Publications (3)0 Total impact
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Article: U.S. domestic money, inflation and output
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ABSTRACT: A vast and often confusing economics literature relates competition to investment in innovation. Following Joseph Schumpeter, one view is that monopoly and large scale promote investment in research and development by allowing a firm to capture a larger fraction of its benefits and by providing a more stable platform for a firm to invest in R&D. Others argue that competition promotes innovation by increasing the cost to a firm that fails to innovate. This lecture surveys the literature at a level that is appropriate for an advanced undergraduate or graduate class and attempts to identify primary determinants of investment in R&D. Key issues are the extent of competition in product markets and in R&D, the degree of protection from imitators, and the dynamics of R&D competition. Competition in the product market using existing technologies increases the incentive to invest in R&D for inventions that are protected from imitators (e.g., by strong patent rights). Competition in R&D can speed the arrival of innovations. Without exclusive rights to an innovation, competition in the product market can reduce incentives to invest in R&D by reducing each innovator's payoff. There are many complications. Under some circumstances, a firm with market power has an incentive and ability to preempt rivals, and the dynamics of innovation competition can make it unprofitable for others to catch up to a firm that is ahead in an innovation race.Journal of Monetary Economics. 01/2006; 53(2):183-197. -
Article: US domestic currency in forecast error variance decompositions of inflation and output
Economics Letters. 02/2005; 86(2):265-271. -
Article: Foreign Holdings of Dollars and Information Value of US Monetary Aggregates
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ABSTRACT: Recent empirical research has found that the strong short-term relationship between US monetary aggregates and macroeconomic fundamentals, as outlined in the classical study of M. Friedman and Schwartz, mostly disappeared since the early 1980s. In the light of B. Friedman and Kuttner (1992) information value approach we reevaluate the vanishing relationship between US monetary aggregates and macroeconomic fundamentals. By using the official US data constructed by Porter and Judson (1996) we find that the currency component of M1 corrected for the foreign holdings of dollars contains valuable information on US macroeconomic fundamentals, such as nominal and real income, as well as inflation. This correction for monetary aggregates is required because the rate of foreign holdings in total money creation is large and unstable. The statistical evidence provided in this paper suggests that the Friedman and Schwartz's stylized facts can be reestablished once the focus of analysis is back on the domestic monetary aggregates. JEL Classification: E3, E4, E5. Keywords: foreign holdings, US monetary aggregates, information value, the Friedman-Schwartz's evidence. + Yunus Aksoy: University of Frankfurt and CES, Katholieke Universiteit Leuven, Mertonstr. 17, PO Box: 94, D-60054 Frankfurt aM; e-mail: yaksoy@wiwi.uni-frankfurt.de; Tomasz Piskorski: CES and LICOS, Katholieke Universiteit Leuven, Naamsestraat 69, B-3000 Leuven; e-mail: Tomasz.Piskorski@econ.kuleuven.ac.be * We are grateful to Richard Anderson, Philip Jefferson and Richard Porter for providing us foreign holdings data series. We are particularly grateful to Elena Bisagni and Hanno Lustig for valuable discussions and advice. We also would like to thank to Filip Abraham, Kai Christoffel, Guenter Coenen, Paul De Grauwe, Han...05/2001;
