Panoeconomicus

Online ISSN: 1452-595X
Publications
Article
Proponents and critics alike agree that the policies spawned by the Washington Consensus have not produced the desired results. The debate now is not over whether the Washington Consensus is dead or alive, but over what will replace it. An important marker in this intellectual terrain is the World Banks Economic Growth in the 1990s: Learning from a Decade of Reform (2005).With its emphasis on humility, policy diversity, selective and modest reforms, and experimentation, this is a rather extraordinary document demonstrating the extent to which the thinking of the development policy community has been transformed over the years. But there are other competing perspectives as well. One (trumpeted elsewhere in Washington) puts faith on extensive institutional reform, and another (exemplified by the U.N. Millennium Report) puts faith on foreign aid. Sorting intelligently among these diverse perspectives requires an explicitly diagnostic approach that recognizes that the binding constraints on growth differ from setting to setting.
 
Real Housing Prices and Banking Crises
Article
Is the 2007-2008 U.S. sub-prime mortgage financial crisis truly a new and different phenomena? Our examination of the longer historical record finds stunning qualitative and quantitative parallels to 18 earlier post-war banking crises in industrialized countries. Specifically, the run-up in U.S. equity and housing prices (which, for countries experiencing large capital inflows, stands out as the best leading indicator in the financial crisis literature) closely tracks the average of the earlier crises. Another important parallel is the inverted v-shape curve for output growth the U.S. experienced as its economy slowed in the eve of the crisis. Among other indicators, the run-up in U.S. public debt and is actually somewhat below the average of other episodes, and its pre-crisis inflation level is also lower. On the other hand, the United States current account deficit trajectory is worse than average. A critical question is whether the U.S. crisis will prove similar to the most severe industrialized-country crises, in which case growth may fall significantly below trend for an extended period. Or will it prove like one of the milder episodes, where the recovery is relatively fast? Much will depend on how large the shock to the financial system proves to be and, to a lesser extent, on the efficacy of the subsequent policy response.
 
Article
Reading Statistics and Research is an invaluable guide for those who find themselves at the receiving end of research summaries. Schuyler W. Huck outlines the main problems of presenting research results in scientific reports and seeks to enhance the reader’s competency assessing the results of investigations in different scientific areas.
 
Article
This paper studies the relationship between long-term growth of GDP per capita, institutional regimes of accumulation (ROA), systemic risk and the Great International Crisis of 2008-2010. The principle hypothesis behind the work is that the ROA provides a foundation for long-term growth as a type of fundamental variable, and that this growth provides a buffer against systemic risk in the sense that sustainable growth provides resources for debt provision and employment stimulation. The emergence of a viable ROA is crucial for long waves of growth which stimulate both private sector profit and public sector tax receipts which (using conventional terminology) reduce the structural deficit for both sectors. Low rates of long-term growth, therefore, provide a good indicator of the emergence of “long wave systemic risk” (LWSR), which left such nations vulnerable to uncertainty, financial crisis and recession. The paper investigates the inability of growth for various decades to “cover” instabilities associated with the Great Crisis, leading to high rates of LWSR, especially for European and North American nations that bore the brunt of the crisis.
 
Article
After four years of ambivalence, the relationship between the European Union and Serbia is again gaining a new opportunity to flourish. The new Serbian government is formed by parties which are strongly committed to Serbias EU integration and hence ready to carry out reforms and fully cooperate with the International Crime Tribunal for the former Yugoslavia. This paper presents the current relationship between Brussels and Belgrade and its main obstacles. It emphasizes both internal and external problems of this relationship and their interdependency. In this regard the author argues that only by a mutual commitment of both Serbia and the EU lasting peace will be achieved in the Western Balkans and the region stabilized.
 
Annual Number and Value of M&As Involving a Financial Firm as the Target, That had a Reported Value of at Least 
Expected Synergies from Recent Years Banking M&As in the European Union 
Assets of Five Largest Credit Institutions as a Percentage of Total Assets, 1980-1999
Average Percentage of Domestic M&As of Credit Institutions in the European Union, 1995- 1999  
Article
The increase in the concentration of the banking industry across European Union countries during the last fifteen years can be explained in terms of: a) global factors, like the comprehensive adoption of technological innovations, the intensification of competition that has resulted from the deregulation of the financial sector and, more recently, as a consequence of the government interventions and forced acquisitions prompted by the 2007-2009 financial crisis; and, b) factors that have been specific to the E.U., in particular, the structural changes that took place in the region as a result of the creation of the Single Financial Market (1993) and the introduction of the euro (1999). This work analyzes the concentration process of the banking industry in the E.U. during the last fifteen years giving preeminence to the strategic choices made by the region’s commercial banks. It also reports the most visible E.U. banks’ M&As and government interventions that resulted from the 2007-2009 financial crisis, make a preliminary evaluation of the outcomes, and suggests possible future trends for the banking industry in the region.
 
