nep-mon New Economics Papers
on Monetary Economics
Issue of 2015‒08‒25
24 papers chosen by
Bernd Hayo
Philipps-Universität Marburg

  1. Monetary and Fiscal Policy in a Liquidity Trap with Inflation Persistence By Jean-Baptiste Michau
  3. Alternative Interpretations of a Stateless Currency crisis By Sergio Cesaratto
  4. An Assessment of ECB Action By Jean-Paul Fitoussi
  5. Taylor-Rule Exit Policies for the Zero Lower Bound By Chattopadhyay, Siddhartha; Daniel, Betty C.
  6. A Markov switching factor-augmented VAR model for analyzing US business cycles and monetary policy By Florian Huber; Manfred M. Fischer
  7. Nominal Targeting in an Economy with Government Debt By Yuting Bai; Tatiana Kirsanova; Campbell Leith
  8. The origin of inflation in a domestic bank-based payment system By Pesenti, Amos
  9. The role of Central Banks in the aftermath of the 2008 financial crisis By Robert Amzallag
  10. Ordoliberalism and the macroeconomic policy in the face of the euro crisis By Michal Moszynski
  11. Incorporating Financial Cycles in Output Gap Measures: Estimates for the Euro Area By Pau Rabanal; Marzie Sanjani
  12. Central Bank Transparency and the consensus forecast: What does The Economist poll of forecasters tell us? By Emna Trabelsi
  14. Asymmetric Exchange Rate Pass-Through in Japanese Exports: Application of the threshold vector autoregressive model By Thi-Ngoc Anh NGUYEN; SATO Kiyotaka
  15. Progress Report on Establishing a Regional Settlement Intermediary and Next Steps: Implementing Central Securities Depository–Real-Time Gross Settlement Linkages in ASEAN+3 By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  16. Google Trends and Forecasting Performance of Exchange Rate Models By Levent Bulut
  17. The Welfare Cost of Inflation Risk Under Imperfect Insurance By Olivier Allais; Yann Algan; Edouard Challe; Xavier Ragot
  18. Banking union a solution to the euro zone crisis By Maylis Avaro; Henri Sterdyniak
  19. Complementary currency systems questioning social and economic changes By Marie Fare; Pepita Ould Ahmed
  20. "The BRICS Initiatives in the Current Global Conjuncture: An Assessment in the Context of the IMF Rulings for Greece" By Sunanda Sen
  21. Monetary Economics Simulation: Stock-Flow Consistent Invariance, Monadic Style By Pierre Boudes; Antoine Kaszczyc; Luc Pellissier
  22. The City of London and the Euro By Berbéri, Carine
  23. The stabilising properties of a European Banking Union in case of financial shocks in the Euro Area By Fritz Breuss; Werner Roeger; Jan in ’t Veld
  24. "Bank Centrality" and Money Creation By François-Xavier Dudouet; Eric Grémont; Antoine Vion

  1. By: Jean-Baptiste Michau (Department of Economics, Ecole Polytechnique - CNRS - Polytechnique - X)
    Abstract: This paper relies on the new Keynesian model with inflation persistence to characterize the optimal monetary and fiscal policy in a liquidity trap. It shows that, with a Phillips curve that is both forward and backward looking, the monetary policy that is implemented during a liquidity trap episode can lift the economy out of depression. The central bank does not need to commit beyond the end of the crisis to get some traction on the level of economic activity. Regarding fiscal policy, inflation persistence justifies some front-loading of government expenditures to get ination started, which reduces the real interest rate. The magnitude of the optimal fiscal stimulus is decreasing in the degree of inflation persistence. Finally, if inflation persistence is due to adaptive expectations, rather than to price indexation, then monetary policy is ineffective while the optimal fiscal stimulus is large and heavily front-loaded.
