Electoral Uncertainty and the Deficit Bias in a New Keynesian Economy

Recent attempts to incorporate optimal fiscal policy into New Keynesian models subject to nominal inertia, have tended to assume that policy makers are benevolent and have access to a commitment technology. A separate literature, on the New Political Economy, has focused on real economies where there is strategic use of policy instruments in a world of political conflict. In this paper we combine these literatures and assume that policy is set in a New Keynesian economy by one of two policy makers facing electoral uncertainty (in terms of infrequent elections and an endogenous voting mechanism). The policy makers generally share the social welfare function, but differ in their preferences over fiscal expenditure (in its size and/or composition). Given the environment, policy shall be realistically constrained to be time-consistent. In a sticky-price economy, such heterogeneity gives rise to the possibility of one policy maker utilising (nominal) debt strategically to tie the hands of the other party, and influence the outcome of any future elections. This can give rise to a deficit bias, implying a sub-optimally high level of steady-state debt, and can also imply a suboptimal response to shocks. The steady-state distortions and inflation bias this generates, combined with the volatility induced by the electoral cycle in a stickyprice environment, can significantly raise the costs of having a less than fully benevolent policy maker.

The Optimal Monetary Policy Response to Exchange Rate Misalignments

A common feature of exchange rate misalignments is that they produce a divergence between traded and non-traded goods sectors, which appears to pose a dilemma for policy makers. In this paper we develop a small open economy model which features traded and non-traded goods sectors with which to assess the extent to which monetary policy should respond to exchange rate misalignments. To do so we initially contrast the efficient outcome of the model with that under flexible prices and find that the flex price equilibrium exhibits an excessive exchange rate appreciation in the face of a positive UIP shock. By introducing sticky prices in both sectors we provide a role for policy in the face of UIP shocks. We then derive a quadratic approximation to welfare which comprises quadratic terms in the output gaps in both sectors as well as sectoral rates of inflation. These can be rewritten in terms of the usual aggregate variables, but only after including terms in relative sectoral prices and/or the terms of trade to capture the sectoral composition of aggregates. We derive optimal policy analytically before giving numerical examples of the optimal response to UIP shocks. Finally, we contrast the optimal policy with a number of alternative policy stances and assess the robustness of results to changes in model parameters.

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Garda Diversion of Young Offenders: An Unreasonable Threat to Due Process Rights?

Diversion programmes play a significant role in the field of youth justice, as an alternative to the conventional court process, which aim to prevent the entry of the child into the formal justice system. The long-established practice of diverting certain young offenders from prosecution ensures that children are not drawn into the criminal justice system and are not given a criminal record (Goldson, 2000: 35). A non-statutory diversion programme entitled the Garda Liaison Scheme was established in Ireland in 1963, which diverted less serious young offenders from prosecution (Report of the Committee Appointed to Monitor the Effectiveness of the Diversion Programme, 2003, para. 3.1). This scheme was placed on a statutory footing by part 4 of the Children Act 2001, an Act which represents a major reform of the law pertaining to young justice. Whilst a diversion programme has been established under part 8 of the Act which concerns those juveniles who are being prosecuted for a crime, this article will concentrate solely on the pre-trial diversion programme, given the particular issues of due process which arise in this regard

Issues affecting Western Australia\u27s inshore crab fishery Blue swimmer crab (Portunus pelagicus) Sand Crab (Ovalipes australiensis)

This paper is designed to inform the general public about the issues and management options for managing the State\u27s blue swimmer and sand crab fishery

Implementing a window system for an all points addressable display

Thesis (B.S.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science, 1982.MICROFICHE COPY AVAILABLE IN ARCHIVES AND ENGINEERINGBibliography: leaves 52-53.by John Cambell Gonzalez.B.S

Audio-based event detection for sports video

In this paper, we present an audio-based event detection approach shown to be effective when applied to the Sports broadcast data. The main benefit of this approach is the ability to recognise patterns that indicate high levels of crowd response which can be correlated to key events. By applying Hidden Markov Model-based classifiers, where the predefined content classes are parameterised using Mel-Frequency Cepstral Coefficients, we were able to eliminate the need for defining a heuristic set of rules to determine event detection, thus avoiding a two-class approach shown not to be suitable for this problem. Experimentation indicated that this is an effective method for classifying crowd response in Soccer matches, thus providing a basis for automatic indexing and summarisation