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5022. French Democracy Without Borders
- Author:
- Suzanne Berger
- Publication Date:
- 03-2002
- Content Type:
- Journal Article
- Journal:
- French Politics, Culture Society
- Institution:
- Conference Group on French Politics Society
- Abstract:
- There are intense debates in France today over globalization and its impact on democratic values and practice. The arguments retrace in many respects a much older inquiry into the compatibility of democracy and capitalism. The history of the past two hundred years suggests that despite the inequities that capitalist economies generate, the majority of the electorate has not been willing to vote out the system. Capitalism was protected, in part, by the fact that these systems were never wholly democratic, but provided constitutional protections for property. And democracy was preserved, in part, by the fact that these systems were never wholly capitalist, but in fact within national borders found a variety of solutions for blunting the impact of market forces. If globalization means a world without national borders, one may question whether this co-existence of capitalism and democracy can continue, and in fact, much of the French debate focuses on this point. This article retraces the history of the borders of France and suggests that borders are political, not geographic, constructions and as such, are far from disappearing even between the US and Canada, even within the European Union. As long as states can still regulate economic exchanges in ways that differentiate their societies from adjacent countries, borders persist. Globalization does create serious new challenges, but the stark dilemma of choosing either a world of economic openness or a world of liberal democracy does not capture the real stake and choices available to France and other democratic societies.
- Topic:
- Economics
- Political Geography:
- Europe, Canada, and France
5023. Film Review
- Author:
- Sylvie Waskiewicz
- Publication Date:
- 03-2002
- Content Type:
- Journal Article
- Journal:
- French Politics, Culture Society
- Institution:
- Conference Group on French Politics Society
- Abstract:
- For years the French film industry has fought to remain healthy in the face of overwhelming competition from American films. France has maintained its position of relative strength through a complex system of legal, political, and economic support: defending artistic creativity via the droit d'auteur, participating actively in international trade negotiations, and, perhaps most important, generously subsidizing the production, distribution, and exhibition of French films. This achievement is also made possible by those filmmakers able to produce the occasional "blockbuster": films able to compete with Hollywood on its own terms.
- Topic:
- Economics
- Political Geography:
- America
5024. Policy Activism In A Globalized Economy: France's 35-hour Workweek
- Author:
- Gunnar Trumbull
- Publication Date:
- 09-2002
- Content Type:
- Journal Article
- Journal:
- French Politics, Culture Society
- Institution:
- Conference Group on French Politics Society
- Abstract:
- Globalization is commonly thought to impede policy activism. Yet France's 35-hour workweek initiative demonstrates that globalization can, in certain circumstances, create incentives for greater policy activism. This is because economic actors experience globalization differently. The French government, facing fiscal and monetary constraints, was seeking alternative means for promoting employment. French employers, facing new foreign competition, increasingly valued workforce flexibility. And French labor unions, facing declining membership, were anxious to establish a bridgehead in new sectors of the economy. These diverse pressures of globalization, felt differently by different economic actors, created the context in which an activist labor policy could be negotiated.
- Topic:
- Economics and Government
5025. Sticky Prices, No Menu Costs
- Author:
- David Bowman
- Publication Date:
- 12-2002
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- A model that contains no costs to changing prices but in which prices do not respond to nominal shocks is presented. In models that do not feature superneutrality of money flexible price equilibria will allow certain types of monetary shocks to affect the real economy. Sticky price behavior may in fact be better at protecting the real economy from the effects of monetary shocks in such environments. This point is demonstrated in a standard monetary model with liquidity effects. An equilibrium in which sticky prices are supported without menu costs is then constructed. In equilibrium firms choose to keep prices fixed in response to nominal shocks because doing so provides a service to their customers, increasing profits by expanding the customer base.
