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In this paper, we present a nonlinear model where the information and communication technology (ICT) sector is endogenized. In the model, there are two intermediate goods: a traditional good produced by capital and labor and the ICT good produced by innovative capital and skilled labor. The final good is obtained combining the two intermediate goods. The model is specified and estimated as continuous-time general disequilibrium framework. Our main results are the following. We find that the elasticity of substitution of the aggregate sector has a value intermediate between that of the ICT sector and that of the traditional sector, indicating that the input complementarity is tighter in the former than in the latter. Moreover, in all the sectors elasticities are well below 1. As for the traditional sector, whose share is predominant in the production of the final good, the input complementarity helps explain most of the labor share decline of Italian economy as a consequence of the slowdown in the growth of capital intensity. In the ICT sector, technological progress, both in the form of capital augmenting and capital bias, showed a decline over the sample period with an obvious negative consequence on the global evolution of the technical progress. The results about the dynamics of the two intermediate sectors allow to interpret the “Italian paradox” of an industrial structure marked by an increasing weight of the traditional sector and the difficulties encountered by the Italian economy in exiting from its actual worst recession since the 1930s.

Purpose – This paper aims to test the hypothesis that the effect of production slowdown on labour demand can be muted by labour hoarding. Design/methodology/approach – This study adopts a production function approach, using data from Malta, a small state in the EU. Findings – The results confirm the hypothesis and indicate that firms are normally prepared to employ and dismissmore workers in the long run than in the short run. Practical implications – This finding has important implications for developed countries, including that labour hoarding can be of certain relevance in times of economic slowdown as shocks are absorbed by internal flexibility. Originality/value – The results of this study add on to the existing literature in two ways. First, this study compares two industries –manufacturing and financial services– for which the former sector received support to hoard labour after the financial turmoil of 2008. Consequently, the dominance of labour hoarding in manufacturing relative to financial services is uncovered and the effect of hoarding practices on labour demand is estimated. Second, Malta is an interesting case because it is one of the smallest economies in the world and faces a high degree of vulnerability because of constraints associated with small size and insularity. As a result, firms adopt policy-inducedmeasures to minimise adjustment costs. Proposito - Este articulo pretende probar la hipotesis de que el efecto de la desaceleracion de la produccion en la demanda de mano de obra puede ser silenciado por el acaparamiento de mano de obra. Diseno/metodologia/enfoque - Este estudio adopta un enfoque de funcion de produccion, utilizando datos de Malta, un pequeno estado de la UE. Resultados - Los resultados confirman la hipotesis y muestran que las empresas normalmente estan preparadas para emplear y despedir a mas trabajadores a largo plazo que a corto plazo. Implicaciones practicas - Este hallazgo tiene implicaciones importantes para los paises desarrollados, incluido el hecho de que la acumulacion de mano de obra puede ser de cierta relevancia en tiempos de desaceleracion economica, ya que sus impactos son absorbidos por la flexibilidad interna. Originalidad/valor – Los resultados de esta investigacion se suman a la literatura existente de dos maneras. En primer lugar, este estudio compara dos industrias, la manufactura y los servicios financieros, para las cuales la primera recibio apoyo para la mano de obra acumulada despues de la crisis financiera de 2008. En consecuencia, se descubre el predominio de la acumulacion de mano de obra en la manufactura en relacion con los servicios financieros y el efecto de la acumulacion. Se estiman practicas sobre demanda laboral. En segundo lugar, Malta es un caso interesante por ser una de las economias mas pequenas del mundo que enfrenta un alto grado de vulnerabilidad debido a las limitaciones asociadas con su tamano pequeno y la insularidad. Como resultado, las empresas adoptan medidas inducidas por politicas para minimizar los costos de ajuste.

Using a disequilibrium model, we investigate the relationship between the supply constraint of electricity generation capacity and electricity demand in Taiwan. We find that electricity consumption faced supply constraints in Taiwan between 1959 and 1972, but that generation capacity grew rapidly after 1973, such that economic growth came to be the major determinant of electricity consumption. Our experience in fitting this disequilibrium model suggests that simple causality tests are not a proper means to understand the relationship between electricity consumption and economic growth. Our results also suggest, at least for developing countries, that an electricity supply constraint sometimes plays an important role when investigating the relationship between energy consumption and economic growth.

