Volume 16, Number 2, 2024

EN:

Silvio Gesell hypothesized that money depreciation is economically and socially beneficial, ideas that have often been contended. Here I analyze the spirit of his claims in a Sidrauski model in which households additionally have a ‘love of wealth’-motive. The analysis is presented in two parts, one focusing on the short and the other one on the long run. In the first part of this work these features provide the microfoundations for analyzing Gesell’s claim for the short run. Contrary to some claims it is shown Gesell’s conjectures may indeed be valid in a demand-determined, short-run equilibrium and why money depreciation overcomes the zero lower bound on nominal interest rates. These results are checked against the recent demonetization episode in India and essentially found to be true. Hence, Gesell’s hypotheses can be verified for a plausible, short-run environment and may be relevant for current economic, especially, monetary policies.

EN:

Silvio Gesell argued that ‘rusting’ money is economically and socially beneficial; that claim has often been contended. In Part II of the paper, I concentrate on the long-run implications of his ideas. I show that introducing money depreciation in isolation may be economically non-beneficial in typical long-run equilibrium. But money depreciation, when coupled with expansionary monetary policy, is a necessary condition for a positive Mundell-Tobin effect on long-run real variables and so creates wealth in the model. It is found that this also holds in the transition to the long-run equilibrium. Hence, the spirit of Gesell’s hypotheses can be verified for a plausible, long-run environment as well, and may, thus, be relevant for long-run economic policy problems.

EN:

The existing body of literature underscores the crucial role of technology, driven by both innovation and imitation, in fostering economic growth. Human capital emerges as a key factor influencing technology adoption and innovation. We consider a R&D-based growth model to analyze how improvement in schooling quality impacts technical progress (via the twin channels of imitation and innovation) and therefore, long- run economic growth of an economy by working through the influence of fertility rates and education decisions at household level. The results indicate that improvement in schooling quality triggers a child quantity-quality trade-off at the household level when quality of schooling exceeds an endogenously determined threshold. At household level, parents invest more in the education of their children and have lesser number of children. This micro-level trade-off has two opposing effects on aggregate human capital accumulation at the macroeconomy wide level. A higher investment in education of a child stimulates the accumulation of human capital, which fosters technical progress, but the simultaneous decline in fertility rate reduces total factor productivity growth by contracting the stock of human capital. The former effect prevails over the latter only when quality of schooling is higher than the threshold and therefore, economic growth is driven by rate of aggregate human capital accumulation under both innovation and imitation regimes. However, when the quality of schooling is lower than this threshold, parents do not invest in education and focus on maximizing fertility. Therefore, the economy grows at the rate of population growth at the macro level under the two regimes. Also, it is advantageous for an economy to innovate upon the local technology frontier instead of imitating from the world technology frontier if the rate of human capital accumulation is higher than the growth rate of world technology frontier in the presence of constant or diminishing returns to R&D sector.

EN:

This article provides a theoretical framework for comparing two different hiring practices: an unpaid competitive internship that is followed by a potential job offer versus a standard series of interviews. After fully characterizing the optimal hiring process, I show that high-ability minorities can be harmed by labour regulations that cause employers to shift towards a hiring process in which they are more likely to discriminate. Furthermore, preventing employers from giving truthful references is shown to exacerbate the obstacles to employment of a community traditionally facing discrimination.

EN:

This study examines the changing nature of ECB communication and how it impacts euro area financial markets over the past two decades. We applied a combination of topic modelling and sentiment analysis for over 2000 public ECB Executive Board member speeches, as well as over 200 ECB press conferences. Topic analysis revealed that the ECB’s main focus has shifted from strategy and objectives, at the inception of the euro area, to various policy actions during the global financial crisis and, later on, to policy instruments. Sentiment analysis showed a trend of a more negative communication tone during periods of turmoil and a gradual shift to a more dovish monetary policy tone over time. Regression analysis revealed that sentiment indices had the expected impact on financial market indicators, while press conferences exhibited substantially stronger effects than speeches. Among the different topics covered in policymaker speeches, only the topic on ECB instruments led to repricing in euro area markets.