Showing papers in "PSL Quarterly Review in 2004"
TL;DR: In this article, the authors propose to include in the set of individual variables some of an environmental or social nature, which can mitigate the effect of outliers and synthesize by principal components, or alternatively by a different averaging method that takes sustainability into account and penalizes unbalances among different aspects of development.
Abstract: As a possible improvement to the United Nations' Human Development Index (HDI), we propose including in the set of individual variables some of an environmental or social nature. Thus, by rescaling all the variables non-linearly it is possible to mitigate the effect of outliers and synthesize by principal components, or alternatively by a different averaging method that takes sustainability into account and penalizes unbalances among different aspects of development. Both methods are easy to implement and calibrate. The ensuing effect on the ranking of world countries is compared to the HDI ranking. JEL Codes: C43, O11, O47, Q01 Keywords: Development, Sustainability
62 citations
TL;DR: In practice, there has been a divorce between rhetoric and reality as discussed by the authors, and the growth of GDP post-liberalization has been only one-half that pre-liberalisation.
Abstract: Trade liberalisation in Mexico started in a significant way in 1985/86, and was consolidated by the NAFTA agreement 1994. Mexico was expected to benefit in terms of increased export growth, employment, real wages, and above all, a faster rate of economic growth. In practice, there has been a divorce between rhetoric and reality. The growth of GDP post-liberalisation has been only one-half that pre-liberalisation. This paper gives three explanations. Firstly, export growth has hardly changed. Secondly, there has been a sharp increase in the propensity to import (partly related to US direct foreign investment) which has reduced the growth of GDP consistent with a sustainable balance of payments equilibrium on current account. Thirdly, liberalisation has been used as a substitute for a development strategy. JEL Codes: F13, F14, F32, O19, O24
33 citations
Journal Article•
TL;DR: In this paper, the authors employ a panel structure that permits them to separate regional, national and continental influences on European unemployment and find that higher pay inequality is associated with more, not less, unemployment.
Abstract: This paper reconsiders the problem of unemployment in Europe at multiple geographic levels and through time from 1984 to 2000. We employ a panel structure that permits us to separate regional, national and continental influences on European unemployment. Important local effects include the economic growth rate, relative wealth or poverty, and the proportion of young people in the labor force. As part of this analysis, we assess the relationship between pay inequality and unemployment in Europe, following the insight of Harris and Todaro (1970) that pay inequalities influence job search. With our own panel of inequality measures derived from Eurostat's REGIO data set, we find that higher pay inequality, though usually taken to indicate greater labor market flexibility, is associated with more, not less, unemployment. Among large countries distinctive effects at the national level are few, perhaps indicating that national labor market institutions are not a decisive factor in the determination of unemployment. Changes in the macro-environment are picked up by time fixed effects, and these show a striking pan-European rise in unemployment immediately following the Maastricht Treaty, though with some encouraging recovery late in the decade. JEL Codes: E24, J31, J64 Keywords: Pay, Unemployment
25 citations
TL;DR: In this article, the authors examined the information provided to the private sector by central banks by using principal component analysis and found that a synthetic quantitative index of transparency is not enough to represent the phenomenon since it can result misleading in understanding the behavior of institutionally different central banks associated with the same index values.
Abstract: This paper examines the information provided to the private sector by central banks. By using the principal component analysis, we investigated the variance of the procedural rules followed by nine major central banks about informationtreatments. We investigate problems related to the information coming from the central banks by focusing on the quantity and quality perspectives and highlight the methodological complexity of the investigation. We find that a synthetic quantitative index of transparency is not enough to represent the phenomenon since it can result misleading in understanding the behavior of institutionally different central banks associated with the same index values. JEL Codes: D82, E52, E58 Keywords: Information
15 citations
TL;DR: In this paper, the authors analyse the treatment of SME loans under the Basel II framework and provide an empirical evaluation of the impact of different proposals on a large hypothetical portfolio of Italian corporations.
Abstract: In April 2003 the Basel Committee on Banking Supervision issued a third consultative paper on the new Basel Capital Accord (Basel II). The document contains substantial changes with respect to the previous proposal of January 2001, on which improvements were requested, among other aspects, regarding the too severe treatment foreseen for loans to small and medium sized enterprises (SMEs). The aim of this paper is to analyse the treatment of SME loans under the Basel II framework and to provide an empirical evaluation of the impact of the different proposals on a large hypothetical portfolio of Italian corporations. Our simulations indicate that the prudential treatment of SME loans foreseen in the last consultative document of the Basel Committee is not penalizing with respect to the current situation. Therefore, we should not expect a reduction of credit or an increase in interest rates on loans to this type of borrowers. JEL Codes: G21, G28, G30, L25
14 citations
TL;DR: This article found that the overnight call rate reacts positively to a shock to the inflation gap, the output gap, yen depreciation, stock prices, or the lagged call rate, except for the Lagged OCR.