Most small businesses in the developing economies suffer from a lack of access to formal external finance. One important alternative source of finance for these entrepreneurs is trade credit. Applying a unique data-set containing data on specific trade relations between rice wholesalers and rice retailers in Tanzania, we analyse the determinants of trade credit demand and supply in this market, using a simultaneous equation modelling approach. The analysis shows that while the demand for trade credit is primarily determined by the extent to which retailers need external funds, supply is mainly driven by wholesalers' incentives to attract and keep clients. Moreover, wholesalers' willingness to provide credit increases if they have better information about the possibility that the customer will fail to repay the credit.

Market frictions or market imperfections are diverse, broadly present in most markets, and affect most transactions in the economy. These market failures may prevent buyers and sellers from trading, even if they agree on a price. This means that the central assumption of perfectly competitive markets that markets clear fails to hold, and some buyers and sellers remain unmatched. Since the 1970s, a growing literature has emerged addressing the importance of market frictions in most markets of the economy, namely in the labor, product, and credit markets. Information asymmetries, transaction costs, heterogeneous preferences, and coordination failure are examples of sources of market imperfections. In labor markets, these frictions imply that firms possess some market power over their employees and that a one cent wage cut does not lead all workers to leave the firm. In product markets, a key ingredient for the sluggish price adjustment is coordination failure among firms. Firms respond incompletely to an aggregate shock because other firms have not yet responded. In turn, asymmetric information and costly contract enforcement provide the foundations of credit market frictions, and are used to explain credit rationing as a market equilibrium. In Chapter 1 we use matched employer-employee data and firm balance sheet data to investigate the importance of firm productivity and firm labor market power in explaining firm heterogeneity in wage formation. We use a linear regression model with one interacted high dimensional fixed effect to estimate 5-digit sector-specifc elasticity of output with respect to input factors directly from the production function. This allows us to derive firm specific price-cost mark-up and elasticity of labor supply. The results show that firms possess a considerable degree of product and labor market power. Furthermore, we find evidence that a firm's monopsony power negatively affects the earnings of its workers, and firm's total factor productivity is closely associated with higher earnings, ceteris paribus. We also find that firms use monopsony power for wage differentiation between male and female workers. Chapter 2 describes price setting behavior using a very rich dataset of producer prices collected for Portuguese frms. The Industrial Producer Prices Index dataset is comprised of monthly transaction prices collected for products defuned at a detailed level. We proceed with the analysis in two steps. First, we estimate a hazard function model for the probability of a price change with high dimensional fixed effects to extensively account for product and firm-specific time-invariant heterogeneity, splitting price changes between price decreases and price increases. Second, we estimate a peer-effects model to document how market competition affects firms' price setting rules. The results suggest that the likelihood of price adjustment depends on both idiosyncratic and sectoral conditions. Furthermore, when we fully account for heterogeneity, duration dependence is estimated to be positive in the case of both a price increase and price decrease. The results of the peer-effects model suggest that firms timidly respond to their competitors' price setting behavior. Chapter 3 examines the importance of credit demand and credit supply-related factors in explaining the evolution of credit granted to Portuguese small and medium-sized enterprises (SMEs). The results suggest that the interest rate is a strong driver of SMEs' demand for bank loans, as well as their internal financing capacity. On the other hand, credit supply mostly depends on firms' ability to generate cash-flows and reimburse their debt, and on the amount of collateral. The model was estimated for the period between 2010 and 2012. The results suggest that a considerable fraction of Portuguese SMEs were affected by credit rationing in this period.