Article
Given a monetary Union which is heterogeneous at the level of labour market flexibility, this paper investigates the effects in terms of macroeconomic stabilization of the different degrees of fiscal coordination between governments. We use a static Keynesian model within a closed monetary Union and we introduce an intermediate level of coordination between the national governments, which is the variable geometry coordination between economic clubs consisting of structurally close countries. The distinction between the wide Unions welfare and each country members individual welfare proves that the effectiveness of a variable geometry fiscal coordination mainly depends on the type of the economic shocks affecting the Union members, the nature of the fiscal spillovers, and the extent of the Unions structural heterogeneity. While this type of game is effective in neutralizing the demand shocks, it doesnt manage to improve the national protection of all the country members against the supply shocks.
 
Article
This paper deals with the synchronization of business cycles and economic shocks between the euro area and acceding countries. We therefore extract the business cycle component of output by using Hodrick-Prescott filter. Supply and demand shocks are recovered from estimated structural VAR models of output growth and inflation using long run restriction (Blanchard and Quah). We then check the (A) symmetry of these shocks by calculating the correlation between euro area shocks and those of the different acceding countries. We find that several acceding countries have a quite high correlation of demand shocks with the euro area however supply shocks are asymmetric; the correlation between euro area and central and east European countries (CEECs) is negative. We therefore conclude that joining the European Monetary Union is not yet possible: central and east European countries have to make structural changes to join the European Monetary Union.
 
Article
The paper examines the reasons for the remarkable growth of transition economies’ export performance. We distinguish between foreign/EU market access and internal supply capacity factors. EU market access has been of great importance, while among supply capacity factors, stable institutional setup, structural reforms, and targeted FDI are in the forefront.
 
Turkey's Current Account Balance as Ratio of GDP (1987:Q1 – 2009:Q4)  
Johansen Cointegration Test Results 
Johansen Cointegration Coefficient Results 
Gregory Hansen Cointegration Test Results (Assuming Level and Slope Shift)
Dynamic Least Squares Results 
Article
We test for sustainability of Turkey’s current account position between 1987 and 2009 using the intertemporal solvency model of Craig S. Hakkio and Mark Rush (1991) and Steven Husted (1992). According to this approach, the intertemporal budget constraint is satisfied if there is cointegration between exports and imports+ (which include imports, net interest income and unilateral transfer payments). We test for, and find evidence of, cointegration using the standard Johansen test as well as the Allan W. Gregory and Bruce Hansen (1996) test. The latter allows for a structural break in the cointegrating relation. Further, dynamic GLS estimation shows a statistically significant relation between exports and imports+, although, we reject strong current account sustainability. Our evidence suggests that Turkey remains vulnerable to reversals in capital flows, but we believe this vulnerability will diminish as the service component of trade increases.
 
Article
Current account imbalances have steadily increased in rich countries over the last 20 years. While the U.S. current account deficit dominates the numbers and the news, other countries, especially within the Euro area, are also running large deficits. These deficits are different from the Latin American deficits of the early 1980s, or the Mexican deficit of the early 1990s. They involve rich countries; they reflect mostly private saving and investment decisions, and fiscal deficits often play a marginal role; and the deficits are financed mostly through equity, FDI, and own-currency bonds rather than through bank lending. Yet, there appears a widely shared worry that these deficits are too large, and government intervention is required. My purpose, in this lecture, is to examine the logic of this argument. I ask the following question: Assume that deficits reflect private saving and investment decisions. Assume also that people and firms have rational expectations. Should the government intervene, and, if so, how? To answer the question, I construct a simple benchmark. In the benchmark, the outcome is first best and there is no need nor justification for government intervention. I then introduce simple distortions in either goods, labor, or financial markets, and characterize the equilibrium in each case. I derive optimal policy and the implications for the current account. I show that optimal policy may or may not lead to smaller current account deficits. I see the model and the extensions very much as a first pass. Sharper conclusions require a better understanding of the exact nature and the extent of distortions, and we do not have it. Such understanding is needed however to improve the quality of the current debate.
 
