One money with several cycles? Evaluation of European business cycles using cluster analysis. ACES Cases No. 2009.3

Optimal currency area theory suggests that business cycle comovement is a sufficient condition for monetary union, particularly if there are low levels of labour mobility between potential members of the monetary union. Previous studies of co-movement of business cycle variables (mainly authored by Artis and Zhang in the late 1990s) found that there was a core of member states in the EU that could be grouped together as having similar business cycle comovements, but these studies always used Germany as the country against which to compare. In this study, the analysis of Artis and Zhang is extended and updated but correlating against both German and euro area macroeconomic aggregates and using more recent techniques in cluster analysis, namely model-based clustering techniques.

Konjunktúraingadozások az Egyesült Államokban 1970-2010 - Értelmezési nehézségek = Business cycles and recession patterns in the US economy and in the G7

Lehet-e beszélni a 2011-ig felgyülemlett empirikus tapasztalatok tükrében egy egységes válságlefolyásról, amely a fejlett ipari országok egészére általában jellemző, és a meghatározó országok esetében is megragadható? Megállapíthatók-e olyan univerzális változások a kibocsátás, a munkapiacok, a fogyasztás, valamint a beruházás tekintetében, amelyek jól illeszkednek a korábbi tapasztalatokhoz, nem kevésbé az ismert makromodellek predikcióihoz? A válasz – legalábbis jelen sorok írásakor – nemleges: sem a válság lefolyásának jellegzetességeiben és a makrogazdasági teljesítmények romlásának ütemében, sem a visszacsúszás mértékében és időbeli kiterjedésében sincsenek jól azonosítható közös jegyek, olyanok, amelyek a meglévő elméleti keretekbe jól beilleszthetők. A tanulmány áttekinti a válsággal és a makrogazdasági sokkokkal foglalkozó empirikus irodalom – a pénzügyi globalizáció értelmezései nyomán – relevánsnak tartott munkáit. Ezt követően egy 60 év távlatát átfogó vizsgálatban próbáljuk megítélni a recessziós időszakokban az amerikai gazdaság teljesítményét azzal a célkitűzéssel, hogy az elmúlt válság súlyosságának megítélése kellően objektív lehessen, legalább a fontosabb makrováltozók elmozdulásának nagyságrendje tekintetében. / === / Based on the empirical evidence accumulated until 2011, using official statistics from the OECD data bank and the US Commerce Department, the article addresses the question whether one can, or cannot, speak about generally observable recession/crisis patterns, such that were to be universally recognized in all major industrial countries (the G7). The answer to this question is a firm no. Changes and volatility in most major macroeconomic indicators such as output-gap, labor market distortions and large deviations from trend in consumption and in investment did all, respectively, exhibit wide differences in depth and width across the G7 countries. The large deviations in output-gaps and especially strong distortions in labor market inputs and hours per capita worked over the crisis months can hardly be explained by the existing model classes of DSGE and those of the real business cycle. Especially bothering are the difficulties in fitting the data into any established model whether business cycle or some other types, in which financial distress reduces economic activity. It is argued that standard business cycle models with financial market imperfections have no mechanism for generating deviation from standard theory, thus they do not shed light on the key factors underlying the 2007–2009 recession. That does not imply that the financial crisis is unimportant in understanding the recession, but it does indicate however, that we do not fully understand the channels through which financial distress reduced labor input. Long historical trends on the privately held portion of the federal debt in the US economy indicate that the standard macro proposition of public debt crowding out private investment and thus inhibiting growth, can be strongly challenged in so far as this ratio is neither a direct indicator of growth slowing down, nor for recession.

Agency theory and the family business

The conceptual domain of agency theory is one of the dominant organisational theory perspectives applied in current family business research (Chrisman et al., 2010). According to agency theory (Jensen and Meckling, 1976), agency costs generally arise due to individuals’ selfinterest and decision making based on rational thinking and oriented toward own preferences. With more people involved in decision making, such as through the separation of ownership and management, agency costs occur due to different preferences and information asymmetries between the owner (principal) and the employed management (agent) (Jensen and Meckling, 1976). In other words, agents take decisions based on their individual preferences (for example, short term, financial gains) instead of the owners’ preferences (for example, long term, sustainable development).

