Volume 219, Issue 5-6

Capital market forecasts sometimes suffer from a too intense orientation towards the current market situation and lose their future-orientated character. This phenomenon can be referred to as Topical Orientated Trend Adjustment (GOVA). For an individual statistic proof we develop a new instrument called GOVA coefficient. In a second step we combine the GOVA coefficient with the conventional forecast quality measure of Theil’s inequality coefficient. The result is the Forecast Quality Matrix. With this instrument, it is possible to verify whether the examined forecast is better or worse than the naive forecast and to exclude a Topical Orientated Trend Adjustment. This results in four different possibilities: 1. The forecast considering the future is an ideal case. This forecast is significantly better than a naive forecast and is not influenced by the market situation during the making of the forecast. 2. The quasi-naive forecast is characterized by a Topical Orientated Trend Adjustment, but is not better than the naive forecast. 3. The wrong forecast does not reflect the past, but unfortunately not even the future. 4. The direction-orientated forecast follows the past, but mostly indicates the correct market trend. This classification facilitates the evaluation of the practicability of forecasts and points out the reasons for a possibly lacking forecast accuracy.

A high natural rate of unemployment has been identified by the time inconsistency literature as the root cause of an inflation bias. Thus, a reduction of equilibrium unemployment and of the inflation bias requires fundamental reforms of labour market institutions. However, there has been little research on how participation in different monetary regimes affects incentives in favour of them. Here an extended Barro-Gordon model is used where monetary policy and the reforms are determined simultaneously. Impacts of different monetary regimes on labour markets crucially depend on the degree of the inflation bias and on the extent of its internalisation by national governments. However, some opponents to a monetary rule hold the prior that a monetary rule serves as a substitute for labour-market reform. Therefore, it does not lower unemployment significantly and leads to lower welfare than discretionary policy. This view is clearly rejected by our model. It is shown that a monetary rule generally leads to a higher total economy welfare than discretionary policy. Under the latter, an overshooting of reforms can be observed because reforms are needed more pressingly and a monetary rule is a superior (and ideally a perfect) instrument to internalise the inflation bias.

Models which are built on the assumption of rational expectations can easily outline the conditions under which bubbles may exist but they remain silent on the factors that cause the price to deviate from the fundamental value. In this paper it is argued that dynamic extensions of the noise trader model of De Long et al. (1990a) may provide a behavioral explanation of persistent deviations of stock prices from their fundamental value if changing fundamentals and especially fundamental shocks are included. As a consequence the pattern and the sustainability of bubbles also depend on noise traders’ reaction to fundamental shocks. In the multi period extension of the noise trader model developed in the paper noise traders’ behavior is captured by two components. First, there is a fundamentally unwarranted optimism about the future development of dividends independent of the recent development of fundamentals. Second, noise traders overreact to an average of recent dividend shocks, which results in waves of optimism or pessimism that create high price volatility. The model shows that sustainable bubbles are slowly growing, while large overreactions to fundamental shocks will result in fast growing but frequently bursting bubbles. Zusammenfassung Modelle, in denen den Akteuren rationale Erwartungen unterstellt werden, können zwar angeben, unter welchen Bedingungen rationale Blasen existieren, aber sie können deren Entstehung nicht erklären. In diesem Aufsatz wird aufgezeigt, dass eine dynamische Erweiterung des Noise-Trader-Modells von De Long et al. (1990a), in dem fundamentale Schocks auftreten, eine mögliche Erklärung für die Entstehung und Entwicklung von längerfristigen Abweichungen der Aktienkurse von ihren Fundamentalwerten liefert. Gemäss dem Modell sind Blasen nur dann beständig, wenn die “Noise Trader” keine zu starken Überreaktionen auf fundamentale Schocks zeigen und von den Schocks unabhängige positive Erwartungen besitzen.

The article deals with increasing reliance of public economic policy on a few indicators, demonstrated at the public deficit ratio in national accounts. Background is the problem of adequacy between theory and measurement. Some controversial accounting rules concerning the timing and sectoring of government transactions are analysed. Finally the use and misuse of the accounting system is discussed.

The paper presents stylized facts of Euroland’s business cycle using aggregated data. The main results are: The determination of turning points in Euroland’s business cycle is not very sensitive to the detrending method used, although the level of the recent output gap depends on it. Investment, net exports and stock building explain the largest share of the swings in real GDP. The types of expenditures - except for net exports - are pro-cyclical with almost no lag or lead. The results for monetary variables are mixed. Prices are counter-cyclical, whereas labour productivity and real wages are pro-cyclical. The cyclical component of industrial production in all member countries shows a positive and over time increasing correlation coefficient with the one in the rest of Euroland. Zusammenfassung Die Untersuchung präsentiert stilisierte Fakten des Konjunkturzyklus in Euroland, die unter Verwendung aggregierter Daten für das Gebiet der Währungsunion ermittelt wurden. Die Festlegung konjunktureller Wendepunkte erfolgt mit Hilfe verschiedener Verfahren zur Trendbereinigung. Die Investitionen, die Exporte und die Vorratsinvestitionen zeigen die stärksten zyklischen Schwankungen, zeigen aber weder Vor- noch Nachläufe in bezug auf die gesamtwirtschaftliche Produktion. Die Ergebnisse in bezug auf monetäre Variable sind nicht eindeutig. Das Preisniveau ist antizyklisch, Arbeitsproduktivität und Reallöhne hingegen prozyklisch. Die Trendabweichungen der Industrieproduktion der einzelnen Teilnehmerländer zeigen eine zunehmende Korrelation mit der entsprechenden Größe für den jeweiligen Rest von Euroland.

