Deficits, Public Debt Dynamics, and Tax and Spending Multipliers

Cutting government spending on goods and services increases the budget defi cit if the nominal interest rate is close to zero. This is the message of a simple but standard New Keynesian DSGE model calibrated with Bayesian methods. The cut in spending reduces output and thus - holding rates for labor and sales taxes constant - reduces revenues by even more than what is saved by the spending cut. Similarly, increasing sales taxes can increase the budget defi cit rather than reduce it. Both results suggest limitations of austerity measures in low interest rate economies to cut budget deficits. Running budget deficits can by itself be either expansionary or contractionary for output, depending on how deficits interact with expectations about the long run in the model. If deficits trigger expectations of i) lower long-run government spending, ii) higher long-run sales taxes, or iii) higher future infl ation, they are expansionary. If deficits trigger expectations of higher long-run labor taxes or lower long-run productivity, they are contractionary

Reforming state-market relations in rural China 1

Because of the political importance of stable and affordable food prices, governments in transitional economies in Europe and Asia fkequently struggle to balance the desire to maintain state controls in the rural sector with the goal of promoting market development and privatizing or commercializing state agencies involved in rural trade or finance. This paper examines institutional change in China's rural state agencies during the reform period, focusing on the conflict between managerial incentives to maximize profits, on the one hand, and implement policy, on the other. We explain the reasons for changing contractual incentives and authority arrangements over time, assess the effects of new institutional forms on economic performance and policy implementation, and consider reform options.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/71599/1/j.1468-0351.1998.tb00059.x.pd

Gender Differences in Russian Colour Naming

In the present study we explored Russian colour naming in a web-based psycholinguistic experiment (http://www.colournaming.com). Colour singletons representing the Munsell Color Solid (N=600 in total) were presented on a computer monitor and named using an unconstrained colour-naming method. Respondents were Russian speakers (N=713). For gender-split equal-size samples (NF=333, NM=333) we estimated and compared (i) location of centroids of 12 Russian basic colour terms (BCTs); (ii) the number of words in colour descriptors; (iii) occurrences of BCTs most frequent non-BCTs. We found a close correspondence between females’ and males’ BCT centroids. Among individual BCTs, the highest inter-gender agreement was for seryj ‘grey’ and goluboj ‘light blue’, while the lowest was for sinij ‘dark blue’ and krasnyj ‘red’. Females revealed a significantly richer repertory of distinct colour descriptors, with great variety of monolexemic non-BCTs and “fancy” colour names; in comparison, males offered relatively more BCTs or their compounds. Along with these measures, we gauged denotata of most frequent CTs, reflected by linguistic segmentation of colour space, by employing a synthetic observer trained by gender-specific responses. This psycholinguistic representation revealed females’ more refined linguistic segmentation, compared to males, with higher linguistic density predominantly along the redgreen axis of colour space

Whole genome characterization of sequence diversity of 15,220 Icelanders

Understanding of sequence diversity is the cornerstone of analysis of genetic disorders, population genetics, and evolutionary biology. Here, we present an update of our sequencing set to 15,220 Icelanders who we sequenced to an average genome-wide coverage of 34X. We identified 39,020,168 autosomal variants passing GATK filters: 31,079,378 SNPs and 7,940,790 indels. Calling de novo mutations (DNMs) is a formidable challenge given the high false positive rate in sequencing datasets relative to the mutation rate. Here we addressed this issue by using segregation of alleles in three-generation families. Using this transmission assay, we controlled the false positive rate and identified 108,778 high quality DNMs. Furthermore, we used our extended family structure and read pair tracing of DNMs to a panel of phased SNPs, to determine the parent of origin of 42,961 DNMs.Peer Reviewe

Modeling Historic Rangeland Management and Grazing Pressures in Landscapes of Settlement

Defining historic grazing pressures and rangeland management is vital if early landscape threshold crossing and long–term trajectories of landscape change are to be properly understood. In this paper we use a new environmental simulation model, Búmodel, to assess two contrasting historical grazing landscapes in Mývatnssveit Iceland for two key periods—the colonization period (ca. Landnám, A.D. 872–1000) and the early eighteenth century A.D. Results suggest that there were spatial and temporal variations in productivity and grazing pressure within and between historic grazing areas and indicate that land degradation was not an inevitable consequence of the livestock grazing introduced with settlement. The results also demonstrate the significance of grazing and livestock management strategies in preventing overgrazing, particularly under cooler climatic conditions. The model enables detailed consideration of historic grazing management scenarios and their associated landscape pressures

The Macroeconomic Effects of the Euro Area's Fiscal Consolidation 2011-2013: A Simulation-Based Approach

We simulate the Euro Area's fiscal consolidation between 2011 and 2013 by employing two DSGE models used by the ECB and the European Commission, respectively. The cumulative multiplier amounts to 0.7 and 1.0 in the baseline, but increases to 1.3 with a reasonably calibrated financial accelerator and a crisis-related increase of the share of liquidity constrained households. In the latter scenario, fiscal consolidation would be largely responsible for the decline in the output gap from 2011-2013. Postponing the fiscal consolidation to a period of unconstrained monetary policy (until after the economic recovery) would have avoided most of these losses.Wir simulieren die Haushaltskonsolidierung im Euroraum im Zeitraum 2011 bis 2013 mit Hilfe von zwei DSGE Modellen der EZB und der Europäischen Kommission. Der kumulative Multiplikator beträgt 0.7 bzw. 1.0 in der Basislinie, steigt aber auf 1.3, wenn die Modelle um einen plausibel kalibrierter Finanzakzelerator erweitert und der Anteil liquiditätsbeschränkter Haushalte krisenbedingt erhöht wird. Im letzteren Szenario trägt die Haushaltskonsolidierung die maßgebliche Verantwortung für die Verschlechterung der Produktionslücke im Zeitraum 2011 bis 2013. Wäre die Haushaltskonsolidierung erst in einer Phase mit uneingeschränktem geldpolitischen Handlungsspielraum vorgenommen worden (d.h. nach der Erholung der Wirtschaft) hätte der Großteil der BIP-Verluste verhindert werden können

The Central-Bank Balance Sheet as an Instrument of Monetary Policy

While many analyses of monetary policy consider only a target for a short-term nominal interest rate, other dimensions of policy have recently been of greater importance: changes in the supply of bank reserves, changes in the assets acquired by central banks, and changes in the interest rate paid on reserves. We extend a standard New Keynesian model to allow a role for the central bank's balance sheet in equilibrium determination, and consider the connections between these alternative dimensions of policy and traditional interest-rate policy. We distinguish between "quantitative easing" in the strict sense and targeted asset purchases by a central bank, and argue that while the former is likely be ineffective at all times, the latter dimension of policy can be effective when financial markets are sufficiently disrupted. Neither is a perfect substitute for conventional interest-rate policy, but purchases of illiquid assets are particularly likely to improve welfare when the zero lower bound on the policy rate is reached. We also consider optimal policy with regard to the payment of interest on reserves; in our model, this requires that the interest rate on reserves be kept near the target for the policy rate at all times