Hohenheimer Diskussionsbeiträge

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Die Aussenhandelspolitik der EU gegenüber China: "China-Bashing" ist keine rationale Basis für Politik
(2007) Belke, Ansgar; Spies, Julia
Mit der Verabschiedung einer handelspolitischen Strategie gegenüber China Ende Oktober 2006 richtet sich die Europäische Union (EU) in einem veränderten globalen Wettbewerbsumfeld neu aus. Erstmals wird mit dem Einsatz von Schutzmaßnahmen gedroht, sollte China die multilateralen Vereinbarungen der Welthandelsorganisation (World Trade Organization ? WTO) nicht vollständig umsetzen. Doch hat auch die EU ihre ?Hausaufgaben? in den vergangenen Jahren nicht immer erledigt. Auf die Einfuhrschwemme von Textilien und Bekleidung Anfang 2005 reagierte sie durch die Erhebung neuer Quoten. In diesem Papier argumentieren wir, dass nur eine reziproke Marktöffnung eine stabile Partnerschaft bedingt, bei der beide Seiten vom ohnehin nicht aufzuhaltenden Vormarsch Chinas profitieren können.
Enlarging the EMU to the East : what effects on trade?
(2007) Belke, Ansgar; Spies, Julia
The purpose of this paper is to assess the implications of the Economic and Monetary Union (EMU) accession of eight Central and Eastern European Countries (CEECs) on their share in EMU-12 imports. Overcoming biases related to endogeneity, omitted variables and sample selection, our results indicate that the common currency has boosted intra-EMU imports by 7%. Under the assumption that the same relationship between the explanatory variables and imports will hold for EMU-CEEC trade, we are able to predict the future impact of the euro. Our findings suggest that except for the least integrated countries, Poland, Latvia and Lithuania, all CEECs can expect increases in the EMU-12 import share.
Exchange rate regimes and the transitionprocess in the Western Balkans : a comparative analysis
(2007) Belke, Ansgar; Zenkic, Albina
In the academic literature some criteria have been identified which could have an impact on the success of the transition process, such as macroeconomic stability, microeconomic restructuring and implementation of legal and institutional reforms. The role of the exchange rate system in general is to foster the stability of the monetary environment characterized by low inflation rates and a stable domestic currency. Although the importance of a sustainable price-level oriented monetary policy for the transition-success has been stressed in the academic literature, there are still further questions to be answered related to the choice of the exchange rate system throughout the different phases of the transition process. This paper intends to contribute to close this gap in the literature. The guiding research question is how the choice of an exchange rate system influences the economic success of a country in transition and its gradual integration within the European Union (EU) and the European Monetary Union (EMU). For this purpose, the study focuses on the transition process of South-eastern Europe (SEE). In particular and for the first time in a joint study, we will take a look at the following South-eastern European Countries (SEECs), often referred to as the �West Balkans�: Bosnia and Herzegovina (BiH), Croatia, Former Yugoslav Republic of Macedonia (FYRM), Serbia and Montenegro, as these five countries share certain common characteristics: they were part of the Former Yugoslav Republic (FYR); they are countries in transition; they are members of the Stability Pact for South-eastern Europe and they are all potential EU-accession candidates.
How the ECB and the US fed set interest rates
(2006) Polleit, Thorsten; Belke, Ansgar
Monetary policies of the ECB and US Fed can be characterised by ?Taylor rules?, that is both central banks seem to be setting rates by taking into account the ?output gap? and inflation. We also set up and tested Taylor rules which incorporate money growth and the euro-dollar exchange rate, thereby improving the ?fit? between actual and Taylor rule based rates. In general, Taylor rules appear to be a much better way of describing Fed policy than ECB policy. Simulations suggest that the ECB?s short-term interest rates have been at a much lower level in the last two years compared with what a Taylor rule would suggest.
