No Money, No Inflation – The Role of Money in the Economy [29/11/2002]
King, M.
In this article the author examines the apparent contradiction that the acceptance of the idea inflation is a monetary phenomenon has been accompanied by the lack of references to money in the conduct of monetary policy during its most successful period. The disappearance of money from the models used by economists is, however, more apparent than real, with official interest rates playing the leading role as the instrument of policy, with money in the wings off-stage. Nevertheless, there are real dangers in relegating money to this behind-the-scenes role.
Modern Hyper- and High Inflations [28/11/2002]
Fischer, S., Sahay, R., Vegh C.
Since 1947, hyperinflations (by Cagan’s definition) in market economies have been rare. Much more common have been longer inflationary processes with inflation rates above 100 percent per annum. Based on a sample of 133 countries, and using the 100 percent threshold as the basis for a definition of very high inflation episodes, this paper examines the main characteristics of such inflations. Among other things, we find that (i) close to 20 percent of countries have experienced inflation above 100 percent per annum; (ii) higher inflation tends to be more unstable; (iii) in high inflation countries, the relationship between the fiscal balance and seigniorage is strong both in the short and long-run; (iv) inflation inertia decreases as average inflation rises; (v) high inflation is associated with poor macroeconomic performance; and (vi) stabilizations from high inflation that rely on the exchange rate as the nominal anchor are expansionary.
Returns to Scale of Production Function and Total Factor Productivity: The Cases of Poland and Belarus [27/11/2002]
Chubrik, A.
The paper analyses economic growth in Poland and Belarus on the basis of Cobb-Douglas production function. The production function is estimated from the model with equilibrium correction mechanism (ECM). Testing a hypothesis of constant returns to scale (CRS) shows that it is accepted in the case of Belarus and rejected in the case of Poland (an alternative hypothesis – increasing returns to scale). The models of production function are well specified, and better than models without ECM or with CRS assumption. It is shown that in the well-specified model total factor productivity (a regression residual) doesn’t explain economic growth. Growth is explained by production function coefficients, which are determined by factors outside the analysis.
Institutional Equilibrium [26/11/2002]
Valevich, Y.
Establishment of an efficient market economy requires creation of the whole range of institutions. Informal and formal institutions and their enforcement characteristics determine opportunities of economic agents. These points are well known and indubitable. However, until recently the theoretical analysis of institutional foundations of market economy has remained (and at some extent still remains) a peripheral field of research. Such analysis implies studying of what institutions are necessary for establishment of an efficient economy and why, how these institutions are interrelated, and how they are created (or how they emerge). This paper considers some of these questions. In particular, the paper analyses the principles of functioning of the market for institutions, introduces the concept of institutional equilibrium, and discusses the conditions of its existence, uniqueness, stability, and efficiency.
Macroinstitutional Mechanisms and Coordination of Macroeconomic Policy: The Experience of Western European and Scandinavian Countries [25/11/2002]
Gaiduk, K.
The paper makes an attempt to reconstruct the experience of capitalist restoration in the post-war Europe, which assumed the corporatist form. This is done through the optics of integrated political economic mode of inquiry, combining finding of both neoclassical school and neocorporatist literature in the field of macro-institutional determinants of economic system. Among these determinants are the collective bargaining system, the macroeconomic policy regime, and the welfare state. Macro-institutional interaction occurs not only through the mechanisms of formal co-ordination, but is also underpinned by the existence of ideational consent over their functioning. The latter is among the causes of a departure from Keynesian centralisation towards monetarist decentralisation, although at the “material level” such a shift has been caused by the shift from the Fordist mass production practices towards flexible specialisation.
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