Granger causality tests in frequency domain: HP-filtered growth rate (a-d); Copectrums and Coherence Squareds (a'-d') (a)  
Gain spectrums of capital flows categories
Results of Breitung-Candelon (2006) causality tests in frequency domain
Article
In this paper we study the interactions and feedbacks between three categories of net capital flows and growth in the Turkish economy for the 1992:01-2009:01 period using frequency domain techniques. Our main spectral analysis tool is a new version of the causality test of Geweke (1982) and Hosoya (1991) in the frequency domain developed by Breitung and Candelon (2006). Besides, we make use of other tools of spectrum analysis such as cospectrum, squared coherence, phase and gain spectrums to decompose total covariance between capital flows and growth across main frequency bands and capture lead/lag interactions between them. Some of our empirical findings are as follows: Variance decompositions over frequency bands reveal that variations in individual capital flow categories are concentrated over high (seasonal) frequencies. We found no feedback from short-term and long-term ‘other’ investments to growth in these frequencies. However, there are highly significant feedbacks from growth to short-term and long-term capital inflows over business cycle and seasonal frequencies. Spectral variance decompositions reveal that, in general, percentage of variation in capital flows due to economic growth is much higher than the percentage of variation in growth due to capital flows.
 
Article
A professional and competent public administration is necessary for successful transition from a socialist, centrally planned economy to a functioning market democracy. The difficulty lies in building an organized and effective civil service sector. This paper gives a brief overview of formal bureaucratic reasoning, beginning with Niskanens theory, followed by the principal-agent model. The Weberian state hypothesis, which provides an alternative view of bureaucracies in less developed countries, is subsequently explored. Finally, the currant state of Serbian public administration is described, along with a discussion of challenges to be addressed in the future.
 
Article
A professional and competent public administration is necessary for successful transition from a socialist, centrally planned economy to a functioning market democracy. The difficulty lies in building an organized and effective civil service sector. This paper gives a brief overview of formal bureaucratic reasoning, beginning with Niskanens theory, followed by the principal-agent model. The Weberian state hypothesis, which provides an alternative view of bureaucracies in less developed countries, is subsequently explored. Finally, the currant state of Serbian public administration is described, along with a discussion of challenges to be addressed in the future.
 
Article
This paper examines the effect of economic crises on structural unemployment using an Autoregressive Distributed Lags model and accounting for the role of institutional settings. Analysing an unbalanced panel of 30 OECD economies from 1970 to 2008, we found that downturns have, on average, a significant positive impact on the level of structural unemployment rate. The maximum impact varies with the severity of the downturn. Institutions (such as Employment Protection Legislation, average replacement ratio and product market regulation) influence both the extent of the initial shock and the adjustment pattern in the aftermath of a downturn. Comment les institutions influencent-elles le chômage structurel en temps de crise ? Ce document examine l’effet des crises économiques sur le chômage structurel en utilisant un modèle Autorégressif à Retards Distribués et en prenant en compte l’effet des institutions. A partir d’un panel non cylindré de 30 économies de l’OCDE de 1970 à 2008, les crises économiques sont estimées avoir, en moyenne, un effet significatif et positif sur le niveau du taux de chômage structurel. L’effet maximal varie avec la sévérité de la crise. Les institutions (législation sur la protection de l’emploi, ratio de remplacement moyen et régulation sur les marchés des produits) influencent à la fois l’amplitude du choc initial et l’ajustement suivant le choc.
 
Article
Since its early days, the Internet has been used by the music industry as a powerful marketing tool to promote artists and their products. Nevertheless, technology developments of the past ten years, and especially the ever-growing phenomenon of file sharing, have created the general impression that the Internet is responsible for a crisis within the industry, on the grounds that music piracy has become more serious than it has ever been. The purpose of this paper is to present the impact of new technologies and the Internet on the three main actors of the music industry: consumers, artists and record companies. It is claimed that the Internet has changed the way music is valued, and also, that it may have a direct effect on the quality of the music produced, as perceived by both artists and consumers alike.
 
Article
The effects of trade liberalisation on female labour depend on a countrys socio-economic and employment sector characteristics. A Gender-aware computable general equilibrium model is applied to Ethiopia and South Africa from a comparative perspective. Tarif reduction results in opposite outcomes regarding gender-based wage and labour market participation inequalities in the two countries due to their structural differences in mens and womens employment.
 