    Date: 2014–12–01
  2. By: Ghrissi Mhamdi (Université de Sousse)
    Abstract: The aim of this paper is to give an answer to the question that remains wide open; Is Central Bank of Tunisia, capable to transmit all the information on the evolution of prices to economic agents through targeting monetary aggregates. To answer this question, a way that focuses on the stability of the money demand function through the test of Cumulative Sum of residues (SUMCU) and Chow's Forecast test is followed. The results of this study indicate that there is no significant and important relationship between money and prices either in short term or long term. In addition, by estimating the money demand function and its long-term stability, the results show that this relationship is not stable in the case of the Tunisian economy. Introduction The instability of money demand can be explained by the instability of the flow velocity. More frequently, the instability of the application is shown on the factors included in the demand function. Anderson (1985) identified three sources of instability in the demand for money, (i) the change in velocity in response to changes in interest rates as well as movements in other variables the demand function of the currency other than real income, (ii) The demand function of the currency itself may change. For example, financial innovations and releasing the interest rate may change the demand for money, and (iii) short-term monetary stocks actually provided may not correspond to the desired equilibrium. In other words, if the speed of adjustment is small compared to unexpected shocks, this can lead to unexpected changes in the velocity of circulation of money. 1. The relationship between money and prices in the Tunisian economy 1.1. Variables and data As Central Bank of Tunisia (CBT) targets the rate of increase in the money supply within the meaning of M3, then M3 is the variable used to measure changes in the money supply in the Tunisian economy. Concerning the measurement of inflation, changes in the price index (CPI) is the variable most suitable for our study. The adoption of the CPI instead of other measures of inflation is explained by two considerations. The first is the data. Indeed, the monthly data on the CPI are available for longer periods. The second consideration is the wide use of the CPI in the economic literature worldwide. While the CPI may involve some bais, it represents the most widely used measure as an indicator of inflation in empirical studies and analyzes of monetary policy. Regarding the sources of monthly data M2, M3 and CPI, they are issued by the IFC, and the CD-R 2008 IMF.
    Date: 2013–10–18
  3. By: Sergio Cesaratto (University of Siena)
    Abstract: A number of economists holding Keynesian or pragmatic monetarist views warned that political union was a necessary premise for a viable monetary union. Inspired by Goodhart, we name this the Cartalist view. The European currency union was, however, strongly influenced by New Classical Macroeconomics, which gave new strength to older traditions, like ordoliberalism, that back separation of monetary and fiscal policy, legitimizing a Stateless currency. Again like Goodhart, we call this the Metallist view. This distinction is particularly relevant for assessing two alternative perspectives of the nature of the Euro area crisis. On one hand, there are those who argue that the crisis is akin to a traditional balance of payment crisis of the kind typically occurring in fixed exchange rate regimes. On the other, there are those who attribute the crisis to obstacles to more resolute intervention by the European Central Bank (ECB). Accordingly, belated intervention by the ECB led to worsening of the fiscal crisis of peripheral Euro area states, subsequently exacerbated by austerity policies. In this view, a classical balance of payment crisis can be excluded as a cause of the crisis, because Target 2, a payment mechanism analogous to Keynes’s International Clearing Union, protects the Euro area. In this paper, I argue that although a balance of payments crisis cannot exist in a viable sovereign monetary union, it is still conceivable in a flawed, stateless monetary union like the Euro zone, possibly obscured by Target 2. In this regard, I also show that, while timely and resolute ECB intervention would have been appropriate, in the absence of federal institutions (particularly a federal budget controlled by a European democratic parliament), once this intervention finally took place, austerity measures necessarily accompanied it to check moral hazard possibilities of peripheral member countries. I argue that the German neo-mercantilist orientation and the influence of the predominant mainstream credo that monetary policy should be detached from politics and fiscal policy are obstacles to a viable federal union. I also warn about the risk that the Parliament of such a union would be divided according to national rather than ideological/class interests. Virtue out of necessity, Hayek pointed out long-ago that a currency union among different nation-States could only survive with a minimalist federal State.
    Keywords: Europe, Crisis, Target2, ECB, State.
