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This paper studies optimal monetary and fiscal policies in an economy à la Lucas and Stokey (1983) and Lagos and Wright (2005) with multiple cash and credit goods. We show that optimal policies are in general time inconsistent due to insufficient number of instruments to influence future government decisions. There are two important cases where time consistency can be restored. First, if taxes in the decentralized anonymous markets are not available, the multipliers on the decentralization constraints can be utilized as additional instruments to ensure time consistency. Second, if taxes in decentralized markets are available, time consistency arises when the different cash goods satisfy the conditions necessary for optimal uniform taxation.

In this paper, we investigate the causes and consequences of “unclaimed” unemployment insurance (UI) benefits. A search model is developed where the costs to collecting UI benefits include both a traditional “fixed” administrative cost and an endogenous cost arising from worker and firm interactions. Experience rated taxes give firms an incentive to challenge a worker's UI claim, and these challenges are costly for the worker. Exploiting data on improper denials of UI benefits across states in the U.S. system, a two‐way fixed effects analysis shows a statistically significant negative relationship between the improper denials and the UI take‐up rate, providing empirical support for our model. We calibrate the model to elasticities implied by the two‐way fixed effects regression to quantify the relative size of these UI collection costs. The results imply that on average the costs associated with firm challenges of UI claims account for 41% of the total costs of collecting, with improper denials accounting for 8% of the total cost. The endogenous collection costs imply the unemployment rate responds much slower to changes in UI benefits relative to a model with fixed collection costs. Finally, removing all eligibility requirements and allowing workers to collect UI benefits without cost shows these costs to be 4.5% of expected output net of vacancy costs. Moreover, this change has minimal impact on the unemployment rate. Unemployment insurance take‐up rate experience rating matching frictions search E61 J32 J64 J65

This paper studies the welfare properties of mutual funds in a Diamond–Dybvig economy with two sources of aggregate risk: (i) shocks to long-term investment returns; and (ii) shocks to aggregate liquidity demand. Mutual funds are inefficient when the long-term investment is risky. Mutual funds improve upon autarky by introducing a wedge between the market and technological rates of return. However, the wedge distorts the decisions of consumers not facing liquidity shocks, and the resulting equilibrium is inefficient. If only aggregate liquidity demand is subject to shocks, mutual funds can implement the social optimum (even when liquidity demand is not directly observable) by means of a price-contingent dividend policy.

The so-called Troika, consisting of the EU-Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF), was supposed to support the member states of the euro area which had been hit hard by a sovereign debt crisis. For that purpose, economic adjustment programs were drafted and monitored in order to prevent the break-up of the euro area and sovereign defaults. The cooperation of these institutions, which was born out of necessity, has been partly successful, but has also created persistent problems. With the further increase of public debt, especially in France and Italy, the danger of a renewed crisis in the euro area was growing. The European Stability Mechanism (ESM) together with the (strongly politicized) European Commission will replace the Troika in the future, following decisions of the EU Summit of December 2018. It shall play the role of a European Monetary Fund in the event of a crisis. The IMF, on the other side, will no longer play an active role in solving sovereign debt crises in the euro area. The current course is, however, inadequate to tackle the core problems of the euro zone and to avoid future crises, which are mainly structural in nature and due to escalating public debt and lack of international competitiveness of some member countries. The current Corona crisis will aggravate the institutional problems. It has led to a common European fiscal response ("Next Generation EU"). This rescue and recovery program will not be financed by ESM resources and will not be monitored by the ESM. One important novelty of this package is that it involves the issuance of substantial common European debt.

The purpose of the “counter-cyclical capital buffer” (buffer) is to dampen procyclicality in the financial system, absorb capital losses and prevent a credit crunch during recessions. In this paper, a stylized analytical expression for optimal buffer policy is presented. Results are derived within a minimalist model framework, useful for a transparent presentation of how authorities’ preferences and structural parameters have implications for optimal buffer policy. In the model, there is a risk of a financial crisis, and an ex ante higher buffer may counteract the effects of it on the economy. The buffer also affects output in the short term, and here the difference between banks’ actual capital coverage ratio and capital requirements plays a role. Under quite general conditions, authorities will want to lower the buffer and allow banks to be less well capitalized today if the output gap is negative. The model illustrates that unless authorities care also about a stable bank capital coverage ratio (in addition to output stabilization and the costs of crisis), optimal policy may prescribe a very volatile buffer. In particular, that is the case if the effect of the buffer on output is weak. This result highlights the importance of learning more about the effects of buffer policy in order to achieve good policy design.

The authors examine the effectiveness of labor cost reductions as a means to stimulate economic activity and assesses the differences which may occur with the prevailing exchange rate regime. They develop a medium-scale three-region DSGE model and show that the impact of a cut in the employers’ social security contributions rate does not vary significantly under different exchange rate regimes. They find that both the interest rate and the exchange rate channel matters. Furthermore, the measure appears to be effective even if it comes along with a consumption tax increase to preserve long-term fiscal sustainability. Finally, they assess whether obtained theoretical results hold up empirically by applying the local projection method. Regression results suggest that changes in employers’ social security contributions rates have statistically significant real effects – a one percentage point reduction leads to an average cumulative rise in output of around 1.3 percent in the medium term. Moreover, the outcome does not differ significantly across the different exchange rate regimes.

