Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

We argue that strong globalization forces have been an important determinant of global real interest rates over the last five decades, as they have been key drivers of changes in the natural real interest rate—i.e. the interest rate consistent with output at its potential and constant inflation. An important implication of our analysis is that increased competition in goods and labor market since the 1970s can help explain both the large increase in real interest rates up to the mid-1980s and—as globalization forces mature and may even go into reverse, leading to incrementally rising market power—its subsequent and protracted decline accompanied by lower inflation. The analysis has important implications for monetary policy and the optimal pace of normalization.

Globalization. --- Global cities --- Globalisation --- Internationalization --- International relations --- Anti-globalization movement --- Banks and Banking --- Labor --- Production and Operations Management --- Globalization --- Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection --- Computable and Other Applied General Equilibrium Models --- General Aggregative Models: Forecasting and Simulation --- Interest Rates: Determination, Term Structure, and Effects --- Financial Markets and the Macroeconomy --- Monetary Policy --- Globalization: Macroeconomic Impacts --- Globalization: General --- Demand and Supply of Labor: General --- Macroeconomics: Production --- Finance --- Labour --- income economics --- Macroeconomics --- Real interest rates --- Labor markets --- Long term interest rates --- Productivity --- Financial services --- Production --- Interest rates --- Labor market --- Industrial productivity --- United States --- Income economics

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Globalization, Market Power, and the Natural Interest Rate.

E-books

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

We study the properties of the IMF-WEO estimates of real-time output gaps for countries in the euro area as well as the determinants of their revisions over 1994-2017. The analysis shows that staff typically saw economies as operating below their potential. In real time, output gaps tend to have large and negative averages that are largely revised away in later vintages. Most of the mis-measurement in real time can be explained by the difficulty in predicting recessions and by overestimation of the economy’s potential capacity. We also find, in line with earlier literature, that real-time output gaps are not useful for predicting inflation. In addition, countries where slack (and potential growth) is overestimated to a larger extent primary fiscal balances tend to be lower and public debt ratios are higher and increase faster than projected. Previous research suggests that national authorities’ real-time output gaps suffer from a similar bias. To the extent these estimates play a role in calibrating fiscal policy, over-optimism about long-term growth could contribute to excessive deficits and debt buildup.

Business cycles. --- Economic cycles --- Economic fluctuations --- Cycles --- Inflation --- Macroeconomics --- Public Finance --- Production and Operations Management --- Measurement and Data on National Income and Product Accounts and Wealth --- Environmental Accounts --- Price Level --- Deflation --- Business Fluctuations --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Forecasts of Budgets, Deficits, and Debt --- Macroeconomics: Production --- Fiscal Policy --- Output gap --- Fiscal stance --- Potential output --- Fiscal policy --- Production --- Prices --- Economic theory --- France

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

German wages have not increased very rapidly in the last decade despite strong employment growth and a 5 percentage point decline in the unemployment rate. Our analysis shows that a large part of the decline in unemployment was structural. Micro-founded Phillips curves fit the German data rather well and suggest that relatively low wage growth can be largely attributed to low inflation expectations and low productivity growth. There is no evidence – from either aggregate or micro-level administrative data – that large immigration flows since 2012 have had dampening effects on aggregate wage growth, as complementarity effects offset composition and competition effects.

Germany --- Labor --- Emigration and Immigration --- 'Panel Data Models --- Spatio-temporal Models' --- Price Level --- Inflation --- Deflation --- Wages, Compensation, and Labor Costs: General --- Mobility, Unemployment, and Vacancies: General --- International Migration --- Unemployment: Models, Duration, Incidence, and Job Search --- Demand and Supply of Labor: General --- Wage Level and Structure --- Wage Differentials --- Labour --- income economics --- Migration, immigration & emigration --- Wages --- Migration --- Labor markets --- Unemployment --- Unemployment rate --- Population and demographics --- Emigration and immigration --- Labor market --- Income economics --- Panel Data Models --- Spatio-temporal Models