#1998-023B "The Effects of Aging and Myopia on the Pay-as-you-go Social Security Systems of the G7"
by Rowena A. Pecchenino, and Patricia S. Pollard

Revised November 1999

The Social Security systems of the G7 countries were established in an era when populations were young and the number or contributors far outweighed the number of beneficiaries. Now, for each beneficiary there are fewer contributors, and this downward trend is projected to accelerate. More...

#1998-022A "Sources of Real and Nominal Exchange Rate Fluctuations in Transition Economies."
by Ali M. Kutan, and Salahattin Dibooglu


This paper provides an empirical inquiry into the sources of movements of the real and nominal exchange rates in Hungary and Poland for during the 1990:01-1998:02 period. We decompose the exchange rate movements into those attributable to real and nominal shocks. Using a popular structural VAR model and assuming long run neutrality of nominal shocks, we find that (1) nominal shocks have played a significant role in Poland, but not in Hungary, in explaining real exchange rate movements during the transition period. More...

PUBLISHED: Journal of Compartive Economics as "Sources of Real Exchange Rate Fluctuations in Transition Economies: Evidence from Hungary and Poland."

#1998-021A "The Persistence of Moderate Inflation in the Czech Republic and the Koruna Crisis of May 1997"
by Ali M. Kutan, and Josef C. Brada


Macroeconomic policy in the Czech Republic has been based on a fixed exchange rate for most of the post-1993 period and a conservative fiscal policy characterized by a government budget that was close to balance combined with a tight monetary policy that sought to maintain high interest rates and to restrict the growth of the money supply. Surprisingly, given the Czech Republic’s good starting conditions for carrying out such a “soft landing” in its macroeconomic stabilization, the economy was hit by a speculative attack on the koruna in May, 1997, and the economy, which had shown some signs of an increasing tempo of growth, appears to have slid into recession. More...

PUBLISHED: Prague Economic Papers, December 1999

#1998-020A "R&D Spending and Cyclical Fluctuations: Putting the 'Technology' in Technology Shocks"
by Alison Butler, and Michael R. Pakko
September 1998

We examine the dynamic properties of an endogenous growth model with an explicit R&D sector in order to evaluate its ability to propagate temporary disturbances into persistent fluctuations in macroeconomic variables. We demonstrate that a large proportion of the variability and persistence of measured Solow residuals can be thought of as reflecting the endogenous accumulation and adaptation of technical knowledge rather than simply exogenous processes. More...

#1998-019A "Household Credit and the Monetary Transmission Mechanism"
by Victor E. Li
September 1998

This paper evaluates the importance of household credit in the transmission of monetary policy and in explaining the positive correlation between money and credit services over the business cycle. It does so in the context of a general equilibrium framework of cash and household credit with two distinguishing features. More...

#1998-018A "Inflation and Economic Activity in a Multiple Matching Model of Money"
by Derek Laing, Victor E. Li, and Ping Wang
September 1998

This paper investigates the relationship between money growth, inflation, and productive activity in a general equilibrium model where search frictions motivate the transactions role of money. The use of a multiple matching technique, where search frictions are captured by limited consumption variety, allows us to study price determination in a search-theoretic environment with divisible money and goods. More...

#1998-017A "Money Credit and the Cyclical Behavior of Household Investment"
by Victor E. Li, and Chia-Ying Chang
September 1998

This paper focuses on a monetary explanation of two business cycle regularities: (i) business and household investment are positively correlated and procyclical and (ii) household investment tends to lead business investment. We construct a general equilibrium framework that explicitly incorporates a credit sector where real resources are employed in the production of costly household and business credit services. More...

#1998-016A "Learning and Excess Volatility"
by James B. Bullard, and John Duffy
September 1998

We introduce adaptive learning behavior into a general equilibrium lifecycle economy with capital accumulation. Agents form forecasts of the rate of return to capital assets using least squares autoregressions on past data. More...

PUBLISHED: Macroeconomic Dynamics, April 2001, 5(2), pp. 272-302

#1998-015B "Trend-Reverting Fluctuations in the Life-Cycle Model"
by Costas Azariadis, James B. Bullard, and Lee Ohanian

Revised September 2001

(Previously circulated under the title,"Complex Eigenvalues and Trend-Reverting Fluctuations.")

Aggregate time series provide evidence of short term dynamic adjustment that appears to be governed by complex or negative real eigenvalues. This finding is at odds with the predictions of reasonably parameterized, convex one-sector growth models with complete markets. More...

PUBLISHED: Journal of Economic Theory, December 2004, 119(2), pp. 334-56

#1998-014A "A Monetary Policy Feedback Rule in Korea's Fast-Growing Economy"
by Michael J. Dueker, and Guyhan Kim


In Korea's high-growth economy, the Bank of Korea had been willing to tolerate double-digit inflation, provided that it remained at 'non-explosive' levels. In this article, we estimate a monetary policy feedback rule for Korea and find that the upper threshold of tolerable inflation for the Bank of Korea was about 20 percent. More...

PUBLISHED: Journal of International Financial Markets, Institutions and Money, January 1999, 9(1), pp. 19-31