Master’s Program in Money and Finance (MMF)

The Master’s program in Money and Finance (MMF) is an innovative joint venture of the Department of Money and Macroeconomics and of the Department of Finance, both located in the new House of Finance. The program offers promising students from all over the world an intellectually stimulating and challenging setting in which to prepare for their professional careers in central banking, commercial banking, insurance and other financial services. By being located in Frankfurt, one of the world's leading financial centers and the only city in the world with two central banks (the ECB and the German Bundesbank), it offers unique opportunities for interaction with practitioners. The program is taught exclusively in English; knowledge of German is not required for admission to, or completion of the program. It has been designed with a view to establishing itself as a leading Masters program integrating studies in monetary economics, macroeconomics and finance and a major gateway to high-profile jobs in the banking and financial sector

Dynamic Organizations: Achieving Marketplace Agility Through Workforce Scalability

Dynamic organizations (DOs) operate in business environments characterized by frequent and discontinuous change, They compete on the basis of marketplace agility; that is on their ability to generate a steady stream of both large and small innovations in products, services, solutions, business models, and even internal processes that enable them to leapfrog and outmaneuver current and would-be competitors and thus eke out a series of temporary competitive advantages that might, with luck, add up to sustained success over time. Marketplace agility requires the ongoing reallocation of resources, including human resources. We use the term workforce scalability to capture the capacity of an organization to keep its human resources aligned with business needs by transitioning quickly and easily from one human resource configuration to another and another, ad infinitum. We argue that marketplace agility is enhanced by workforce agility because it is likely to meet the four necessary and sufficient conditions postulated by the resource based view (RBV) of the firm – valuable, rare, inimitable, and non-substitutable – if it can be attained. Our analysis therefore concludes by focusing on the two dimensions of workforce scalability – alignment and fluidity – and postulating a number of principles that might be used to guide the design of an HR strategy that enhances both. Throughout the paper, key concepts are illustrated using the experiences of Google, the well-known Internet search firm. Because the analysis is speculative and intended primarily to pique the interest of researchers and practitioners, the paper ends with a number of important questions that remain to be clarified

Real interest rate persistence: evidence and implications

The real interest rate plays a central role in many important financial and macroeconomic models, including the consumption-based asset pricing model, neoclassical growth model, and models of the monetary transmission mechanism. We selectively survey the empirical literature that examines the time-series properties of real interest rates. A key stylized fact is that postwar real interest rates exhibit substantial persistence, shown by extended periods of time where the real interest rate is substantially above or below the sample mean. The finding of persistence in real interest rates is pervasive, appearing in a variety of guises in the literature. We discuss the implications of persistence for theoretical models, illustrate existing findings with updated data, and highlight areas for future research.Interest rates

Real interest rate persistence: evidence and implications

The real interest rate plays a central role in many important financial and macroeconomic models, including the consumption-based asset pricing model, neoclassical growth model, and models of the monetary transmission mechanism. The authors selectively survey the empirical literature that examines the time-series properties of real interest rates. A key stylized fact is that postwar real interest rates exhibit substantial persistence, shown by extended periods when the real interest rate is substantially above or below the sample mean. The finding of persistence in real interest rates is pervasive, appearing in a variety of guises in the literature. The authors discuss the implications of persistence for theoretical models, illustrate existing findings with updated data, and highlight areas for future research.Interest rates

Business Cycles Analysis and Expectational Survey Data

What is the role of foresight, and the significance of the lack of foresight under uncertainty, in the theory of business cycles ? What relevant evidence on these questions can be extracted from the survey data on agents' expectations and experts' forecasts? To provide some answers, the recent work in this area is reviewed in the perspective of economic and doctrinal history. The address proceeds from (1) a discussion of the expectational aspects of modern business cycles theories and (2) a critique of the currently dominant approaches to (3) a summary of the evidence and (4) some illustrations and implications for further analysis. Of the conclusions drawn,perhaps the most general one is that expectations matter a great deal but are not all-important. They may be rational in the sense of effectively using the limited available knowledge and information, but they are also diversified and not always self-validating or stabilizing.

Optimal Strategies for a Knowledge Workers Acquisition Problem with Expanding and Volatile Demand: Train Internally or Recruit Externally?