Promoting the decarbonization of economic activity through climate policies raises many questions. From a macroeconomic perspective, it is important to understand how these policies perform under uncertainty, how they affect short-run dynamics and to what extent they have distributional effects. In addition, uncertainties directly associated with climate policies, such as uncertainty about the carbon budget or emission intensities, become relevant aspects. We study the implications of emission reduction schemes within a Two-Agent New-Keynesian (TANK) model. This quantitative exercise, based on data for the German economy, provides various insights. In the light of frictions and fluctuations, compared to other instruments, a carbon price (i.e. tax) is associated with lower volatility in output and consumption. In terms of aggregate welfare, price instruments are found to be preferable. Conditional on the distribution of revenues from climate policies, quantity instruments can exert regressive effects, posing a larger economic loss on wealth-poor households, whereas price instruments are moderately progressive. Finally, we find that unexpected changes in climate policies can induce substantial aggregate adjustments. With uncertainty about the carbon budget, the costs of adjustment are larger under quantity instruments., CEPA Discussion Papers; 33

A well-known time-inconsistency problem hinders optimal decision-making when policymakers are constrained in their pesent choices by expectations of future outcomes. The time-inconsistency problem is caused by differences in the preferences of policymakers who exist at different points in time. Adapting the arguments of Rawls (1971), we propose that these differences can be eliminated if policy is set from behind a 'veil of ignorance', without knowledge of when the policy will be implemented. We set up a well-defined choice problem that captures this normative perspective. The policies that it generates have a number of appealing properties.

This paper investigates how best to determine time-invariant policy rules in macroeconomic models with forward-looking constraints, where fully optimal policy is known to be time-inconsistent. It proposes a new 'coefficient optimisation' approach that improves upon the timeless perspective method of Woodford (2003) in deterministic problems, and on average in stochastic problems, without resorting to asymptotic ('unconditional') loss comparisons.

This paper presents empirical evidence of asymmetric fiscal policy along the business cycle, using a real-time panel data on 19 OECD countries. We estimate various specifications of fiscal policy rules, in which ex ante fiscal policy has two major objectives: macroeconomic stabilization and fiscal consolidation. First, we find that a symmetric fiscal policy rule may not be an accurate representation of real-time fiscal policy. We find evidence in favor of asymmetric fiscal policy, in particular regarding the response to output gap. Second, fiscal policy appears to be generally procyclical in downturns and a-cyclical in upturns, typically in the Euro Area and during the crisis. Third, we do not find significant evidence of a procyclical fiscal consolidation in the OECD and the Euro Area, although surplus-debt feedback coefficients are generally larger in downturns. Our results are robust to an alternative measure of business cycle and to country exclusion.

The presence of the lagged shadow policy rate in the interest rate feedback rule reduces the government spending multiplier nontrivially when the policy rate is constrained at the zero lower bound (ZLB). In the economy with policy inertia, increased inflation and output due to higher government spending during a recession speed up the return of the policy rate to the steady state after the recession ends. This in turn dampens the expansionary effects of the government spending during the recession via expectations. In our baseline calibration, the output multiplier at the ZLB is 2.5 when the weight on the lagged shadow rate is zero, and 1.1 when the weight is 0.9.

I show how the evolution of bank capital depends on the share of non-state-contingent assets in banks’ balance sheets and present the implications for macroeconomic dynamics. State-contingent securities impact on banks’ balance sheets through changes in their returns (and their prices), both of which depend on the current state of the economy. Non-state-contingent assets are signed before shocks are realized and their repayment is guaranteed. For this reason, they insulate banks’ balance sheets from recent economic activity in the absence of defaults. Non-state-contingent assets in banks’ balance sheets attenuate the amplification of shocks resulting from financial frictions. The same effect can be achieved if more weight is placed on the state-contingent assets in the equity related constraint against the costs of long-run output losses.

We estimate the Smets and Wouters (2007) model augmented with the Gertler and Karadi (2011) financial intermediation sector on US data by using real and financial observables. Given the framework of the estimated model, we address the question whether and how standard monetary policy should interact with macroprudential policy in order to safeguard real and financial stability. For this purpose, monetary policy is described by a flexible inflation targeting regime using the interest rate as instrument, while the macroprudential regulator adopts a tax/subsidy on bank capital in a countercyclical manner in order to stabilize nominal credit growth and the output gap. We look at the gains from coordination between the central bank and the macroprudential regulator under alternative assumptions regarding the degree of importance assigned to output gap fluctuations in the macroprudential mandate. The results suggest that there can be considerable gains from coordination if the macroprudential regulator has been assigned a sufficiently high weight on output gap stabilization, i.e. the common objective with monetary policy. If, on the other hand, the main focus of the macroprudential mandate is on credit growth, the macroprudential policy maker can reach better outcomes, while the central bank does worse, in the absence of coordination. Therefore, whether and to which extent monetary policy gains from coordination with the macroprudential regulator depends on the relative weight assigned to output fluctuations in the macroprudential mandate. Our counterfactual analysis further confirms the effectiveness of the countercyclical macroprudential tax/subsidy in containing the amplification effects triggered by a financial shock, and suggests that having a macroprudential regulatory tool at work could have successfully avoided the massive drop in credit such as the one observed at the onset of the Great Recession.

With its public debt amounting to 132.1% of GDP and its negative productivity growth over the last twenty years, Italy appears to be the sick man of the European Union. In this Policy brief, we focus on its two main plights: high public debt burden on the one hand, sluggish GDP and productivity growth on the other hand. Both issues are intimately related: a slow growth limits the budgetary margins and casts doubts on public debt sustainability; the reduced fiscal space in turn weighs on growth and public investment. The first part is dedicated to describing the history and causes of Italian public debt. A first phase, from the 1960s to the 1980s, was characterized by a positive but moderate growth of debt. A second phase saw the explosion of public debt, from 54% of GDP in 1980 to roughly 117% in 1994. The budget law of the Amato's government in 1992 initiated a third phase, marked by a significant fiscal consolidation effort, and the decrease of the public debt to GDP ratio. The Great Recession interrupted this consolidation era and a last phase began from 2008 on, when the public debt-to-GDP ratio consequently increased. In the second part, we review some of the structural weaknesses of the Italian economy. We notably emphasize the specialization bias towards low tech sectors, the “nanism” of Italian firms, the misallocation of talents and resources, the North-South divide and its related labor market consequences. We conclude with four policy recommendations for a revival of growth in Italy. Our first proposal is technical and proposes a new European fiscal golden rule which would remove specific public investments from the computation of structural primary balance. Our second and third proposals are related to the regulation of the labor market, with the introduction of a minimum wage on the one hand, and the facilitation of retraining policies on the other hand. Last, we call for a revival of industrial policies in order to foster knowledge accumulation and firm learning. Our view is that Italy's fate is inextricably related to Europe's and that Italy needs more rather than less Europe.

