Breaking-up a nation, from the inside

The paper ascribes to the literature analysing the conditions leading to the break-up of nations. The model englobes the existing literature and considers two separate spaces, a state and its region, where informed and non-informed citizens cohabit. We depart in considering that noninformed citizens may be convinced, via the action of groups acting to obtain independence. Conditions for separation are established and discussed. --Political Economy,Separatism,Independence

Back to the roots: On the origins of the Fed's independence

This note considers the foundations of the Federal Reserve Board's independence. Its origins are shown to reside in the American political philosophy, under which independence is an essential working condition for a perennial democracy.Federal Reserve Board, independence, constitution.

Electoral Control when Policies are for Sale

This article analyses the dynamics of electoral promises, building on an electoral competition model with endogenous policies. It extends the Grossman-Helpman (1994) model [Grossman G., Helpman E. [1994], "Protection for sale", American Economic Review, 84, 4, 833-850] to include sanctions from the electorate and lobbies when the incumbent does not satisfy the expected performance she promised to deliver. This framework allows to deal with the intertemporal dimension needed to understand the prevalent cycle of promises, disappointment, new promises, new disappointment ….lobbies, promises, elections, electoral competition, lies

Intergenerational Transmission of Inflation Aversion: Theory and Evidence

This paper studies the transmission of preferences in an overlapping-generations model with heterogeneous mature agents characterized by different degrees of inflation aversion. We show how the dynamics of a society's degree of inflation aversion and the implied degree of central bank independence depend on the direction and speed of changes in the structure of the population's preferences, themselves a function of parent socialization efforts in response to observed inflation. We then construct a survey-based measure of inflation aversion and provide empirical support for our analytical and simulation results. Available cross-section evidence confirms that a nation's demographic structure, in particular variation in the share of retirees as a proxy for the more inflation-averse type, is a key determinant of inflation aversion, together with experience with past inflation and the resulting collective memory embodied in monetary institutions.intergenerational transmi ; evolving preferences ; inflation aversion ; central bank independence ; collective memory

Too close for comfort? Politician - interest group relations under voters' supervision

This article analyzes the dynamics of electoral promises towards the population and interest groups, focusing on the reaction of voters to the proximity of a candidate to interests groups. In a two-period electoral competition model, we show that a (re)election seeking politician must consider the inherent characteristics of voters whilst making announcements and seeking financial support or implementing policies, not to be penalized by strategic voters.Interest groups, Promises, Elections, Campaign

Australian and American tariffs policies: do they rock or tango?

This paper disentangles between two hypotheses on the determinants of Australia's and the US' average tariffs levels. Relying on historical data that covers a century (1904 to 2005), it is first shown that a break in the series occurs in 1947, forcing to separate the data into two sub-periods (before and after the 1947 break). The results permit to distinguish a "rock" and a "tango" regime. The first designates the period where one country (the US) has a stronger influence on the other, while the second indicates that, after 1947, stronger reciprocal inter-relations have to be taken into account.Australia, United States, Trade Policy, Tariffs

Australian and American tariffs policies: do they rock or tango?

This paper disentangles between two hypotheses on the determinants of Australia's and the US' average tariffs levels. Relying on historical data that covers a century (1904 to 2005), it is first shown that a break in the series occurs in 1947, forcing to separate the data into two sub-periods (before and after the 1947 break). The results permit to distinguish a "rock" and a "tango" regime. The first designates the period where one country (the US) has a stronger influence on the other, while the second indicates that, after 1947, stronger reciprocal inter-relations have to be taken into account.Australia, United States, Trade Policy, Tariffs

On the Sustainability of a Monetary Union under External Shocks: a Theoretical Result and Its Application to the Gulf Countries

External shocks, be they political or economic, can pose a significant threat to the sustainability of a monetary union. This paper focuses on the openness of a monetary union, and examines how the degrees and characteristics of the sensitivities of its member nations towards external shocks affect the sustainability of the commitment which each of its members made when joining the union. Furthermore, we discuss the sustainability of the prospective monetary union among the Gulf Cooperation Council countries in the light of obtained insights.Monetary Union, Optimum Currency Areas, External Shocks, Gulf Cooperation Council

Intergenerational Transmission of Inflation Aversion: Theory and Evidence

We study the evolution of inflation aversion preferences across generations. In the theoretical part of the paper, we analyze the dynamics of such preferences in an overlapping-generations model with heterogenous mature agents characterized by different degrees of inflation aversion. We show how the stability of a society’s degree of inflation aversion depends on the strength and speed of changes in the structure of the population. The empirical part then proposes two applications in support of the theoretical results. We first link demographic structures to inflation aversion, and then proceed by looking at the relations between income (in)equality and measures of inflation aversion.Intergenerational transmission, evolving preferences, inflation aversion, central bank independence, demographic change, income inequality

Monetary Unions and External Shocks

According to Bordo and James (2008), history shows that multinational monetary unions have dissolved mainly under the consequences of external shocks. This paper focuses on the effects of external shocks in assessing the sustainability of a monetary union and provides a theoretical argument that confirms their point.Monetary Union, Optimum Currency Areas, External Shocks