    JEL: E11 F33 N14
    Date: 2015–08
  4. By: Jean-Paul Fitoussi (OFCE - OFCE - Sciences Po)
    Abstract: An assessment of the conduct of monetary policy in Europe must necessarily be made along two distinct and complementary lines. The first is a comparison with the policies followed in the past. The second line has to assess whether monetary policy is adapted to the new conditions that came into existence with the inception of the Euro. The picture with respect to these two criteria is mixed. Monetary policy has certainly improved with respect to the policies followed in the 1990s, during the run up to the euro. In fact, the ECB proved to be much more growth friendly than its predecessors. On the other hand, though, the challenges posed by the new environment, the management of a large open economy, have not been internalized by the ECB, that was less reactive than the Fed, and too focussed on current inflation. The tightening of monetary conditions in the euro zone, mainly due to the euro appreciation, was not sufficiently cautioned by monetary policy. Especially considering the poor economic performances of the euro zone in the past few years, we must conclude that monetary policy was not helpful in fostering growth recovery in the euro area. The ECB did not fully recognise its new responsibility of conducting the monetary policy of a "big country".
    Date: 2014–04–03
  5. By: Chattopadhyay, Siddhartha; Daniel, Betty C.
    Abstract: The monetary authority loses the ability to implement the Taylor Rule at the zero lower bound. However, the promise to implement a Taylor Rule upon exit remains an effective policy instrument. We present two Taylor-Rule exit policies, each with different commitment requirements, as alternatives to a truncated Taylor Rule. A Taylor Rule with an optimally-chosen exit date and time varying inflation target delivers fully optimal policy, but requires a negative inflation target, possibly threatening the ability to commit. A Taylor Rule with only an optimally-chosen exit date delivers almost all the gains of fully optimal policy with no need to commit to the negative inflation target.
    Keywords: New-Keynesian Model, Inflation Target, Liquidity Trap
    JEL: E52 E58 E63
    Date: 2015–08–11
  6. By: Florian Huber (Oesterreichische Nationalbank); Manfred M. Fischer (Department of Socioeconomics, Vienna University of Economics and Business)
    Abstract: This paper develops a multivariate regime switching monetary policy model for the US economy. To exploit a large dataset we use a factor-augmented VAR with discrete regime shifts, capturing distinct business cycle phases. The transition probabilities are modelled as time-varying, depending on a broad set of indicators that influence business cycle movements. The model is used to investigate the relationship between business cycle phases and monetary policy. Our results indicate that the effects of monetary policy are stronger in recessions, whereas the responses are more muted in expansionary phases. Moreover, lagged prices serve as good predictors for business cycle transitions.
    Keywords: Non-linear FAVAR, business cycles, monetary policy, structural model
    JEL: C30 E52 F41 E32
    Date: 2015–08
  7. By: Yuting Bai; Tatiana Kirsanova; Campbell Leith
    Abstract: Most analyses of monetary policy delegation schemes typically ignore the behavior of the fiscal policy maker. The paper investigates how monetary price level targeting or monetary nominal income targeting may yield social gain in an economy with government debt and where the fiscal policymaker, acting strategically, may take counter actions. We argue that the choice of fiscal policy instrument plays an important role for the performance of monetary policy. The optimal choice of monetary policy delegation scheme depends crucially on the level of government debt and its maturity, with a switch from price level targeting being desirable to nominal income targets being strongly preferred as debt levels rise and maturity shortens.
    Keywords: Monetary and Fiscal Policy Interactions, Price Level Targeing, Nominal Income Targeting, Discretionary Policy
    JEL: E31 E52 E58 E61 C61
    Date: 2015–06
  8. By: Pesenti, Amos
    Abstract: This paper shows how a disorderly-working bank-based payment system negatively affects monetary stability. This occurs when firms invest their profits in production with the aim of forming and accumulating (fixed) capital, while at the same time banks carry out the payment of workers’ wages and enter the corresponding payment order in the architecture for domestic payments. In fact, if the payment of wages is financed with profits, this payment operation corresponds to an emission of (empty) money without it being endowed with value, to wit, purchasing power. It follows that the existing value of money is “diluted” in a greater amount of money units, so much so that the current purchasing power of each unit of money is reduced. This monetary phenomenon can be defined as inflation, which, in turn, exerts an upward pressure on the general price level. A structural reform of the bank-based payment system, as suggested in this paper, may consequently improve the defective architecture for domestic payments and thereby promote long-run monetary stability.