- Topic:
- Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- United States
5026. Inflation Persistence and Optimal Monetary Policy in the Euro Area
- Author:
- Pierpaolo Benigno and J. David Lopez-Salido
- Publication Date:
- 12-2002
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- In this paper we first present supporting evidence of the existence of heterogeneity in inflation dynamics across euro area countries. Based on the estimation of New Phillips Curves for five major countries of the euro area, we find that there is significant inertial (backward looking) behavior in inflation in four of them, while inflation in Germany has a dominant forward looking component. In the second part of the paper we present an optimizing agent model for the euro area emphasizing the heterogeneity in inflation persistence across regions. Allowing for such a backward looking component will affect the evaluation of the degree of nominal rigidities relevant for the monetary policy design. We explore the welfare implications of this circumstance by comparing the adjustment of the economies and the area as a whole in response to terms-of-trade shocks under four monetary policy rules: fully optimal, optimal inflation targeting, HICP targeting and output gap stabilization.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- Europe
5027. International Monetary Policy Coordination and Financial Market Integration
- Author:
- Alan Sutherland
- Publication Date:
- 12-2002
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- The welfare gains from international coordination of monetary policy are analysed in a two-country model with sticky prices. The gains from coordination are compared under two alternative structures for financial markets: financial autarky and risk sharing. The welfare gains from coordination are found to be largest when there is risk sharing and the elasticity of substitution between home and foreign goods is greater than unity. When there is no risk sharing the gains to coordination are almost zero. It is also shown that the welfare gain from risk sharing can be negative when monetary policy is uncoordinated.
- Topic:
- Economics, Human Welfare, and International Trade and Finance
- Political Geography:
- United States
5028. Monetary Policy and the Financial Accelerator in a Monetary Union
- Author:
- Simon Gilchrist, Jean-Olivier Hairault, and Hubert Kempf
- Publication Date:
- 12-2002
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- In this paper, we consider the effect of a monetary union in a model with a significant role for financial market imperfections. We do so by introducing a financial accelerator into a stochastic general equilibrium macro model of a two country economy. We show that financial market imperfections introduce important cross-country transmission mechanisms to asymmetric shocks to supply and demand. Within this framework, we study the likely costs and benefits of monetary union. We also consider the effects of cross-country heterogeneity in financial markets. Both the presence of financial frictions and the use of a single currency have significant impacts on the international propagation of exogenous shocks. The introduction of asymmetries in the financial contract widens the difference in cyclical behavior of national economies in a monetary union, but financial integration compensates the loss of policy instruments.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- United States
5029. The Road to Adopting the Euro: Monetary Policy and Exchange Rate Regimes in EU Candidate Countries
- Author:
- Fabio M. Natalucci and Federico Ravenna
- Publication Date:
- 12-2002
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- This paper examines the choice of exchange rate regime in EU candidate countries during the process of accession to the European Monetary Union (EMU). In the presence of real exchange rate appreciation due to the Balassa-Samuelson effect, candidate countries face a trade-off between trend appreciation of the nominal exchange rate and high inflation rates. In a general equilibrium model of an emerging market economy, we show that under a fixed or heavily managed exchange rate the Balassa-Samuelson effect might prevent compliance with the Maastricht inflation criterion, unless a contractionary policy is adopted. We then discuss how the real exchange rate appreciation shifts the output gap/inflation variance trade-off, increasing the cost of managing or fixing the exchange rate. As a consequence, the requirement of membership in the Exchange Rate Mechanism (ERM-II) and the Maastricht inflation criterion constrain the policy choice while providing no additional benefit to countries credibly committed to joining the Euro. Finally, we show that relaxing either the exchange rate requirement or the inflation criterion has sharply different business cycle implications for the accession countries.
- Topic:
- Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- Europe
5030. Productivity, Investment, and Current Accounts: Reassessing the Evidence
- Author:
- Jaime Marquez
- Publication Date:
- 11-2002
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- The most widely accepted explanation for the inverse association between private investments and current accounts [Glick and Rogoff, 1995] rests on data for manufactures through 1990. Is this consensus robust to revisions to the national accounts and the expansion of information technologies since 1990? To address this question I replicate their results and I find that post 1990 developments eliminate the support for such a conclusion. I also implement alternative formulations and find, again, a lack of empirical support for their findings. Thus I examine the role of measurement errors and focus on the treatment of the manufacturing sector as representative of the whole economy and the exclusion of the contribution of capital when measuring productivity. Correcting these two measurement errors restores to Glick and Rogoff's conclusion its original strength.
- Topic:
- Economics, International Trade and Finance, and Science and Technology
- Political Geography:
- United States