Bank credit to Egypt's private sector decreased over the last decade, despite a recapitalized banking system and high rates of economic growth. Recent macro-economic turmoil has reinforced the trend. This paper explains the decrease based on credit supply and demand considerations by 1) presenting stylized facts regarding the evolution of the banks' sources and fund use in 2005 to 2011, noting two different cycles of external capital flows, and 2) estimating private credit supply and demand equations using quarterly data from 1998 to 2011. The system of simultaneous equations is estimated both assuming continuous market clearing and allowing for transitory price rigidity entailing market disequilibrium. The main results are robust to the market clearing assumption. During the global financial crisis, a significant capital outflow stalled bank deposit growth, which in turn affected the private sector's credit supply. At the same time, the banking sector increased credit to the government. Both factors reduced the private sector's credit supply during the period under study. After the trough of the global crisis, capital flowed back into Egypt and deposit growth stopped being a drag on the supply side, but bank credit to the government continued to drive the decrease in the private sector's credit supply. Beginning in the final quarter of 2010, capital flows reversed in tandem with global capital markets, and in January 2011 the popular uprising that ousted President Hosni Mubarak added an Egypt-specific shock that accentuated the outflow. Lending capacity dragged again, accounting for 10 percent of the estimated fall in private credit. Credit to the government continued to drain resources, accounting for 70 - 80 percent of the estimated total decline. Reduced economic activity contributed around 15 percent of the total fall in credit. The relative importance of these factors contrasts with that of the preceding capital inflow period, when credit to the government accounted for 54 percent of the estimated fall, while demand factors accounted for a similar percentage.

Using a disequilibrium model, we investigate the relationship between the supply constraint of electricity generation capacity and electricity demand in Taiwan. We find that electricity consumption faced supply constraints in Taiwan between 1959 and 1972, but that after 1973 generation capacity grew rapidly, such that economic growth came to be the major determinant of electricity consumption. Our experience in fitting this disequilibrium model suggests that simple causality tests are not a proper means to understand the relationship between electricity consumption and economic growth. Our results also suggest, at least for developing countries, that an electricity supply constraint sometimes plays an important role when investigating the relationship between energy consumption and economic growth.

Tensions in the French short-Term Loan Market : A Historical Perspective. This paper assesses the tensions in the distribution of short-term loans in France in 1994-2013. It is hard to determine how much of the decrease in newloanswas due to weaker corporate demand caused by an economic slowdownand howmuch was due to credit rationing by banks. This is a key issue because each scenario calls for different public policy responses. Using a macroeconometric model, we show that tensions appeared in the wake of recessions (1994-1995 and 2009-2010), with a potential for hampering economic recovery. These episodeswere caused by credit supply shocks due to a sharp increase in bad loans amid a rise in credit demand stimulated by a revival of business activity., Cet article analyse les tensions sur le marché du crédit de trésorerie des entreprises en France de 1994 à 2013. Face à la diminution des crédits octroyés, il apparaît difficile de distinguer ce qui relève d’une baisse de la demande de crédit liée au ralentissement de l’activité ou d’une restriction de l’offre bancaire. Cette question est essentielle car les deux situations appellent des réponses différentes en termes de politiques publiques. Les résultats issus d’un modèle macro-économétrique suggèrent que les tensions sur le marché du crédit se manifestent en sortie de récession (en 1994-1995 et en 2009-2010), pouvant alors freiner la reprise économique. Ces épisodes de rationnement tiendraient à une offre restreinte, due à un surcroît de créances douteuses tandis que la demande de crédit progresse sur fond de reprise de l’activité des entreprises., Benhami Kheira, Bessec Marie, Gilquin Guillaume. Les tensions sur le marché du crédit de trésorerie en France dans une perspective historique. In: Économie & prévision, n°210, 2017. pp. 95-111.