    Keywords: banks; deflation; inflation; money; payment systems; profits; wages
    JEL: E20 E31 E42 E51
    Date: 2015–08–12
  9. By: Robert Amzallag
    Abstract: Central Banks are powerful institutionsthat can print money, control liquidityand interest rates and, in manycountries, regulate their bankingsystem. So much so that governmentshave wisely restricted their mandatesand made them independent fromelected politicians.Central banks have traditionally beenvery discreet and always tried to avoidthe limelight. In most situations, theyworked in the background, usinggovernments or the banking systemresources to guide economic forcesaway from excesses onto the path ofreasonable growth and, in worse casescenarios, to solve economic crises.Until 2008, their decisions, oftencommunicated in impenetrablelanguage, were hardly reported passthe business sections of dailynewspapers. Their discreetinterventions to regulate or solve acrisis did not make waves beyond theupper financial and banking circle.Fast forward to 2015.Central bank actions are now frontpage material for daily newspapers.Janet Yellen, Chairman of the USFederal Reserve and Mario DraghiChairman of the European CentralBank are considered among the mostpowerful persons in the world andtreated by the press as celebrities.When the Chairman of the Fed hintsthat she might be considering a slightrise in interest rates, markets collapsearound the world, there is talk ofasphyxiating a fragile recovery andtriggering a world recession withpolitical consequences.The recent Eurozone crisis is an evenmore remarkable example. As politicalleaders were meeting endlessly inBrussels to try and find a solution toGreece financial default, all eyesturned on the ECB and its ChairmanMario Draghi.
    Date: 2015–08–05
  10. By: Michal Moszynski (Nicolaus Copernicus University, Poland)
    Abstract: The global economic crisis and the crisis in the euro zone exposed the deep differences of opinion between German economists and scientists from other European countries and the US. The German approach conceptually differs in the views on the strategies and tools of anti-crisis policy, especially fiscal stimulus in the Keynesian-style, quantitative easing monetary policy of the ECB, the question of financial assistance to Greece and restructuring its debt. The other areas of difference are the approach to the rules in macroeconomic policy, fiscal consolidation, and interpretation of current account surplus. Given the size and performance of German economy it is important to understand the reasons for these opposites, which constitute the research goal of this article. Considerations are based on the thesis that ordoliberal thought still has a strong impact on the practice of macroeconomic policy in Germany and also at European level. The analysis is built on the short overview of ideological foundations of the German social market economy and its most important postulates, which then will be applied for interpretation of intellectual distinctions between economists from Germany and other countries in the theoretical and practical dimensions of economic policy observed in Europe. The methodology includes the critical literature studies and the comparative analysis of macroeconomic policy through the prism of economic thought.
    Keywords: Germany, macroeconomic policy, ordoliberalism, rules, economic order
    JEL: B25 E61 H12
    Date: 2015–08
  11. By: Pau Rabanal (IMF); Marzie Sanjani (International Monetary Fund)
    Abstract: During the early 2000s, the euro area periphery countries experienced a credit and house price boom, but with moderate CPI inflation. We suggest a new approach for analyzing the role of credit and house prices in potential output and estimating the output gap. We present a two-country DSGE model for the core and periphery of the euro area, with financial frictions at the household level. We use several macroeconomic variables, including house prices and household credit for each region, to estimate the model. We find that, in the core, the measure of output gap is independent of financial frictions and is similar to that obtained with the Hodrick and Prescott filter, because of the absence of a credit boom. On the contrary, in the periphery, the presence of financial frictions amplify economic fluctuations and the output gap. We also present evidence of the trade-offs faced by the European Central Bank when trying to stabilize two regions in a currency union with divergent economic cycles.
