The Frontiers of New Institutional Economics (Eds.: John N. Drobak and John V. C. Nye) (in English)

institutional economics, history, political economy

Exchange Rate Regimes: Choices and Consequences (A. R. Ghosh ? A.-M. Gulde ? H. C. Wolf)

exchange rate regimes, economic growth, currency crises

Liberalized Markets Have More Stable Exchange Rates: Short-Run Evidence from Four Transition Countries

The paper looks at the hypothesis that financial-market liberalization can create a basis for more stable exchange rates, as deviations of exchange rates from equilibrium levels bring forth stabilizing flows of liquidity. This hypothesis suggests that opening up financial markets militates in favor of exchange-rate flexibility by increasing the viability of a floating regime as well as making it more difficult to maintain a peg. The paper examines this hypothesis in a sample of four transition economies and finds that exchange rates tend to return faster to their Hodrick-Prescott-based values where markets are liberalized. The results suggest that early and successful foreign-exchange liberalization pays off in terms of depth of the market and, hence, faster adjustment of the exchange rate to shocks. Moreover, it implies that central banks should not be overly concerned with short-run volatility of their national exchange rates.endogenous liquidity, error-correction mechanism, exchange rate, nonlinearity

Hits and Misses: Ten Years of Czech Inflation Targeting (Introduction)

The first 10 years of Czech Republic's inflation targeting regime have been remarkable by the persistent undershooting of the inflation targets. This article is an introduction to a special issue aimed at analyzing the factors of the undershooting. The articles in this issue explore the following hypotheses: the impact of a series of counter-inflationary shocks; a biased forecasting system; a faulty decision-making system; and the role of inflation expectations. Based on a meta-analysis of the articles, this introduction suggests that the undershooting cannot be explained by a single factor, although counter-inflationary shocks are identified most frequently. The impact of the undershooting on central bank credibility was modest, partly because the forecasts were accompanied by explicit discussions of the forecast risks.inflation targeting, forecasting system, inflation expectations

Economics of Communist and Capitalist Dictatorships (M. Olson)

teorie verejné volby; plánované ekonomiky; ekonomický rust

Striving to Be “Clearly Open” and “Crystal Clear”: Monetary Policy Communication of the CNB

The Czech National Bank has a respectable track record in terms of its policy actions and the corresponding inflation outturns. The authors analyze its main communication tools – inflation targets, inflation forecasts, verbal assessments of the inflation risks contained in quarterly inflation reports, and the voting within the CNB Board – to assess clarity of communication. They find that these tools provided a very clear message in about three out of every four observations in our 2001–2005 sample.transparency, communication, monetary policy, Czech National Bank

Emerging Market Countries Don’t Believe in Fiscal Stimuli: Should We Blame Ricardo?

Emerging market countries had by early 2009 announced that they will have remained fiscally conservative during the 2008–09 crisis, at least compared with the developed countries, which announced much larger fiscal stimuli. The authors argue that the difference in the pre-announced fiscal stance between those two groups of countries could be at least partly due to the awareness of Ricardian equivalence, that is, a higher offset between private and public saving in emerging market countries. They find that the offset coefficient is almost twice as high in emerging market countries as in developed countries, implying that additional government spending, that is, public dissaving, would be almost completely offset by private saving.private saving, Ricardian equivalence, fiscal policies

Nothing Is Sacred: Economic Ideas for the New Millenium (R. J. Barro)

U. S. economy – fiscal reform – economic policy