Instability of the Eurozone? : on monetary policy, house prices and structural reforms
(2006) Belke, Ansgar; Gros, Daniel
This paper deals with potential instabilities of the eurozone stemming from an insufficien interplay between monetary policy and reform effort on the one hand and the emergence of intra-euro area divergences on the other. As a first step, we assess the effect of EMU on structural reform and investigate this question by an examination of the relationship between fixed exchange rates and reform in two wider samples of countries. We also stress that loose monetary conditions which prevailed until some months ago can also manifest themselves in asset price inflation, notably in the housing market. When these bubbles burst, for example, when housing prices stop rising, this often leads to a prolonged period of economic instability and weakness rather than consumer price inflation. As a second step, we point out that risks for EMU are not only increasing because longer-term disequilibria become evident in fiscal and monetary policy, but also because serious divergences are now appearing within the euro area which threaten its long-term cohesiveness. The most manifest example of this threat comes from what promises to be a long-term divergence between Germany and Italy which for the time being was offset by asynchronous developments of house prices in both countries. There are still large differences within the euro area, with the small countries performing much better than the large ones on almost every indicator. This suggests that better policies can make a large difference even if monetary policy is the same for everybody. Finally, we construct a simple formal model in order to investigate whether EMU is in danger from internal tensions which could lead to severe instabilities. The experience so far has shown that some countries are continuously losing competitiveness. Is this a structural problem in the sense that these countries just have problems in keeping inflation at level that does not imply a continuing loss of competitiveness? Or is the persistence of higher inflation one can observe in some countries due to the internal dynamics of a monetary union in which any country that starts with higher inflation rate also has a lower real interest rate, which stimulates demand, and thus leads potentially to even more inflation. The purpose of our theoretical section is to discuss what the main factors are which could lead to such diverging cycles.
Money and inflation : lessons from the US for ECB monetary policy
(2007) Polleit, Thorsten; Belke, Ansgar
We turn our attention to the role of money for determining nominal magnitudes. Using US data, we find that the aggregate ?nominal output plus and stock market capitalisation? is closely related to the money stock, lending support to one of Milton Friedman?s key monetarist propositions. This finding should be particularly important for ECB monetary policy: an inflation-free euro plays a crucial role for European economic and political integration. We conclude that monetary policy must keep a very close eye on money supply if it wants to prevent consumer and asset price inflation.
Money and Swedish inflation reconsidered
(2006) Belke, Ansgar; Polleit, Thorsten
Analysing the role of money for Swedish inflation, we apply a single equation ?PStar? model and a structural VECM for the period of the late 1980 to the beginning of 2005. Against the background of theoretical and empirical considerations, we find that money ? when measured by the ?price gap? or, alternatively, the ?money overhang? ? has a statistically significant impact on future price movements. The results suggest that money should play a systematic role in monetary policy making in Sweden compared with the status quo.
Money matters for inflation in the euro area
(2006) Polleit, Thorsten; Belke, Ansgar; Kösters, Wim; Leschke, Martin
PART 1 ECB independence and price stability The success of the stability oriented monetary policy of the ECB depends on the acceptance of the bank?s institutional set-up. In this context, the ECB?s political independence seems to be of the utmost importance. However, important pillars for safeguarding the bank?s political independence ? such as, for instance, governments? adherence to the European Stability and Growth Pact and the acceptance of the division of labor between fiscal and monetary policy ? induced) financial crisis which, in turn, could have a highly negative impact on output and employment. PART 2 Monetary policy and structural reforms What role does monetary policy play for structural reform in open economies? Empirical estimations were performed with panel data for 23 OECD countries from 1970 to 2000. Structural reform was measured by the Economic Freedom of the World index, whereas the monetary policy constraints were measured by a monetary commitment index and the prevailing exchange rate regime. ? Our results provide little evidence for the hypothesis that a discretionary monetary policy promotes structural reform and economic freedom. The results strongly argue against those views