The unintended consequences of the debt ... will increased government expenditure hurt the economy?

In 2008, governments in many countries embarked on large fiscal expenditure programmes, with the intention to support the economy and prevent a more serious recession. In this study, the overall impact of a substantial increase in fiscal expenditure is considered by providing a novel analysis of the most relevant recent experience in similar circumstances, namely that of Japan in the 1990s. Then a weak economy with risk-averse banks seemed to require some of the largest peacetime fiscal stimulation programmes on record, albeit with disappointing results. The explanations provided by the literature and their unsatisfactory empirical record are reviewed. An alternative explanation, derived from early Keynesian models on the ineffectiveness of fiscal policy is presented in the form of a modified Fisher-equation, which incorporates the recent findings in the credit view literature. The model postulates complete quantity crowding out. It is subjected to empirical tests, which were supportive. Thus evidence is found that fiscal policy, if not supported by suitable monetary policy, is likely to crowd out private sector demand, even in an environment of falling or near-zero interest rates. As a policy conclusion it is pointed out that by changing the funding strategy, complete crowding out can be avoided and a positive net effect produced. The proposed framework creates common ground between proponents of Keynesian views (as held, among others, by Blinder and Solow), monetarist views (as held in particular by Milton Friedman) and those of leading contemporary macroeconomists (such as Mankiw)

Newly independent Bank of Japan reduces information disclosure

To assess the economy and the role of the central bank, data on bank credit creation is crucial. Such data is produced by the central bank, creating a conflict of interest. The Japanese central bank, like many other central banks, only publishes such data after substantial time delays, although available to the central bank virtually in real time. Furthermore, the central bank has stopped the publication of detailed disaggregated credit data, which is vital for economic analysis and the application of the Quantity Theory of Credit (Werner, 1992, 1997

New evidence on the effectiveness of 'Quantitative Easing' in Japan

Central banks have recently introduced new policy initiatives, including a policy called ‘Quantitative Easing’ (QE). Since it has been argued by the Bank of England that “Standard economic models are of limited use in these unusual circumstances, and the empirical evidence is extremely limited” (Bank of England, 2009b), we have taken an entirely empirical approach and have focused on the QE-experience, on which substantial data is available, namely that of Japan (2001-2006). Recent literature on the effectiveness of QE has neglected any reference to final policy goals. In this paper, we adopt the view that ultimately effectiveness will be measured by whether it will be able to “boost spending” (Bank of England, 2009b) and “will ultimately be judged by their impact on the wider macroeconomy” (Bank of England, 2010). In line with a widely held view among leading macroeconomists from various persuasions, while attempting to stay agnostic and open-minded on the distribution of demand changes between real output and inflation, we have thus identified nominal GDP growth as the key final policy goal of monetary policy. The empirical research finds that the policy conducted by the Bank of Japan between 2001 and 2006 makes little empirical difference while an alternative policy targeting credit creation (the original definition of QE) would likely have been more successful

The lessons from QE and other 'unconventional' monetary policies - evidence from the Bank of England

This paper investigates the effectiveness of the ‘quantitative easing’ policy, as implemented by the Bank of England in March 2009. Similar policies had been previously implemented in Japan, the U.S. and the Eurozone. The effectiveness is measured by the impact of Bank of England policies (including, but not limited to QE) on nominal GDP growth – the declared goal of the policy, according to the Bank of England. Unlike the majority of the literature on the topic, the general-to-specific econometric modeling methodology (a.k.a. the ‘Hendry’ or ‘LSE’ methodology) is employed for this purpose. The empirical analysis indicates that QE as defined and announced in March 2009 had no apparent effect on the UK economy. Meanwhile, it is found that a policy of ‘quantitative easing’ defined in the original sense of the term (Werner, 1994) is supported by empirical evidence: a stable relationship between a lending aggregate (disaggregated M4 lending, i.e. bank credit for GDP transactions) and nominal GDP is found. The findings imply that BoE policy should more directly target the growth of bank credit for GDP-transactions

Natural Family Planning and Catholic Hospitals: A National Survey

A recent survey conducted by the American Academy of Natural Family Planning (AANFP) found that over 55% of Catholic hospitals surveyed either provide or would like to provide some form of Natural Family Planning (NFP) services. In addition, over 60% of the respondents felt that NFP should be part of the mission of a Catholic hospital. This recent survey was conducted by the AANFP in order to determine the use of NFP in Catholic hospitals, (i.e., whether NFP is provided, types of NFP methods taught, teaching standardization and methodologies used, qualifications of NFP teachers, and the ethics of NFP services). This article is a report on that survey

Quasimolecular structure in elastic O16 + O16 scattering

It is suggested that the experimentally observed intermediate structure in the cross section of elastic O16 + O16 scattering is due to quasibound molecular states of the ion-ion system while the gross structure originates from virtually bound molecular states

UK QE reconsidered: the real economy effects of monetary policy in the UK, 1990-2012 – an empirical analysis

Empirical studies of so called ‘unconventional’ monetary policy – ‘Quantitative Easing’ or ‘Large Scale Asset Purchases’ - since the North Atlantic Financial Crisis of 2007-2009 in the United Kingdom and elsewhere have mainly focussed on the effect of policy on intermediate variables rather than the stated ultimate goal of such policies, boosting nominal demand and GDP growth. Secondly and relatedly they tend to focus on the crisis and post-crisis period, a time of extraordinary economic and financial dislocation, which creates counterfactual and attribution problems and fails to capture typical macroeconomic lag dynamics. Adopting the approach of Voutsinas and Werner (2010), and building on Lyonnet and Werner’s (2012) study of UK QE, this paper addresses these weaknesses by 1) examining the impact of various different monetary policy instruments (including Quantitative Easing) directly on UK nominal GDP growth; and 2) using a quarterly time series beginning in the first quarter of 1990 and up to the last quarter of 2012 (92 observations in total). We use the Hendry ‘general-to-specific’ econometric methodology to estimate a parsimonious model. The results show that disaggregated bank credit to the real economy (households and firms) has the most significant impact on nominal GDP growth. Changes to the central bank’s interest rate, central bank reserves, and total central bank asset ratios drop out of the model as insignificant. The policy implication it that, as private banks continue to shrink their balance sheets in the UK and Europe following the North Atlantic Crisis of 2008, central banks might wish to consider ‘unconventional’ monetary policies that more directly boost credit to the real economy and thus nominal GDP growt

Disaggregated Credit Flows and Growth in Central Europe

The aim of this paper is to explore the link between credit and output in the context of a developed transition economy. Salient credit market features of these economies are (i) credit market imperfections leading to constraints on growth and (ii) the rapidly growing importance during transition of their financial sectors (the insurance, pension funds and real estate sectors). We develop a framework of credit and output including separate measures for credit to the real sector and financial sectors and for credit constraints, taking account of the role of trade credit. In our empirical work we focus on the Czech Republic because of the level of its financial development and data quality. In VAR and ARIMA analyses we find that our disaggregated measures for credit flows are better predictors of nominal growth than traditional, aggregate measures.Credit, growth, transition, central Europe, Czech Republic

IRAS observations of the ISM in the gamma CAS reflection nebula

Mid-infrared emission from other galaxies originates both from interstellar grains heated by diffuse starlight and local excitation of grains by hot OB stars. Thus, a detailed examination of the Infrared Astronomy Satellite (IRAS) data from a B star interacting with the interstellar medium (ISM) could provide insight into infrared (IR) emission processes in external galaxies. Researchers have therefore used IRAS data to study the B0 IVe star gamma Cas and its surroundings, which they find to exhibit evidence of grain heating, destruction, and possible star formation