Showing papers in "PSL Quarterly Review in 1997"
Journal Article•
83 citations
TL;DR: In this paper, the authors evaluate the institutional arrangements which underpinned the Irish pound for a half-century while the regime did have a credibility which led to low interest rates and a degree of price stability, its resilience was partly due to the large additional foreign reserves held by the private banking system and the fact that the sterling proved not to be a very strong currency.
Abstract: The resurgence of interest in currency boards prompts reconsideration of one of the Irish experience The authors evaluate the institutional arrangements which underpinned the Irish pound for a half-century While the regime did have a credibility which led to low interest rates and a degree of price stability, its resilience was partly due to the large additional foreign reserves held by the private banking system and to the fact that the sterling proved not to be a very strong currency However, an attempt in 1955 to evade the interest rate discipline of the regime was quickly punished, with far-reaching policy consequences JEL Codes: E58, G20 Keywords: Financial systems and central banks
44 citations
TL;DR: In this article, the authors analyzed the bank-firm relationship in Italy, in order to verify its impact on the behaviour of banks towards customers and the effects on the transmission of monetary policy impulses.
Abstract: The work analyses the bank-firm relationship in Italy, in order to verify its impact on the behaviour of banks towards customers and the effects on the transmission of monetary policy impulses. The authors single out a sub-group of borrowers whose dependence upon banks seems to be particularly close and examine banks’ behaviour towards this subgroup vis-a-vis other groups of firms. The analysis differs from previous empirical research in that a wider sample of non-financial firms is used, a stability index is employed among the explanatory variables, and the importance of customer relationships is tested with reference to the response of interest rates applied by banks during Italy’s sever episode of monetary restriction in 1992. Specifically, the work looks at the relation between the closeness of bank-firm relations and the probability of being rationed, the multiple borrowing of firms and the possibility that the recent consolidation of the banking system is bound to determine a strengthening in customer relationships. JEL Codes: G21 Keywords: Bank-firm relations, Italian credit market, interest rates
33 citations
TL;DR: The meaning and policy implications of central bank independence are discussed in this article, where it is shown that "instrument independence" (the freedom of a central bank to choose its policy means) is important for inflation performance.
Abstract: Contemporary views often support the idea that a high level of central bank independence, together with a clear mandate for it to restrain inflation, are important institutional devices for maintaining price stability. The meaning and policy implications of central bank independence are discussed. Two indicators of central bank independence are tested, and it is shown that 'instrument independence' (the freedom of a central bank to choose its policy means) is important for inflation performance, but other aspects of central bank independence and 'conservativeness' have little or no impact on inflation. JEL Codes: E58, G20 Keywords: Financial Systems and central banks
33 citations
TL;DR: In this paper, the authors discuss the implications of a large-scale introduction of electronic money products on the seigniorage revenues and financial independence of central banks in the group of G10 countries.
Abstract: Recently, the subject of seigniorage - the revenues deriving from the monetary monopoly - has attracted the attention of academics and policy-makers. The authors discuss the reasons for this interest before undertaking a survey of the implications of a large-scale introduction of electronic money products on the seigniorage revenues and financial independence of central banks in the group of G10 countries. In countries with decreased seigniorage revenues and a high percentage of e-money the financial independence of central banks are negatively affected as a result of their inability to compensate for increasing operational expenses. Measures such as the limitation of e-money issuance and the imposition of requirements on e-money help in curtailing operational costs related to salaries, pensions, publications and banknote circulation, among others. JEL Codes: E58, G20
16 citations
15 citations
TL;DR: In this article, the authors provide quantitative inter-temporal and international perspectives for assessing performance in 16 European capitalist countries, and examine the forces which have shaped their development from a historical perspective.
Abstract: The work provides quantitative inter-temporal and international perspectives for assessing performance in 16 European capitalist countries, and examines the forces which have shaped their development. From a historical perspective, the author looks back over the five main phases of the modern capitalist era since 1820, and contrasts their experience with that of the United States and Eastern Europe. Some distinctive features of European capitalism which have influenced its performance are outlined. Changes in Western policy and performance form 1820 to 1973 are then dealt with before the latest phase of development from 1973 to 1996 is analysed in detail. Finally, recent developments in Eastern Europe are assessed and some conclusions regarding the major policy problems facing capitalist countries are reached. JEL Codes: O11, P1 Keywords: European capitalism, capitalist performance, European economic history
15 citations
TL;DR: In this article, the authors examine how the irrevocably fixed conversion rates for the currencies of countries participating in the EMU can be set and propose a multi-stage solution that is compatible with the recent Council regulation on the legal framework.