    Date: 2015
  12. By: Emna Trabelsi (ISG - Institut Supérieur de Gestion de Tunis [Tunis] - Université de Tunis [Tunis])
    Abstract: We are interested, in this paper, in studying the effects that central banks exert on private sector forecasts by means of their transparency and communication measures. We analyze the impact of central bank transparency on the accuracy of the consensus forecasts (usually calculated as the mean or the median of the forecasts from a panel of individual forecasters) for a series of macroeconomic variables: inflation, Real output growth and the current account as a share of GDP for 7 advanced economies. Interestingly, while it is found of significance of central bank transparency and communication measures on forecasts themselves, there appear some limits of the same measures when we study their impact on forecast errors. Our findings, indeed, suggest that deviations of the forecasted economic data from the realized ones (i.e. RGDP and the current account as a share of GDP) are a bit affected by the central bank transparency measures considered in the paper. Inflation forecast errors, especially, are not affected at all by those measures. A possible explanation (among others) could be attributed to the inefficiency of the mean forecasts. Inefficiency of the consensus forecasts is not a new issue from a theoretical point of view, but its empirical relevance is for the first time (to our knowledge) questioned on data extracted from The Economist poll of forecasters. More particularly, our paper has implications over questioning the efficacy of releasing more transparent public information as sparked by Morris and Shin (2002) whose argument states that when private agents have diverse sources of information, public information can lead them to overreact to the signals from the central bank.
    Date: 2015–04–30
  13. By: David Amiel (Ecole normale supérieure); Paul-Adrien Hyppolite (Ecole normale supérieure)
    Abstract: What would be the short-term financial consequences of exiting the Euro? This article addresses this issue by focusing on some key strategic non-financial corporations and systemic banking Groups of French nationality. We show that special attention should be paid to the marketable debt under foreign law issued to finance domestic activities which is unlikely to be redenominated in a devalued domestic currency becoming suddenly much more difficult to service. What would be the magnitude of this effect ? Drawing on a new database on debt securities compiled at the firm level and taking into account the nationality of the ultimate issuer, this paper identifies strategic and systemic French companies that would end up, in case of a Euro exit, with unhedged mismatches on their respective consolidated balance sheets, thereby triggering large negative balance sheet effects. These very mismatches would prove to be in fact very similar to currency mismatches faced by many financial and non-financial corporations in emerging economies at the time of the Asian crisis in the late 1990s, with the difference that they would be related to the juridical nature of the contracts instead of the currency of issue. We find that a significant share of the French financial and non-financial private sector finances its domestic activities with Eurodenominated debts under foreign law, which would ultimately remain in Euro and be repaid with a devalued currency if France were to leave the Eurozone. Historical examples support the idea that this “redenomination channel” has been crucial in explaining the successes or failures of exits from monetary unions. The “redenomination issue” played an important role in the 2002 Argentine collapse. On the contrary, some specificities, unlikely to be found in the Eurozone, of the widely-praised exits from the Gold Standard in the 1930s and of the “Velvet Divorce” in 1993 Czechoslovakia explain why this very issue was defused. Hence, the problem of private debt and the difficulties of redenomination appear to be much more formidable than conventional wisdom has long held and this should be kept in mind by policy makers.
    Date: 2015–02–16
  14. By: Thi-Ngoc Anh NGUYEN; SATO Kiyotaka
    Abstract: This paper employs a threshold vector autoregressive (TVAR) model to analyze a possible asymmetric behavior of exchange rate pass-through (ERPT) or pricing-to-market (PTM) in Japanese exports between the yen appreciation and depreciation regimes. We developed a new approach to estimating the exporting firm's reference (predicted) exchange rate by applying the threshold autoregressive (TAR) model with a rolling window. We also use an industry-specific nominal effective exchange rate on a contract currency basis to better capture a role of the U.S. dollar as the third currency for trade invoicing. It is found that the degree of PTM (ERPT) was larger (smaller) in the yen depreciation regime up to the end of the 1990s but became smaller (larger) in the 2000s and after. A decline (increase) in PTM (ERPT) in the yen depreciation regime suggests that Japanese exporters tend to lower the yen-based export price and fail to fully exploit foreign exchange gain in response to the yen depreciation, likely due to an increase in export competition in the world market.
