome debater. He is also gracious and friendly.Born in 1912, he grew up in Rahway, New Jersey, where he attended local public schools. He graduated from Rutgers University in the midst of the Great Depression in 1932. He then went to study economics at the University of Chicago, where he met fellow graduate student Rose Director whom he later married. For nearly 10 years after he left Chicago, he worked at government agencies and research institutes (with one year visiting at the University of Wisconsin and one year at the University of Minnesota) before taking a faculty position at the University of Chicago in 1946. He remained at Chicago until he retired in 1977 at the age of 65, and he then moved to the Hoover Institution at Stanford University.I have always found Milton and Rose to be gregarious, energetic people, who genuinely enjoy interacting with others, and who enjoy life in all its dimensions, from walks near the Pacific Ocean to surfs on the World Wide Web. The day of this interview was no exception. It took place on May 2, 2000, in Milton's office in their San Francisco apartment. The interview lasted for two-and-a-half hours. A tape recorder and some economic charts were on the desk between us. Behind Milton was a floor-to-ceiling picture window with beautiful panoramic views of the San Francisco hills and skyline. Behind me were his bookcases stuffed with his books, papers, and mementos.The interview began in a rather unplanned way. When we walked into his office Milton started talking enthusiastically about the charts that were on his desk. The charts—which he had recently prepared from data he had downloaded from the Internet—raised questions about some remarks that I had given at a conference several weeks before—which he had read about on the Internet.As we began talking about the charts, I asked if I could turn on the tape recorder, since one of the topics for the interview was to be about how he formulated his ideas—and a conversation about the ideas he was formulating right then and there seemed like an excellent way to begin the interview. So I turned on the tape recorder, and the interview began. Soon we segued into the series of questions that I had planned in advance (but had not shown Milton in advance). We took one break for a very pleasant lunch and (unrecorded) conversation with his wife Rose before going back to “work.” After the interview, the tapes were transcribed and the transcript was edited by me and Milton. The questions and answers were rearranged slightly to fit into the following broad topic areas:[bull ] money growth, thermostats, and Alan Greenspan;[bull ] causes of the great inflation and its end;[bull ] early interest in economics;[bull ] graduate school and early “on-the-job” training;[bull ] permanent income theory;[bull ] return of monetary economics;[bull ] fiscal and monetary policy rules;[bull ] use of models in monetary economics;[bull ] use of time-series methods;[bull ] real business-cycle models, calibration, and detrending;[bull ] natural rate hypothesis;[bull ] role of debates in monetary economics;[bull ] capitalism and freedom today;[bull ] monetary unions and flexible exchange rates.

This paper draws on nearly 25 years of modern monetary theory (MMT) scholarship to provide an assessment of the critique of MMT by Drumetz/Pfister in their 2021 working paper. The present paper commences with a review of methodology. It then pursues a thematic approach, initially exploring the issue of currency sovereignty and the nature of modern monetary systems before addressing the specific criticisms that Drumetz/Pfister have raised about MMT’s approach to monetary and fiscal policy.

The theoretical justification and the practical recommendations for the formation of the architecture of the economic space of the region are proposed and grounded in article. The modern views of scientists on the elements of the architecture of the economic space, the features of the economic space and it influence on the effectiveness of the functioning of the regions are analyzed. The legislative framework defining the principles of the territorial system of Ukraine is characterized. The influence of decentralization on the formation of the economic space of the regions of Ukraine was assessed. The regional disintegration is the most dangerous consequence of the imperfect organization of the economic space. The regional disintegration and the national macroeconomics destructiveness lead to the emergence of significant socio-economic disparities, uneven economic growth, disruption of the processes of economic reproduction and the corresponding reproductive proportions as at the regional and national levels. The transformation of economic space in Ukraine is analyzed by the levels. The list and general characteristics of the features of the modern economic space are given. There are the following:1) economic space is formed within the geographical space; 2) unity (legislative, political, informational, monetary and currency; institutional, fiscal, etc.); 3) integration (common labor, capital, goods and services market); 4) cyclical functioning and development; 5) combination of specialization and integration of economic activity; 6) integrity; 7) hierarchy; 8) polarization and heterogeneity. The key features of the formation of effective architecture and ensuring regional development in the conditions of global competition are characterized. The transparency, self-organization, self-reproduce ability, flexibility is the most important for economic space in terms of global competitiveness. The peculiarities of the formation of the economic space are primarily determined by the corresponding level of the administrative-territorial unit, which as a whole system has the corresponding management objects and goals.

