Stefan Krause

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NBER Working Papers and Publications

January 2006Assessing the Sources of Changes in the Volatility of Real Growth
with Stephen G. Cecchetti, Alfonso Flores-Lagunes: w11946
In much of the world, growth is more stable than it once was. Looking at a sample of twentyfive countries, we find that in sixteen, real GDP growth is less volatile today than it was twenty years ago. And these declines are large, averaging more than fifty per cent. What accounts for the fact that real growth has been more stable in recent years? We survey the evidence and competing explanations and find support for the view that improved inventory management policies, coupled with financial innovation, adopting an inflation targeting scheme and increased central bank independence have all been associated with more stable real growth. Furthermore, we find weak evidence suggesting that increased commercial openness has coincided with increased output volatility.

Published: Stephen G Cecchetti & Alfonso Flores-Lagunes & Stefan Krause, 2005. "Assessing the Sources of Changes in the Volatility of Real Growth," RBA Annual Conference Volume, in: Christopher Kent & David Norman (ed.), The Changing Nature of the Business Cycle Reserve Bank of Australia.

December 2004Has Monetary Policy Become More Efficient? A Cross Country Analysis
with Stephen G. Cecchetti, Alfonso Flores-Lagunes: w10973
Over the past twenty years, macroeconomic performance has improved in industrialized and developing countries alike. In a broad cross-section of countries inflation volatility has fallen markedly while output variability has either fallen or risen only slightly. This increased stability can be attributed to either: 1) more efficient policy-making by the monetary authority, 2) a reduction in the variability of the aggregate supply shocks, or 3) changes in the structure of the economy. In this paper we develop a method for measuring changes in performance, and allocate the source of performance changes to these two factors. Our technique involves estimating movements toward an inflation and output variability efficiency frontier, and shifts in the frontier itself. We study the change from th...

Published: Cecchetti, Stephen G., Alfonso Flores-Lagunes and Stefan Krause. "Has Monetary Policy Become More Efficient? A Cross-Country Analysis," Economic Journal, 2006, v116(511,Apr), 408-433. citation courtesy of

November 2004Deposit Insurance and External Finance
with Stephen G. Cecchetti: w10908
Countries around the world differ substantially in the relative importance of their banks and capital markets in providing investment financing. This paper examines one potential explanation for the cross-country differences in the importance of banks and capital market financing of investment. It is our contention that much of the variation across countries in the depth and breadth of capital markets can be explained by a combination of the existence of deposit insurance and the extent to which a country's banking system is state owned. We provide both an equilibrium model predicting and empirical evidence showing that countries with explicit deposit insurance and a high degree of state-owned bank assets have smaller equity markets, a lower number of publicly traded firms and a smaller am...

Published: Cecchetti, Stephen G. and Stefan Krause. "Deposit Insurance And External Finance," Economic Inquiry, 2005, v43(3,Jul), 531-541. citation courtesy of

July 2001Financial Structure, Macroeconomic Stability and Monetary Policy
with Stephen G. Cecchetti: w8354
Over the past twenty years, macroeconomic performance has improved markedly in industrialized and developing countries alike. Both inflation and real growth are more stable now than they were in the 1980s. This stability has been accompanied by dramatic changes in financial structure. We examine the connection between these concurrent events using data from 23 developed and emerging markets countries. There are a number of possible explanations for the widespread improvement in economic outcomes over the past two decades. There is the very real possibility that the world has become a more stable place. Alternatively, monetary policymakers may have become more skillful in carry out their stabilization objectives. That is, the monetary policy of the 1990s may have been more efficient than it...
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