This paper analyzes the implications of distortionary taxation and debt financing for optimal government spending policy in a sticky-price economy where the nominal interest rate is subject to the zero lower bound constraint. Regardless of the type of tax available and the initial debt level, optimal government spending policy in a recession is characterized by an initial increase followed by a reduction below, and an eventual return to, the steady state. The magnitude of variations in the government spending as well as their welfare implications depend importantly on the available tax instrument and the initial debt level.

We investigate a new macroprudential policy in a DSGE model with fi?nancial frictions. As Gertler, Kiyotaki and Queralto (2012), we propose to subsidize bank equities. However, our tax rate is different from their policy. The tax rate in our macroprudential policy is proportional to capital ratio gap while it is proportional to the shadow price of bank deposit in Gertler et al. (2012). Our policy has two advantages: Firstly, because bank?s balance sheet structure is observable target for central bank, our policy is more applicable for practical policy design. Secondly, our policy makes individual banks choose to raise more capital. While it tightens the moral hazard constraint, the policy could raise the future value of investment and it shows the modi?fied policy is welfare dominant.

This paper builds on the Lucas' (1973) signal extraction model to study the time-varying effect of uncertainty in the output-inflation trade-off on inflation, using a monetary model with asymmetric central bank preferences whereby deviations of output (relative to target) from above are weighted differently from deviations from below. The model is investigated empirically using data from the South African Reserve Bank (SARB). We show that the implication of the uncertainty element is to cause the authority to change its indirect control, output by less (and hence change it direct control, interest rate by less) whenever inflation is below or above the target, in line with Brainard's attenuation principle. We also find that SARB's asymmetric output stabilization explains inflation movements significantly, and that the monetary authority seems to be more averse to business cycle recessions than expansions, hence more keen to avoid recessions than expansions. Overall, a more transparent and committed monetary policy practice that would reduce uncertainty over the output-inflation trade-off would be helpful for economic stability.

This paper is aimed at revisiting monetary analysis in order to better understand erroneous choices in the conduct of monetary policy. According to the prevailing consensus, the market economy is intrinsically stable and is upset only by poor behaviour by government or the banking system. We maintain on the contrary that the economy is unstable and that achieving stability requires a discretionary economic policy. This position relies upon an analytical approach in which monetary and financial organisations are devices that help markets to function. In this perspective, which focuses on the heterogeneity of markets and agents, and, consequently, on the role of institutions in determining overall performance, it turns out that nominal rigidities and financial commitment offer the means to achieve economic stability. This is because they prevent successive, unavoidable disequilibria from becoming explosive.

L’article est dédié à reconsidérer l’analyse monétaire afin de mieux comprendre des choix erronés dans la conduite de la politique monétaire. Suivant le consensus en vigueur, l’économie de marché est intrinsèquement stable, étant seulement perturbée par les mauvais comportements du gouvernement et des banques. Nous maintenons, au contraire, que cette économie est instable et que la stabiliser requiert une politique économique discrétionnaire. Une telle position repose sur une approche analytique suivant laquelle l’organisation monétaire et financière des échanges est un outil qui facilite le fonctionnement des marchés Suivant cette perspective centrée sur l'hétérogénéité des marchés et des agents, et donc sur le rôle des institutions dans la détermination de la performance globale, il apparaît que les rigidités nominales et l'engagement financier sont les moyens qui assurent la stabilité de l’économie. La raison est que ces mesures empêchent les déséquilibres successifs et inévitables d’être explosifs.

We revisit the main building blocks of the theoretical models underlying the monetary policy consensus before the Great Recession. We highlight how the failure of these models to prevent the crisis and to provide guidance during the recession were due to the excessive confidence in the ability of markets to coordinate demand and supply, and to the neglect of the role of finance. Furthermore, we outline the main elements of an alternative approach to monetary policy that put emphasis on the processes driving coordination in markets, and on the externalities transmitted by financial inter-linkages. Many elements of this new approach are captured by new classes of models, namely, agent-based and financial network models. We discuss some insights from these models for the conduct of monetary policy, and for its interactions with fiscal and macroprudential policies.

We show that firms’ individually optimal liquidity management results in socially inefficient boom-and-bust patterns. Financially constrained firms decide on the level of their liquid resources facing cash-flow shocks and time-varying investment opportunities. Firms; liquidity management decisions generate simoultaneous waves in aggregate cash holdings, in market value of liquidity and in investment even if technology remains constant, consistently with firm-level and aggregate evidence. These investment waves are not constrained efficient in general, because the social and private value of liquidity differs. The resulting pecuniary externality affect incentives differentially depending on the state of the economy. There is often overinvestment in booms and underinvestment in recessions. In general, policies targeted to raise prices in recessions to mitigate underinvestment, make overinvestment in booms worse. However, a well designed price-support policy will increase welfare both in booms and in recessions.

This paper investigates the relationship between bubbles and government bailouts. Contrary to the previous literature about bailouts, it shows that bailouts for bursting bubbles may positively influence ex-ante production efficiency and relax the existence condition of stochastic bubbles. The level of bailouts has a non-monotonic relationship with production efficiency and not full bailouts but a "partial bailout" policy achieves production efficiency. Moreover, it examines the welfare effects of bailout policies rigorously. The welfare of rescued entrepreneurs is an increasing function of bailout level, but the welfare of taxpayers (workers) shows a non-monotonic relation with bailout level. It shows that even non-risky bubbles may be undesirable for taxpayers.

