Expectation traps and monetary policy

Why is inflation persistently high in some periods and low in others? The reason may be absence of commitment in monetary policy. In a standard model, absence of commitment leads to multiple equilibria, or expectation traps, even without trigger strategies. In these traps, expectations of high or low inflation lead the public to take defensive actions, which then make accommodating those expectations the optimal monetary policy. Under commitment, the equilibrium is unique and the inflation rate is low on average. This analysis suggests that institutions which promote commitment can prevent high inflation episodes from recurring.Monetary policy ; Inflation (Finance) ; Consumer behavior

Expectation Traps and Monetary Policy

Why is it that inflation is persistently high in some periods and persistently low in other periods? We argue that lack of commitment in monetary policy may bear a large part of the blame. We show that, in a standard equilibrium model, absence of commitment leads to multiple equilibria, or expectation traps. In these traps, expectations of high or low inflation lead the public to take defensive actions which then make it optimal for the monetary authority to validate those expectations. We find support in cross-country evidence for key implications of the model.

Policies Affecting or Facilitating Resource Adjustment in Agriculture in the European Union

Structural policy in the EU is ambiguous in its aims and contains conflicting elements. Interventions to ease change are combined with defensive measures that support income and discourage some aspects of adjustment. Structural change is a complex process and the number of farms is an incomplete indicator. Most adjustment takes place without active public assistance. Structural measures at EU level are now mostly within the rural development pillar of the Common Agricultural Policy. Their performance is mixed. However, many countries also have national policies, especially on taxation and land transfer, whose influence on adjustment must not be overlooked.adjustment, farm, income, policy, rural development, taxation, Agricultural and Food Policy,

Review Of Hiring And Firing Public Officials: Rethinking The Purpose Of Elections By J. Buchler

Few books can be called workmanlike as well as exciting, analytic as well as poignant. Hiring and Firing Public Officials achieves those rare pairings by methodically pursuing an academic coup. Justin Buchler aims to replace electoral theory's dominant “market paradigm”—whose pioneers include Joseph Schumpeter (Capitalism, Socialism and Democracy, 1942) and Anthony Downs (An Economic Model of Democracy, 1957)—with a more accurate “employment model,” and to defend that new model against all manner of attack. Buchler prosecutes his goals doggedly, repetitively, and quite effectively. The result is an intelligent, important new book that may not dazzle but will challenge settled convictions and change more than a few minds. The author's occasionally defensive tone is understandable given the nature of his ambition. His book advocates paradigmatic revolution and, to borrow from Mao Zedong, revolution is not a dinner party.</jats:p

The Objectives of Sexual Harassment Law, with Application to 1998's Ellerth, Oncale, and Faragher Decisions

Imposing liability on a company for sexual harassment by supervisors cannot be justified as promoting equality between the sexes, protection of workers, or protection of the owners of the company. Such liability might be justified to prevent breach of contract or behavior offensive to the general public-- a "civility code". The recent Supreme Court ruling in Oncale that same-sex harassment is illegal can be justified on these grounds. The ruling in Ellerth and Faragher concerning employer liability for sexual harassment by supervisors contrary to the employer's interest is less satisfactory because the Court's rule will encourage litigation and defensive bureaucratic complexity.sexual harassment, Supreme Court, mandated fringe benefits

The Empire Writes Back (to Michael Ignatieff)

This article critiques the re-legitimisation of empire evident in recent writing by Michael Ignatieff. It begins by locating his work within the larger debate on empire emerging today. Focusing first on Ignatieff's more general comments on empire, it suggests that his defensive case for empire is misleading: it ignores the extent to which the circumstances allegedly necessitating `new' empire are themselves a consequence of older empire, and indeed older US empire. Focusing next on Ignatieff's largely consequentialist case for the 2003 attack on Iraq, it argues that the `success' of the imperial project — to the extent that this requires the cooperation of Iraqis — will depend crucially on the motives of the imperialists. Without engaging directly with Ignatieff's work, the final section addresses some of the questions that the foregoing critique may have raised. In particular, it examines critically the claim that empires are legitimised by the public goods they provide

Confidential Report on the Recent Bombing of Le Havre

Flight Lieutenant R.F. Delderfield was a RAF public relations officer in 1944 when he was ordered to the continent to cover the capture of Le Havre. Arriving about a week after the city was liberated, Delderfield spent two days examining the town and interviewing soldiers and civlians about their impressions of the RAF bombing of the city. The report is noteworthy for the attention it pays to the impact of the bombing of the local population. The RAF subsequently modified its plans for the bombing of Boulogne so that only defensive works around the perimeter of the city were attacked and a Royal Air Force officer was in direct communication with the aircraft during the attacks the ensure that accuracy was maintained

Leveraged Public to Private Transactions in the UK

This paper examines the magnitude and the sources of the expected shareholder gains in UK public to private transactions (PTPs) in the second wave from 1997-2003.Pre-transaction shareholders on average receive a premium of 40% and the share price reaction to the PTP announcement is about 30%.The main sources of the shareholder wealth gains are undervaluation of the pre-transaction target firm, increased interest tax shields and incentive realignment.An expected reduction of free cash flows does not determine the premiums nor are PTPs a defensive reaction against a takeover.Public to private;going-private;LBO;MBO;IBO;Management buyins;Management buyouts;Leveraged buyouts