Debt, Recovery Rates and the Greek Dilemma
Most discussions of the Greek debt overhang have focussed on the implications for Greece. We show that when additional funds released to the debtor (Greece), via debt restructuring, are used efficiently in pursuit of a practicable business plan, then both debtor and creditor can benefit. We examine a dynamic two country model calibrated to Greek and German economies and support two-steady states, one with endogenous default and one without, depending on creditors expectations. In the default steady state, debt forgiveness lowers the volatility of both German and Greek consumption whereas demanding higher recovery rates has the opposite effect.
The Corporate entrepreneurship has been becoming one of the most powerful approaches in the developing processes of the Open economy by growing technological changes to the modern and successful enterprises. In the current article it is shown two models of the corporate entrepreneurships and personnel policy matching human resources to the corporate strategy of innovation oriented enterprises. The article shows the main role and duties of the Innovation managers in the Open economy and Open innovation models.
Venture capital (VC) provides financial and managerial support for new innovative ideas at the initial stages of commercialization. It has helped to find the market for many radical innovations of 20th century, including personal computer, Internet and genetic engineering.
As a part of market economy venture business was not stable from the very beginning. The periods of rapid growth alternated with deep recessions. However each time VC revived anew as the Phoenix due to its very important function in modern knowledge-based economy.
This report presents an analysis of statistical data that prove the existence of several cycles in VC dynamics in the USA and the Great Britain. The main factors of these cycles formation are discussed. The author proposes two possible scenarios of development of VC market for the first 30 years of the new 21st century. A hypothesis is put forward about the relation between VC cycle's amplitude and a phase of Kondratieff's cycle.
The paper represents the review of contemporary approaches to the analysis of financial market imperfections and financial crises and their impact on fluctuations of the key macroeconomic variables during the business cycle as well as the transmission mechanism of financial shocks on the real economy in the framework of New Keynesian dynamic stochastic general equilibrium models. These models are widely used for the evaluation of monetary policy effects on macroeconomy and constitute the theoretical base for elaboration the optimal monetary policy not only during the crisis but for the further perspective. The construction of such models types for different economies including the Russian economy requires considering the institutional features and specific development and functioning characteristics of the of the national financial sector and economy as a whole.
The welfare analysis of the monetary policy has been in the centre of macroeconomics since the Great Depression. Empirical observations of the Phillips curve suggest that prices are sticky in the short run and, therefore, the monetary policy may be used to smooth the business cycle and increase social welfare.
In an open economy where foreign shocks may be passed into the domestic economy the task of the monetary policy becomes even more complicated. Under high pass-through of exchange rate onto the domestic prices, monetary policy stops to be independent and should adjust to exchange rate shocks. Such a policy of smoothing exchange rate fluctuations is common in western economies (e.g. [Parsley, Popper, 1998]).
The problem of optimal monetary policy is extremely relevant for Russia. Although the monetary authority claims that inflation targeting is the main goal of the monetary policy, empirical finding suggest that the real exchange rate targeting is of major importance [Vdovichenko, Voronina, 2004]. Due to the rising flow of petrodollars, Rouble is experiencing significant real appreciation recently. But the fear to loose exports makes the monetary authority respond to this real appreciation by accumulating dollar reserves and increasing the money supply, thus preventing the nominal appreciation. Such policy leads to high inflation and benefits of some interested groups at the expense of others. That is why the optimal degree of intervention is in the centre of all political and economic discussions nowadays.
Recent empirical literature finds that prices are more sticky downwards than upwards. This effect it called «asymmetric price rigidity» and may result from money illusion of workers, collusive behaviour of firms or search behaviour of consumers. Therefore, in this paper we propose a model in which we assume downward price rigidity and determine the optimal monetary policy in case of positive and negative exchange rate shocks. We claim that while depreciation of the domestic currency should be accompanied by a significant rise in the interest rate, its appreciation of the same size should be accompanied by a much smaller cut in the interest rate. Then we test this claim on the Russian data.
This thought-provoking monograph analyzes long- medium- and short-term global cycles of prosperity, recession, and depression, plotting them against centuries of important world events. Major research on economic and political cycles is integrated to clarify evolving relationships between the global center and its periphery as well as current worldwide economic upheavals and potential future developments. Central to this survey are successive waves of industrial and, later, technological and cybernetic progress, leading to the current era of globalization and the changes of the roles of both Western powers and former minors players, however that will lead to the formation of the world order without a hegemon. Additionally, the authors predict what they term the Great Convergence, the lessening of inequities between the global core and the rest of the world, including the wealth gap between First and Third World nations.
Among the topics in this ambitious volume:
· Why politics is often omitted from economic analysis.
· Why economic cycles are crucial to understanding the modern geopolitical landscape.
· How the aging of the developed world will affect world technological and economic future.<
· The evolving technological forecast for Global North and South.
· Where the U.S. is likely to stand on the future world stage.
Economic Cycles, Crises, and the Global Periphery will inspire discussion and debate among sociologists, global economists, demographers, global historians, and futurologists. This expert knowledge is necessary for further research, proactive response, and preparedness for a new age of sociopolitical change.
This volume focuses on the analysis and measurement of business cycles in Brazil, Russia, India, China and South Africa (BRICS). Divided into five parts, it begins with an overview of the main concepts and problems involved in monitoring and forecasting business cycles. Then it highlights the role of BRICS in the global economy and explores the interrelatedness of business cycles within BRICS. In turn, part two provides studies on the historical development of business cycles in the individual BRICS countries and describes the driving forces behind those cycles. Parts three and four present national business tendency surveys and composite cyclical indices for real-time monitoring and forecasting of various BRICS economies, while the final part discusses how the lessons learned in the BRICS countries can be used for the analysis of business cycles and their socio-political consequences in other emerging countries.