In the year 2015 the European Union has reached the halfway of implementation of Europe 2020 strategy, which is aimed at forming the conditions for sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion. In this context the aim of the paper is to analyze the level of fulfillment its aims with special concentration on diversity between New Member States that joined European Union in 2004 and 2007 (EU-10) and Old European Union Members (EU-15). The empirical part of the paper is based on the taxonomic research with application of zero-unitarization method. In order to make the dynamic analysis for the years 2004-2013 the constant reference point for the whole period was used. The evaluation was based on the Eurostat Europe 2020 indicators. The analysis showed significant diversity between New and Old Member States. However, in the years 2004-2013 EU-10 had made an important progress in the implementation of Europe 2020 strategy.Keywords: Europe 2020 strategy, multivariate analysis, zero-unitarization method.JEL Classification : C00, E61, 052(ProQuest: ... denotes formulae omitted.)IntroductionIn the year 2015 the European Union has reached the halfway of implementation of Europe 2020 strategy. The plan constitutes the second in this century ten-year strategy, which is aimed at building the conditions for sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion. As the foundation for the Europe 2020 strategy three mutually reinforcing priorities were formed: a) Smart growth: developing an economy based on knowledge and innovation; b) Sustainable growth: promoting a more resource efficient, greener and more competitive economy. c) inclusive growth: fostering a high-employment economy delivering social and territorial cohesion (European Commission 2010, p. 3).Europe 2020 document is a continuation of the Lisbon Strategy announced at the beginning of this century, which was aimed at improving conditions for sustainable economic development described with the formula "to become the most competitive and dynamic economy in the world; based on knowledge, capable of sustainable economic growth with more and better jobs and greater social cohesion" (see Royuela-Mora et al., 2005, pp. 54-58; Lenain, 2005, pp. 9-31). The Lisbon Strategy was adopted during the significant economic changes associated with development of the global knowledge-based economy, which was accompanied by very high rate of economic growth achieved by the United States (see Balcerzak, 2009, pp. 3-22). It was an ambition of political and economic elites of the European Union to create the conditions, which would allow Europe to "catch up" of the United States in terms of the development of conditions for using the potential of knowledgebased economy. Unfortunately, already in the halfway of the Lisbon strategy, it was clear that the achievement of its objectives is impossible (Mogensen, 2005, pp. 46-49). In this time many representatives of European political elites were in favor of the view that the failure of Lisbon strategy implementation should be mainly treated as a consequence of European Union enlargement and the structural diversity between "New and Old Europe" (see Wanilin, 2006). In this context the main aim of the paper is to analyze the fulfillment of the goals of Europe 2020 strategy from the perspective of the years 2004-2013 with special consideration to the progress obtained by ten countries that joined EU in the years 2004 and 2007. In the analysis a special attention was given to the results of the Visegrad Group as the biggest economies of the EU-10 in relation to the achievements of the most important Eurozone economies. The first year of the analysis is the year of the biggest European Union enlargement, which can be considered as the most significant institutional change in Central and Eastern Europe. …

In times of fiscal stress, governments fail to adjust fiscal policy in line with the requirements for debt sustainability. Under these circumstances, monetary policy impacts the probability of sovereign default alongside inflation dynamics. Uribe (2006) studies the relationship between inflation and sovereign defaults with a model in which the central bank controls a risky interest rate. He concludes that low inflation can only be maintained if the government sometimes defaults. This paper follows Uribe (2006) by examining monetary policy that controls a risky interest rate. However, it differs by the baseline assumption about the objectives of the central bank. In this paper, monetary policy is not pure inflation targeting: it is assumed that the central bank minimizes the probability of default under the upper restriction on inflation. An advantage of this framework is that it avoids the issue of zero risk premium, which exists in Uribe (2006), while at the same time allowing a study of the relationship between the constraints on monetary pol icy, the equilibrium default rate, and the risk premium. We show that monetary policy that controls the risky interest rate can mitigate default risks only when the upper limit on inflation is sufficiently high. The higher the agents believe the upper limit on inflation to be, the lower the equilibrium risk premium and probability of default are. Under a low default rate, constraints on inflation can only be fulfilled when fiscal shocks are either positive or small.

Revolutions in genetic technology have heralded the age of population-scale genomic metadata. This article analyzes the tensions and gaps between traditional conceptions of personhood and international legal responses to a person’s right over disembodied data obtained from his/her body. The opportunities for breakthroughs in healthcare by interrogating population-scale genomic databases are accompanied by questions about privacy, property, dignity, and the nature of information regulation in a global economy. This article highlights instances where law and policy makers have grappled with these challenges, and foreshadows some emerging future challenges. It also highlights differences between jurisdictions, and calls for greater global participation in the development of a coherent framework, rather than continued reliance on a small number of stakeholders, to develop that framework.

This paper is an exercise in comparative institutional analysis, asking what kinds of arrangements most facilitate innovation. After identifying pervasive market failures in innovation, it explains why those associated with the Nordic model may be particularly conducive to innovation, and demonstrates that, in general, the optimal policies of the leader should differ from that of followers, but that both leaders and followers can benefit from active government policies (like industrial policies, public investments, and systems of social protection), not only leading to more innovation, but ensuring that more innovative activity is directed in ways that lead to the enhancement of living standards. It concludes by constructing a simple model in which knowledge flows slowly across national borders but moves easily within borders. We show there is a leadership-followership equilibrium, in which some countries are leaders, others are followers. Contrary to Solow's analysis, there need not be convergence. Focusing on technological progress that is a result of learning by doing, where learning occurs within the industrial sector but spills over to other sectors, we demonstrate the optimality of policies to expand the industrial sector beyond that which prevails in competitive equilibrium.