    Date: 2015–08
  15. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB)
    Abstract: This progress report developed by the Cross-Border Settlement Infrastructure Forum (CSIF), composed of the central banks and central securities depositories in the Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China, Japan, and the Republic of Korea—collectively known as ASEAN??, is an important step for the establishment of Central Securities Depository–Real-Time Gross Settlement (CSD–RTGS) Linkages as a regional settlement intermediary in the region. The report shows the desktop study results between the Bank of Japan and the Hong Kong Monetary Authority aiming to create a common model for the linkages. The report also sets out the implementation road map for establishment of CSD–RTGS Linkages. As secretariat of the CSIF, the Asian Development Bank supports this initiative.
    Keywords: adb, asian development bank, asdb, asia, pacific, poverty asia, settlements, asean+3, asian bond markets, central securities depositories, real-time gross settlement, asian development bank, multi-currency bonds, csd–rtgs linkages, delivery versus payment, money markets, cross-currency dvp, boj, hkma
    Date: 2015–04
  16. By: Levent Bulut (Department of Economics, Ipek University)
    Abstract: In this paper, internet search data provided from Google Trends is utilized to nowcast the known variates of alternative exchange rate determination models. The sample covers 12 OECD countries’ exchange rates for the period from Jan 2004 to June 2014. The results indicate that inclusion of Google Trends-based nowcasting values of macro fundamentals to the current set of government released-macro-economic variables improve the out-of-sample forecast of Purchasing Power Parity model in seven currency pairs and of Monetary model in four currency pairs. In this paper we claim that, for proper testing of the structural models, since there is a lag in the release of official data on macro fundamentals, the literature should focus more on using ex ante variables on current macro fundamentals and nowcasting of these variables with utilization of Google Search Inquiries can be one alternative for this purpose.
    Keywords: Meese-Rogoff Puzzle, Out-of-sample predictability of Exchange Rates, Google Trends
    JEL: F31 F37 C52
    Date: 2015–08
  17. By: Olivier Allais (CORELA - Laboratoire de Recherche sur la Consommation - INRA); Yann Algan (CORELA - Laboratoire de Recherche sur la Consommation - INRA); Edouard Challe (CORELA - Laboratoire de Recherche sur la Consommation - INRA); Xavier Ragot (CORELA - Laboratoire de Recherche sur la Consommation - INRA)
    Abstract: What are the costs of inflation fluctuations and who bears those costs? In this paper, we investigate this question by means of a quantitative incomplete-market, heterogenous-agent model wherein households hold real and nominal assets and are subject to both idiosyncratic labor income shocks and aggregate inflation risk. A key feature of our analysis is a nonhomothetic specification for households' preferences towards money and consumption goods. Unlike traditional specifications, ours allows the model to reproduce the broad features of the distribution of monetary assets (in addition to being consistent with the distribution of nonmonetary assets). Inflation risk is found to generate significant welfare losses for most households, i.e., between 1 and 1.5 percent of permanent consumption. The loss is small or even negative for households at the very top of the productivity and/or wealth distribution.
    Date: 2015–05
  18. By: Maylis Avaro (ENS Cachan - École normale supérieure - Cachan); Henri Sterdyniak (OFCE - OFCE - Sciences Po)
    Abstract: The banking union emerged from the June 2012 European Council as a new project expected to help and solve the euro area crisis. Is banking union a necessary supplement to monetary union or a new rush forward? The banking union would break the link between the sovereign debt crisis and the banking crisis, by asking the ECB to supervise banks, establishing common mechanisms to solve banking crises, and encouraging banks to diversify their activities. The banking union project is based on three pillars: a Single Supervisory Mechanism (SSM), a Single Resolution Mechanism (SRM), a European Deposit Guarantee Scheme. Each of these pillars raises specific problems. Some are related to the current crisis (can deposits in euro area countries facing difficulties be guaranteed?); some other are related to the EU complexity (should the banking union include all EU member states? Who will decide on banking regulations?), some other are related to the EU specificity (is the banking union a step towards more federalism?), the more stringent are related to structural choices regarding the European banking system. The banks' solvency and their ability to lend would primarily depend on their capital ratios, and thus on financial markets' sentiment. The links between the government, firms, households and domestic banks would be cut, which is questionnable. Will governments be able tomorrow to intervene to influence bank lending policies, or to settle specific public banks? An opposite strategy could be promoted: restructuring the banking sector, and isolating retail banking activity from risky activities. Retail banks would focus on lending to domestic agents, and their solvency would be guaranteed because they would not be allowed to run risky activity. Can European peoples leave such strategic choices in the hands of the ECB?