This paper aims to examine the effects of public debt on economic growth by using a regression method of a fixed effect model with the data of 58 developed countries (high-income countries) and developing countries (low and medium income countries). The analysis shows that public debt (both in terms of scale and rate of increase), inflation, government spending and unemployment are negatively associated with economic growth. A reasonable expenditure plan (in this case, consumption expenditure) can control the impact of public debt on economic growth. More particularly, public debt has a positive impact on economic growth if consumption expenditure is larger than 14-16% of the GDP. Other factors such as TFP (Total-Factor Productivity), trade and public investment can stimulate growth in the observed sample. Interestingly, for high-income countries, economic growth rate in Assembly-elected President countries is higher than that in the Presidential countries. Keywords Public debt, consumption expenditure, economic growth, developing countries, fixed effect model References [1] World Bank, International Debt Statistics 2017. Washington, DC., 2017.[2] Eisner, R., “Deficits: which, how much, and so what?” The American Economic Review, 82 (1992) 2, 295-298.[3] Aschauer, D. A., “Is public expenditure productive?”, Journal of Monetary Economics, 23 (1989) 2, 177-200.[4] Eisner, R., “Budget deficits: Rhetoric and reality”, The Journal of Economic Perspectives, 3 (1989) 2, 73-93.[5] Heng, H. K., “Economic development and political change: The democratization process in Singapore”, Democratization in Southeast and East Asia, 1997, 13-140.[6] Lê Thị Minh Ngọc, “Nợ công: Sự tác động đến tăng trưởng kinh tế và gánh nặng của thế hệ tương lai”, Học viện Ngân hàng, 2011.[7] Võ Hữu Phước, & Nguyễn Quyết., “Impact of Public Debt and Inflation on Vietnam's Economic Growth: Quantitative Study Using the ARDL Model”, Economic Studies, 453 (2017) 2, 3-11.[8] Barro, R. J., “The Ricardian to Budget Deficits”, Journal of Economic Perspectives, 3 (1989) 2, 37-54.[9] Checherita-Westphal, C., & Rother, P., “The impact of high and growing government debt on economic growth - An empirical investigation for the Euro area” European Central Bank, Working paper No. 1237 (2010). [10] Hameed, A., Ashraf, H., & Chaudhary, M. A., “External debt and its impact on economic and business growth in Pakistan”, International Research Journal of Finance and Economics, 20 (2008), 132-140.[11] Reinhart, C. M., Reinhart, V. R., & Rogoff, K. S., “Public debt overhangs: Advanced-economy episodes since 1800”, The Journal of Economic Perspectives, 26 (2012) 3, 69-86.[12] Presbitero, A. F., “The debt-growth nexus: A dynamic panel data estimation”, Rivista italiana degli economisti, 11 (2006) 3, 417-462. [13] James, R. B., George, I., & Frank, S. R., “Government Debt, Government Spending, and Private Sector Behavior: Comment”, The American Economic Review, 76 (1986) 5, 1158-1167.[14] Elmendorf, D. W., & Mankiw, N. G., “Government debt”, Handbook of Macroeconomics, 1 (1999), 1615-1669.[15] Teles & Mussolini, “Public debt and the limits of fiscal policy to increase economic growth”, European Economic Review (2014).[16] Aly, H., & Strazicich, M., “Is government size optimal in the gulf countries of the middle east? An empirical investigation”, International Review of Applied Economics, 14 (2000) 4, 475-483.[17] Asimakopoulos, S., & Karavias, Y., “The impact of government size on economic growth: A threshold analysis”, Economics Letters, 139 (2016), 65-68.[18] Woo, J., & Kumar, M. S., “Public debt and growth”, Economica, 82 (2015) 328, 705-739.[19] Caner, M., & Hansen, B. E., “Instrumental variable estimation of a threshold model”, Econometric Theory, 20 (2004) 5, 813-843.[20] Haggard, S., & Kaufman, R. R. (Eds.), The politics of economic adjustment: International constraints, distributive conflicts, and the state, Princeton University Press, 1992.[21] Ram, R., “Government Size and Economic Growth: A New Framework and Some Evidence from Cross-Section and Time-Series Data”, The American Economic Review, 76 (1986) 1, 191-203.[22] Vittorio, D., “Public spending and regional convergence in Italy”, Journal of Applied Economic Sciences, 4 (2009) 8, 2.[23] Baum, S., Ma, J., & Payea, K., “Education Pays, 2010: The Benefits of Higher Education for Individuals and Society. Trends in Higher Education Series”, College Board Advocacy & Policy Center, 2010.[24] Cruz, C., Keefer, P., & Scartascini, C., “Database of political institutions codebook, 2015 update (DPI2015)”. Inter-American Development Bank, 2016.[25] Cecchetti, S. G., Mohanty, M. S., & Zampolli, F., “The real effects of debt”, 2011.

