Showing papers by "Lorenz Goette published in 1999"

How Robust Are Nominal Wage Rigidities

Abstract: Several studies indicate that firms are reluctant to cut nominal wages during periods of relatively high nominal per capita GDP growth. It has been argued, however, that in an environment with a low nominal per capita GDP growth, i.e., when nominal wage cuts become customary, firms would no longer hesitate to cut nominal pay. To examine this argument we use data from Switzerland where nominal GDP growth has been very low between 1991 to 1997. It turns out that, although nominal wage cuts indeed become more customary during this period of time, the rigidity of nominal wages does not vanish but even increases over time. Our estimates indicate that the fraction of nominally rigid wages is between 35 and 40 percent among full-time workers who stay in their jobs. Moreover, nominal rigidity decreases if inflation or regional unemployment rises or if real per capita GDP growth decreases.

Wars and Markets: how bond values reflect World War II

Abstract: Historical events are reflected in asset prices. In this paper, we analyse government bond prices of Germany and Austria traded on the Swiss bourse during WWII. Some war events that are generally considered crucial are clearly reflected in government bond prices. This holds, in particular, for the official outbreak of the war and the loss and gain of national sovereignty. Other events to which historians attach great importance are not reflected in bond prices: The most prominent example is Germany?s capitulation in 1945. The analysis of financial markets provides a fruitful method to evaluate the importance contemporaries attached to historical events.