Now showing 1 - 3 of 3
  • Publication
    Hysteresis in Potential Ourtput and Monetary Policy
    (Wiley-Blackwell, 2014-09) ;
    Schmid, Kai D.
    We show that actively stabilizing economic activity plays a more prominent role in the conduct of monetary policy when potential output is subject to hysteresis. We augment a basic New Keynesian model by hysteresis in potential output and contrast simulation outcomes of this extended model to the standard model. We find that considering hysteresis allows for a more realistic propagation of macroeconomic shocks and persistent movements in output after monetary shocks. Our central policy implication of active output gap stabilization arises from stability analyses and welfare considerations.
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    Scopus© Citations 9
  • Publication
    Balanced Growth : finding strategies for sustainable development
    (Springer, 2012) ;
    Sunde, Uwe
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    Vischer, Thomas
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    Oschlies, Melaniekatharina
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    Nazarkina, Liudmila
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    Rüdisser, Michèle F.
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    Kunz, Justus Julius
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    Roy, Friedemann
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    Komba, Xaver Kazimoto
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    Meissner, Felix
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    Pieper, Cornelius
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    Rubel, Holger
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    Schädler, Jens
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    What is balanced growth? This book shows that the definitions and implications of the concept of balanced growth vary significantly among the different disciplines in economic science, but are not exclusive at all. Terms such as sustainability or balanced growth have become buzzwords. In practice, they are often a desirable vision rather than an achievable objective. Why? Doubts may arise about the extent to which such concepts are compatible with a modern market economy. Is balanced growth possible at all? Is it reasonable to accept balanced growth as a norm? Why should a balanced growth path be a desirable strategy to pursue for policymakers, managers, employees, and other societal stakeholders? Empirical evidence suggests that the actual worldwide economic growth is not balanced at all. Meanwhile, ever since the beginning of the financial and economic crisis in 2007 and its accompanying spillover effects, our globalizing world has uncompromisingly shown the flip side of its coin. Its crisis-prone character has intensified the discussion about our economic system's sustainability. Questions related to acceptable sovereign debt levels, suitable trade deficits and surpluses, firms' growth targets, resource management and efficiency have aroused high interest. What is the cause of the observed imbalances? In our opinion, this debate must involve rethinking the qualitative and quantitative dimension of our present understanding of the nature of economic growth. This book accompanies the 9th DocNet Management Symposium of the University of St. Gallen, Switzerland. It contains contributions of the symposium's panel speakers, renowned authors to the field and young researchers. The Ph.D. students' and post-doctoral association DocNet organizes the DocNet Management Symposium on a yearly basis with the goal to foster exchange between academia and practitioners.
  • Publication
    Cyclical Long-term Unemployment, Skill Loss, and Monetary Policy
    (School of Finance Working Paper Series, 2012)
    Movements in long-term unemployment (LTU) exhibit a substantial cyclical component. I develop a business cycle model featuring labor market frictions and skill loss during unemployment to capture various stylized facts about the cyclical behavior of long-term unemployment. I find that the skill loss mechanism helps reproduce negative duration dependence, high persistence in unemployment and output, volatility patterns across macroeconomic variables and the behavior of the incidence of LTU around business cycle turning points. Optimal monetary policy in the presence of skill loss during unemployment calls for a softer reaction to inflation after productivity shocks. The monetary authority accepts more inflation in order to avoid high skill loss during unemployment which would reduce production and hence consumption possibilities.
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