Abstract of thesis submitted in partial fulfilment of the requirements for the Degree of Master of Commerce and Management Dynamics of macroeconomic variables in Fiji : a cointegrated VAR analysis By Shiu Raj Singh The objective of this study is to examine how macroeconomic variables of Fiji inter-relate with aggregate demand and co-determine one another using a vector autoregression (VAR) approach. This study did not use a prior theoretical framework but instead used economic justification for selection of variables. It was found that fiscal policy, which is generally used as a stabilisation tool, did not have a positive effect on real Gross Domestic Product (GDP) growth in the short term. Effects on GDP growth were positive over the long term but not statistically significant. Furthermore, expansionary fiscal policy caused inflationary pressures. Fiji has a fixed exchange rate regime, therefore, it was expected that the focus of monetary policy would be the maintenance of foreign reserves. It was, however, found that monetary expansion in the short term resulted in positive effects on real GDP growth and resulted in inflation. The long term effects of monetary policy on real GDP growth were negative, which are explained by the fixed exchange rate regime, endogenous determination of money supply by the central bank, an unsophisticated financial market and, perhaps, an incomplete transmission of the policy. Both merchandise trade and visitor arrivals growth were found to positively contribute to short term and long term economic growth. Political instability was found not to have significant direct effects on real GDP growth but caused a significant decline in visitor arrivals which then negatively affected economic growth in the short term.

ABSTRACT In this thesis, I evaluate how fiscal and monetary stimulus policies contribute to the economic recovery process of recessions in the United States. Using a case study approach, I will study ten major recessions over the 20th century and early 21st century to answer this question. I will study the different fiscal and monetary policies implemented during the following recessions: the Great Depression; the Recession of 1937, the Recession of 1945, the Recession of 1953, the 1973-75 Recession, the 1980 Recession, the Early 1980s Recession, the Early 1990s Recession, the Early 2000s Recession, and the Late-2000s Recession. The literature suggests a wide range of conflicting viewpoints as to the most effective stimulus policies for economic recovery. I conclude that while both monetary and fiscal stimulus policies have been effective in contributing to GDP growth and reductions in unemployment, it is evident that each recession requires a unique policy response. In many cases, I find value in implementing both monetary and fiscal policy, jointly, as they complement one another. I also find that, generally, monetary policy is most effective in contributing to the economic recovery process of recessions through open market operations that reduce the interest rate and that fiscal policy is most effective in contributing to the economic recovery process of recessions through government spending. My systematic exploration of these policies and the recession case studies, provide valuable information of the effects of these policies and provide insight into the appropriate use of stimulus policies in the current economy and for future recessions and recoveries.