Credit rationing results from the existence of asymmetric information, both ex ante and ex post the signing of the loan agreement. It refers to an equilibrium wherein which banks grant credit to some borrowers whereas they crowd out others that would pay nevertheless a higher interest rate. A conventional assumption is that Small and medium enterprises (SMEs) are most affected by credit crunch. We design a disequilibrium model to analyse the determinants of credit rationing upon a balanced panel of 2,370 French SMEs over the period 2002-2010. According to the estimates of simultaneous equations, the desired demand for bank credit is determined by exogenous factors from the supply-side such as interest rate and the guarantees required by banks. Banks decide to grant credit based on the means to ensure the payback of loans. The average share of rationed SMEs, whether partially or totally, is 23.46 per cent of the sample. This result suggests that access to bank loans is not a major issue for French SMEs, which have been operating for a decade. Keywords: balanced panel; credit rationing; disequilibrium model; France; SME, JEL: G21, G23, Communication au 2 ème Colloque International de Défaillance d'Entreprise (CIDE) "Quand les PME matent l'échec", Université Paris Ouest la Défense, 14 octobre 2016 Les déterminants du rationnement du crédit des PME en France: un modèle de déséquilibre sur un panel cylindré (2002-2010) Philippe ADAIR 1 et Mohamed ADASKOU 2 Résumé Le rationnement de crédit procède de l'existence de l'asymétrie d'information, à la fois ex ante et ex post à la signature du contrat de prêt. Il constitue un équilibre dans lequel les banques accordent du crédit à certains emprunteurs alors qu'elles en évincent d'autres qui pourraient néanmoins payer un taux d'intérêt plus élevé. Une hypothèse classique est que les petites et moyennes entreprises (PME) sont les plus affectées par le rationnement du crédit. Nous élaborons un modèle de déséquilibre afin d'analyser les déterminants du rationnement du crédit sur un panel équilibré de 2.370 PME françaises au cours de la période 2002-2010. Selon les estimations des équations simultanées, la demande désirée de crédit bancaire est déterminée par des facteurs exogènes du côté de l'offre, tels que le taux d'intérêt et les garanties exigées par les banques. Les banques décident d'accorder un crédit selon la capacité des emprunteurs d'assurer le remboursement des prêts. La part des PME rationnées, que ce soit partiellement ou totalement, s'élève en moyenne à 23,46% de l'échantillon. Ce résultat suggère que l'accès aux prêts bancaires n'est pas un enjeu majeur pour les PME françaises qui en sont en activité depuis une dizaine d'années. Mots-clés : France, modèle de déséquilibre, panel cylindré, PME, rationnement du crédit JEL: G21, G23

Die Kreditversorgung war im Zuge der Finanzkrise von 2008/2009 insbesondere in Deutschland Gegenstand großer Besorgnis. Die Verknappung von Krediten, besonders von Geschäftskrediten, in Kombination mit der anhaltenden Rezession führte zu einer wachsenden Furcht vor einer Kreditklemme. Dieser Beitrag analysiert die mögliche Existenz einer Kreditklemme für den Zeitraum bis Ende 2009 unter Verwendung eines Ungleichgewichtsmodells. Einer Abschwächung des Kreditwachstums können sowohl eine, rezessionsbedingt, schwache Kreditnachfrage, als auch angebotsseitige Faktoren zugrunde liegen. In diesem Beitrag werden für den Zeitraum zwischen 1991 und 2009 Kreditangebot und -nachfrage entflochten und getrennt voneinander analysiert. Das Modell weist auf eine vorübergehende angebotsseitige Verknappung der Kreditvergabe zu Beginn des Jahres 2007 hin. Die Zuführung von Liquidität in das deutsche Bankensystem im Rahmen der geldpolitischen Stützungsmaßnahmen der EZB hat jedoch schließlich geholfen, die Kreditverknappung zum Ende des Jahres 2008 zu überwinden. Des Weiteren zeigt die Schätzung des Ungleichgewichtsmodells, dass sich die Kreditmärkte zum Ende des Jahres 2009 wieder im Gleichgewicht befanden, auch wenn dieses Gleichgewicht fragil blieb. So hätte zu diesem Zeitpunkt eine weitere Verringerung des Eigenkapitals der deutschen Banken eine Kreditklemme mit entsprechenden Folgen für die konjunkturelle Erholung nach sich ziehen können. The availability of credit has been an issue of particular concern in Germany during the financial meltdown of 2008-2009. The contraction of loans, especially business loans, together with an ongoing recession led to growing fears about an upcoming shortage in lending. This study analyses the existence of a possible "credit crunch" in Germany until the end of 2009 by utilizing a disequilibrium model. The downward course of credit growth might be due to both weak demand for loans stemming from recession and supply side factors. Hence, we attempt to disentangle credit supply from demand with a disequilibrium model using quarterly data from Q1 1991 to Q4 2009. At the beginning of 2007, we observe a significant supply dependent credit shortage. Liquidity injected in the German banking system has helped to overcome credit tightening, especially towards the end of 2008.There is evidence that credit markets returned to equilibrium in Germany at the end of 2009. However, this equilibrium was still fragile. Any further deterioration of the equity capital of banks could have resulted in a supply-driven credit crunch, which would have circumvented an economic recovery.