The shipping industry, although relatively carbon-efficient, is projected to produce rising carbon emissions in the future as a consequence of increasing world trade. A number of candidate regulations designed to mitigate these emissions have been canvassed by the UN’s International Maritime Organisation and by the European Commission. Many of these schemes are focussed on the use of market measures—emission trading schemes or fuel levies. This paper draws on observational and interview data gathered to examine enforcement issues associated with the control of ships’ sulphur emissions in order to consider the possible enforcement problems that might be associated with projected market measures to control ships’ carbon emissions. Enforcement problems are shown to be associated with the globalised character of the industry and its polycentric governance structure.

Central to the Mental Capacity Act 2005 (MCA) is the claim that a conferral of incapacity may not be based on the wisdom of a decision alone. This paper problematizes this position. Values-based medicine is drawn on to explore the process of capacity assessment, highlighting the presence of preconceptions throughout assessment. Two cases before the Court of Protection are examined to bring into focus the complexity of conducting assessment without reference to wisdom. The paper proposes that every stage in the assessment of capacity is undertaken with reference to preconceptions and that an acknowledgement of these, along with transparency about when they are to be employed, would allow for greater clarity about what the MCA demands of practitioners.

Trends in international human rights law have challenged States globally to rethink involuntary mental health interventions from a non-discrimination perspective. The United Nations Convention on the Rights of Persons with Disabilities (CRPD) in particular prohibits laws that discriminate on the basis of disability. However, a key criterion for compulsory mental health treatment under typical mental health legislation is a psychiatric diagnosis (in conjunction with risk of harm and other criteria). Hence, for people with mental health disabilities, rights to liberty and consent in healthcare are held to a different standard compared to other citizens. A prominent law reform option being explored by some governments and commentators for achieving non-discrimination is to replace the diagnostic criterion for triggering involuntary intervention with an assessment of mental capacity. After all, every citizen is subject to restrictions on autonomy where they are deemed to lack mental capacity, such as where concussion necessitates emergency service. However, the use of mental capacity “testing” is seen by diverse commentators as wanting in key respects. A prominent criticism comes from the United Nations Committee on the Rights of Persons with Disabilities, which considers mental capacity assessments a form of disability-based discrimination. This article queries the call to replace the diagnostic criterion in mental health law with an assessment of mental capacity in the light of jurisprudence on equality and non-discrimination in international human rights law. Instead, we examine the doctrine of necessity as an area of law, which might help identify specific thresholds for overriding autonomy in emergency circumstances that can be codified in a non-discriminatory way. We also consider the need for deliberative law reform processes to identify such measures, and we suggest interim, short-term measures for creating a “supported decision-making regime” in the mental health context. The article focuses in particular on the Australian context of mental health law reform, though the analysis can be generalised to international trends in mental health law.

Migration is a global phenomenon gradually increased in scope, impact and complexity. Practically all countries are simultaneously countries of destination, origin and transit for migrants. Traditionally migration flows are complemented by new changes generated by economic, demographic, political or social conditions, and these trends affect both the size and structure of the migrant population and also economies and societies. Of course this has sparked international interest from various NGOs and by the European Union and the United Nations. This paper aims to present the vision of international organizations concerned with migration and how they define migration and its typologies.

We investigate the drivers of excess interbank liquidity in Pakistan, using the Autoregressive Distributed Lag approach on weekly data for December 2005 to July 2011. We find that the financing of the government budget deficit by the central bank and non-banks leads to persistence in excess liquidity. Moreover, we identify a structural shift in the interbank market in June 2008. Before June 2008, low credit demand was driving the excess liquidity holdings by banks. After June 2008, banks’ precautionary investments in risk-free securities drive excess liquidity holdings. Monetary policy is less effective if banks hold excess liquidity for precautionary reasons.

Diese Arbeit analysiert den Effekt geplanter fiskalischer Konsolidierungen auf den Prognosefehler des BIP-Wachstums fur die Jahre 2010-2013 mittels Querschnittsanalysen und Fixed Effects Modellen. Unsere Ergebnisse zeigen, dass fiskalische Multiplikatoren im Jahr 2011 in den meisten Fallen unterschatzt wurden, wahrend fur das Jahr 2010 und speziell die spateren Jahre 2012 und 2013 wenig bis gar kein Anzeichen einer Unterschatzung zu finden ist. Die Unterschatzung fiskalischer Multiplikatoren nimmt mit der Zeit ab, was ein Zeichen fur Lerneffekte bei der Prognose sein konnte. Die Implikationen fur die Fiskalpolitik sollte allerdings vorsichtig betrachtet werden, da ein falscher fiskalischer Multiplikator nicht impliziert, dass Austeritat das falsche haushaltspolitische Vorgehen ist. Es ist lediglich eine zu positive Einschatzung fiskalischer Multiplikatoren fur das Jahr 2011 festzustellen.

Recently, a political shift has been observed, in that some political conservatives are now advocating, adjusting, or abandoning draconian drug laws, including mandatory minimums, and funding diversion, re-entry, and drug programs. Vocal proponents of this movement include Grover Norquist, Rand Paul, Edwin Meese, and Mark Levin, from the Texas Public Policy Council. Any movement away from the mass incarceration that has characterized the U.S. correctional policy for the last 30 years is welcomed, however, it is important to note carefully the philosophical foundation of the conservative’s interest in shifting correctional policy. This paper explores the potential factors contributing to this philosophical shift.

