Rule of Thumb Consumers, Public Debt and Income Tax

This paper analyzes a New Keynesian model with Rule-of-Thumb consumers (ROTC) as in Galí et al.(2007) and a fiscal policy which levies a proportional income tax. We …nd that, when the share of ROTC is above a specified threshold and di¤erently from the usual Leeper (1991) result, the determinacy condition requires for both monetary and fiscal policy to be either active of passive. Furthermore we show that the introduction of a set of ROTC can reverse the traditional predictions of a change in government spending on the economy as a whole: under a reasonable parametrization of the model, an increase in government spending can lead, against the common Keynesian wisdom, to a decrease in total output. Finally we point out that with the introduction of a distortive fiscal policy and independently of the parametrization used, private consumption responds negatively to a positive government spending shock.Rule-of-thumb-consumers, monetary-fiscal policy interactions, distortive taxation, public spend- ing, private consumption.

Designing monetary and Fiscal policy rules in a New Keynesian model with rule-of-thumb consumers

This paper develops a small New Keynesian model augmented with a steady state level of public debt and a share of rule-of-thumb consumers (ROTC henceforth) as in Gali' et al. (2004; 2007). The paper focuses on the consequences for the design of monetary and fiscal rules, of the bifurcation generated by the presence of ROTC on the demand side of the economy, in the absence of Ricardian equivalence. We find that, when fiscal policy follows a balanced budget rule, the amount of ROTC determines whether an active and/or a passive monetary policy in the sense of Leeper (1991) guarantees determinacy. When short run public debt assets are introduced, the amount of ROTC determines whether equilibrium determinacy requires a mix of active (passive) monetary policy and a passive (active) fiscal policy or a mix where policies are both active or passive. This set of equilibria has the potential to explain the empirical evidence on the U.S. postwar data on monetary and fiscal policy interactions.Rule-of-thumb consumers, monetary-?scal iteractions, balanced budget rule, Taylor principle, active-passive policy mix

Effective critical micellar concentration of a zwitterionic detergent: A fluorimetric study on n-dodecyl phosphocholine

We have investigated the effect of ionic strength on the aggregation behavior of n-dodecyl phosphocholine. On the basis of the classical Corrin-Harkins relation, the critical micellar concentration of this detergent decreases with a biphasic trend on lithium chloride addition. It is nearly constant below 150 mM salt, with a mean value of 0.91 mM, whereas it undergoes a dramatic 80-fold decrease in 7 M LiCl. Such a drop in the critical micellar concentration could be explained by the effect of salting out and the implication of phosphocholine head groups on the organization of surrounding water. Knowledge of the effective critical micellar concentration of n-dodecyl phosphocholine could be useful in the purification of membrane proteins in non-denaturing conditions

Monetary and fiscal policy under deep habits

Recent work on optimal policy in sticky price models suggests that demand management through fiscal policy adds little to optimal monetary policy. We explore this consensus assignment in an economy subject to ‘deep’ habits at the level of individual goods where the counter-cyclicality of mark-ups this implies can result in government spending crowding-in private consumption in the short run. We explore the robustness of this mechanism to the existence of price discrimination in the supply of goods to the public and private sectors. We then describe optimal monetary and fiscal policy in our New Keynesian economy subject to the additional externality of deep habits and explore the ability of simple (but potentially nonlinear) policy rules to mimic fully optimal policy.Monetary Policy, Fiscal Policy, Deep Habits, New Keynesian

Optimal monetary policy in a new Keynesian model with habits in consumption

While consumption habits have been utilised as a means of generating a hump shaped output response to monetary policy shocks in sticky-price New Keynesian economies, there is relatively little analysis of the impact of habits (particularly, external habits) on optimal policy. In this paper we consider the implications of external habits for optimal monetary policy, when those habits either exist at the level of the aggregate basket of consumption goods (‘superficial’ habits) or at the level of individual goods (‘deep’ habits: see Ravn, Schmitt-Grohe, and Uribe (2006)). External habits generate an additional distortion in the economy, which implies that the flex-price equilibrium will no longer be efficient and that policy faces interesting new trade-offs and potential stabilisation biases. Furthermore, the endogenous mark-up behaviour, which emerges when habits are deep, can also significantly affect the optimal policy response to shocks, as well as dramatically affecting the stabilising properties of standard simple rules. JEL Classification: E30, E57, E61consumption habits, nominal inertia, optimal monetary policy

Pursuing Aviation Biofuels. A Diagnostic Analysis of the Swedish Biojet Innovation System

Globally, aviation biofuel (biojet) technology has reached a degree of progress that allows immediate substitution of conventional fossil fuel in commercial air travel. However,numerous factors constitute an impediment to its large-scale use and deployment: a diagnostic analysis identifying key obstacles to biojet development is needed. For this reason, an examination of actors, institutions and activities existing in the Swedish landscape is performed. The research uses the System of Innovation framework to identify key factors having an impact on the biojet innovation process and to map out the current state of play. The analysis indicates that a large number of actors and institutions can influence the innovation system. Only a limited amount of organisations is proactively contributing to the system success, whereas a large group of actors are generally favourable to biojet development but participate somewhat passively to the innovation process. In particular, a major barrier to development is constituted by the scarce involvement of the Swedish public authority, which could foster the innovation process by setting binding targets, providing financial incentives and encouraging collaboration among stakeholders. Limits in the significance of results are due the categorisation approach, which prevents to consider the whole picture of the innovation system, and due to the inability of comparing the Swedish system with other national studies; the latter issue can be overcome by conducting analogue research in other settings

