The new Keynesian Phillips curve: empirical results for Luxembourg

The New Keynesian Phillips curve (NPC) differs from the conventional expectations-augmented Phillips curve in that it is forward-looking and links inflation to a measure of marginal cost instead of unemployment or the output gap. More fundamentally, the NPC is derived from New Keynesian models that combine nominal rigidities with individual optimising behaviour and model-consistent (rational) expectations. Because the NPC is grounded in micro-theory (unlike the conventional expectations-augmented Phillips curve), it is robust to some forms of the Lucas critique and may serve to analyse the impact structural changes such as increased price flexibility may have on inflation. New Keynesian Phillips curve estimates for Luxembourg using the Galí and Gertler (1999) hybrid form suggest that firms change prices often but tend to use backward-looking rules-of-thumb instead of resetting prices optimally using forward-looking expectations. In terms of policy implications, although the results suggest prices in Luxembourg are relatively flexible, the prevalence of backward-looking price setting implies greater inflation persistence and a higher sacrifice ratio attached to disinflationary monetary policy. From the perspective of individual firms, backward-looking price setting may be a rational response in a very small open economy because of its vulnerability to external shocks. Small size and openness plausibly imply higher costs of collecting information and lower benefits from optimal price setting.

Open Access to Legal Scholarship and Open Archives: Towards a Better Future? = L’Open Access per la dottrina giuridica e gli Open Archives: verso un futuro migliore?

The logic of Open Access (OA) is gradually spreading in the scientific community, mainly thanks to the help of important areas of public libraries. OA basically describes a phenomenon that sees many scientific communities publishing through the Internet their results (papers, articles, books, etc.) on archives accessible to anyone (and without payment of a price). OA seems to have the possibility to become a very powerful tool for the dissemination of scientific knowledge. As part of the general phenomenon called “Transfer of Knowledge” (broader category than the more famous “Technology Transfer”), which sees universities and research centers increasingly interested in showing in the market the quality of their scientific production through various activities aimed at exploiting the foreground of their researches (IPRs, licenses, spin-off, etc.), OA plays a pivotal role: it could make transfer of knowledge - previously conveyed (under payment) by private intermerdiaries - more transparent, fluid, and accessible to anyone. Despite the initial delay, the OA movement is quickly growing in importance for legal scholarship. Nonetheless, the institutional arrangements and the technological features of OA to legal scholarship are variegated and pose a vast array of problems. OA to legal scholarship changes the form of the legal publication - e.g., we face new kinds of publications such as blog posts or Wikipedia articles - and shifts the “quality selection” function of the publication system from traditional intermediaries (publishers, learning societies, editorial boards, etc.) to new ones (e.g., search engines, social software, Open Archives, etc.) and readers. In this perspective, a prominent issue is represented by the Open Archives. Open Archives, as well as other OA tools (OA journals), increase the reputation of authors and improve the future impact of their articles. A vast literature – although referring to other subjects - shows that papers deposited in OA repositories are cited more often than those which are not. Moreover, the OA repositories enable a new form of evaluation process. On one hand, it is possible to develop innovative bibliometric indicators. On the other hand, through them you can easily trace the entire life of a scientific product: for example, the OA repositories will allow the display of all the evolution stages of an article from the presentation at a conference to its final version. Given the enormous power of the Net and the rise of these OA repositories, we are still suffering - especially within the Italian context – the low number of uploads and the lack of innovative tools fit to navigate through the OA legal materials. The governance of legal Open Archives should pay attention to the following main features: interoperability, redundancy, multilingualism, evaluation criteria and tools, policies. This kind of issues can be solved only by using an interdisciplinary law and technology approach which clarifies the various, complex aspects of the relationship between Open Archives and legal scholarship. ITALIAN ABSTRACT Da qualche anno si sta gradualmente diffondendo all’interno della comunità scientifica, grazie anche all’impegno di operatori delle biblioteche pubbliche, la logica dell’“Open Access” (OA). Questa espressione descrive un fenomeno che vede molti ricercatori pubblicare attraverso Internet i risultati della propria ricerca (saggi, articoli, libri, etc.) su archivi accessibili a chiunque (e senza il pagamento di un prezzo). L’OA è sicuramente destinato a diventare uno strumento molto potente per la diffusione della conoscenza scientifica. Come parte del più generale fenomeno chiamato “trasferimento della conoscenza”, che vede le università e i centri di ricerca sempre più interessati a dimostrare la qualità della, propria, produzione scientifica attraverso varie attività volte alla valorizzazione delle loro ricerche, l’OA gioca un ruolo fondamentale: esso potrebbe rendere il trasferimento di conoscenze – prima veicolato, a pagamento, dagli intermediari privati - più trasparente, fluido ed accessibile a tutti. Nonostante il ritardo iniziale, il movimento OA sta rapidamente acquisendo importanza per la dottrina giuridica; ciò sebbene gli assetti istituzionali e le caratteristiche tecnologiche proprie di questo nuovo fenomeno siano variegati e pongano una vasta gamma di problemi. L’OA cambia, infatti, la forma stessa delle pubblicazioni scientifiche – affiorano, così, nuovi “generi letterari” quali post sui blog o articoli di Wikipedia – e determina uno spostamento della funzione di selezione della qualità del sistema di pubblicazione che dai tradizionali intermediari (editori, società scientifiche, comitati editoriali, etc.) viene sempre più svolta da nuovi soggetti (motori di ricerca, social software, Open Archives, etc.), quando non direttamente dai lettori stessi. Gli Open Archives, così come altri strumenti di OA (riviste ad accesso aperto), aumentano la fama degli autori ed incrementano l’impatto (citazionale) futuro dei loro articoli. Una vasta letteratura dimostra che i documenti depositati in archivi OA sono citati più spesso di quelli che, invece, non lo sono. Inoltre, tali archivi permettono di porre in essere una nuova forma di processo di valutazione: da un lato, è possibile sviluppare innovativi indicatori bibliometrici; dall’altro, consentono di tracciare facilmente l’intera vita di un prodotto scientifico (ad es., un repository OA consente la visualizzazione di tutte le fasi dell’evoluzione di un articolo: dalla presentazione in una conferenza alla sua versione finale). Nonostante l’enorme importanza che l’uso della Rete sta acquisendo e l’ascesa di questi archivi aperti, stiamo, però, ancora soffrendo – soprattutto all’interno del contesto italiano – il basso numero di depositi e la mancanza di strumenti idonei a navigare attraverso i materiali giuridici distributi secondo la logica dell’OA. La governance di questi innovativi Open Archives dovrebbe essere volta all’incorporazione dei seguenti principi: interoperabilità, ridondanza, multilinguismo, utilizzo di nuovi criteri e strumenti di valutazione, adozione di nuove policy. Questo tipo di problematiche possono trovare soluzione solo tramite l’utilizzo di un approccio interdisciplinare di “diritto e tecnologia” che chiarisca i vari e complessi aspetti del rapporto tra gli “archivi aperti” ed il mondo della dottrina giuridica