Article
Following the global financial crisis, many countries have embarked on fundamental reviews of their regulatory systems in an attempt to identify the causes of the near collapse in financial systems and to pave the way for a new approach to regulation. The focus of this paper concerns the intellectual assumptions on which previous regulatory approaches have largely been built, both in the UK and in a number of other countries. We examine the analysis provided by the UK’s Turner Review (2009) which follows the “market failure†approach to regulation and we contrast this with the alternative “state failure†approach. Both approaches only offer partial and polarised views into the causes of the crisis. We offer a synthesis and argue that a new conceptual approach to the management of financial markets is required. The essence of this new approach is the recognition that the state and regulation are not external to the market. While this paper largely relates to the UK, it provides potentially important lessons for many other countries.
 
Article
This paper tries to examine the long run relationships between the aggregate consumer prices and some cost-based components for the Turkish economy. Based on a simple economic model of the macro-scaled price formation, multivariate cointegration techniques have been applied to test whether the real data support the a priori model construction. The results reveal that all of the factors, related to the price determination, have a positive impact on the consumer prices as expected. We find that the most significant component contributing to the price setting is the nominal exchange rate depreciation. We also cannot reject the linear homogeneity of the sum of all the price data as to the domestic inflation. The paper concludes that the Turkish consumer prices have in fact a strong cost-push component that contributes to the aggregate pricing.
 
Article
Agriculture posed considerable tensions for the processes of enlargement of the European Union, because of its continuing importance both in the economies of the applicant countries of Central and Eastern European countries which have joined EU on the 1st may 2004., and in the EU budget and acquis communautaire. The preparation of agriculture in the candidate countries to join the EU was rendered more complex by the fact that the Communitys Common Agricultural Policy was a moving target. The aim of this paper is to show the bases elements of the Common Agricultural Policy, but also to provide a survey of recent developments relating to agriculture in the EU and new member states of the EU before their accession to EU and their preparation to access on the enlarged market, in order to indicate the main challenges and difficulties posed by enlargement. It seems likely that agricultural policy in the enlarged EU will attach increased priority to objectives such as rural development and the environment. However, these new priorities may be expensive to realise, and may impose a growing burden on the national budgets of EU member states.
 
Article
The main point of this paper is that foreign aid fails because the structure of its incentives resembles that of central planning. Aid is not only ineffective, it is arguably counterproductive. Contrary to business firms that are paid by those they are supposed to serve (customers), aid agencies are paid by tax payers of developed countries and not by those they serve. This inverse structure of incentives breaks the stream of pressure that exists on the commercial market. It also creates larger loopholes in the principle-agent relationship on each point along the chain of aid delivery. Both factors enhance corruption, moral hazard and negative selection. Instead of promoting development, aid extends the life of bad institutions and those in power. Proposals to reform foreign aid like aid privatization and aid conditionality do not change the existing structure of the incentives in aid delivery, and their implementation may just slightly improve aid efficacy. Larger improvement is not possible. For that reason, foreign aid will continue to be a waste of resources, probably serving some objectives different to those that are usually mentioned, like recipients development, poverty reduction and pain relief.
 
Article
The paper discusses the main aims and characteristics of the three Ways in British economics and politics: the First Way refers to the period from after WWII to the mid 1970s; the second Way refers to the Conservative Government period starting from 1979; and the Third Way to the New Labour Government period since 1997. These three Ways are considered in relation to their main characteristics, the policies of the relevant governments and the problems they have encountered. The New Labour policies are analysed in more details by reference to the case of the National Health Service. The reasons why the New Labour Way is different from the second Way as well as the problems it is facing are highlighted. A discussion of why New Labour has taken the Third Way route follows.
 
Article
Za većinu posmatrača trenutna recesija kreira neodoljive okolnosti za obnavljanje aktivizma fiskalne politike. Ali, snažna podrška diskrecionoj fiskalnoj politici predstavlja odraz obnovljenog poverenja prema aktivnijoj ekonomskoj politici koje je postojalo i pre sadašnje krize. Medjutim, nedavne debate o mogućim intervencijama fiskalne politike sugerišu da se mi još uvek oslanjamo na pristupe diskrecionoj politici korišćene u proteklim periodima aktivizma politike. Nije iznenađujuće što su prisutna samo neznatna poboljšanja u oblikovanju diskrecione politike, s obzirom da diskreciona ekonomska politika dugo nije bila favorizovana. Ali, ako ćemo sprovoditi diskrecionu politiku u većoj meri, onda je krajnje neophodno obratiti više pažnje oblikovanju mera ekonomske politike.
 