Abstract: The work examines how the irrevocably fixed conversion rates for the currencies of countries participating in the EMU can be set. The authors recall the few provisions delineated in the Maastricht Treaty before examining the wide set of options available. If there are currencies in the ECU basket that do not participate to the single currency, setting conversion rates becomes more complicated. Moreover, the Lamfalussy rule for defining rates comports undesirable consequences. The authors conclude by proposing a multi-stage solution that is compatible with the recent Council regulation on the legal framework: announcement that the euro conversion rate will be set equal to the ECU market rate on the last day and a parallel agreement on the desired structure of bilateral rates of the inside countries. JEL Codes: F02, F15 Keywords: EMU, Conversion rates, European currency unit
12 citations
TL;DR: In this paper, a comparative analysis of two bank-oriented and two market-oriented countries is performed to reveal whether or not there are fundamental differences between their financial systems, and the evidence does not support the idea of a distinction between bank- and market-based financial systems.
Abstract: Many distinguish between financial systems with a dominant role for banks and those with a dominant role for financial markets, assuming this is of great importance for economic development. The author analyses why the distinction might matter, first by investigating how bank and market finance affect economic development. A framework to analyse the financial system is then developed. Finally, a comparative analysis of two so-called bank-oriented countries (Germany and Japan) and two so-called market-oriented countries (the UK and the US) is performed to reveal whether or not there are fundamental differences between their financial systems. The evidence does not support the idea of a distinction between bank- and market-based financial systems, with all four countries showing unique characteristics. JEL Codes: G00 Keywords: Economic development, Bank finance, Market finance
7 citations
Journal Article•
7 citations
Journal Article•
TL;DR: In this article, the authors adopt an old Keynesian perspective to evaluate the European monetary union, and evaluate whether effective sovereign monetary policy is feasible now and in the future, whether the EMU constitutes an optimal currency area and whether the proposed European Central Bank will have an appropriate institutional design.
Abstract: The work adopts an old Keynesian perspective to evaluate the EMU. Such a perspective raises concerns with the effectiveness of monetary policy, the feasibility of monetary policy, and the political economy of monetary policy. The EMU brings with it institutional lock-in, and therefore needs to be evaluated with a long term perspective. Whether or not to join the EMU depends on whether effective sovereign monetary policy is feasible now and in the future, whether the EMU constitutes an optimal currency area, and whether the proposed European Central Bank will have an appropriate institutional design. If formed, the EMU should create institutions which promote expansionary policies and empower the conduct of sovereign European monetary policy. JEL Codes: E5, F3, F4, F02 Keywords: European monetary union, European central bank, Optimal currency area, Sovereign monetary policy
TL;DR: In this article, the authors integrate the growth models by Kalecki, Harrod, Robinson and Kaldor, together with an introduction on monetary aspects, based on the endogenous money supply theory.
Abstract: The work attempts to integrate the growth models by authors such as Kalecki, Harrod, Robinson and Kaldor, together with an introduction on monetary aspects, based on the endogenous money supply theory. A short-run income determination model is presented and then extended to a long-run model without assuming full employment. The steady growth rate is then investigated before dynamic aspects of the model are studied and fiscal and monetary policies are examined within a dynamic growth process. Phase diagrams for growth models are employed to to offer an explanation for the effects of short-run demand-control policies. The most important difference from previous works is the explicit introduction of a financial sector functioning as an inflation barrier. JEL Codes: E12
TL;DR: In this article, the authors argue that poor macroeconomic control is an important cause of poor enterprise performance and suggest the importance of implementing microeconomic and structural reforms alongside the establishment of macroeconomic stability.
Abstract: The work argues that poor macroeconomic control is an important cause of poor enterprise performance. The authors review the empirical evidence on the relationship between macroeconomic stability and the performance of the real economy both at the aggregate and the project levels, before presenting a cursory review of the theoretical links. The importance of implementing microeconomic and structural reforms alongside the establishment of macroeconomic stability is also dealt with. The authors conclude with suggestions for policy makers regarding the priorities in the development of the institutions required to achieve and preserve a stable macroeconomic framework. JEL Codes: E20 Keywords: Macroeconomic control, macroeconomic stability, enterprise performance
TL;DR: In this paper, the authors investigated the interpretation of the Maastricht Treaty's government debt criterion, which has a considerable scope for interpretation and has been discussed extensively, but relatively little work has been done to develop a clear interpretation of it.
Abstract: The convergence criteria specified in the Maastricht Treaty on government deficit and debt, inflation, the exchange rate and the long-term interest rate will play an important, if not decisive, role in determining which countries move on to the third stage of the Economic and Monetary Union (EMU). The aim of this work is to provide a possible interpretation of the EMU debt criterion. The author investigates the government debt criterion which, as Article 104c(2b) of the Treaty shows, has a considerable scope for interpretation. Although this subject has been discussed extensively, relatively little work has been done to develop a clear interpretation of the EMU debt criterion. A flexible approach is adopted in which parts of the relevant Treaty text are characterised using two parameters. JEL Codes: F02, F33, F36 Keywords: Economic and Monetary Union, Government debt criterion, Maastricht Treaty
Journal Article•