Recent evidence on the development of corporate debt suggests that firms' leverage ratios increased enormously during the past few decades. Taking into account firms financing concerns, the present work provides a dynamic disequilibrium model that is able to generate cyclical patterns of various key economic variables. One of the main features of the model is that a dynamic law governing the evolution of investor sentiment determines firms' investment through their sales expectations according to recurrent and endogenously determined waves of optimism and pessimism. The model further incorporates commercial banks providing loans to firms with the respective lending rate exhibiting a mark-up that changes endogenously with the evolution of the firms' indebtedness. It is shown that the model generates sentiment-driven business cycle fluctuations for two economic environments that exist contemporaneously: a "normal-" and "high-indebted" regime.

Credit rationing results from the existence of asymmetric information, both ex ante and ex post the signing of the loan agreement. It refers to an equilibrium wherein which banks grant credit to some borrowers whereas they crowd out others that would pay nevertheless a higher interest rate. A conventional assumption is that Small and medium enterprises (SMEs) are most affected by credit crunch. We design a disequilibrium model to analyse the determinants of credit rationing upon a balanced panel of 2,370 French SMEs over the period 2002-2010. According to the estimates of simultaneous equations, the desired demand for bank credit is determined by exogenous factors from the supply-side such as interest rate and the guarantees required by banks. Banks decide to grant credit based on the means to ensure the payback of loans. The average share of rationed SMEs, whether partially or totally, is 23.46 per cent of the sample. This result suggests that access to bank loans is not a major issue for French SMEs, which have been operating for a decade. Keywords: balanced panel; credit rationing; disequilibrium model; France; SME, JEL: G21, G23, Communication au 2 ème Colloque International de Défaillance d'Entreprise (CIDE) "Quand les PME matent l'échec", Université Paris Ouest la Défense, 14 octobre 2016 Les déterminants du rationnement du crédit des PME en France: un modèle de déséquilibre sur un panel cylindré (2002-2010) Philippe ADAIR 1 et Mohamed ADASKOU 2 Résumé Le rationnement de crédit procède de l'existence de l'asymétrie d'information, à la fois ex ante et ex post à la signature du contrat de prêt. Il constitue un équilibre dans lequel les banques accordent du crédit à certains emprunteurs alors qu'elles en évincent d'autres qui pourraient néanmoins payer un taux d'intérêt plus élevé. Une hypothèse classique est que les petites et moyennes entreprises (PME) sont les plus affectées par le rationnement du crédit. Nous élaborons un modèle de déséquilibre afin d'analyser les déterminants du rationnement du crédit sur un panel équilibré de 2.370 PME françaises au cours de la période 2002-2010. Selon les estimations des équations simultanées, la demande désirée de crédit bancaire est déterminée par des facteurs exogènes du côté de l'offre, tels que le taux d'intérêt et les garanties exigées par les banques. Les banques décident d'accorder un crédit selon la capacité des emprunteurs d'assurer le remboursement des prêts. La part des PME rationnées, que ce soit partiellement ou totalement, s'élève en moyenne à 23,46% de l'échantillon. Ce résultat suggère que l'accès aux prêts bancaires n'est pas un enjeu majeur pour les PME françaises qui en sont en activité depuis une dizaine d'années. Mots-clés : France, modèle de déséquilibre, panel cylindré, PME, rationnement du crédit JEL: G21, G23

