Capital controls, exchange rate volatility and risk premium

Capital controls lower the variability of the exchange rate and reduce the risk premium as well as the domestic interest rate. On the other hand, capital controls reduce the number of noise traders and, therefore, the risk-bearing capacity of the market, leading to higher interest rates and a lower growth potential of the economy. The identification of these two effects which work in opposite directions are the result of a study on the effect of capital controls on the exchange rate, the domestic interest rate, and the microstructure of the foreign exchange market in a small open economy. --Capital Controls,Capital Flows,Risk Premium

The Misallocation of Resources of Anticipated Inflation

This paper analyzes the effects of anticipated inflation on the resource allocations between production and financial services. We develop a model with heterogeneous workers and two sectors economy. A manufacturing sector producing a final composite good and a financial sector providing monetary management services for manufacturers. Workers in this economy are heterogeneous in their productivity and are free to move between the two sectors. Hence workers with high productivity in the financial sector choose to work in the financial sector, where they can earn high wages, while workers with low productivity prefer to work in the manufacturing sector. In equilibrium, the allocation of workers between the two sectors, i.e., the size of each sector depends, among other factors, on the inflation rate. Higher inflation increases the marginal revenues of financial workers and decrease the marginal revenues of production workers. As a consequence, resources are shifted from the manufacturing sector to the financial sector. That is, the share of the financial services in output increases and production (output) decreases. The resulting decline in manufacturing sector output reduces consumption opportunities and represents costs of inflation. To estimate the change in the production structure and, thus, the costs of inflation we analyze data from 28 countries which had some notable inflation history during the period 1972-1995. We find strong support for the hypothesis that higher inflation increases the share of the financial sector output and employment relative to the manufacturing sector.anticipated inflation, resource allocation, financial sector.

Some shocking aspects of EMU enlargement

This paper uses a structural vector autoregression to examine differences in demand and supply shocks and the response to these shocks between EMU member countries and three other groups of countries. The first group includes non-EMU EU countries, the second group EFTA countries and the third group central and eastern European countries which seek EU membership over the next years. Our results suggest that, so far, EMU enlargement towards central and eastern European countries would involve significantly higher costs than EMU enlargement towards countries of the other two groups. --European Monetary Integration,International Monetary Arrangements and Institutions

Monetary and Fiscal Policies in an Open Economy

The central theme of this paper is that international linkages between national economies influence, in fundamentally important ways, the effectiveness and proper conduct of national macroeconomic policies. Specifically, our purpose is to summarize the implications for the conduct of macroeconomic policies in open economies of both the traditional approach to open economy macroeconomics (as developed largely by James Meade, Robert Mundell, and J. Marcus Fleming) and of more recent developments. Our discussion is organized around three key linkages between national economies: through commodity trade; through capital mobility; and through exchange of national monies. These linkages have important implications concerning the effects of macroeconomic policies in open economies that differ from the effects of such policies in closed economies. Recent developments in the theory of macroeconomic policy have established conditions for the effectiveness of policies in influencing output and employment which emphasize the distinction between anticipated and unanticipated policy actions, the importance of incomplete information, and the consequences of contracts that fix nominal wages and prices over finite intervals. In this paper, we shall not analyze how these conditions are modified in an open economy. However, since our concern is with macro-economic policy, a principal objective of which is to influence output and employment, we shall assume that requisite conditions for such influence are satisfied.

The Runaway Shop

One of the most difficult problems in labor law is that of plant removal, better known as the runaway shop. Here the applicable law is changing and uncertain, yet the advisor must be prepared to answer vital questions. Certainly, one of the most drastic economic weapons in managements\u27 arsenal in battles with labor unions is the runaway shop. This is the device whereby an employer either prevents unionization, or escapes bargaining with an established union, by ceasing operations at his original location and relocating in another, usually distant community. The purpose of this article is to outline the matters which must be looked at when there is a plant removal problem, and to state the applicable legal doctrines

Brauchen wir ein anderes Weltwährungsregime? - Euroentwicklung: Mögliche Ursachen und politische Optionen

--

Systems and Method for hybrid local tomography image reconstruction

Methods, processes and systems of image reconstruction utilizing a hybrid local tomography (HLT) methodology for reconstructing internal body images in medical applications, and the like. The system and method of the present invention provides an image with emphasized edges, and the image provides estimations of the attenuation coefficient inside the object being scanned

System and method of variable filter length local tomography

In Computed Tomography (CT) the goal is to reconstruct the distribution µ of the x-ray attenuation coefficient inside the object being scanned. Local Tomography (LT) computes not µ, but Bµ, where B is some operator that enhances singularities. Suppose one is interested in reconstructing a region of interest (ROI) inside a patient. For example, the ROI could be the cardiac region. Conventional (also known as global) reconstruction requires that the entire cross-section of the patient be irradiated. This means that during the scan one has to transmit x-rays through parts of the patient located far from the ROI. The main advantage of LT compared to global reconstruction is that it requires only the x-rays passing through the ROI, thereby allowing to reduce the x-ray dose to the patient. In classical cone beam LT the convolution kernel is very short, because it is equivalent to computing some kind of derivative on the detector. (See Disclosure