    Date: 2013–09
  19. By: Marie Fare (TRIANGLE - Triangle : action, discours, pensée politique et économique - CNRS - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - Institut d'Études Politiques [IEP] - Lyon - ENS Lyon - École normale supérieure - Lyon); Pepita Ould Ahmed (CESSMA - Centre d'Etudes en Sciences Sociales sur les Mondes Africains, Américains et Asiatiques - UP7 - Université Paris Diderot - Paris 7 - Institut de Recherche pour le Développement - IRD (FRANCE))
    Abstract: From an analysis of the literature, this article proposes a reading of the contributions of complementary currency systems (CCS) to promote social and economics change. After a presentation of the nature and diversity of CCS, this paper analyzes the method deployed by the literature to evaluate the scope of CCS and the diversity of impact measures criteria.This article argues these new monetary arrangements are part of local economic and socio-economic dynamics, and should be seen as weapons in the struggle against social and monetary exclusion. CCS raise important questions on the emergence of a new economic order, based on new standards of production and consumption and on the role and place of money in the economy. Finally, we conclude with a return to the question of their scale, one of the challenges facing CCS.
    Date: 2014–11–14
  20. By: Sunanda Sen
    Abstract: Developing countries, led by China and other BRICS members (Brazil, Russia, India, and South Africa), have been successfully organizing alternative sources of credit flows, aiming for financial stability, growth, and development. With their goals of avoiding International Monetary Fund loan conditionality and the dominance of the US dollar in global finance, these new BRICS-led institutions represent a much-needed renovation of the global financial architecture. The nascent institutions will provide an alternative to the prevailing Bretton Woods institutions, loans from which are usually laden with prescriptions for austerity--with often disastrous consequences for output and employment. We refer here to the most recent example in Europe, with Greece currently facing the diktat of the troika to accept austerity as a precondition for further financial assistance. It is rather disappointing that Western financial institutions and the EU are in no mood to provide Greece with any options short of complying with these disciplinary measures. Limitations, such as the above, in the prevailing global financial architecture bring to the fore the need for new institutions as alternative sources of funds. The launch of financial institutions by the BRICS--when combined with the BRICS clearing arrangement in local currencies proposed in this policy note--may chart a course for achieving an improved global financial order. Avoiding the use of the dollar as a currency to settle payments would help mitigate the impact of exchange rate fluctuations on transactions within the BRICS. Moreover, using the proposed clearing account arrangement to settle trade imbalances would help in generating additional demand within the BRICS, which would have an overall expansionary impact on the world economy as a whole.
    Date: 2015–08
  21. By: Pierre Boudes (LIPN - Laboratoire d'Informatique de Paris-Nord - CNRS - Université Paris 13 - Université Sorbonne Paris Cité (USPC) - Institut Galilée); Antoine Kaszczyc (LIPN - Laboratoire d'Informatique de Paris-Nord - CNRS - Université Paris 13 - Université Sorbonne Paris Cité (USPC) - Institut Galilée); Luc Pellissier (LIPN - Laboratoire d'Informatique de Paris-Nord - CNRS - Université Paris 13 - Université Sorbonne Paris Cité (USPC) - Institut Galilée)
    Abstract: An agent-based simulation of a monetary economy as a whole should be stock-flow consistent [7]. We aim at providing a compile-time verification of the preservation of this invariant by the computation. We guarantee this invariant by wrapping the accounting operations in a monad. Our objective is to increase the confidence in the SFCness of an existing complex simulation with a minimal refactoring of code.