Behavioural theory and the family business

Fifty years have passed since Cyert and March’s 1963 A Behavioral Theory of the Firm. During this time, BTOF has been adopted across different research domains to investigate how organizations set goals, how they determine aspirations and how they finally react to performance aspiration discrepancies. Cyert and March’s framework has also recently emerged as one of the dominant paradigms to understand the ways in which family business organizations make decisions. In this chapter, I review the theoretical development and empirical results of BTOF and its application in the family business field of study in order to identify theoretical and empirical gaps and propose suggestions for future research. The conclusions suggest that BTOF is both a theoretically and empirically valid perspective in family business research, particularly when combined with other theoretical frameworks. The principal recommendation is to apply behavioral theory to enhance scholarly understanding of  how family organisations define their aspiration levels and respond to organizational problems. 

Critical pedagogy theory and the family business

In contemporary times family business research has been dominated by three theoretical perspectives; principal-agent theory, stewardship theory, and resource-based view theory (Siebels 2012) but at the same time scholars argue that what still needs further attention is how underlying processes and phenomena can be explained (Melin, Nordqvist & Sharma  2014). In order to understand themes such as repression or relations of asymmetry the suggestion in this chapter is to move towards a critical stance of thinking which involves problematizing the obvious issues in family firms (Alvesson & Deetz 2000) and moreover allowing the critical perspective to destabilize assumptions made within earlier research (Freire, 1974). By discussing critical theory in general but foremost the Freirean  (1970, 1974) critical pedagogy specifically, the arguments in the chapter revolves around how critical pedagogy can open up for a more novel view on family business. The purpose is via critical pedagogy discuss family business from a limited situation perspective, and to argue for a Freirean (1970) dialogue as means of developing a critical consciousness for family members in the family business context. The chapter concludes with some recommendations on platforms or common grounds in which dialogue and raising of consciousness can occur in which the concept can open up possibilities for interesting learning transfer and bring multidimensional knowledge into the family firm.

Gender theory and the family business

Gender Theory started in understanding and explain women's role in society and are also now including men and masculinities, Gender Theory has recently been adapted to family business research. This chapter will briefly introduce Gender Theory and its development, before reviewing how it has been used in family business research. Arguing that the family business context is suitable in studying gender phenomena, the chapter outlines several ways through which Gender Theory could yield new insights into issues, of how family business structures, settings and practices produce relations of power or asymmetry. A common approach so far to the study of gender in family business situations is to consider ‘gender as a variable’, which maintains the categorisation of women and men as a relevant and unproblematic variable. Many analyses of family businesses that also address gender focus on feminist ‘standpoint positions’, giving voice to women´s unique experiences. Often in family business research, the dominant approach is to conceive gender in terms of limited male/female distinctions rather than by reframing family business through critical positions, with the aim of reflection and sensitivity towards gender issues in terms of the socially constituted patterns that are produced through male/female, masculine/feminine distinctions. Concluding, the chapter suggests a possible methodology for capturing gendered processes and proposes how family business research could offer new insights into Gender theory.

Steepness and deepness in the Australian macroeconomy

This study uses nonparametric tests - the triples test and the BDS test, to examine whether key Australian macroeconomic aggregates exhibit nonlinearities and important 'steepness' and 'deepness' asymmetries at the business cycle frequency. Evidence is found of nonlinearities but there is little evidence of deepness in the Australian macroeconomy. However, there is evidence of steepness, especially concerning labour market variables, as well as both the CPI and M3. The evidence suggests that unemployment (employment) rises (falls) rapidly in recessions and only recovers slowly over time. Also, positive asymmetries in M3 are reflected in similar asymmetries in the CPI but not in output, consumption or investment.

