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This dissertation consists of three chapters. The first two chapters investigate the real effects of inflation and the third chapter the role of child care for fertility and female female labor supply. Chapter 1 introduces a generalized panel threshold model to analyze the relation between inflation and economic growth for a sample of developing countries. It is demonstrated that allowing for regime intercepts can be crucial for obtaining unbiased estimates of both, inflation thresholds and its marginal effects on growth in the various regimes. The empirical results confirm that the omitted variable bias of standard panel threshold models can be statistically and economically significant. Chapter 2, which is joined work with Dieter Nautz, investigates the impact of inflation on relative price variability (RPV) as a further important channel of the real effects of inflation. With a view to the recent debate on the Fed's implicit lower and upper bounds of its inflation objective, the econometric model introduced in Chapter 1 is used to explore the inflation-RPV linkage in U.S. cities. Chapter 3 investigates the relationship between fertility, female labor supply and child care in the context of a life cycle model for Germany. A particular emphasis is placed on the differences between West and East Germany. Counterfactual policy experiments mimicking recent policy reforms on maternal leave and the provision of subsidized child care are conducted with a structurally estimated version of the model.
Inflation and relative price variability in the Euro area : evidence from a panel threshold model
(2006)
In recent macroeconomic theory, relative price variability (RPV) generates the central distortions of inflation. This paper provides first evidence on the empirical relation between inflation and RPV in the euro area focusing on threshold effects of inflation. We ¯nd that expected inflation significantly increases RPV if inflation is either very low (below -1.38% p.a.) or very high (above 5.94% p.a.). In the intermediate regime, however, expected in°ation has no distorting effects which supports price stability as an outcome of optimal monetary policy. JEL classification: E31, C23