The infrared fixed point of Landau gauge Yang-Mills theory: A renormalization group analysis

The infrared behavior of gluon and ghost propagators in Landau gauge Yang-Mills theory has been at the center of an intense debate over the last decade. Different solutions of the Dyson-Schwinger equations show a different behavior of the propagators in the infrared: in the so-called scaling solutions both propagators follow a power law, while in the decoupling solutions the gluon propagator shows a massive behavior. The latest lattice results favor the decoupling solutions. In this contribution, after giving a brief overview of the present status of analytical and semi-analytical approaches to the infrared regime of Landau gauge Yang-Mills theory, we will show how Callan-Symanzik renormalization group equations in an epsilon expansion reproduce both types of solutions and single out the decoupling solutions as the infrared-stable ones for space-time dimensions greater than two, in agreement with the lattice calculations.Comment: 17 pages. Talk delivered at the XIII Mexican Workshop on Particles and Fields in Leon, Guanajuato, Mexico, October 2011. Slightly extended version of the contribution to the conference proceeding

Banking Regulation by Axel Weber

Finanzmarktkrise; Bank; Regulierung

Challenges for monetary policy in the European Monetary Union

This article was originally presented as the Homer Jones Memorial Lecture, organized by the Federal Reserve Bank of St. Louis, St. Louis, Missouri, April 13, 2011.Monetary policy - European Union countries ; Monetary unions - European Union countries

Sources of Purchasing Power Disparities Between the G3-Economies

Recent theoretical and empirical research in international macroeconomics has rediscovered the problem of purchasing power parity (PPP). Empirically, PPP is a bad approximation of both the short-term and medium-term properties of the data. Economists have had difficulties in explaining the persistent misalignments of real exchange rates, but new empirical research by Clarida and Galí (1995) suggests that much of these real exchange rate movements are due to relative demand shocks. The present paper challenges this view by using an extended version of their structural vector autoregressive (SVAR) model in order to identify a larger number of real shocks (labour supply, productivity and aggregate demand) and nominal shocks (money demand and money supply). It is found that whilst some of their results go through in our extended framework, there is serious doubt with respect to the appropriateness of labelling those shocks which drive real exchange rates as aggregate demand disturbances.purchasing power parity, real exchange rates, shocks, structural vector autoregression, impulse response functions, variance decompositions

Sources of Currency Crisis: An Empirical Analysis

Two types of currency crisis models coexist in the literature: first generation models view speculative attacks as being caused by economic fundamentals which are inconsistent with a given parity. Second generation models claim self-fulfilling speculation as the main source of a currency crisis. Recent empirical research in international macroeconomics has attempted to distinguish between the sources of currency crises. This paper adds to this literature by proposing a new empirical approach to identifying the speculative and fundamental components of currency crises in the context of a structural vector autoregression model. Our results suggest that only for the French franc can a substantial speculative component be identified as a potential source of the 1992-93 ERM crisis.exchange rates, speculation, fundamentals, currency crisis, purchasing, power parity, structural vector autoregression, impulse response

How wide are European borders? : On the integration effects of monetary unions

We use consumer price data for 81 European cities (in Germany, Austria, Finland, Italy, Spain, Portugal and Switzerland) to study the impact of the introduction of the euro on goods market integration. Employing both aggregated and disaggregated consumer price index (CPI) data we confirm previous results which showed that the distance between European cities explains a significant amount of the variation in the prices of similar goods in different locations. We also find that the variation of relative prices is much higher for two cities located in different countries than for two equidistant cities in the same country. Under the EMU, the elimination of nominal exchange rate volatility has largely reduced these border effects, but distance and border still matter for intra-European relative price volatility

How wide are European borders? New evidence on the integration effects of monetary unions

We use consumer price data for 81 European cities (in Germany, Austria, Switzerland, Italy, Spain and Portugal) to study deviations from the law-of-one-price before and during the European Economic and Monetary Union (EMU) by analysing both aggregate and disaggregate CPI data for 7 categories of goods we find that the distance between cities explains a significant amount of the variation in the prices of similar goods in different locations. We also find that the variation of the relative price is much higher for two cities located in different countries than for two equidistant cities in the same country. Under EMU, the elimination of nominal exchange rate volatility has largely reduced these border effects, but distance and border still matter for intra-European relative price volatility. JEL classification: F40, F4

Economic integration and the exchange rate regime: how damaging are currency crises? : [This Version: October 2003]

We use consumer price data for 205 cities/regions in 21 countries to study PPP deviations before, during and after the major currency crises of the 1990s. We combine data from industrialized nations in North America (Unites States, Canada and Mexico), Europe (Germany, Italy, Spain and Portugal), Asia (Japan and South Korea), and Oceania (Australia and New Zealand) with corresponding data from emerging market economies in South America (Argentina, Bolivia, Brazil, Columbia) and Asia (India, Indonesia, Malaysia, Philippines, Taiwan, Thailand). By doing so, we confirm previous results that both distance and border explain a significant amount of relative price variation across different locations. We also find that currency attacks had major disintegration effects by considerably increasing these border effects and by raising within-country relative price dispersion in emerging market economies. These effects are found to be quite persistent since relative price volatility across emerging markets today is still significantly larger than a decade ago