Die vorliegende Dissertation zu makroökonomischen Themen beinhaltet einen einleitenden Literaturüberblick, drei eigenständige und voneinander unabhängige Kapitel sowie einen technischen Anhang. In Kapitel zwei wird ein Zwei-Länder Modell einer Währungsunion betrachtet, in dem die gemeinsame Zentralbank die Wohlfahrt der gesamten Währungsunion maximieren will, während die zwei fiskalpolitischen Akteure vergleichbare, aber minimal abweichende länderspezifische Verlustfunktionen zu minimieren suchen. Das Konkurrenzverhalten dieser drei Institutionen wird in sieben spieltheoretischen Szenarien analysiert. Beim Vergleich einer homogenen mit einer heterogenen Währungsunion lassen sich für letztere deutlich höhere Wohlfahrtsverluste relativ zum sozialen Optimum feststellen. Die Szenarien mit den geringsten Wohlfahrtsverlusten sind Kooperation aller drei Institutionen und eine Stackelberg-Führerschaft der Zentralbank. Kapitel drei untersucht, inwieweit das Verhältnis von Immobilienpreise zum Bruttoinlandsprodukt als langfristig konstant und nur auf Grund von Produktivitätsschocks von seinem Mittelwert abweichend angesehen werden kann. Hierzu wird ein Zwei-Sektoren RBC-Modell für den Immobiliensektor und einen Konsumgütersektor erstellt. Es wird gezeigt, dass ein antizipierter, zukünftiger Schock auf das Produktivitätswachstum im Konsumgütersektor eine sofortige, deutliche Erhöhung der Immobilienpreise relativ zum Bruttoinlandsprodukt zur Folge hat. In Kapitel vier wird gefragt, ob ein typisches Neukeynesianisches Modell "sechs große Rätsel der internationalen Makroökonomie" erklären kann. Die sechs Rätsel werden in Bedingungen für erste und zweite Momente übersetzt und fünf wesentliche Modellparameter geschätzt. Das Ergebnis ist erstaunlich gut: unter anderem können die empirischen Beobachtungen zur Heimatpräferenz wiedergegeben und die Schwankungsbreite des realen Wechselkurses deutlich erhöht werden. Handelskosten sind für dieses Ergebnis ein wesentlicher Faktor.
This dissertation consists of an introductory chapter with an extended literature review, three chapters on individual and independent research topics, and an appendix. Chapter 2 uses a two-country model with a central bank maximizing union-wide welfare and two fiscal authorities minimizing comparable, but slightly different country-wide losses. The rivalry between the three authorities is analyzed in seven static games. Comparing a homogeneous with a heterogeneous monetary union, welfare losses relative to the social optimum are found to be significantly larger in a heterogeneous union. The best-performing scenarios are cooperation between all authorities and monetary leadership. The goal of Chapter 3 is to investigate whether or not it is possible to explain the house price to GDP ratio and the house price to stock price ratio as being generally constant, deviating from its respective mean only because of shocks to productivity? Building a two-sector RBC model for residential and non-residential capital, it is shown that an anticipated future shock to productivity growth in the non-residential sector leads to an immediate large increase in house prices relative to GDP. In Chapter 4, it is asked whether a typical New Keynesian Open Economy Model is able to explain "Six Major Puzzles in International Macroeconomics". After translating the six puzzles into moment conditions for the model, I estimate five parameters to fit the moment conditions implied by the data. Given the simplicity of the model, its fit is surprisingly good: among other things, the home bias puzzles can easily be replicated, the exchange rate volatility is formidably increased and the exchange rate correlation pattern is relatively close to realistic values. Trade costs are one important ingredient for this finding.

Labor market indicators such as unemployment and labor force participation show a significant amount of heterogeneity across demographic groups, which is often not incorporated in monetary policy analysis. This dissertation is composed of three essays that explore the effect of labor market heterogeneity on the design and conduct of monetary policy. The first chapter, Effect of Monetary Policy Shocks on Labor Market Outcomes, studies this question empirically by looking at dynamics of macroeconomic outcomes to a monetary policy shock. I construct a measure of monetary policy shock using narrative methods that represent the unanticipatory changes in policy. Impulse response of unemployment rates for high and low-skill workers show low-skill workers bear a greater burden of contractionary monetary policy shock. Their unemployment rates increase by almost four times that of the high-skill group. Even though we see differences in dynamic response of unemployment rates, the empirical analysis shows some puzzling results where effects of contractionary shock are expansionary in nature. Moreover, these results are plagued by the “recursiveness assumption” that the shock does not affect current output and prices, which is at odds with theoretical models in the New Keynesian literature. In the second chapter, Skill Heterogeneity in an Estimated DSGE Model, I use a structural model to better identify these shocks and study dynamic responses of outcomes to economic shocks. I build a dynamic stochastic general equilibrium model, which captures skill heterogeneity in the U.S. labor market. I use Bayesian estimation techniques with data on unemployment and wages to obtain distribution of key parameters of the model. Low-skilled workers have a higher elasticity of labor supply and labor demand, contributing to the flatness of the wage Phillips curve estimated using aggregate data. A contractionary monetary policy shock has immediate effects on output and prices, lowering both output and inflation. Moreover, it increases unemployment rates for both high and low-skill groups, the magnitude being larger for the latter group. The presence of labor market heterogeneity will have new implications for the design of monetary policy, that I study in the third chapter, Optimal Monetary Policy with Skill Heterogeneity. I design an optimal policy for the central bank where policymakers respond to the different inflation-unemployment trade-off between high and low-skill workers. The monetary authority must strike a balance between stabilization of inflation, GDP and outcomes of high and low-skill workers separately. This optimal policy can be implemented by a simple interest rate rule with unemployment rates for high and low-skill workers and this policy is welfare improving.