Potential output and the output gap in Luxembourg: some alternative methods

The output gap is defined as the difference between the observed level of an economy's output and its trend or potential level. In the short term, an economy can produce above its potential level (a positive output gap) through unusually high levels of labour force participation, capacity utilisation, or technical progress. However, a positive output gap tends to generate inflationary pressures on the markets for factors of production. Once inflation accelerates, output will have to fall below its potential level (a negative output gap) to increase available resources and reduce the pressure on prices. Therefore, measures of the output gap are often used in macroeconomic analysis to assess current and future levels of inflationary pressures in the economy. This study reviews several of the many alternative methods of estimating output gaps and applies six of these to annual data for Luxembourg. These different measures of the output gap are then compared and evaluated in terms of their contribution to inflation forecasting. Methods based on unobserved components models tend to do better than simpler, better known methods (i.e. linear trends, the HP filter). Multivariate methods that consider the simultaneous evolution of several different economic variables tend to do better than univariate methods that limit themselves to the output series itself.

Public debt, population ageing and medium-term growth

This paper analyses the challenges that high public debt and ageing populations pose to medium-term growth. First, macroeconometric model simulations suggest that medium-term growth can benefit from credible fiscal consolidation, partly through reductions in sovereign risk premia. Second, a disaggregated growth accounting exercise suggests that the impact of population ageing on medium-term growth can be mitigated by structural reforms boosting labour force participation. Finally, general equilibrium models suggest that pay-as-you-go public pension systems will require reforms combining lower benefits, a later retirement age and higher social contributions. These findings suggest several policy recommendations: (a) “fiscal space” should be preserved to counter adverse shocks, (b) credible fiscal plans can benefit growth through the sovereign risk channel, (c) the demographic transition increases the need for improved fiscal policy coordination and more flexible labour migration policies, and (d) fiscal consolidation should avoid perverse incentive effects that could lower labour supply and medium-term growth

Is foreign-bank efficiency in financial centers driven by home-country characteristics?

This paper investigates the effects of home country banking regulations on the performance of foreign banks in Luxembourg’s financial center. We control for the main regulatory indicators, such as capital requirements, private monitoring, official disciplinary power and restrictions on bank activities, accounting for the regulatory regime applied to foreign banks. We also control for the level of GDP in the home country and its position in the business cycle. The two-stage bootstrap method proposed by Simar and Wilson (2007) is applied to bank panel data covering 1999-2009. The analysis carries policy implications for bank regulators in both home and host countries and provides insight into the choice between establishing a branch or a subsidiary, when developing cross-border activities through financial centers.

