Aggregate implications of innovation policy

In this paper we present a tractable model of innovating firms and the aggregate economy that we use to assess quantitatively the link between the responses of firms to changes in innovation policy and the impact of those policy changes on aggregate output and welfare. We show that, to a first-order approximation, a wide range of policy changes have a long-run impact in direct proportion to the fiscal expenditures on those policies, and that to evaluate the aggregate impact of a policy change, there is no need to calculate changes in firms' decisions in response to these policy changes. ; We use these results to compare the relative magnitudes of the impact on aggregates in the long run of three innovation policies in the United States: the Research and Experimentation Tax Credit, federal expenditure on R&D, and the corporate profits tax. We argue that the corporate profits tax is a relatively important policy through its negative effects on innovation and physical capital accumulation. We also use a calibrated version of our model to examine the absolute magnitude of the impact of these policies on aggregates. We show that, depending on the magnitude of spillovers, it is possible for changes in innovation policies to have very large impact on aggregates in the long run. However, over a 15-year horizon, the impact of changes in innovation policies on aggregate output is not very sensitive to the magnitude of spillovers. ; On the basis of these results we conclude that, while it is possible to make comparisons about the relative importance of different policies and sharp predictions about their aggregate impact in the medium term, it is very difficult to shed much light on the implications of innovation policies for long-run aggregate outcomes and welfare in the absence of direct quantitative evidence on the magnitude of spillovers.

Employment Implications of U.S. Immigration Policy

Public testimony by Prof. Briggs given before the before the Subcommittee on Immigration, Refugees, and International Law of the Committee on the Judiciary, House of Representatives, July 21, 1987

Policy Implications of Freestanding Emergency Departments

Policymakers have a responsibility to look at both the short- and long-term implications of their decisions. The state’s current fiscal situation, coupled with rising health-care costs makes “budget neutrality” highly desirable in decision-making. In spite of efforts to bend the cost curve, health expenditures have grown inexorably in Alaska. As of 2009 our health expenditures per capita were the second highest in the nation. This means that the state spends a larger portion of its budget on health costs, employers allocate more of employees’ compensation to health premiums, and households spend more of their disposable income on out-of- pocket costs, premiums, and co-pays. The evidence we provide in this analysis consistently shows that freestanding emergency departments charge higher prices for services that are available for considerably less in traditional settings. Allowing freestanding emergency departments to enter the Alaska market goes against the many efforts being undertaken to contain health-care costs. Markets forces explain a significant portion of the high health-care prices charged in Alaska, but in this case the state has an opportunity to use its regulatory authority to help prevent even higher prices in the future. Putting costs aside, in considering emergency services one needs to rationalize the hospital and clinical capacity across a region and the needs of the population. In the Alaska health-care system there are problems with coordinating the delivery of care. Freestanding emergency departments pose the risk of exacerbating that lack of coordination, if people use them in lieu of seeing their primary physicians—which can disrupt the continuum of care and potentially hurt outcomes for patients.Providence Alaska Medical Cente

Implications of ERM2 for Poland’s Monetary Policy

This study proposes an extension to the inflation targeting framework for Poland that takes into consideration the exchange rate stability constraints imposed by the obligatory participation in the ERM2 on the path to the euro. The modified policy framework is based on targeting the differential between the domestic and the implicit euro area inflation forecasts. The exchange rate stability objective enters the central bank reaction function and is treated as an indicator variable. Adjustments of interest rates respond to changes in the relative inflation forecast, while foreign exchange market intervention is applied for the purpose of stabilizing the exchange rate. The dynamic market equilibrium exchange rate is ascertained by employing the Johanssen cointegration tests and the threshold generalized autoregressive heteroscedasticity model with the in-mean extension and generalized error distribution (TGARCH-M-GED).http://deepblue.lib.umich.edu/bitstream/2027.42/40188/3/wp802.pd

Agricultural policy implications of biotechnology

Advances in genetic engineering involve more than scientific breakthroughs. Potential economic effects - some possibly undesirable - also need to be considered.biotechnology; agricultural commodities; agricultural policy

Policy implications of warming permafrost

Permafrost is perennially frozen ground occurring in about 24% of the exposed land surface in the Northern Hemisphere. The distribution of permafrost is controlled by air temperature and, to a lesser extent, by snow depth, vegetation, orientation to the sun and soil properties. Any location with annual average air temperatures below freezing can potentially form permafrost. Snow is an effective insulator and modulates the effect of air temperature, resulting in permafrost temperatures up to 6°C higher than the local mean annual air temperature. Most of the current permafrost formed during or since the last ice age and can extend down to depths of more than 700 meters in parts of northern Siberia and Canada. Permafrost includes the contents of the ground before it was frozen, such as bedrock, gravel, silt and organic material. Permafrost often contains large lenses, layers and wedges of pure ice that grow over many years as a result of annual freezing and thawing of the surface soil laye

Switch on the competition; causes, consequences and policy implications of consumer switching costs

The success or failure of reforms aimed at liberalising markets depends to an important degree on consumer behaviour. If consumers do not base their choices on differences in prices and quality, competition between firms may be weak and the benefits of liberalisation to consumers may be small. One possible reason why consumers may respond only weakly to differences in price and quality is high costs of switching to another firm. This report presents a framework for analysing markets with switching costs and applies the framework in two empirical case studies. The first case study analyses the residential energy market, the second focuses on the market for social health insurance. In both markets, there are indications that switching costs are substantial. The report discusses policy options for reducing switching costs and for alleviating the consequences of switching costs.

International contagion - implications for policy

The authors try to identify and evaluate the public policy implications of financial crises. In this model, financial contagion can be driven by a combination of fundamentals and by self-fulfilling market expectations. The model allows the authors to identify different notions of contagion, especially the distinction between"monsoonal effects","spillovers", and"switchers between equilibria". They discuss both domestic and international policy options. Domestic policies, they say, should be aimed at reducing financial fragility - that is, reducing unnecessary short-term debt commitments. With explicit commitments, the maturity of external debts should be lengthened. With implicit commitments, such as private liability guarantees, they emphasize limiting or eliminating such guarantees, to improve an economy's international liquidity and reduce its exposure to contagion. Internationally, they stress the need for improving financial standards, which makes it easier to assess when a country is subject to different kinds of contagion. The effectiveness of international rescue packages depends on the kind of contagion to which a country is exposed. Implications: the international community should help those countries that are already helping themselves.Financial Crisis Management&Restructuring,Financial Intermediation,Banks&Banking Reform,Economic Theory&Research,Environmental Economics&Policies

Implications of Globalization for Monetary Policy

This paper argues that the implications of globalization for monetary policy come mainly through two channels: On the one hand, the many structural changes, which are associated with the globalization process, cause an increase in uncertainty surrounding monetary policy. This leads to an increase in uncertainty about how to interpret macroeconomic data/indicators and about the monetary transmission mechanism. On the other hand, by strengthening the process of global economic integration, the globalization process increases international competition. Thereby, globalization forces market players to make structural adjustments or reforms which change the conditions or constraints under which monetary policy is implemented.