maintaining that a business cycle oriented and lax monetary policy has never and nowhere been detrimental for employment. In fact, our results show that discretionary monetary policies tend to lead to a lower degree of structural labor market reform and, hence, to lower employment. That said, the ECB should pursue a medium- to long-term oriented monetary policy if it wants to strengthen growth and employment in the euro area via supporting reforms. PART 3 A critical view of the real interest rate concept The concept of the neutral (real) interest rate (NRIR) ? as implied by the Taylor rule ? recommends monetary policy to set real interest rates at a level that closes, or at least smoothes, the output gap. We argue that such a policy, if put into practice, would entail substantial pitfalls. First, monetary policy is an inadequate tool for influencing real GDP: the central bank?s impact on long-term interest rates and GDP is actually small (or not existing); to make things worse, a cyclically oriented policy would provoke the well-known time-lag problem. Second, and perhaps most importantly, the NRIR concept is not necessarily compatible with price stability, as it ignores the impact of credit and money growth on inflation. ? As a result, we are in favour of a long-term oriented monetary policy that has a strong focus on money and credit growth and asset prices. Such a monetary policy would not only be compatible with the objective of price stability. It would also reduce the risk of the economy falling into (a monetary induced) financial crisis which, in turn, could have a highly negative impact on output and employment. PART 4 ECB monetary policy and euro inflation outlook Even at a main refinancing rate of 3.25%, ECB monetary policy remains very expansionary. We forecast annual HICP inflation in 2007 to be 2.3% on average (including the German VAT hike). Due to strong excess liquidity, annual consumer price inflation is likely to remain at 2.3% in 2008. We recommend raising ECB rates further to around 4.0%, for reducing credit and money supply growth, thereby dampening inflationary pressure. ? Our money demand analyses for the euro area suggest that, in recent years, excess liquidity might have been translating in great part into asset price inflation rather than consumer price inflation. The results indicate that headline M3 growth is actually much more closely related to the ongoing loss of purchasing of money power of the euro ? that is consumer and asset price inflation ? than may be widely believed. That said, for keeping inflation in check it seems advisable for the ECB to set interest rates in line with the signals provided by (trend) money supply (excess liquidity).
Nobelpreis für Wirtschaftswissenschaften 2006 an Edmund S. Phelps
(2006) Polleit, Thorsten; Geisslreither, Kai; Belke, Ansgar
Am 9. Oktober dieses Jahres gab die Königlich Schwedische Akademie der Wissenschaften (KVA) bekannt, dass der Ökonom Edmund S. Phelps mit dem Wirtschaftsnobelpreis ausgezeichnet wird. Der vorliegende Beitrag stellt die wissenschaftlichen Leistungen von Phelps vor und ordnet sie in den makroökonomischen Gesamtkontext ein. Phelps? Arbeiten haben signifikant zur Verbesserung der Theorie des makroökonomischen Politik-Designs beigetragen. Von ihm ging die Idee einer um Erwartungen modifizierten Phillips-Kurve aus; diese trug dazu bei, den Konflikt zwischen Inflation und Beschäftigung als ?Scheinkonflikt? zu entlarven. Phelps lieferte somit einen bedeutenden Beitrag für die Mikrofundierung der Makroökonomik. Phelps? zweite bedeutende makroökonomische Innovation war die Entdeckung der goldenen Regel der Kapitalakkumulation. Auch sie birgt wichtige Politikimplikationen. Die Auszeichnung von Edmund S. Phelps ist ein folgerichtiger Schritt zur Würdigung eines Ökonomen, der die moderne Makroökonomik in umfassender Weise geprägt hat.
The bazaar economy hypothesis revisited : a new measure for Germany's international openness
(2007) Wang, Lars; Belke, Ansgar; Mattes, Anselm
In this paper we argue that traditional measures of openness of an economy usually overstate the actual degree. This is due to the fact that traditional export or import shares are measured as a share of the gross domestic product. The former are expressed in gross terms, the latter in value added terms. In this way the actual interdependences between economies are overstated. We develop a new value based openness indicator that includes interregional and interindustrial dependencies. Based on a Leontief production system and input-output-tables we argue that export-induced imports of intermediate parts must be subtracted of the value of exports in order to obtain the real value added in the export sector. The same reasoning applies to the import side. We use these measures of actual openness to calculate openness indicators for Germany using GTAP data. We show that traditional measures of openness exaggerate the actual openness and argue that these new indicators are an important contribution to the debate about the German ?bazaar economy?.

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