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Sweden represents an archetypal welfare state economy, with extensive government safety nets. Some scholars have attributed a decline in its per capita income ranking since 1970 to "eurosclerosis" or sluggish growth caused by distortionary policies. This paper argues rather, that the permanent loss in output following Sweden's banking crisis in the early 1990s explains the decline in its per capita GDP ratings. The paper finds no macroeconomic evidence that welfare state policies have deterred growth. The results warn that empirical growth analyses should distinguish between trend output growth and permanent output loss associated, for example, with financial crises.

Bank failures -- Sweden. --- Electronic books. -- local. --- Financial crises -- Sweden. --- Income distribution -- Sweden. --- Welfare state -- Sweden. --- Banks and Banking --- Foreign Exchange --- Labor --- Macroeconomics --- Aggregate Factor Income Distribution --- Financial Crises --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Demand and Supply of Labor: General --- Economic & financial crises & disasters --- Economic growth --- Currency --- Foreign exchange --- Labour --- income economics --- Income --- Banking crises --- Business cycles --- Purchasing power parity --- Labor supply --- Financial crises --- Labor market --- Sweden

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This paper reviews a number of different methods that can be used to estimate potential output and the output gap. Measures of potential output and the output gap are useful to help identify the scope for sustainable noninflationary growth and to allow an assessment of the stance of macroeconomic policies. The paper then compares results from some of these methods to the case of Sweden, showing the range of estimates.

Inflation --- Labor --- Production and Operations Management --- Business Fluctuations --- Cycles --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Macroeconomics: Production --- Unemployment: Models, Duration, Incidence, and Job Search --- Price Level --- Deflation --- Macroeconomics --- Labour --- income economics --- Potential output --- Output gap --- Unemployment --- Unemployment rate --- Production --- Prices --- Economic theory --- Sweden

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Ireland has had significant competitiveness gains in the 1990s on the basis of the standard manufacturing unit labor cost-based measure of the real effective exchange rate. A handful of sectors mostly dominated by multinational companies have accounted for the bulk of value added in production. Their productivity gains have greatly contributed to Ireland's exceptional growth performance in the 1990s, which has earned it the nickname of "Celtic Tiger." However, these sectors represent a disproportionately smaller share of manufacturing employment, and competitiveness in employment-intensive sectors has been much weaker. This paper thus explores Irish competitiveness from the viewpoint of risks to employment.

Finance: General --- Foreign Exchange --- Labor --- Industries: Manufacturing --- Globalization --- Empirical Studies of Trade --- Trade and Labor Market Interactions --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Industry Studies: Manufacturing: General --- General Financial Markets: General (includes Measurement and Data) --- Wages, Compensation, and Labor Costs: General --- Globalization: General --- Manufacturing industries --- Currency --- Foreign exchange --- Finance --- Labour --- income economics --- Manufacturing --- Real effective exchange rates --- Competition --- Labor costs --- Global competitiveness --- Economic sectors --- Financial markets --- United Kingdom

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This paper investigates whether Indonesia’s recent currency crisis was due to domestic fundamentals, common external shocks (“monsoons”), or contagion from neighboring countries. Markov-switching models attribute speculative pressure on Indonesia’s currency to domestic political and financial factors and contagion from speculative pressures in Thailand and Korea. In particular, the results from a time-varying transition probability Markov-switching model (which overcomes some drawbacks of previous methods) show that inclusion of exchange rate pressures from Thailand and Korea in the transition probabilities improves the conditional probabilities of crisis in Indonesia. There is also evidence of contagion in the stock market.

Econometrics --- Finance: General --- Foreign Exchange --- International Finance: Other --- Open Economy Macroeconomics --- International Policy Coordination and Transmission --- Macroeconomic Aspects of International Trade and Finance: Other --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- International Financial Markets --- Discrete Regression and Qualitative Choice Models --- Discrete Regressors --- Proportions --- General Financial Markets: General (includes Measurement and Data) --- Currency --- Foreign exchange --- Econometrics & economic statistics --- Finance --- Exchange rates --- Real effective exchange rates --- Probit models --- Stock markets --- Markov-switching models --- Econometric analysis --- Financial markets --- Econometric models --- Stock exchanges --- Indonesia

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We revisit the dramatic failure of monetary models in explaining exchange rate movements. Using the information content from 98 countries, we find strong evidence for cointegration between nominal exchange rates and monetary fundamentals. We also find fundamentalsbased models very successful in beating a random walk in out-of-sample prediction.

Monetary policy --- Foreign exchange rates --- Econometric models. --- Foreign Exchange --- Inflation --- Macroeconomics --- Money and Monetary Policy --- Price Level --- Deflation --- Personal Income, Wealth, and Their Distributions --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Currency --- Foreign exchange --- Monetary economics --- Exchange rates --- Personal income --- Exchange rate adjustments --- Monetary base --- Prices --- Income --- Money supply --- United States