Straipsnyje pateikiama empirinė Lietuvos kredito rinkos procesų analizė. Sudaromi keturi vektoriniai paklaidų koregavimo modeliai, leidžiantys įvertinti ilgojo laikotarpio kredito ir makroekonominių rodiklių sąryšius, taip pat nepusiausvyros modelis, padedantis išskirti kredito pasiūlą ir paklausą lemiančius veiksnius, galiausiai – panelinių duomenų modelis, leidžiantis įvertinti, kaip kreditavimas priklauso nuo banko ypatybių. Atlikta analizė patvirtina, kad kredito rinka ir ekonomikos raida yra glaudžiai susijusios. Per pastarąjį finansinį ciklą kredito procesus gana nedaug lėmė palūkanų normos ir būsto kainos, spartus kredito augimas labiau buvo susijęs su nominaliąja konvergencija ir žemu pradiniu įsiskolinimo lygiu. Tačiau kreditas ir palūkanų normos yra svarbūs būsto kainų kilimo veiksniai. Perteklinis kredito augimas taip pat gali būti svarbus ekonominių disbalansų susidarymo veiksnys. Pagrindiniai žodžiai: kredito rinka, kredito paklausa, kredito pasiūla, pusiausvyra, nepusiausvyros modelis, vektorinis paklaidų koregavimo modelis. Monetary policy conducted by the Eurosystem, as well as micro- and macroprudential regulations implemented by the Bank of Lithuania have a significant impact on credit market developments in Lithuania. In order to ensure effectiveness of policy interventions, it is necessary to gain a deeper understanding about the workings of the local credit market, its empirical regularities, the relationship between credit and the broader economy, and key drivers behind credit market activity. The present paper is aimed at adressing some of these issues. To this end, we develop a suite of simple empirical models: four vector error-correction models (VECMs) allow us to analyse dynamic and cointegrating relationships between credit and various macroeconomic variables, the disequilibrium model sheds light on credit supply and demand conditions in Lithuania over the last decade, wheareas the panel regression model explains bank lending activity with the help of both macroeconomic and bank-specific variables. VECM results suggest that the Lithuanian credit market activity is closely linked to housing prices and the overall level of economic activity. In contrast, the role of nominal interest rates in determining credit activity over the financial cycle was found to be quite modest: during the credit boom, gradually rising interest rates had a modest dampening effect on credit market activity, whereas in the post-crisis period an extremely favourable interest environment did not instantly ignite credit market buoyancy. One of the more important drivers behind strong credit growth during the better half of the previous decade was a low initial price level (also linked to low initial wage and indebtedness levels), which created a strong potential for nominal convergence and credit market deepening. VECM analysis also provides interesting insights into the role of credit in endogenous relationships with other economic variables. There are indications that plentiful and cheap credit might lead to increases in house prices, whereas the positive impact of rising house prices on credit is less pronounced. Likewise, credit fluctuations do a much better job in explaining the variation in bank deposits, as opposed than vice versa. Positive credit shocks also lead to postitive changes in investment, corporate earnings and overall economic activity but credit developments can only explain a relatively small part of the general variation in these variables. Strong credit growth is a precursor to a rise in economic imbalances, for instance, in the form of current account deficits. The credit supply and demand disequilibrium model reveals that credit supply in Lithuania positively depends on the rates of return on capital, banks‘ net borrowing from abroad and housing prices, and negatively depends on interest rate margins. Also, prior to the financial crisis, the credit supply was positively related to the level of capital in the banking system; however this was no longer the case after the crisis, when the system as a whole became very well capitalised. Credit demand is positively related to real economic activity and investment, and negatively linked to housing prices and real interest rates. The panel regression model yields quite similar results. Notably, the model does not show significant differences in the lending activity of domestically and foreign-owned banks, except that the latter can effectively boost their lending activity by borrowing from their parent institutions.

