The Morning After: Explaining the Slowdown in Japanese Growth in the 1990s

This paper uses a VAR to investigate four possible explanations of the extended slump in Japanese economic activity over the 1990s: the absence of bold and consistent fiscal stimulus; the limited room for expansionary monetary policy due to a liquidity trap; overinvestment and debt overhang; and disruption of financial intermediation. The results indicate that all of these factors played a role, but that the major explanation is disruption in financial intermediation, largely operating through the impact of changes in domestic asset prices on bank lending.

Monetary Magic? How the Fed Improved the Supply Side of the Economy

Extending recent theoretical contributions on sources of inflation inertia, we argue that monetary uncertainty accounts for sluggish expectations adjustment to nominal disturbances. Estimating a model in which rational individuals learn over time about shifts in U.S. monetary policy and the Phillips curve, we find strong evidence that this link exists. These results question the standard approach for evaluating monetary rules by assuming unchanged private sector responses, help clarify the role of monetary stability in reducing output variability in the U.S. and elsewhere, and tell a subtle and dynamic story of the interaction between monetary policy and the supply-side of the ecoInflation dynamics; Monetary Policy; Kalman filter

Is Regionalism Simply a Diversion? Evidence From the Evolution of the EC and EFTA

This paper considers the impact on trade of preferential arrangements in Europe since the 1950s. Using a first difference version of the gravity model, we find that the EC and EFTA altered the pattern of international trade. We also find evidence of trade diversion in several cases, notably that of the EC in the 1960s.

Monetary Magic? How the Fed Improved the Supply Side of the Economy

Extending recent theoretical contributions on sources of inflation inertia, we argue that monetary uncertainty accounts for sluggish expectations adjustment to nominal disturbances. Estimating a model in which rational individuals learn over time about shifts in U.S. monetary policy and the Phillips curve, we find strong evidence that this link exists. These results question the standard approach for evaluating monetary rules by assuming unchanged private sector responses, help clarify the role of monetary stability in reducing output variability in the U.S. and elsewhere, and tell a subtle and dynamic story of the interaction between monetary policy and the supply-side of the econoInflation dynamics; Monetary policy; Kalman filter

A Peek Inside the Black Box: The Monetary Transmission Mechanism in Japan

This paper uses vector autoregressions to examine the monetary transmission mechanism in Japan. The empirical results indicate that both monetary policy and bank's balance sheets are important sources of shocks, that banks play a crucial role in transmitting monetary shocks to economic activity, that corporations andhouseholds have not been able to substitute borrowing from other sources for a shortfall in bank borrowing, and that business investment is especially sensitive to monetary shocks. We conclude that policy measures to strengthen banks are probably a prerequisite to restoring the effectiveness of the monetary transmission mechanism. Copyright 2001, International Monetary Fund

New Rates from New Weights

This paper describes the result and the methodology of updating nominal and real effective exchange rate weights on the basis of trade data from 1999 to 2001. The underlying framework is an updated version of the IMF's current effective exchange rate calculation, which uses weights largely based on 1989-91 data. Since then, substantial changes have occurred in international trade relations, warranting a recalculation of effective exchange rate indices on the basis of new trade patterns. Updated weights show that the United States and developing countries (most notably China) have grown in their importance in global trade, while Japan and the European Union have declined, with substantial implications for the path of the dollar and exchange rate effects of emerging market crises since 1995. Copyright 2006, International Monetary Fund

Benefits and Spillovers of Greater Competition in Europe: A Macroeconomic Assesment

Using a general-equilibrium simulation model featuring nominal rigidities and monopolistic competition in product and labor markets, this paper estimates the macroeconomic benefits and international spillovers of an increase in competition. After calibrating the model to the euro area vs. the rest of the industrial world, the paper draws three conclusions. First, greater competition produces large effects on macroeconomic performance, as measured by standard indicators. In particular, we show that differences in competition can account for over half of the current gap in GDP per capita between the euro area and the US. Second, it may improve macroeconomic management by increasing the responsiveness of wages and prices to market conditions. Third, greater competition can generate positive spillovers to the rest of the world through its impact on the terms of trade.

RCTS: A flexible environment for sensor integration and control of robot systems; the distributed processing approach

Most robot systems lack a suitable hardware and software environment for the efficient research of new control and sensing schemes. Typically, engineers and researchers need to be experts in control, sensing, programming, communication and robotics in order to implement, integrate and test new ideas in a robot system. In order to reduce this time, the Robot Controller Test Station (RCTS) has been developed. It uses a modular hardware and software architecture allowing easy physical and functional reconfiguration of a robot. This is accomplished by emphasizing four major design goals: flexibility, portability, ease of use, and ease of modification. An enhanced distributed processing version of RCTS is described. It features an expanded and more flexible communication system design. Distributed processing results in the availability of more local computing power and retains the low cost of microprocessors. A large number of possible communication, control and sensing schemes can therefore be easily introduced and tested, using the same basic software structure