William Easterly marshals yet another brilliant critique of established development policies, with a focus on the experts' excessive focus on state-led policies and goals (à la Myrdal) and ignorance of bottom-up solutions, including technology and individual rights (à la Hayek). It suggests a world where success occurs in spite of nation-states. Yet not all bottom-up leads to success, and the worst disasters, as in civil violence, occur where states fail. Easterly highlights the important links between success and individual freedom and opportunity. He fails to note that myriad impoverished individuals cannot exercise these freedoms due to low expectations or compromised rights. (JEL A11, D82, E61, I23, O10, O40)

What institutional arrangements for an independent central bank with a price stability mandate promote good policy outcomes when unconventional policies become necessary? Unconventional monetary policy poses challenges. The large scale asset purchases needed to counteract the zero lower bound on nominal interest rates have uncomfortable fiscal and distributional consequences and require central banks to assume greater risks on their balance sheets. Lack of clarity on the precise definition of price stability, coupled with concerns about the legitimacy of large balance sheet expansions, hinders policy: It encourages the central bank to eschew the decisive quantitative easing needed to reflate the economy and instead to accommodate too-low inflation. The experience of the Bank of Japan's encounter with the zero lower bound suggests important benefits from a clear definition of price stability as a symmetric 2% goal for inflation, which the Bank adopted in 2013. Wie muss die Unabhängigkeit einer Notenbank, die das Ziel der Preisstabilität verfolgt, gestaltet sein, damit die Geldpolitik auch beim Einsatz unkonventioneller Maßnahmen erfolgreich ist? Athanasios Orphanides analysiert die Maßnahmen der Bank of Japan (BoJ) seit den späten 1990er Jahren und zeigt auf, worauf bei der Formulierung geachtet werden sollte.

Dlouhodobý fiskální výhled většiny vyspělých zemí je pesimistický. Měli by se nezávislí centrální bankéři bát, že se fiskální nerovnováha přenese do měnové oblasti a ohrozí cenovou stabilitu? Pro zodpovězení této otázky naše studie zkoumá vztahy mezi fiskální a měnovou politikou v datech od roku 1980 pro Austrálii, Kanadu, Japonsko, Švýcarsko, Velkou Británii a Spojené státy americké. Využívá VAR modely s časově proměnlivými parametry, a proto na rozdíl od konvenčních přístupů dokáže zachytit změny měnového a fiskálního chování, které jsou pouze postupné. Naše výsledky ukazují, že v USA se míra měnové akomodace fiskálních šoků (snížení úrokových sazeb centrální bankou v reakci na zvýšené vládní výdaje financované z dluhů) postupně rostla. K tomu docházelo mezi koncem 80. let a krizí v roce 2008, tj. po celou dobu působení předsedy Fedu Alana Greenspana. Opačný trend byl zaznamenán ve Velké Británii, Austrálii, Švýcarsku a Kanadě, kde měnová akomodace klesala, tzn. centrální banky reagovaly na (neadekvátně) zvýšené vládní výdaje zvednutím (nikoli snížením) svých úrokových sazeb. Naše srovnávací analýza a několik kontrol robustnosti ukazují, že uzákoněné numerické inflační cíle v těchto zemích pravděpodobně vysvětlují odlišnosti od USA, protože posouvají strategickou sílu z rukou fiskální politiky do rukou měnové politiky. Proto je ve studii zkoumána pravděpodobnost budoucí fiskální a měnové krize v posuzovaných šesti zemích, a jsou diskutovány implikace našich zjištění pro optimální design měnové politiky. The long-term fiscal outlook of most high-income countries is grim. Should independent central bankers be afraid of an unpleasant monetarist arithmetic, i.e., fiscal imbalances spilling over to monetary policy and jeopardizing price stability? To provide some insights, this paper tracks the interactions between fiscal and monetary policies in the data since 1980 for Australia, Canada, Japan, Switzerland, the United Kingdom, and the United States. In doing so it uses a combination of time-varying parameter vector autoregression with sign, magnitude, and contemporaneous restrictions identification. Unlike conventional approaches, this can capture changes in monetary and fiscal behavior that are gradual and differ across the two policies. Our results show that in the United States the degree of monetary policy accommodation of fiscal shocks (debt-financed government spending) increased gradually between the late 1980s and the 2008 crisis, i.e., over the whole tenure of Chairman Greenspan. In contrast, it seems to have decreased over this period in the United Kingdom, Australia, Switzerland, and Canada. Our benchmark analysis and several robustness checks show that legislating numerical inflation targets may account for some of the country differences, presumably because they may shift the strategic power from fiscal to monetary policy. We conclude by considering the implications of our results for the long-term likelihood of an unpleasant monetarist arithmetic in the six countries.

This article proposes a change in public policy that promises to greatly reduce major crime in the United States, protect society, eliminate prison overcrowding, and save taxpayer dollars. This policy would employ electronic monitoring (EM) technology in a way that discourages individuals who might otherwise be tempted to commit crimes. The approach is arguably more effective, efficient, humane and ethical than any alternative strategy and potentially could revolutionize law enforcement and the American criminal justice system. Keywords: crime; policy; corrections; law; electronic monitoring; cost-benefit; criminal justice 1. Introduction Existing policies to “get tough” on crime have not only failed to control crime but have contributed to an enormous increase in the number of incarcerated individuals [1,2]. This suggests that the underlying premise—stiffer sentences deter criminals—may be incorrect. Furthermore, even in the unlikely event that incarceration rates could be tripled through a tripling of law enforcement and prison budgets, the available data suggest that the probability that an offender would be apprehended and incarcerated would remain low. As of 2004, the probability that an offender would be incarcerated was negligible for residential burglary (0.8 percent), vehicle theft (0.6 percent), robbery (1.7 percent), and assault (1.2 percent); and fairly small for rape (12.4 percent) [3]. This suggests that the deterrent effect of policies to “get tough” on crime would remain weak, and suggests a need to switch paradigms.

In this article, the study is done with the view of Nauri model, Keynes and Classical doctrine. According to the Classical doctrine, while the ratio of technology and mark-up depends on data, the value balance of unemployment level is determined by the share that the employees get from the whole salary. Aggressive salary policy increases the natural unemployment level. According to Nauri, in the situations where the expectations of inflation is right, the natural unemployment level is determined with the demand of salary related to the ratio. To Keynes doctrine, the natural unemployment level is explained with the investment expenses and the demand side. From the point of view of Keynes, instability in investment expenses, insufficiency in demands, decreased productivity increase the natural unemployment level. In the light of this view, between 2000 and 2013, in Turkey the development of variations such as salary, growing, investment which affect Nairu is studied. The evaluation of the natural unemployment is examined from the point of Classical and Keynes doctrine. As a result, it is found that the factor which affects the unemployment in Turkey is insufficiency in the demand.