Liquidity, business cycles and monetary policy: A simulation

A Masters Thesis, presented as part of the requirements for the award of a Research Masters Degree in Economics from NOVA – School of Business and Economics

Asset Prices, Business Cycles, and Markov-Perfect Fiscal Policy when Agents are Risk-Sensitive

We study a business cycle model in which a benevolent fiscal authority must determine the optimal provision of government services, while lacking credibility, lump-sum taxes, and the ability to bond finance deficits. Households and the fiscal authority have risk sensitive preferences. We find that outcomes are affected importantly by the household's risk sensitivity, but not by the fiscal authority's. Further, while household risk-sensitivity induces a strong precautionary saving motive, which raises capital and lowers the return on assets, its effects on fluctuations and the business cycle are generally small, although more pronounced for negative shocks. Holding the stochastic steady state constant, increases in household risk-sensitivity lower the risk-free rate and raise the return on equity, increasing the equity premium. Finally, although risk-sensitivity has little effect on the provision of government services, it does cause the fiscal authority to lower the income tax rate. An additional contribution of this paper is to present a method for computing Markov-perfect equilibria in models where private agents and the government are risk-sensitive decisionmakers.

News Shocks and Business Cycles: Bridging the Gap from Different Methodologies

An important disconnect in the news driven view of the business cycle formalized by Beaudry and Portier (2004), is the lack of agreement between different—VAR and DSGE—methodologies over the empirical plausibility of this view. We argue that this disconnect can be largely resolved once we augment a standard DSGE model with a financial channel that provides amplification to news shocks. Both methodologies suggest news shocks to the future growth prospects of the economy to be significant drivers of U.S. business cycles in the post-Greenspan era (1990-2011), explaining as much as 50% of the forecast error variance in hours worked in cyclical frequencies

Are There Classical Business Cycles?

The aim of this paper is to test formally the classical business cycle hypothesis, using data from industrialized countries for the time period since 1960. The hypothesis is characterized by the view that the cyclical structure in GDP is concentrated in the investment series: fixed investment has typically a long cycle, while the cycle in inventory investment is shorter. To check the robustness of our results, we subject the data for 15 OECD countries to a variety of detrending techniques. While the hypothesis is not confirmed uniformly for all countries, there is a considerably high number for which the data display the predicted pattern. None of the countries shows a pattern which can be interpreted as a clear rejection of the classical hypothesis.

International business cycles, financial markets and household production

This paper investigates the properties of an international real business cycle model with household production. We show that a model with disturbances to both market and household technologies reproduces the main regularities of the data and improves existing models in matching international consumption, investment and output correlations without irrealistic assumptions on the structure of international financial markets. Sensitivity analysis shows the robustness of the results to alternative specifications of the stochastic processes for the disturbances and to variations of unmeasured parameters within a reasonable range.

Do institutions and culture matter for business cycles?

We examine the relationship between institutions, culture and cyclical fluctuations for a sampleof 45 European, Middle Eastern and North African countries. Better governance is associated withshorter and less severe contractions and milder expansions. Certain cultural traits, such as lack ofacceptance of power distance and individualism, are also linked business cycle features. Businesscycle synchronization is tightly related to similarities in the institutional environment. Mediterraneancountries conform to these general tendencies.

Does money matter in shaping domestic business cycles? An international investigation (with appendices)

We study the contribution of money to business cycle fluctuations in the US,the UK, Japan, and the Euro area using a small scale structural monetary business cycle model. Constrained likelihood-based estimates of the parameters areprovided and time instabilities analyzed. Real balances are statistically importantfor output and inflation fluctuations. Their contribution changes over time. Models giving money no role provide a distorted representation of the sources of cyclicalfluctuations, of the transmission of shocks and of the events of the last 40 years.

Man-bites-dog business cycles

The newsworthiness of an event is partly determined by how unusual it isand this paper investigates the business cycle implications of this fact. In particular, weanalyze the consequences of information structures in which some types of signals are morelikely to be observed after unusual events. Such signals may increase both uncertainty anddisagreement among agents and when embedded in a simple business cycle model, can helpus understand why we observe (i) occasional large changes in macro economic aggregatevariables without a correspondingly large change in underlying fundamentals (ii) persistentperiods of high macroeconomic volatility and (iii) a positive correlation between absolutechanges in macro variables and the cross-sectional dispersion of expectations as measuredby survey data. These results are consequences of optimal updating by agents when theavailability of some signals is positively correlated with tail-events. The model is estimatedby likelihood based methods using individual survey responses and a quarterly time seriesof total factor productivity along with standard aggregate time series. The estimated modelsuggests that there have been episodes in recent US history when the impact on outputof innovations to productivity of a given magnitude was more than eight times as largecompared to other times.