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We focus on a quantitative assessment of rigid labor markets in an environment of stable monetary policy. We ask how wages and labor market shocks feed into the inflation process and derive monetary policy implications. Towards that aim, we structurally model matching frictions and rigid wages in line with an optimizing rationale in a New Keynesian closed economy DSGE model. We estimate the model using Bayesian techniques for German data from the late 1970s to present. Given the pre-euro heterogeneity in wage bargaining we take this as the first-best approximation at hand for modelling monetary policy in the presence of labor market frictions in the current European regime. In our framework, we find that labor market structure is of prime importance for the evolution of the business cycle, and for monetary policy in particular. Yet shocks originating in the labor market itself may contain only limited information for the conduct of stabilization policy. JEL - Klassifikation: J64 , E32 , C11 , E52
As of today, estimating interest rate reaction functions for the Euro Area is hampered by the short time span since the conduct of a single monetary policy. In this paper we circumvent the common use of aggregated data before 1999 by estimating interest rate reaction functions based on a panel including actual EMU Member States. We find that exploiting the cross-section dimen- sion of a multi-country panel and accounting for cross-country heterogeneity in advance of the single monetary policy pays off with regard to the estimated reaction functions' ability to describe actual interest rate dynamics. We retrieve a panel reaction function which is demonstrated to be a valuable tool for evaluating episodes of monetary policy since 1999. JEL - Klassifikation: E43 , E58 , C33
This paper investigates various theories explaining banks´ overbidding in the fixed rate tenders of the European Central Bank (ECB). Using auction data from both the Bundesbank and the ECB, we show that none of the theories can on its own explain the observed overbidding. This implies that the proposed new rules by the ECB, aimed at neutralizing interest rate expectations, would not eliminate overbidding if the rationing rule in the fixed rate tenders remains unchanged. JEL - Klassifikation: D44 , E32
Although stable money demand functions are crucial for the monetary model of the exchange rate, empirical research on exchange rates and money demand is more or less disconnected. This paper tries to fill the gap for the Euro/Dollar exchange rate. We investigate whether monetary disequilibria provided by the empirical literature on U.S. and European money demand functions contain useful information about exchange rate movements. Our results suggest that the empirical performance of the monetary exchange rate model improves when insights from the money demand literature are explicitly taken into account. JEL - Klassifikation: F31 , E41
The dynamic relationship between the Euro overnight rate, the ECB´s policy rate and the term spread
(2006)
This paper investigates how the dynamic adjustment of the European overnight rate Eonia to the term spread and the ECB’s policy rate has been affected by rate expectations and the operational framework of the ECB. In line with recent evidence found for the US and Japan, the reaction of the Eonia to the term spread is non-symmetric. Moreover, the response of the Eonia to the policy rate depends on both, the repo auction format and the position of the Eonia in the ECB’s interest rate corridor. JEL - Klassifikation: E43 , E52
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
This paper employs individual bidding data to analyze the empirical performance of the longer term refinancing operations (LTROs) of the European Central Bank (ECB). We investigate how banks’ bidding behavior is related to a series of exogenous variables such as collateral costs, interest rate expectations, market volatility and to individual bank characteristics like country of origin, size, and experience. Panel regressions reveal that a bank’s bidding depends on bank characteristics. Yet, different bidding behavior generally does not translate into differences concerning bidder success. In contrast to the ECB’s main refinancing operations, we find evidence for the winner’s curse effect in LTROs. Our results indicate that LTROs do neither lead to market distortions nor to unfair auction outcomes. JEL classification: E52, D44
A distinguishing feature of the ECB’s monetary policy setup is the preannouncement of a minimum bid rate in its weekly repo auctions. However, whenever interest rates are expected to decline, the minimum bid rate is viewed as too high and banks refrain from bidding, severely impeding the ECB’s money market management. To shed more light on banks’ underbidding, we perform a panel analysis of the bidder behavior in the repo auctions of the Bundesbank where no minimum bid rate was set. Our results indicate that neither bank’s participation nor the submitted bid amount is significantly affected by an expected rate cut. This suggests that abandoning the minimum bid rate might increase the efficiency of the ECB’s money market management.
Even though tourism has been recognised as an important field for transnational research today, there are few attempts to place tourism in the context of transnational theories or to think about transnationalism from the perspective of tourists. I argue that in researching tourist practices one can add important aspects to transnational approaches. The prerequisites of mobility and interaction for example are the features chosen by backpackers to describe what their Round-The-World-Trip is about. A form of tourism is adopted, or created, that itself confronts many aspects of globalisation: First of all there is the immense dynamic that is involved. Backpackers try to cover as many places and experiences as possible, travelling at high speed. They adopt all kinds of touristic experiences ranging from beach to adventure to culture tourism. They don't focus on a specific area or country but travel the world. They cross national borders perpetually. Additionally they form a transnational network in which they interact with strangers of similar backgrounds (other backpackers, tourist professionals). This network helps them interacting with people from different backgrounds (the socalled hosts or locals). Considering my research Backpackers forge a certain identity from these transnational practices which I want to name globedentity. Globedentity expresses a type of identity construction that not only refers to the individual (I) but reflects the world (globe) in this identity. This globedentity is not fixed but is perpetually re-created and re-defined. It also embraces the increasing popular awareness of globalisation which backpackers, coming from highly educated middle class backgrounds, in particular have identified with. Due to the constant awareness of the latest global social, cultural and economic developments in these educated milieus they know exactly which tools to use to become successful parts of their societies.
Spacially dispersed transnational professional communities can be perceived of as cultural formations living in a global frame of reference, transgressing existing political and cultural boundaries. In their capacity as members of local technical and knowledgebased elites, they take part in circulating and connecting cultural meanings that are both locally produced, and continuously re-working non- local flows. I argue that those elites can be described as actors at cultural interfaces, taking part in shaping and mediating social change. The aim is twofold: one, to point to mutually opposed tendencies, and ambivalences in the framework of a „culture of change“, and two, to look into the question how such situations and groups can be methodologically approached.