An MVAR framework to capture extreme events in macro-prudential stress tests

Severe financial turbulences are driven by high impact and low probability events that are the characteristic hallmarks of systemic financial stress. These unlikely adverse events arise from the extreme tail of a probability distribution and are therefore very poorly captured by traditional econometric models that rely on the assumption of normality. In order to address the problem of extreme tail events, we adopt a mixture vector autoregressive (MVAR) model framework that allows for a multi-modal distribution of the residuals. A comparison between the respective results of a VAR and MVAR approach suggests that the mixture of distributions allows for a better assessment of the effect that adverse shocks have on counterparty credit risk, the real economy and banks’ capital requirements. Consequently, we argue that the MVAR provides a more accurate assessment of risk since it captures the fat tail events often observed in time series of default probabilities

Sicurezza dei pagamenti e privacy nell’e-commerce

La sempre maggiore diffusione delle tecnologie digitali e lo sviluppo dell'attività commerciale on-line impongono l'analisi di rilevanti problematiche legate sia alla sicurezza dei nuovi metodi di pagamento, intesa come possibilità di porre in essere trasferimenti patrimoniali per via telematica "sicuri" (nell'interesse di chi effettua il pagamento, ma anche di chi offre beni e servizi), sia alla tutela della privacy delle parti coinvolte, nonché alla sicurezza dei dati personali richiesti al fine di eseguire le varie operazioni negoziali e, più in generale, dei dati che viaggiano sulla rete. Ripubblicazione inalterata di un articolo già pubblicato in Diritto dell’Internet, 2005, 91-101. Questa versione 1.0 – aprile 2008 in pdf - © 2008 Paolo Guarda – è pubblicata con licenza Creative Commons Attribuzione-NonCommerciale-NoOpereDerivate 2.5 Italy. Tale licenza consente l’uso non commerciale dell’opera, a condizione che ne sia sempre data attribuzione all’autore (per maggiori informazioni visita il sito: http://creativecommons.org/licenses/by-nc-nd/2.5/it/

Changes in bank specialisation: comparing foreign subsidiaries and branches in Luxembourg

Presumably, foreign banks open subsidiaries and branches in Luxembourg to perform different tasks. This paper studies the balance sheet structure of banks in Luxembourg, testing for differences across groups and across periods. Non-parametric methods yield several findings. First, specialisation and heterogeneity vary across years as well as across different market segments. Second, comparing subsidiaries and branches, estimated distributions across banks have been relatively similar for Interbank Loans but have become rather different for Interbank Deposits. For Customer Loans and Customer Deposits, the differences across groups are generally greater, especially for Customer Deposits. Third, in 2009 the financial crisis generally sharpened the differences between subsidiaries and branches for all variables considered. Fourth, long-term changes between 1995 and 2007 appeared to be (temporarily?) reversed between 2007 and 2009 by the financial crisis.Luxembourg Banks; Banking activities; Convergence; Distribution Dynamics; Non-Parametric kernel

Estimating the natural interest rate for the euro area and Luxembourg

This paper estimates the natural real interest rate that is consistent with stable inflation and output at its potential for the euro area and Luxembourg. The natural interest rate provides a benchmark for assessing the monetary policy stance, as policy is contractionary when real interest rates rise above the natural rate and expansionary when real interest rates fall below this level. We follow Laubach and Williams (2003) in using a small backward-looking macroeconomic model to estimate the time-varying natural interest rate as an unobservable variable. For the euro area, our results suggest the natural interest rate has been fairly stable since 1970 and confirm its decline over the last decade. For Luxembourg, our estimate of the natural interest rate is much higher, reflecting higher potential growth. The results suggest that the single monetary policy may have had an expansionary impact in recent years, especially in Luxembourg.Kalman filter, natural interest rate equilibrium, real interest rate

Is foreign-bank efficiency in financial centers driven by homecountry characteristics?

This paper investigates the effects of home country banking regulations on the performance of foreign banks in Luxembourg?s financial center. We control for the main regulatory indicators, such as capital requirements, private monitoring, official disciplinary power and restrictions on bank activities, accounting for the regulatory regime applied to foreign banks. We also control for the level of GDP in the home country and its position in the business cycle. The two-stage bootstrap method proposed by Simar and Wilson (2007) is applied to bank panel data covering 1999-2009. The analysis carries policy implications for bank regulators in both home and host countries and provides insight into the choice between establishing a branch or a subsidiary, when developing cross-border activities through financial centers.Foreign bank efficiency, Home-host country characteristics, Bank regulation, Data Envelopment Analysis, Bootstrap