The aim of this paper is to consider the process of supplying trained workers with knowledge and skills for upcoming business opportunities, and of training apprentices prepared to meet future demands in an IT service firm. As the demand for new workers has fluctuations, a firm should employ a buffer workforce such as apprentices or interns. However, as a result of rapid development of a business, the buffer‟s capacity may be exceeded, thus requiring the company to recruit skilled workers from outside the firm. It is thus important for a firm to map out a strategy for manpower planning so as to fulfill the demands of new business and minimize operation costs related to training apprentices and recruiting experienced workers. This paper first analyzes the demand and supply of workers for IT service in a knowledge-intensive field. It then presents optimal human resource planning via the familiar method of stochastic process - queueing analysis

Short-term Forecasting Methods Based on the LEI Approach: The Case of the Czech Republic

This paper is aimed at developing short-term forecasting methods based on the LEI (leading economic indicators) approach. We use a set of econometric models (PCA, SURE) that provide estimates of GDP growth for the Czech economy for a co-incident quarter and a few quarters ahead. These models exploit monthly or quarterly indicators such as business surveys, financial or labour market indicators, monetary aggregates, interest rates and spreads, etc. that become available before the release of data on GDP growth itself. Our tests show that the LEIs provide relatively accurate forecasts of GDP fluctuations in the short run.Leading indicators, principal component analysis, seemingly unrelated regression estimate.

Unemployment, Hysterisis and Transition

We quantify the degree of persistence in the unemployment rates of transition countries using a variety of methods benchmarked against the EU. In doing so, we will also characterize the dynamic behavior of unemployment in the CEECs during the past decade. In part of the paper, we will work with the concept of linear ÒHysteresisÓ as described by the presence of unit roots in unemployment as in most empirical research on this area. Given that this is potentially a rather narrow definition, we will also take into account the existence of structural breaks and non-linear dynamics in unemployment in order to allow for a richer set of dynamics. Finally, we examine whether CEECsÕ unemployment presents features of multiple equilibria, that is, if it remains locked into a new level whenever a structural change occurs. Our findings show that, in general, we can reject the unit root hypothesis after controlling for structural changes and business cycle effects, but we can observe the presence of a high and low unemployment equilibria. The speed of adjustment is faster for CEECs than the EU, although CEECs tend to move more frequently between equilibria.unemployment, hysterisis, unit root, transition

Current Account Deficits: The Australian Debate

This paper documents the clear change of view, which has taken place in Australia over the past three decades or so, concerning the relevance of the current account deficit for policy. Historical experience under a fixed exchange rate regime suggested that large persistent deficits were unsustainable and could leave the economy vulnerable to sudden reversals in sentiment. These concerns persisted after the floating of the Australian dollar and financial deregulation, and it was thought that all arms of policy should help to rein in the then much larger current account deficits. However, these policies were shown to be ineffective and, by the early 1990s, the argument that current account deficits represent the optimal outcomes of decisions made by ‘consenting adults’ gained wide support. This paper presents some empirical evidence consistent with optimal smoothing in the face of temporary shocks; the persistence of the deficit is attributed to a modest degree of impatience relative to the rest of the world. Although it is now widely accepted that policy should not seek to influence the current account balance, the issue of external vulnerability remains of interest. Here, country-specific considerations are important, and it is argued that the factors that have made Australia relatively resilient to external shocks are also those that helped to attract foreign capital in the first place.

A Model for Efficiency-Based Resource Integration in Services

Service processes, such as consulting, require coordinated efforts from the service recipient (client) and the service provider in order to deliver the desired output – a process known as resource integration. Client involvement directly affects the efficiency of service processes, thereby affecting capacity decisions. We present a mathematical model of the resource-integration decision for a service process through which the client and the service provider co-produce resource outputs. This workforce planning model is unique because we include the extent of client involvement as a policy variable and introduce to the resource-planning model efficiency and quality performance measures, which are functions of client involvement. The optimization of resource planning for services produces interesting policy prescriptions due to the presence of a client-modulated efficiency function in the capacity constraint and subjective client value placed on participation in the service process. The primary results of this research are optimal decision rules that provide insights into the optimal levels of client involvement and provider commitment in resource integration