This dissertation consists of three independent chapters at the intersection of macroeconomics and labor economics. The first chapter studies the job-search trade-offs between full-time employment, part-time employment, and multiple job holdings. The second chapter explores the macroeconomic relationship between property crime and output in a dynamic stochastic general equilibrium framework. The third chapter studies the causal effect of property crime on output.

The first chapter develops a search-matching model of the labor market with part-time employment and multiple job holdings. The model is calibrated to data from the CPS between 2001 and 2004. Workers are able to choose their search intensity and are allowed to hold two jobs while firms can choose what type of worker to recruit. When compared to the canonical Diamond-Mortensen-Pissarides model, this model performs quite well while capturing some empirical regularities. First, the model generates recruiting and vacancy posting rates that move in opposite directions. Second, part-time employment is up to 10 times more responsive than full-time employment. Third, the model suggests that multiple job holding rates are more flexible than observed in the data with the rate changing by as much as 4 percentage points compared to 0.1 percentage points in the data. Finally, the full model is able to capture compositional changes during recessions with the full-time rate declining and the part-time rate increasing. It also produces an empirically consistent increase in the unemployment rate as well as a decrease in output. The DMP model is more muted than in the data for both.

The second chapter explores how property crime can affect static and dynamic general equilibrium behavior of households and firms. I calibrate a model with a representative firm and heterogeneous households where households have the choice to commit property crime. In contrast to previous literature, I treat crime as a transfer rather than home production. This creates a feedback loop wherein negative productivity shocks increase property crime which further depresses legitimate work and capital accumulation. These responses by households are particularly important when thinking about the effect of property crime on the economy. Household and firm losses account for 24% of compensating variation (CV) and 37% of lost production. This suggests that behavioral responses are quite important when calculating the cost of property crime. Finally, on the margin, decreasing property crime by 1% increases social welfare by 0.19%, but the effect is diminishing suggesting that reducing crime entirely may not be optimal from a policymakers perspective.

The third chapter estimates the causal effect of property crime on real personal income per capita. Running system GMM on an unbalanced panel of MSA-year pairs suggests that property crime reduces real personal income per capita by a highly statistically significant 13.3%. This implies that the average person loses $4,869 (2009 dollars) per year with real annual personal income per capita totaling $36,615. The effect is driven primarily by larceny-theft and burglary with highly statistically significant coefficients of -0.179 and -0.110 respectively. Estimates for the effect of robbery are unstable, and the effect of motor vehicle theft is statistically significant, but smaller with a coefficient of -0.060.

This paper summarises a series of Asia-Pacific based studies that explore three distinct central and commercial banking regimes, looking at interest rate pricing and transmission. This research is significant for several reasons: (a) the relative lack of research into pricing behaviour and price transmission in Asia-Pacific, (b) the development of new tools to analyse non linear cointegration and hence price asymmetry, (c) economic and financial convergence is now a topic of regional importance, (d) transmission and price behaviour evidence has not been documented in the context of the different central bank policy signaling regimes evident in the region, (e) the banking markets in the region are clearly in the midst of a consolidation and globalisation phase. This follows rapidly from the 1997/98 financial-crisis, (f) there is little evidence in the region of how advances in risk management practice have impacted the price behaviour of the banking industry. A number of findings have been documented. Regional financial integration appears already under way, evidenced by both regional banking mergers and regional consistency in the timing of structural breaks during the Asian crisis. Transmission of policy rates to wholesale rates appears rapid in the case of Hong Kong (HK) and New Zealand (NZ), but slow in the case of Singapore with its currency-basket regime. Generally, there is little evidence of asymmetric interest rate pricing practices in Singapore and HK, whilst asymmetry noted for NZ appears to be largely a function of how banks reacted in a significant decline in rates over a long period prior to the implementation of the Official Cash Rate.
Professional Doctorate

