Inflation persistence and optimal monetary policy in the euro area

In this paper we present supporting evidence of the existence of heterogeneity in inflation dynamics across euro area countries. Based on the estimation of New Phillips Curves for five major countries of the euro area, we find that there is significant inertial (backward looking) behavior in inflation in four of them, while inflation in Germany has a dominat forward looking component. We then present an optimizing agent model for the area emphasizing the hetergeneity in inflation persistence across regions. Allowing for such a backward looking component will affect the evaluation of the degree of nominal rigidities relevant for the monetary policy design. We explore the welfare implications of this circumstance by comparing the adjustment of the economies and the area as a whole in response to terms-of-trade shocks under four monetary policy rules: fully optimal, optimal inflation targeting, HICP targeting and output gap stabilization. JEL Classification: E52, E58currency areas, Inflation Dynamics, optimal monetary policy

Towards a collocation writing assistant for learners of Spanish

This paper describes the process followed in creating a tool aimed at helping learners produce collocations in Spanish. First we present the Diccionario de colocaciones del español (DiCE), an online collocation dictionary, which represents the first stage of this process. The following section focuses on the potential user of a collocation learning tool: we examine the usability problems DiCE presents in this respect, and explore the actual learner needs through a learner corpus study of collocation errors. Next, we review how collocation production problems of English language learners can be solved using a variety of electronic tools devised for that language. Finally, taking all the above into account, we present a new tool aimed at assisting learners of Spanish in writing texts, with particular attention being paid to the use of collocations in this language

The magnitude and Cyclical Behavior of Financial Market Frictions

We analyze a new panel data set that includes balance sheet information, measures of expected default risk, and credit spreads on publicly-traded debt for more than 900 firms over the period 1997Q1 through 2003Q3. We obtain precise time-specific estimates of the financial frictions parameter underlying the benchmark financial accelerator model of Bernanke, Gertler, and Gilchrist (1999) and clearly reject the null hypothesis of no credit market imperfections; furthermore, for the expansionary period through mid-2000, these estimates are quite similar to the calibrated values used in previous research. Finally, we find that financial market frictions exhibit strong cyclical pattern, with parameter estimates rising by a factor of two during the latest economic downturn before returning to pre-recession levels in 2003.perturbation, policy

Schumpeterian technology shocks

We analyze the labor market effects of neutral and investment-specific technology shocks along the intensive margin (hours worked) and the extensive margin (unemployment). We characterize the dynamic response of unemployment in terms of the job separation and the job finding rate. Labor market adjustments occur along the extensive margin in response to neutral shocks, along the intensive margin in response to investment specific shocks. The job separation rate accounts for a major portion of the impact response of unemployment. Neutral shocks prompt a contemporaneous increase in unemployment because of a sharp rise in the separation rate. This is prolonged by a persistent fall in the job finding rate. Investment specific shocks rise employment and hours worked. Neutral shocks explain a substantial portion of the volatility of unemployment and output; investment specific shocks mainly explain hours worked volatility. This suggests that neutral progress is consistent with Schumpeterian creative destruction, while investment-specific progress operates as in a neoclassical growth model.Search frictions, technological progress, creative destruction

Consumption and habits : evidence from panel data

The purpose of this paper is to test for the presence of habit formation in consumption decisions using household panel data. We use the test proposed by Meghir and Weber (1996) and estimate the within -period marginal rate of substitution between commodities, which is robust to the presence of liquidity constraints. To that end, we use a Spanish panel data set in which households are observed up to eight consecutive quarters. This temporal dimension is crucial, since it allows us to take into account time invariant unobserved heterogeneity across households ("fixed effects") and, therefore, to investigate if the relationship between current and past consumption reflects habits or heterogeneity. Our results conf irm the importance of accounting for fixed effects when analyzing intertemporal consumption decisions allowing for time non-separabilities. Once fixed effects are controlled for and a proper set of instruments is used, the results yield supporting evidence of habit formation in the demand system of food at home, transport and services

Understanding the effects of government spending on consumption

Recent evidence on the effect of government spending shocks on consumption cannot be easily reconciled with existing optimizing business cycle models. We extend the standard New Keynesian model to allow for the presence of rule-of-thumb (non-Ricardian) consumers. We show how the interaction of the latter with sticky prices and deficit financing can account for the existing evidence on the effects of government spending. JEL Classification: E32, E62fiscal multiplier, government spending, rule-of-thumb consumers, Taylor rules

Audio-visuals as a resource for children’s literature teaching: an ICT experience at teachers’ training

De un tiempo a esta parte, el cine o la animación han empezado a cobrar en las aulas un merecido protagonismo por su gran potencial pedagógico y didáctico. Si bien es cierto, no en todas las ocasiones estos recursos visuales se ajustan ni a las exigencias de los nuevos métodos de enseñanza-aprendizaje ni a la realidad del grupo-aula. Con la llegada de las nuevas tecnologías, este proceso de adaptación y mejora de los recursos pedagógicos y didácticos se puede llevar a cabo desde la creación del propio producto audiovisual por parte del docente. En este sentido, la experiencia que presentamos en este trabajo tiene como finalidad formar profesionales de la educación competentes para diseñar audiovisuales didácticos, en este caso vinculados a la enseñanza de la literatura infantil.From a time to this part, the cinema or the animation receive in the classrooms a deserved protagonist by its pedagogical and didactic potential. However, these visual resources aren’t always adjusted to the demands of the new teaching-learning methods and to the reality of the classroom group. With the advent of the new technologies, this process of adaptation and improvement of pedagogical and didactic resources can be carried out from the creation of the audio-visual product itself by the teacher. In this sense, the experience that we present in this article aims to train educational professionals competent to design didactic audio-visuals, in this case linked to the teaching of children's literature

The ins and outs of unemployment: An analysis conditional on technology shocks

We analyze how unemployment, job finding and job separation rates react to neutral and investment-specific technology shocks. Neutral shocks increase unemployment and explain a substantial portion of it volatility; investment-specific shocks expand employment and hours worked and contribute to hours worked volatility. Movements in the job separation rates are responsible for the impact response of unemployment while job finding rates for movements along its adjustment path. The evidence warns against using models with exogenous separation rates and challenges the conventional way of modelling technology shocks in search and sticky price models.Unemployment, technological progress, labor market flows, business cycle models.

On the robust effects of technology shocks on hours worked and output

We analyze the effects of neutral and investment-specific technology shocks on hours and output. Long cycles in hours are captured in a variety of ways. Hours robustly fall in response to neutral shocks and robustly increase in response to investment specific shocks. The percentage of the variance of hours (output) explained by neutral shocks is small (large); the opposite is true for investment specific shocks. ‘News shocks’ are uncorrelated with the estimated technology shocks.Technology disturbances, structural VARs, low frequency movements, news shocks

Robustness of the Estimates of the Hybrid New Keynesian Phillips Curve

Galí and Gertler (1999) developed a hybrid variant of the New Keynesian Phillips curve that relates inflation to real marginal cost, expected future inflation and lagged inflation. GMM estimates of the model suggest that forward looking behavior is dominant: The coefficient on expected future inflation substantially exceeds the coefficient on lagged inflation. While the latter differs significantly from zero, it is quantitatively modest. Several authors have suggested that our results are the product of specification bias or suspect estimation methods. Here we show that these claims are incorrect, and that our results are robust to a variety of estimation procedures, including GMM estimation of the closed form, and nonlinear instrumental variables. Also, as we discuss, many others have obtained very similar results to ours using a systems approach, including FIML techniques. Hence, the conclusions of GG and others regarding the importance of forward looking behavior remain robust.