Abstract: Extending the Taylor rule and applying the VAR model, the author finds that the overnight call rate reacts positively to a shock to the inflation gap, the output gap, yen depreciation, stock prices, or the lagged overnight call rate. The response of the overnight call rate to exchange rates or stock prices lasts longer than the reaction to the output gap and the inflation gap. Except for the lagged overnight call rate, the inflation gap and the exchange rate are more influential than the output gap and stock prices in explaining the variance of the overnight call rate. JEL Codes: E52, E58
8 citations
Journal Article•
TL;DR: In this article, a cross-country price-augmented modification of Engel Law, econometrically specified, indicates that the relative price of food is related positively to the supply of food items and negatively to that of non-food items.
Abstract: Relative to non-food items, food tends to be cheaper in rich, as compared with poorEuropean countries. This tendency cannot be explained in terms of cost developments or foreign-trade considerations. A positive explanation proposed focuses on demand-income-supply interaction. An analysis of a cross-country price-augmented modification of Engel Law, econometrically specified, indicates that the relative price of food is related positively to the supply of food items and negatively to that of non-food items. This finding is consistent with "agricultural price scissors", and also casts a different light on the nature of economic development and structural change. JEL Codes: L11, L66, Q11 Keywords: Food, Prices
7 citations
Journal Article•
TL;DR: In this paper, the authors present the main characteristics and implications of the macroeconomic business cycle models in a predominantly non-technical way, in order to highlight the progress connected with the new class of models, and put them into the context of former debates on stabilization policies.
Abstract: Recently, a new class of macroeconomic business cycle models has emerged. Stochastic dynamic general equilibrium models with rational expectations originally employed by RBC researchers are combined with nominal rigidities and imperfect competition traditionally highlighted by New Keynesian economists. This class of models leads to a new paradigm in business cycle theory and stabilization policies. The paper presents the main characteristics and implications of the new class of models in a predominantly non-technical way. In order to highlight the progress connected with the new class of models, it puts them into the context of former debates on stabilization policy, such as the Phillips curve dispute. JEL Codes: E12, E13, E23, E31, E32, E52, E63 Keywords: Business Cycle, Cycle, Equilibrium, Macroeconomics, New Keynesian, Rational Expectation, Stabilization
4 citations
TL;DR: In this paper, the authors analyzed the effects of technical choices in the field of monetary policy instruments on the interbank market and bank treasuries, and examined how the tender typology adopted for main refinancing operations affects overbidding and underbidding, as well as efficiency in bank liquidity management.
Abstract: This paper analyses the current operational framework chosen to implement single monetary policy in the euro area, pointing out the effects of certain technical choices in the field of monetary policy instruments on the interbank market and bank treasuries. In particular, I examine how the tender typology adopted for main refinancing operations affects overbidding and underbidding, as well as efficiency in bank liquidity management. I then go on to analyse the technical features of unsecured interbank markets in the euro area in order to determine whether a screen-based framework leads to more efficient liquidity management than achieved in over-the-counter markets. In accordance with the averaging provision mechanism, minimum reserves during the maintenance period in Italy, where the interbank market is electronic-based, are taken as indicators of efficiency in this market. On the evidence of the data, it seems that Italian banks can reduce the opportunity cost of maintaining minimum reserves, also performing intertemporal arbitrages between the interbank market and their reserve accounts. Finally, the focus comes on cross border differences in the use of collateral within the euro area in order to analyse the projects currently debated for the reform of collateral lists. JEL Codes: E43, E52
3 citations
TL;DR: Einaudi as discussed by the authors advocated federating the states of Europe, thus transferring to a supranational level part of the sovereign prerogatives, particularly in the defence, interstate-commerce and monetary fields.
Abstract: Luigi Einaudi was a well-known economist in Italy and abroad, a very prolific journalist, a great public figure particularly after the end of the Second World War. As his thoughts and writings were permeated with a solid liberalism, he was keen on looking for constraint on the State's absolute sovereignty, propensity to interfere with consumer and producer choices, and ability to finance public expenditure through money printing; the first was the principal cause of war, the other two the origin of misallocation and the worst of taxes, inflation. To fight these evils he advocated federating the states of Europe, thus transferring to a supranational level part of the sovereign prerogatives, particularly in the defence, interstate-commerce and monetary fields. As to the strategy to achieve this result he started from a functionalist approach, moved to a technocratic one, and ended up embracing the thesis to have "political federation" right away. JEL Codes: B31, F02 Keywords: Luigi Einaudi
2 citations