In contrast to monetary policy, the fiscal policy of the euro area countries has remained a national competence. Since it is important for the countries belonging to the Economic and Monetary Union to aim at fiscal discipline, the Maastricht Treaty and the Stability and Growth Pact made provision for establishing a European governance framework for public finances, accompanied by binding fiscal rules. The framework is one of the cornerstones of EMU, and it is vital that Member States comply with the rules for that union to work well. The article discusses the European governance framework for public finances and subjects it to a critical appraisal. Section 1 looks at the importance of fiscal rules in general, and especially in a monetary union. Section 2 outlines the main stages in the creation of the European budgetary framework. Section 3 describes the current framework. Section 4 details the way in which the European budgetary framework has been applied in recent times. Section 5 presents an appraisal. The European fiscal governance framework has evolved since the foundations were laid by the requirements concerning fiscal surveillance set out in the 1992 Maastricht Treaty. These changes have made it smarter but at the same time they have also increased its complexity. Since the start of European Monetary Union, the most important rules of the Stability and Growth Pact have often been broken. That is undeniably the result of the rather weak support for strict compliance with the rules in some countries, but is also due in part to the complexity of the fiscal rules and the lax supervision over their implementation. Although the measures taken to tighten up the framework over the period 2011-2013 improved public finances in many Member States, there are still many countries, including Belgium, that need to make additional efforts to comply with the fiscal rules. In the short and medium term, the rule-based framework needs to be correctly implemented. In the long term, it is desirable for fiscal policy to become more centralised but that requires more macroeconomic and social convergence, and fundamental steps towards political union. The Five Presidents’ Report published at the end of June contains a number of interesting proposals and in any event forms a good starting point for the reform of the budgetary framework.

We present a model of policy development in which competing factions have different ideologies, yet agree on certain common objectives. Policy developers can appeal to a decision maker by making productive investments to improve the quality of their proposals. These investments are specific to a given proposal, which means that policy developers can potentially obtain informal agenda power. Competition undermines this agenda power, forcing policy developers to craft policies that are better for the decision maker. This beneficial effect is strongest if policy developers have divergent ideological preferences, because their intense desire to affect policy motivates them to develop higher quality proposals. (JEL D72, D73, D78, E61) During the early years of the New Deal, President Franklin Delano Roosevelt faced an enormous challenge. He believed that dramatic policy innovation was urgently needed on a wide range of issues, including agriculture, trade, banking, employment, and social insurance. However, although Roosevelt was well versed in policy, crafting workable proposals for such a far-reaching agenda was well beyond his capacity, or that of his immediate advisors. Instead, the president had to rely on a broader array of politicians and bureaucrats to develop new policies. Although these individuals shared some common goals (e.g., ending the Great Depression), they also had deep-seated ideological disagreements among themselves, and with the president, about what policies the federal government should pursue. Classic and contemporary theories of bureaucratic politics would suggest that this situation was ripe for exploitation and inefficiency. Weber (1991) famously argued that the typical ruler of a modern state is reduced to being a “mere dilettante” when dealing with institutionalized bureaucratic actors. More recently, scholars

Using a unique set of data on fund use by China's listed companies, this paper examines how macroeconomic uncertainty works on corporate investment. The study shows that macroeconomic uncertainty affects corporate investment behavior through the three channels of external demand, liquidity demand and long-term fund demand. However, the result is influenced by expectations and can differ across firms depending on their economic cycle, shareholder character, industrial character and the financial constraints they are exposed to. Specifically, high macroeconomic uncertainty can weaken the positive roles of these channels, especially those of external demand and liquidity demand, in driving corporate investment. During economic upturns, the effect of these channels is the most evident among state-owned firms, manufacturing firms and low cash dividend firms. The lessons from this study are that macroeconomic policies should be leveraged taking account of the channels through which economic shocks find their way, and monetary policies have to be implemented by targeting microscopic fund demand.

“Why workers’ rights are not women’s rights” is an argument whose purpose is to make clear why workers’ rights rest on a masculine embodiment of the labor subject and it is this masculine embodiment which is at the center of employment contracts and employment relations systems. By excavating the gender subjects implicit to and explicit in regulations of labor, the paper reveals the opposition of paired terms, masculinity and femininity privileging production over reproduction and naturalizing gender-based power relations. The paper identifies various laboring activities associated with differential rights and responsibilities. An examination of the treatment of part-time employment and waged caring labor, framed in labor, welfare, immigration, and citizenship policies and practices, locates exclusions from labor standards and exemptions from entitlements due to eligibility requirements and thresholds that assume the masculine embodiment of the worker-citizen. Gendering the analysis illustrates how contemporary labor laws and conventions grant rights on the basis of, and to, a rather abstract conception of the prototypical worker-citizen. Its origins lie in what classical political economy labeled a capitalist logic, as well as the historical practices in which free class agents entered into contracts for continuous, full-time work free of care responsibilities outside of the wage/labor nexus. Thus, it is this particular abstract construction of the proto-typical worker which instantiates the separation of “rights to” from “responsibilities for”, and it is this separation that allows the masculine embodiment of the labor subject. Modes of regulation privileging rights over responsibilities will valorize the masculine worker-citizen whose rights derive from their participation in wage labor and simultaneously devalue the feminine worker who is directly connected to caring labor.

This paper is a review about the book ‘Stress Test: Reflections on Financial Crises’ by Timothy Geithner. The book mainly discusses the policy decisions and implications of T. Geithner during his job as New York FED president and US-Treasury secretary under president Obama. The book reveals some hidden information about the decision-making process in both institutions. But it lacks a scientific foundation in order to explain the financial crisis in more detail. Hence, I think the book is less convincing than recognized in public. No doubt, Geithner crisis response deserves appreciation especially the ‘Stress Test’. However, the overall book does not demonstrate that the response is sustainable in the long run and scientifically sound. Consequently, it is more a book on public policy and governance than economics.Keywords. Financial Crisis, Regulation, Cause of Financial Bubbles.JEL.A30, B31, E58, E61, G18, G38.