    Date: 2015–06–05
  22. By: Berbéri, Carine
    Abstract: Analyzing the attitude of the City of London towards the euro can seem a bit strange today, at a time when Great Britain has still not joined the eurozone and even tries to organize a referendum about Britain's EU membership. One should not forget that in January 2013 Prime Minister David Cameron promised he would hold such a referendum if the Conservatives were re-elected in 2015. Nevertheless, examining the attitude of the City remains interesting insofar as it reflects the difficult relations between Britain and Europe / Britain and European monetary initiatives. As mentioned by Tony Blair in July 1999: "Yet, we always come back to the same dilemma: in or out of Europe. To be in or not to be in, that is the question. In the end, we have always chosen to be in" (Speech to the London Business School). Furthermore, one can wonder whether the City, which is one of the main business and financial centres in the world and the largest financial centre in Europe, has been much affected by Blair's decision not to join the euro in 1999. Focusing on the City seems all the more interesting today since the Cameron-Clegg government has increasingly tried to protect London's financial centre over the past European summits. Consequently, the purpose of this article is to study the impact of the euro on the City so as to examine whether London's position as a financial centre has been threatened since the late 1990s. It will also try to determine if the City has been influenced by the less and less constructive attitude of the Cameron-Clegg government towards the euro and the European Union (EU).
    Date: 2014
  23. By: Fritz Breuss; Werner Roeger; Jan in ’t Veld
    Abstract: This paper analyses the stabilising properties of a European Banking Union in case of financial shocks in the euro area.
    JEL: C54 E12 E32 E42 E63 F41 G21
    Date: 2015–06
  24. By: François-Xavier Dudouet (IRISSO - Institut de Recherche Interdisciplinaire en Sciences Sociales - Université Paris IX - Paris Dauphine - CNRS); Eric Grémont (OpesC - Observatoire politico-économique des structures du Capitalisme); Antoine Vion (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix-Marseille Université - CNRS - Université de Provence - Aix-Marseille 1 - Université de la Méditerranée - Aix-Marseille 2)
    Abstract: For more than one century, interlocking directorate studies have provided evidence of bank centrality in corporate networks. Many interpretations of this phenomenon have been elaborated, but none of them was conclusive. In this paper, we assume that theoretical and methodological limits have affected this literature. Firstly, two usual confusions have been to assimilate bank centrality to bank control and to study corporate networks from the perspective of a sum of links rather than the one of a whole structure. Secondly, scholars have paid attention to immediate financial relations between bank and industry, such as credit and shareholding, but not to financial intermediation and money creation. We think that economic theory of money creation is worth bringing back in. From such a theoretical perspective, bank centrality seems to be better understood as a form of collegial regulation of money creation, while the absence of such a phenomenon indicates the rise of bureaucratic regulation by central banks and global financial institutions.
    Abstract: Depuis plus d'un siècle, les analyses de réseaux appliquées aux conseils d'administration des grandes entreprises (interlocking directorate studies) ont régulièrement observé la tendance qu'ont les banques à occuper une position plus centrale que les autres entreprises. Cette observation a donné lieu à de nombreuses interprétations, dont aucune n'est parvenue à s'imposer. Nous soutenons que l'absence de consensus repose en premier lieu sur une question de méthode, celle qui consiste, d'une part, à confondre « centralité » et « contrôle » et d'autre part à étudier les réseaux inter-firmes d'après la somme de leurs parties et non comme un tout. En second lieu, les sociologues se sont intéressés à des formes immédiates de relations financières entre banques et industrie, essentiellement sous les rapports de dette et d'actionnariat, en négligeant tout ce que la théorie économique pouvait apporter sur le rôle joué par les banques dans l'émission monétaire et l'intermédiation financière. Or, ces deux derniers aspects sont fondamentaux pour saisir les rapports structurels qui lient les entreprises financières et non financières. En nous appuyant sur la longue tradition des intrerlocking directorate studies, d'une, part et certains économistes de la monnaie et des marchés financiers d'autre part, nous souhaitons montrer que ce que l'on appelle la « centralité bancaire » repose avant tout sur le rôle prééminent des institutions financières dans le circuit de l'argent.
    Date: 2014–12

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