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Sudden and protracted oil-price increases are generally accompanied by economic contractions and high inflation. How should monetary policy react to oil-price shocks in order to minimize such adverse macroeconomic effects? We build a DSGE model characterized by two oil-importing countries and...
Persistent link: https://www.econbiz.de/10005537449
This paper examines the sources of Australia’s business cycle fluctuations. The cyclical component of GDP is extracted using the Beveridge-Nelson decomposition and a structural VAR model is identified using robust sign restrictions derived from a small open economy model. In contrast to...
Persistent link: https://www.econbiz.de/10005423551
A European transfer system could contribute to a stabilization of the euro area by synchronizing business cycles in the monetary union, thereby simplifying the common monetary policy. Such a system is suggested here in the form of a European unemployment insurance system. Compared to other forms...
Persistent link: https://www.econbiz.de/10011128558
Depending on how it is structured, the introduction of a European unemployment insurance within the euro area could make a significant contribution to stabilizing economic development. This even applies to a relatively small-scale system (based on the volume of transfers) with a maximum...
Persistent link: https://www.econbiz.de/10011128785
Germany and the Czech Republic, Hungary, Poland, and Slovakia (the CE4) have been in a process of deepening economic integration which has lead to the development of a dynamic supply chain within Europe—the Germany-Central European Supply Chain (GCESC). Model-based simulations suggest two key...
Persistent link: https://www.econbiz.de/10011264218
This paper examines the sources of Australia's business cycle fluctuations focusing on the role of international shocks and short run stabilization policy. A VAR model identified using robust sign restrictions derived from an estimated structural model is used to aid the investigation. The...
Persistent link: https://www.econbiz.de/10011201614
We show that welfare can be lower under complete financial markets than under autarky in a monetary union with home bias, sticky prices and asymmetric shocks. Such a monetary union is a second-best environment in which the structure of financial markets affects risk-sharing but also shapes the...
Persistent link: https://www.econbiz.de/10010729309
The global economy has a chronic shortage of safe assets which lies behind many recent macroeconomic imbalances. This paper provides a simple model of the Safe Asset Mechanism (SAM), its recessionary safety traps, and its policy antidotes. Safety traps share many common features with...
Persistent link: https://www.econbiz.de/10010796549
A European transfer system could contribute to stabilization of the euro area by synchronizing business cycles in the monetary union, thus simplifying the common monetary policy. Such a system is proposed here in the form of a European unemployment insurance scheme. Compared to other forms of...
Persistent link: https://www.econbiz.de/10010896096
We show that the welfare costs of business cycles in a monetary union can be higher under incomplete financial markets than under complete markets. A monetary union with home bias, sticky prices and country-specific shocks is a second-best environment in which the structure of financial markets...
Persistent link: https://www.econbiz.de/10010857721