This paper relates openness to the decline in inflation by using panel data for six OECD (the USA, Japan, Canada, Portugal, Finland, and Australia) countries over the period from 1980 to 2006. I obtain industrial level data for twenty industries in each of the six countries in the timeframe and estimate the effects of increases in openness, through its effect on productivity and markups on inflation. The methods used to construct the variables in this paper follow methods introduced in Chen, Imbs and Scott (2004), and the estimations follow Chen, Imbs and Scott (2007). The results suggest openness reduces the rate of inflation in the short run. Furthermore, it also reduces short run productivity and markups. The long run results are ambiguous, however. The evidence that openness leads to anti-competitive effects in the long run is weak. JEL Classification: E31, F12, F14, F15, L16 Keywords: Openness, Prices, Productivity, Markups

Research Doctorate - Doctor of Philosophy (PhD)
The Global Financial Crisis and ongoing Eurozone crisis have posed a growing challenge to the implementation of mainstream macroeconomic stabilisation policies. This thesis develops an integrated and coherent theoretical and empirical framework for understanding the constraints on the post-crisis conduct of fiscal and monetary policy among Eurozone and advanced non-Eurozone economies. It is presented as a series of published and submitted research articles which are informed by the principles of Modern Monetary Theory. The central contribution of the thesis is to highlight the policy freedoms of economies which enjoy full fiscal-monetary policy sovereignty. The implications are, first, government within sovereign economies are not adequately exploiting their inherent financial capacity to implement a full employment policy and advance the public purpose. Second, economies which do not enjoy policy sovereignty, such as Eurozone members, face a unique set of institutional constraints which have undermined not only policymakers’ attempts to address the deepening crisis, but the achievement of sustained full employment. The thesis is highly critical of these institutional arrangements and recommends that policy sovereignty is restored since it promotes flexibility in the design and implementation of fiscal and monetary policy, and eliminates the financial constraints vis-à-vis implementing a full employment policy, such as a Job Guarantee.

The chapter points out some deficiencies of the mainstream model utilized by many central banks. It also reviews the Fiscal Theory of the Price level. Extending the barebones version of the central banks' model presented here to the case in which "land" is endowed with liquidity, the chapter shows, among other things, that if land is subject to Liquidity Crunch, increasing the supply of liquidity by pump-priming high-powered money fails to send land's relative price back to pre-liquidity-shock level. This helps to give a rationale for Quantitative Easing in which the central bank purchases "toxic assets" with high-powered money. The chapter includes extensions to account for banks and liquidity as a factor of production, and it ends with a critique of the new crop of financial crisis models, especially those stressing non-linear constraints.

Abstract The chapter gives an overview of post-Keynesian economics (PKE) and how it offers a macroeconomic foundation for the growth models approach. It first contrasts the methodological foundations of PKE and discusses differences and similarities to mainstream economics and New Keynesian Economics in particular. Second it presents the main features of PKE: demand-led growth (the goods market), post-Keynesian monetary theory (financial markets), and the theory of induced technological change and how it gives rise to path-dependent growth (the supply side). Third it presents the post-Keynesian theory of demand regimes, which covers distributional growth drivers (wage/profit-led growth) as well as finance and fiscal policy effects. Finally, the chapter discusses financialization, and the return of financial cycles and the central role of real estate prices for macroeconomic performance.

A well-established theory in macroeconomics is that governments running persistent deficits have sooner or later to finance those deficits with money creation, thus producing inflation. The fiscal view of inflation has been especially prominent in the developing country literature, which has long recognized that less efficient tax collection, political instability, and more limited access to external borrowing tend to lower the relative cost of seigniorage and increase dependence on the inflation tax. For this reason, the main factors which affecting inflation rate in developing countries are extremely important for policy makers as when the causes of inflation are correctly specified the appropriate policy change can be easily diagnosed and effectively implemented. The purpose of this study is to test the empirical relationship between inflation and the budget deficit for the Turkish economy by an autoregressive distributed lag model (ARDL) analysis for the period 1970–2010. The data is taken from Republic of Turkey Ministry of Development and World Bank’s Database. The empirical findings indicates that fiscal deficit is one of the important variables of the price level along with other variables like interest rates, exchange rate, per capita income, trade of GDP. The short-run analysis captured from error correction model (ECM). The results of the bounds test suggest that there is a long run relationship between fiscal deficit and inflation. These findings drive important inferences for implications of monetary and fiscal policies.