This paper presents a scoping investigation of environment-friendly innovation, price and policy signals in Germany. The variables for sustainable innovation (special patent indicators) and for rational expectations (real crude oil import costs and expenditures for environmental protection) are cointegrated and need respective econometric treatment. The aim is to shed some light on the issue whether price signals spur innovation processes in the long run and how, in the short run, the interactions in innovation per environmental sector (waste treatment, water protection, noise reduction and clean air) function. The results show that the market mechanisms are distinct: In the long run, the pace of technical progress for energy and resource saving follows the lead price signal, whereby the couplings occur immediately. Yet, within the single environmental sectors, a variety of short-term interaction patterns is observed. Not always is it technical progress that spurs cost reactions, but there is an influence of government regulation and procurement, too. Most distinct observations offers the study of the interactions in the clean air policies of the past 15 years which did change a lot. Most of the rational expectations on measures and their impact came true.

This paper applies multivariate linear discriminant analysis to classify West German business cycles from 1955 to 1994 into a four phase scheme (upswing, downswing, and upper/lower turning point phases). It describes the scheme as well as the selection of the classifying variables, and presents classification results for various sample periods confirming the four phase scheme. Special attention is given to changes of the explanatory power of the variables and its implication for changes of cycle patterns. While for the 1963/94 period the results display all in all much stability, the 1955/62 period does not fit into this pattern, indicating a change of regime which might even reach into the fourth cycle (1963-1967). Zusammenfassung Die Arbeit ordnet mit Hilfe der multivariaten linearen Diskriminanzanalyse die westdeutsche Konjunkturentwicklung von 1955 bis 1994 in ein Vierphasenschema (Aufschwung, Abschwung, untere/obere Wendepunktphase). Sie beschreibt das Schema sowie die Auswahl der verwendeten Klassifikationsvariablen und präsentiert die Klassifikationsresultate für verschiedene Stichprobenzeiträume. Das Vierphasenschema wird dabei im wesentlichen bestätigt. Besondere Bedeutung wird dem Wandel der Erklärungskraft der einzelnen Variablen und ihrer Bedeutung für den Wechsel der Zyklenmuster beigemessen. Während für den Zeitraum 1963/94 die Ergebnisse insgesamt als vergleichsweise stabil anzusehen sind, paßt der Zeitraum 1955/62 nicht in dieses Muster, was auf einen Wechsel vor allem im vierten Zyklus (1963 bis 1967) hindeutet.

Using Kaldor’s business cycle model we show how a chaotic system with limited resources can be controlled in the general case where the equilibrium which we want to stabilize is not a saddle point. This problem has considerable economic relevance because it cannot be assumed that equilibria can always be characterized by a saddle point. We choose the volume of public investment as the control variable. It turns out that particular properties of chaotic systems can be applied advantageously to control the economy. These systems therefore inhibit more flexibility than traditional non chaotic models.

The Treaty of Amsterdam has enlarged the acquis communautaire of the European Union by a chapter concerning the common employment strategy. It focuses on the co-ordination of active measures. In this paper it is examined, whether active labour market policy may cause problems, which only occur in a monetary union and necessitate the co-operation of the member states on the European level. Indeed, the so-called stability pact impedes new debts and the lack of nominal exchange rates as an instrument of adjustment intensifies intra-Union tax competition. The resulting sub-optimal level of active labour market policy can be raised by financial co-operation. On the other hand, a centralised employment strategy is the consequence of political efforts to involve the European Central Bank (ECB). If the ECB resists the political pressure and concentrates on internal price stability, fiscal co-ordination will lead to an excessive use of active labour market policy and affect European competitiveness on the world markets. Eventually, social costs will be higher than in the non-co-operative equilibrium.

The prominent position of Carl Menger in the history of economics is mainly seen in his contribution in the subjective theory of value. In this article Menger's analysis of competition is examined and it is suggested that he understood competition as a dynamic process. All elements of the modern process-oriented analysis of competition along evolutionary lines are contained in his work: the emphasis of the process and not of the end-state to which competition might lead, the variety of action parameters, the creation and diffusion of knowledge, the role of time and finally the growth aspects of the competitive procedure.

It has been argued that the increasing labour market participation of married women with children can be understood as a process of gender despecialization which is not in accordance with the propositions of the production theoretic approach to household behaviour. The idea of this paper is to show that - by extending the production theoretic model beyond the limits of neoclassical thinking - it is possible to explain non-specialization within the framework of the economic approach to family behaviour so that it is not necessary to have recourse to "non-economic" reasoning. In order to do this a linear model of time use and consumption within families is developed. This model explains processes of specialization and despecialization within families in a context of restrictions in the labour market, consumption demands and characteristics of the consumption technology of the household. A multidimensional time concept is used. Implications of joint consumption are taken into account. The method consists in simulating alternative constellations of data starting from a linear optimization model which is based on the tradition of the Lancasterian theory of consumption. The results show that non-specialization is not in contrast to conclusions which can be drawn from production theoretic modelling.

Just 13 years passed away since a complete census was hold in Germany. The struggling discussions in the German public about the last census in 1987 had a long lasting effect on politics that there was no desire to renew this debate. In 1997 EUROSTAT advised the members of the European Union to hold a census about the year 2001 under equal conditions. German politics and the official statistics were such forced to deal with the problems concerned. In the following text some traditional aspects of the census will be carried out and the stations of the recent developments on the way to a new kind of census in Germany about the year 2001 + x years are reported in detail.