Article
The financial reform is one of the most important reforms prescribed by the Washington Consensus. With its internal and external components, it occurs in the final stages of the process of economic liberalization. In this work, and after listing, briefly, the causes of financial liberalization, we are going to study in a second section financial development and bank performance in four countries of the MENA region: Tunisia, Algeria, Morocco and Egypt. In this context, we will explore some criteria for determining if the banking sector is performing as the level of intermediation margins, the state of the banking service, and so on. The third section will be subject to an assessment of financial liberalization since the start of reforms to the present day, while focusing on the impact of liberalization on the investment, savings, capital entry, and so on. Our conclusion will be in the form of recommendations aimed at showing that overall reforms, significant progress have been made in recent years but much remains to be done.
 
1834-1914: The " Liberal " Phase (First Swing) Economic Political 
1945-1973: The " Welfare Capitalizm " (Second Swing) Economic Political 
Article
The present paper devises an account of the possibilities that the recent crisis opens up for capitalism, which dwells upon its history. The paper takes three propositions as its starting point: First, capitalism, which must solve the problem of coordination of the decisions of different agents in changing environment, is prone to periodic and structural crises because of its very institutional structure. Second, thus, crises should be seen as signs that indicate that economic and social institutional matrix is at fault, which requires new “solutions”. Third, an appropriate account of capitalism must also take into account that crises usually require transformation almost the entire economic and socio-political institutional structure of the system. Having said this, we try to address briefly to possible and likely transformation.
 
Article
This paper assesses the monetary consequences of the Latin-American integration process. Over the period 1991-2007, we analyze a sample of five Latin-American countries focusing on the feasibility of a monetary union between L.A. economies. To this end, we study the issue of business cycle synchronization with the occurrence of common shocks. First, we assess the international disturbances influence on the domestic business cycles. Second, we analyze the impact of the adoption of different exchange rate regimes on the countries responses to shocks.
 
Article
Economists generally accept the proposition that high and volatile inflation rates generate inefficiencies that reduce societys welfare. Furthermore, studies have shown that inflation is harmful to economic growth. However, determining the causes of the worldwide diversity of inflationary experiences is an important challenge not yet satisfactorily confronted by the profession. Based on a broad dataset covering over 100 countries for the period 1975-1997 and using dynamic and static panel data econometric techniques, this paper shows that a higher degree of political instability is associated with both higher inflation levels and volatility. Not only does this paper advance the political economy literature establishing a relationship between inflation moments and political instability, but it also has important policy implications regarding the optimal design of inflation stabilization programs and of the institutions favorable to price stability.
 
Contribution to GDP growth. OECD method 
GDP growth contribution. AB method 
Article
In this paper, Antoine Brunet questions the OECD method in calculating contributions to GDP growth. He tries to show this method induces the users to seriously misjudge the contribution of external trade balance to GDP growth. He shows there is an alternative method, i.e. the AB method which is mathematically as correct as the OECD one. And this method is much more pertinent and allows the users to distinguish between two kinds of countries: on the one hand, the mercantilist countries and on the other hand, the non-mercantilist countries.
 
Article
L’objectif de notre travail est d’identifier les conditions nécessaires pour réussir la transition vers le régime de ciblage d’inflation pour le cas de la Tunisie. Dans ce contexte, nous analysons, tout d’abord, les fondements théoriques de la politique de ciblage d’inflation. Ensuite, nous exposons les prérequis pour adopter une telle stratégie dans un pays comme la Tunisie. Enfin, et en se basant sur une modélisation du type SVAR, nous essayons d’évaluer les canaux de transmission de la politique monétaire et de dégager les conditions pour réussir l’adoption du régime de ciblage d’inflation.
 
Models of Political Macroeconomics
Transition Indicators for Serbia (1989 and 2000)
Article
This study deals with important issues related to the new political macroeconomics and its appliance to the economic movements in Serbia, which is a country of “new democracy” as well as with transition economy. In political macroeconomics, it is a known fact that the economic policy instruments can be used for political purposes – simulated improvement of economic indicators to win the elections. These options assume specific features in transition economies, such as the Serbian economy. The political instability in Serbia, reflected in frequent elections, as well as in the diversity in political and economic goals of the key political parties leading to increasing political uncertainty in both the pre-election and post-election periods, weakened the economic system. Simultaneously, using the economic policy for political purposes to support the “pro-democratic” and “pro-European” parties proved to be paradoxically justified.
 
