R. Tamborini

Following the end of the Bretton Woods system faith in a freely floating exchange rate regime, and in particular the complete Laissez-faire policy of the US after 1980, was supported by a large and influential literature - the so-called "stock theory of the exchange rate" - which has had almost absolute dominance in the field. The present work is of primarily a theoretical nature, calling attention to the recent drastic change of opinion regarding the efficiency of foreign exchange markets, of expectations and speculation. In contrast to the previously held belief, agents that anticipate the market are now accused of inefficient, if not irrational behaviour; they are said to be misinterpreting or violating the "hard data" that should lead the market on the path of equilibrium. According to the author, this new vein is challenging, yet the new "bad" deus ex machina is as unconvincing as its "good" predecessors. Thus, the focus is precisely on t...

... 8-3-2012 1 Revised version. I thank professors Velupillai and Zambelli for their comments and corrections during the seminar Page 2. 2 ... apparatus for thinking about these things, but it doesn't mean that this replacement apparatus can do it either” (Lucas, 2004, p. 23). ...

Dopo la fine del sistema di fede, di Bretton Woods in un regime di cambio liberamente fluttuante, e in particolare la completa politica di laissez-faire degli Stati Uniti dopo il 1980, è stata sostenuta da una letteratura vasta e influente - la cosiddetta "teoria il punto della cambio "- che ha avuto predominio quasi assoluto nel campo. Il presente lavoro è di natura teorica in primo luogo, richiamando l'attenzione sul recente cambiamento drastico di opinione per quanto riguarda l'efficienza dei mercati dei cambi, delle aspettative e speculazioni. In contrasto con la credenza precedentemente detenuta, gli agenti che anticipano il mercato sono ora accusati di inefficiente, se non il comportamento irrazionale; si dice che essere mal interpretare o violare i "dati concreti", che dovrebbero portare il mercato sul sentiero di equilibrio. Secondo l'autore, questa nuova vena è impegnativo, ma il nuovo "cattivo" deus ex machina è convincente come i ...

... a consigliarlo, quale che fosse il Principe, a come «far girare» il mondo per il verso giusto), orgogliosi di poter giustificare la loro fretta d'agire ... Un esempio estremo ne è stata L'eco-nomia politica del rentier di N. Bucharin, che ha verificato la teoria dell'utilità margi-nale come ...

This paper examines the reform of fiscal rules in the European Economic and Monetary Union (EMU), in particular the Stability and Convergence Plans (SCP) of public debts. The focus is on factors of heterogeneity and interdependence in the key variables of growth and interest rates. By means of dynamic models of the debt/GDP ratio in a multi-country setup, the paper shows how these factors may jeopardize the main goal of fostering convergence and keeping debt/GDP ratios equalized and stable over time, especially in case of uncoordinated implementation of large SCPs across member countries. Controlling for these factors in practice may be quite demanding, but the key flaw is that they are almost entirely ignored in the SGP institutional framework that therefore requires a different approach.

This paper examines the new SGP rules that should govern fiscal policies of the EMU member countries by means of dynamic models of the debt/GDP ratio. The focus is on factors of heterogeneity and interdependence in the three key variables that may affect the debt/GDP evolution in a multi-country setup like a monetary union: the real growth rate, the inflation

Purpose – The purpose of this paper is to explain why some countries in the eurozone between 2010 and 2012 experienced a dramatic vicious circle between hard austerity plans and rising default risk premia. Were such plans too small, and hence non-credible, or too large, and hence non-sustainable? These questions have prompted theoretical and empirical investigations in the line of the so-called “self-fulfilling beliefs”, where beliefs of unsustainability of fiscal adjustments, and hence default on debt, feed higher risk premia which indeed make fiscal adjustments less sustainable. Design/methodology/approach – Detecting the sustainability factor in the evolution of spreads is uneasy because it is largely non-observable and may be proxied by different variables. In this paper, the authors present the results of a dynamic principal components factor analysis (PCFA) applied to a panel data set of the 11 major EZ countries from 2000 to 2013, consisting of each country’s spread of long-t...

ABSTRACT The New Neoclassical Synthesis (NNS) provides the established macroeconomic foundation for monetary policy. The Great Recession has, however, unveiled a number of unresolved issues. Prominent scholars have stressed the connections of the NNS with the founders of macroeconomic thought, Wicksell and Keynes. Our main contention is that the NNS fails to consider, and learn from, the hallmark of Wicksell's and Keynes's approaches to business cycles, namely investment–saving imbalances (ISI). Systematic studies of macroeconomic instability, and notably the Great Recession, give prominence to this phenomenon. Drawing on Wicksell's and Keynes's insights, this paper provides a framework to deal with ISI and monetary policy according to modern theoretical standards and techniques (e.g. agents seek to optimize intertemporally and markets clear). Section 2 of the paper clarifies some basic theoretical issues underlying the NNS vis‐à‐vis Wicksell and Keynes. Section 3 presents a dynamic model whereby it is possible to assess some basic issues concerning the macroeconomics of ISI that are at variance with the NNS. Section 4 shows how system stabilization can be achieved by means of a ‘Wicksellian’ interest‐rate rule, which, however, displays dynamic features and conditions that differ from the current NNS consensus. Central banks may thus learn that ISI deserve careful symptom monitoring, and that they require greater attention to the dynamic stability of choices of policy reaction functions.