Essays in monetary and fiscal policy

This thesis is composed by four chapters on New Keynesian macroeconomics. Chapter 1 develops a small New Keynesian model augmented with a steady state level of public debt and a share of rule-of-thumb consumers (ROTC henceforth) as in Galí et al. (2004; 2007). This chapter focuses on the consequences for the design of monetary and �scal rules, of the bifurcation on the demand side of the economy generated by the presence of ROTC, in the absence of Ricardian equivalence. When �scal policy follows a balanced budget rule, the share of ROTC determines whether an active and/or a passive monetary policy in the sense of Leeper (1991) guarantees determinacy. When a short run public debt asset is introduced, the amount of ROTC determines whether equilibrium determinacy requires a mix of active (passive) monetary policy and a passive (active) fiscal policy or a mix where both policies are active or passive. Chapter 2 studies the equilibrium determinacy of a New Keynesian model augmented with trend inflation, public debt and distortionary taxation. Both the level of long run inflation as well as the stock of steady state public debt have to be explicitly taken into consideration for the characterisation of the equilibrium dynamics between monetary and fiscal policy. Chapter 3 considers the implications of external habits for optimal monetary policy in an otherwise standard New Keynesian model, when those habits exist at the level of individual goods as in Ravn et al. (2006). External habits generate an additional distortion in the economy, which implies that the flex-price equilibrium will no longer be efficient and that policy faces interesting new trade-offs and potential stabilisation biases. The endogenous mark-up behaviour, which emerges with deep habits, signi�cantly a¤ects the optimal policy response to shocks and the stabilising properties of standard simple rules. Chapter 4 analyses both optimal monetary and �scal policy in a New Keynesian model augmented with deep habits and valuable government spending. We �find that, in line with the general consensus in the macro literature, �scal policy adds very little to optimal monetary policy as a stabilisation device

Monetary and Fiscal Policy under Deep Habits

Recent work on optimal policy in sticky price models suggests that demand management through fiscal policy adds little to optimal monetary policy. We explore this consensus assignment in an economy subject to ‘deep’ habits at the level of individual goods where the counter-cyclicality of mark-ups this implies can result in government spending crowding-in private consumption in the short run. We explore the robustness of this mechanism to the existence of price discrimination in the supply of goods to the public and private sectors. We then describe optimal monetary and fiscal policy in our New Keynesian economy subject to the additional externality of deep habits and explore the ability of simple (but potentially non¬linear) policy rules to mimic fully optimal policy.Monetary Policy, Fiscal Policy, Deep Habits, New Keynesian.

Adaptation measures in Intended Nationally Determined Contributions from Small Island Developing States and Least Developed Countries

Due to higher risk of climate change impacts, Small Island Developing States (SIDS) and Least Developed Countries (LDCs) are identified as the two country categories in which adaptation action is most needed. To address adaptation issues, countries submitted, under the framework of the Paris Agreement, Intended Nationally Determined Contributions (INDCs), a vehicle to communicate adaptation actions and needs. This study performs an analysis of adaptation measures communicated through the INDCs of 74 developing countries belonging to the SIDS and LDC groups. By looking at the measures as provided in INDCs, the study makes an assessment of communicated adaptation actions and needs from recipients’ perspective. Besides categorising the types of adaptation actions and calculating total communicated costs, an in-depth analysis of information exhaustiveness in INDCs is performed, classifying the countries depending on the degree of detail in communicated information and looking at factors connected to the provision of exhaustive information. Total communicated costs amount to USD 228 billion, of which USD 141 billion are costs for specified actions and the remainder is composed of non-specified aggregates. With only 6.5 percent of specified actions being unconditional, the greatest bulk of actions are conditional on external support. Factors influencing information exhaustiveness in INDCs have been investigated through a conceptual framework that examines the willingness and the capacity to provide information. By looking at the indicators used for the analysis, preliminary results seem to indicate that countries communicating more exhaustive information are associated with higher levels of need of adaptation action, but are also associated with lower scores in terms of institutional, economic, financial, technical and human capacity. In contrast, the results do not show correlation between information exhaustiveness and political willingness to use the INDC framework.JRC.D.6-Knowledge for Sustainable Development and Food Securit

Time-consistent consumption taxation

We characterise optimal fiscal policies when the government has access to consumption taxation but cannot credibly commit to future policies, in a calibrated Real Business Cycle model of the United States economy. Contrary to the case where only labour and capital income are taxed, the optimal time-consistent policies are remarkably similar to their Ramsey counterparts, as long as the capital income tax causes some distortion within the period. The welfare gains from commitment are negligible, while they are substantial without consumption taxation. Further, the welfare gains from taxing consumption are much higher without commitment. These results suggest that the policy-maker's ability to commit is of secondary importance if consumption is taxed optimally