International Macroeconomics in the Wake of the Global Financial Crisis

Foreword

Contents

Editors and Contributors

Introduction

1 The Slowdown in Global Growth: Supply-Side Factors

2 The Slowdown in Global Growth: Demand-Side Explanations

3 Challenges for Monetary Policy After the GFC

4 External Developments

References

Global Growth Slowdown: Supply-Side Factors

The Productivity Slowdown and the Secular Stagnation Hypothesis

1 Introduction

2 Sources of Post-war U.S. Growth

2.1 Total Factor Productivity

2.2 Human Capital

2.3 Employment Ratio

2.4 Capital-Output Ratio

2.5 Summing Up

3 Growth, Research Intensity and Size Effect

4 Insights from Economic History

4.1 TFP and Population

4.2 Human Capital

5 Conclusion

References

Growth Potential in Emerging Countries

1 Introduction

2 The Recent Growth Phases of EMEs

3 Cyclical and Structural Components of the Slowdown in Major EMEs

4 Labour Productivity

5 Labour Productivity Gains: Within- and Across-Sector Effects

6 Labour Supply: Quantity and Quality Issues

7 Conclusion

References

What are the Drivers of TFP Growth? An Empirical Assessment

1 Introduction

2 Growth Accounting Methodology and Data

3 TFP Growth Determinants

4 The Econometric Strategy

4.1 Bayesian Model Averaging (BMA)

5 Empirical Results

5.1 BMA: Pooled OLS

5.2 Advanced Versus Emerging

5.3 TFP Growth Decomposition

6 Concluding Remarks

Appendix 1. Commodities Export Price Index (CEPI)

Appendix 2. TFP Convergence

References

The Unintended Consequences of Globalization and Technological Progress

1 Introduction

2 Data

3 Evolution of Global Inequality

4 Causes of Rising Within-Country Inequality

5 Policy Options

References

Global Growth Slowdown: Demand-Side Explanations

Trade Weakness: Cycle or Trend?

1 Introduction

2 Building Intuition

3 Trade Weakness: The Cycle and the Trend

4 Forecasting Trade

5 Conclusion

References

The Role of Debt Dynamics in US Household Consumption

1 Introduction

2 Illusions About Private Consumption and Debt Sustainability

2.1 A Credit and Asset Prices Boom that Boosts US Private Consumption and GDP

2.2 An Illusion of Household Balance Sheet Sustainability Caught Back by the Deleveraging Reality

3 A Consistent Stock-Flow Approach for Debt Dynamics

4 Modelling US Private Consumption with Debt Flows Dynamics

5 Conclusions

References

Explaining Weak Investment Growth After the Great Recession: A Macro-Panel Analysis

1 Introduction

2 The Model for Investment and the Data

3 Results

3.1 Time-Invariant Coefficients: Model Selection

3.2 The Determinants of Investment Over Time: Sample Split

3.3 The Determinants of Investment over Time: Time-Varying Coefficients

4 Robustness and Further Analysis

5 Concluding Remarks

References

New Challenges for Monetary Policies at a Time of High Uncertainty, Low Inflation and Low Real Interest Rates

Uncertainty Fluctuations: Measures, Effects and Macroeconomic Policy Challenges

1 Introduction

2 Measuring Uncertainty Fluctuations

2.1 Uncertainty on Financial Markets

2.2 Micro-level Measures of Uncertainty

2.3 Economic Policy Uncertainty

2.4 Macroeconomic Uncertainty Based on Forecasting

2.5 Macroeconomic Uncertainty Based on Surveys Among Forecasters

2.6 Discussion

3 Understanding the Effects of Uncertainty Fluctuations

3.1 Irreversible Investment

3.2 Precautionary Saving

3.3 Financial Frictions

3.4 Discussion

4 Policy Implications: Three Lessons from the Literature

References

Determinants and Implications of Low Global Inflation Rates

1 Introduction

2 Global Inflation Trends

3 Determinants of Low Global Inflation

3.1 The Effect of Commodity Prices and Exchange Rates

3.2 Cyclical Sensitivity of Inflation

3.3 Influence of Global Factors on Inflation

3.4 The Role of Inflation Expectations

3.5 Empirical Analysis of the Factors Determining Inflation

4 Implications of Low Inflation

4.1 Adverse Economic Effects of Low Inflation

4.2 Monetary Policy Implications

5 Concluding Remarks

Appendix: Definitions and Sources of Variables

References

The Global Real Interest Rate: Past Developments and Outlook

1 Introduction

2 The Global Interest Rate

3 Determinants of the Global Real Interest Rate

3.1 Socio-Demographic Changes and Investment Shifts in the Advanced Economies (1980–2000)

3.2 The Growing Importance of the Emerging Market Economies (2000–2007)

3.3 The Impact of the Global Financial Crisis (2008–2015)

4 The Medium and Long-Term Outlook

References

Exchange Rate Shocks, Capital Flows and International Spillovers

The Nature of the Shock Matters: Some Model-Based Results on the Macroeconomic Effects of Exchange Rate

1 Motivation

2 ‘Good’ Versus ‘Bad’ Currency Appreciations

2.1 Literature Review

2.2 The ‘Good’ and the ‘Bad’ (in NiGEM): Model-Based Simulations

3 Lessons for the Recent Dollar and Euro Fluctuations (2014–16)

3.1 Identification of the Shocks

3.2 Macroeconomic Impact of the Dollar and Euro Shocks

4 Conclusions

References

International Financial Flows in the New Normal: Key Patterns (and Why We Should Care)

1 Introduction

2 Global Financial Flows: Dwindling to a Trickle

2.1 The Rise and Fall of Global Financial Flows

2.2 The Geographical Pattern of Global Financial Flows: Stylized Facts

3 When the Composition of Capital Flows Matters

3.1 Different Components, Different Degrees of Resilience

3.2 Changing Composition of International Financial Flows: Explanatory Factors and Implications

4 Conclusion

References

International Spillovers of Non-standard Monetary Policy: Evidence From Central and Eastern Europe

1 Introduction and Main Conclusions

2 Transmission Channels of UMPs

3 Some Stylized Facts

3.1 The ECB’s Asset Purchase Programmes

3.2 The Impact on CESEE Economies of the Series of Shocks Hitting the Euro Area

4 Empirical Results

4.1 Event Study Analysis

4.2 Longer-Term Analysis: The Portfolio Rebalancing and Banking Liquidity Channels

5 Conclusion and Policy Considerations

Appendix 1: The ECB’s Asset Purchase Programmes

Appendix 2: The ECB’s Asset Purchase Programmes

References