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DIW Discussion Papers 674 / 2007
Using unit labor cost (ULC) data from Euro area countries as well as US States and German Länder we investigate inflation convergence using different approaches, namely panel unit root tests, co-integration tests and error-correction models. All in all we cannot reject convergence of ULC growth in EMU, however, country-specific deviations from the rest of the currency union are more pronounced in Europe ...
2007| Sebastian Dullien, Ulrich Fritsche
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DIW Discussion Papers 667 / 2007
Inflation differentials in the Euro area are mainly due to a sustained divergence of wage developments across the Euro area, and narrower differences in labour productivity growth (Alvarez et al., 2006). We investigate convergence of inflation using unit labour cost (ULC) growth and applying PANIC (Bai and Ng, 2004) and cluster procedures (Hobijn and Franses, 2000, Busetti et al., 2006) to Euro area ...
2007| Ulrich Fritsche, Vladimir Kuzin
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DIW Discussion Papers 664 / 2007
In this paper, we make multi-step forecasts of the annual growth rates of the real GDP for each of the 16 German Länder (states) simultaneously. Beside the usual panel data models, such as pooled and fixed-effects models, we apply panel models that explicitly account for spatial dependence between regional GDP. We find that both pooling and accounting for spatial effects helps substantially improve ...
2007| Konstantin A. Kholodilin, Boriss Siliverstovs, Stefan Kooths
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DIW Discussion Papers 660 / 2007
We analyse how money as a store of value affects the decisions of a representative household under diversifiable and non-diversifiable risks given that the central bank successfully stabilizes the rate of inflation at a low level. Assuming exponential utility allows us to derive an explicit relationship between optimal money holdings, the household's desire to tilt, smooth and stabilize consumption ...
2007| Ingrid Größl, Ulrich Fritsche
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DIW Discussion Papers 649 / 2006
In this paper we analyze the impact of the economic reforms implemented in 1980s and of the Custom Union Agreement of 1996 on the intra-industry trade in Turkey. Using the panel data for 15 trading partners of Turkey and the sample period 1970-2005, we record the positive impact of both reforms with the former reforms exercising stronger influence on the intra-industry trade measured either by the ...
2006| Sule Akkoyunlu, Konstantin A. Kholodilin, Boriss Siliverstovs
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DIW Discussion Papers 647 / 2006
I construct a new dataset with financial and housing wealth in 16 countries and investigate the effect of wealth on consumption. The baseline estimation method based on the sluggishness of consumption growth implies that the long-run marginal propensity to consume out of total wealth averaged across countries is 5 cents. I find substantial heterogeneity in the wealth effects: the individual country ...
2006| Jiri Slacalek
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DIW Discussion Papers 631 / 2006
In this paper, the process of productivity convergence is investigated for the enlarged European Union using regional (NUTS-2) data. The Solow model extended by human capital is employed as a workhorse. Alternative strategies are proposed to control for spatial effects. All specifications confirm the presence of convergence with an annual speed between 3 and 3.5 percent towards regional steady states. ...
2006| Hans-Friedrich Eckey, Christian Dreger, Matthias Türck
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DIW Discussion Papers 624 / 2006
Foreign exchange rate expectations play a central role in virtually all monetary models for the open economy. Therefore, it is extremely important to gain empirical insights into the expectations formation process. In this paper, we use a unique disaggregated data set to model the expectations of the Yen/USD exchange rate of about 50 leading foreign exchange rate professionals. The survey includes ...
2006| Christian Dreger, Georg Stadtmann
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DIW Discussion Papers 622 / 2006
In this paper we examine the interactions between the remittances of the Turkish workers in Germany and the output both in Turkey and in Germany. In our analysis we use the new data set provided by the German monetary authorities, which was never before employed in the literature and which we consider as a more reliable source than the data sets used in the other studies. We show that the remittances ...
2006| Sule Akkoyunlu, Konstantin A. Kholodilin
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DIW Discussion Papers 615 / 2006
We estimate the sticky information Phillips curve model of Mankiw and Reis (2002) using survey expectations of professional forecasters from four major European economies. Our estimates imply that inflation expectations in France, Germany and the United Kingdom are updated about once a year, in Italy about once each six months.
2006| Jörg Döpke, Jonas Dovern, Ulrich Fritsche, Jiri Slacalek