In this paper we present a non-linear model where ICT sector is endogenized. In the model there are two intermediate goods: a traditional good produced by capital and labor and the ICT good produced by innovative capital and skilled labor. The final good is obtained combining the two intermediate goods. The model is specified and estimated as continuous-time general disequilibrium framework. Our main results are the following. We find that the elasticity of substitution of the aggregate sector has a value intermediate between that of the ICT sector and that of the traditional sector, since the input complementarity is tighter in the former than in the latter. Moreover, in all the sectors elasticities are well below 1. As for the traditional sector, whose share is predominant in the production of the final good, the input complementarity helps explain most of the labour share decline of Italian economy as a consequence of the slowdown in the growth of capital intensity. In the ICT sector, technological progress, both in the form of capital augmenting and capital bias, showed a decline over the sample period with an obvious negative consequence on the global evolution of the technical progress. The results about the dynamics of the two intermediate sectors allows to interpret the "Italian paradox" of an industrial structure marked by an increasing weight of the traditional sector.

International audience; We use a disequilibrium model to estimate credit rationing to Small and Medium-sized Enterprises (SMEs) on the Tunisian bank credit market. Based on a panel dataset of 1,275 SMEs over the period 2001-2006, results show that the demand for bank credit is not determined by " endogenous " factors, i.e. the activity level and internal available resources of SMEs, but rather by " exogenous " factors, i.e. the cost of financing and guarantees required by banks. The latter, especially real guarantees, explain to a large extent the lack of bank lending and results in an average share of 80% — partially or totally — credit rationed SMEs.

We identify a disconnect between historical and model-based assessments of the costs of currency pegs due to nominal rigidities. While the former attribute major contractions and massive unemployment to currency pegs, the latter find miniscule welfare losses. The goal of this paper is to reconcile these two assessments. We refocus attention to downward wage inflexibility as the central source of nominal rigidity. More importantly, our model departs from existing sticky wage models in the Calvo-Rotemberg tradition in that employment is not always demand determined. This departure creates an endogenous connection between macroeconomic volatility and the average level of unemployment and in this way opens the door to large welfare gains from stabilization policy. In a calibrated version of the model, an external crisis, defined as a two-standard-deviation decline in tradable output and a two-standard-deviation increase in the country interest rate premium, causes the unemployment rate to rise by more than 20 percentage points under a peg. Currency pegs are shown to be highly costly also during regular business-cycle fluctuations. The median welfare cost of a currency peg is 4 and 10 percent of consumption per period.

This study focuses on the credit market in the Czech Republic. The aim of this paper is to carry out an econometric investigation of supply and demand on the credit market and to predict the development in the future. The first part of the paper briefly characterizes the credit market in the Czech Republic. As a result of banking crisis, the growth rate of credits provided to private sector has decreased sharply and is recovering only gradually. It has caused many problems especially to nonfinancial companies. Next chapter discuss the essence of disequilibrium model. Credit markets are very often characterized by the fact that the interest rate does not clean the market and the discrepancy between credit demand and credit supply occurs. The fact that it is impossible to measure credit demand and credit supply quantities can be solved by the use of disequilibrium model. In the framework of disequilibrium model, the credit demand and credit supply functions are estimated under the restriction that the minimum of the two determines credit. The last chapter describes the data used and the empirical findings. The analysis is based on quarterly data covered the period from the first quarter of 1994 to the fourth quarter of 2006. Based on parameter estimates, the volume of credit demand and credit supply is calculated and compared with the actual volume of credit. The future development of the Czech credit market is predicted.

The aim of this paper is to analyse how banking firms set their capital ratios, that is, the rate of equity capital over assets. In order to study this isue, two theoretical models are developed. Both models deal with the existence of an optimal capital ratio; the first one for firms not affected by capital adequacy regulation, the second one for firms which are. The models have been tested by estimating a disequilibrium model using data of Spanish savings banks.

The aim of this paper is to analyse how banking firms set their capital ratios, that is, the rate of equity capital over assets. In order to study this issue, two theoretical models are developed. Both models deal with the existence of an optimal capital ratio; the first one for firms not affected by capital adequacy regulation, the second one for firms which are. The models have been tested by estimating a disequilibrium model using data of Spanish savings banks.