Article
Inflation targeting represents monetary regime primarily applied in New Zealand in 1989. Since then, this regime has extended into over 30 countries and it is recommended by International Monetary Fund within its business arrangements in last couple of years. The last country that announced this regime was Serbia. It is regularly introduced when previous one had poor performances. Its nature is determined by targeted inflation rate, high level of transparency in monetary policies conducting, absence of secondary goals, as well as responsibility for realized targeted inflation rates. Within work, theoretical presumptions are analyzed regarding implementation of this regime, and the most important aspects of its functioning in chosen countries, and its application in Serbia is a subject of particular consideration.
 
Article
Although with the Maastricht Treaty, European construction took a remarkable step forward, the robust pillar of the single currency started to shake the other one: the social welfare systems. The main goal of this contribution is to study the evolution of Social Protection in Europe by questioning the existence of a convergence between the different social welfare systems and the impact of the Treaty of Maastricht on this process. The evolution of the social protection concept in Europe, the reforms implemented in the most important domains of social protection: pensions, health and employment are analyzed. A common philosophy clearly appears. The welfare State is receding, calling more and more upon market mechanisms. Furthermore, the traditional binary typology is changing and countries are becoming more similar in their financing methods. We can thus say that a process of social convergence seems well and truly underway in the European Union.
 
Article
The paper studies theoretical and empirical location dispersion of exchange rate arrangements - rigid-intermediate-flexible regimes, in the context of extreme arrangements of a currency board, dollarization and monetary union, moderate characteristics of intermediate arrangements (adjustable pegs, crawling pegs and target zones) and imperative-process normalization in the form of a managed or clean floating system. It is established that de iure and de facto classifications generate fear of floating and fear of pegging. The impossible trinity under the conditions of capital liberalization and globalization creates a bipolar view or hypothesis of vanishing intermediate exchange rate regimes.
 
The Insurability Criteria of Berliner (1982) 
The Predictive Power of Neural Networks 
Comparison of One Hidden Layer MLP Neural Networks 
Classification of Variables According to their Decreasing Sensitivity Order 
Article
The main difficulty for natural disaster insurance derives from the uncertainty of an event’s damages. Insurers cannot precisely appreciate the weight of natural hazards because of risk dependences. Insurability under uncertainty first requires an accurate assessment of entire damages. Insured and insurers both win when premiums calculate risk properly. In such cases, coverage will be available and affordable. Using the artificial neural network – a technique rooted in artificial intelligence - insurers can predict annual natural disaster losses. There are many types of artificial neural network models. In this paper we use the multilayer perceptron neural network, the most accommodated to the prediction task. In fact, if we provide the natural disaster explanatory variables to the developed neural network, it calculates perfectly the potential annual losses for the studied country.
 
Article
In this paper we are testing for contagion caused by the Thai baht collapse of July 1997. In line with earlier work, shift-contagion is defined as a structural change within the international propagation mechanisms of financial shocks. We adopt Bai and Perrons (1998) structural break approach in order to detect the endogenous break points of the pair-wise time-varying correlations between Thailand and seven Asian stock market returns. Our approach enables us to solve the misspecification problem of the crisis window. Our results illustrate the existence of shift-contagion in the Asian crisis caused by the crisis in Thailand.
 
Article
A contribution appeared in the previous issue of Panoeconomicus reviewed the theoretical arguments brought by Alain Parguez and Jean Gabriel Bliek in support of their idea of assigning a full employment objective to European economic policies and their coordination (Bliek and Parguez (2007) and Parguez (2007b)). Without pretending at exhaustiveness, this contribution reviews and partly extends the empirical evidence they presented in support of their argument with reference to selected macroeconomic developments in several countries and different historical periods, in particular for the US, Canada, Japan and the EU. It confirms the descriptive power of the circuit and its relevance for the discussion of alternative economic policies, in particular in the field of employment. Together with the previous article, it shows that the circuit can be used to update economic policy thinking, nourishing also the necessary democratic debate amongst policy alternatives.
 
Top-cited authors
Kenneth Rogoff
  • Harvard University
Ayhan Kose
  • International Monetary Fund
Shang-Jin Wei
  • Columbia University
Eswar S. Prasad
  • Cornell University
Carmen Reinhart
  • Harvard University