The concept of social economy concept is relatively new in Romania, but the interest of specialists and practitioners is growing because significant funds has been allocated to stimulate the development of social economy organizations and numerous supporting statements was made by the European Commission. The present paper realizes an exploratory approach on the concept of social enterprise in Romania and clarifies some notions, given the practices of social economy in recent years. Also, a typology of the Romania's counties in terms of the presence of social enterprises has been obtained. A series of data were collected by accessing sites of specialized institutions or requesting information under the Law regarding the free access to information of public interest. After their processing a territorial distribution of social enterprises in Romania was shaped.

This paper offers a few remarks on the so-called heterodoxy commentaries of recent times. It will be highlighted that, in accordance with the growing popularity of non-usual economic policy actions, a set of “tools” is emerging that aims to exert its effects breaking with usual, common, instrumental actions. Outlining a framework of the history of economic thoughts and treating fiscal and monetary policy separately, it will be argued that economic policy only gradually has become capable of applying this system. The point is that though the economic effects of expectations (on output, unemployment, cycles, etc.) were highlighted in the theory of Keynes (and even in those of Marx and Mises), the models vulgarizing the theory of Keynes completely have forgotten about it. Moreover, some modern theories have regarded public beliefs (in other words, expectations) as a power that deprives economic policy of its instruments, causing further delays in making deliberate efforts by economic policy to influence these public beliefs. In our view, both the emergence of symbolic economic policies mentioned above and the rise of heterodoxy are on the same level, since certain governments, not having much leeway, can only operate through giving signals to markets. Although it is not the time to formulate ultimate and eternal generalised statements, it may perhaps be stated that symbolic economic policies, as part of the intersection of heterodox and unorthodox interventions, cut away from instrumental policies, can make some room for manoeuvring available as a last resort for economic policies. Our theoretical framework will be filled with some episodes from the last few years of the economic policy of Hungary. Of course, it is not suggested that the Hungarian case analysed here is the only example of symbolic economic policies. The possibility of symbolic economic policies follows from the theoretical foundations of new classical macroeconomics (as it will be detailed below), however, it cannot be judged at this point how widely this set of tools will be utilized later – the set of tools that is suggested here on theoretical grounds only as a mere option.

Article 12 of the UN Convention on the Rights of Persons with Disabilities, particularly as interpreted in the Committee on the Rights of Persons with Disabilities General Comment No. 1, presents a significant challenge to all jurisdictions that equate interventions permitted under their mental health and incapacity laws with mental capacity. This is most notable in terms of the General Comment’s requirement that substitute decision-making regimes must be abolished. Notwithstanding this, it also offers the opportunity to revisit conceptions about the exercise of legal capacity and how this might be better supported and extended through supported decision-making. This article will offer some preliminary observations on this using Scottish mental health and incapacity legislation as an illustration although this may also have relevance to other jurisdictions.

Neuroscientific endeavours to uncover the causes of severe mental impairments may be viewed as supporting arguments for capacity-based mental health laws that enable compulsory detention and treatment. This article explores the tensions between clinical, human rights and legal concepts of “capacity”. It is argued that capacity-based mental health laws, rather than providing a progressive approach to law reform, may simply reinforce presumptions that those with mental impairments completely lack decision-making capacity and thereby should not be afforded legal capacity. A better approach may be to shift the current focus on notions of capacity to socio-economic obligations under the Convention on the Rights of Persons with Disabilities. Keywords: legal capacity; mental capacity; decision-making; mental health laws; neuroscience 1. Introduction Laws that enable the compulsory detention and treatment of individuals with severe mental impairments [1] have been enacted in many countries, including recently in China [2]. While the criteria for compulsory detention and treatment differ across jurisdictions, in general, there must be evidence of “mental illness”, generally defined according to certain symptoms, a need for treatment and some form of risk of harm to self or others [3]. Such mental health laws place decision-making about treatment primarily in the hands of clinicians, rather than the individual concerned, thereby enabling what is generally termed “substituted” decision-making. Some jurisdictions have mental health laws which also require evidence that the person concerned is unable or lacks “capacity” to consent to admission and/or treatment [4]. There have been calls by

The article presents the brief overview of the results of privatization in Russia during the period from 1995 to 2013. The privatization of the largest state companies is covered, large-scale privatization deals of the last two years are considered as highly efficient. The paper provides the comparative analysis of the standard or mass privatization mechanism of state (municipal) property and the individual approach to the privatization of the biggest companies with state participation. Based on the results of the analysis the number of criteria is suggested in order to objectively determine by what mechamism (classic or individual) the privatization should take place.

It is impossible in a few pages to even touch on the impact Gary Becker had on economics and public policy. Becker was a pioneer whose work spanned many fields, most of which he was responsible for creating. His imagination was limitless, and he applied economics to areas that few would have thought feasible, providing insight, innovation, and reason in every direction he went. Milton Friedman described him as the most important social scientist of the second half of the twentieth century, and the description is not an overstatement. Becker was more than an economist. He was a social thinker who could bring logic to any subject, no matter how unapproachable. It is for that reason that he had such an important impact on public policy. Becker’s seemingly heretical work often reversed stereotypic thoughts and provided approaches to public policy that were not only novel—they were correct. Based on economic theory and empirical analyses that backed it up, Becker provided prescriptions that were both practical and welfare enhancing. Above all, Becker was a scholar in the finest sense of the word, who believed in economics and its power to explain the world. The ultimate economic imperialist, Becker’s real-world orientation gave us new ways to think about economics and its application to policy. 1