New monetary policy tools?

Monetary policy

In the quest of macroprudential policy tools

The global financial crisis of late 2008 could not have provided more convincing evidence that price stability is not a sufficient condition for financial stability. In order to attain both, central banks must develop macroprudential instruments in order to prevent the occurrence of systemic risk episodes. For this reason testing the effectiveness of different macroprudential tools and their interaction with monetary policy is crucial. In this paper we explore whether two policy instruments, namely, a capital adequacy ratio (CAR) rule in combination with a Taylor rule may provide a better macroeconomic outcome than a Taylor rule alone. We conduct our analysis by appending a macroeconometric financial block to an otherwise standard semistructural small open economy neokeynesian model for policy analysis estimated for the Mexican economy. Our results show that with the inclusion of the second policy instrument the central bank can obtain substantial gains. Moreover, we find that when the CAR rule is adequately designed the central authority can mitigate output gap shocks of twice the variance than the Taylor rule alone scenario. Thus, under this two rule case the central authority can isolate financial shocks and dampen their effects over macroeconomic variables.macroprudential tools; macroprudential policy; capital adequacy ratio; Taylor rule

Multi Pollutant Yardstick Schemes as Environmental Policy Tools

We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a “yardstick competition” scheme where the regulatory scheme depends on the dierence between a firm’s “aggregate” performance and the average “aggregate” performance of the industry. Whether this instruments dominates Pigovian taxation depends on the complete structure of the covariance matrix of the “common” random terms in measured pollution. Moreover, if the number of firms is large enough, the “yardstick scheme” is always superior to Pigovian taxation. This analysis also provides new arguments in favor of strict liability rather than negligence liability as regulatory tool.yardstick competition, multitasking, environmental regulation, asymmetric information

Peculiarities to choose sales policy tools at the Ukrainian innovatively active machine building enterprises at the economic cycle stage

The article deals with identification of the most active sales policy tools set at the innovatively active machine building enterprise, considering economic development cycles. One establishes cyclical constituent of the real GDP change time series, interconnection between real GDP lag change in one year and innovative production selling profitability from machine building enterprises. Authors determine sales policy tools impact on enterprise ability to recover from crisis and their impact lags. Methodic recommendations concerning sales policy efficient strategies choice at the machine building enterprises-innovators are investigated

University Tuition Fee Policy Tools

The two main priorities of a liberal state’s tuition policy are accessibility and equality: accessibility for all qualified students; and equality among publicly funded universities. This article analyses the policy tools that the state can use to directly or indirectly control tuition fees to best address accessibility. The article discusses the regulatory, economic and informational tuition policy tools used around the world and discusses their application in Ontario, Australia and England, based on each jurisdiction’s history and existing funding model for higher education. The article concludes with an analysis of the current trends in tuition fee policy tools

Market failure, government inefficiency, and optimal R&D policy

This paper presents a growth model that can explain the coexistence of intellectual property rights and R&D subsidies as a response to the presence of both market and government failures. The framework can also generate the observed positive correlation between these two policy tools

Remedy for Now but Prohibit for Tomorrow: The Deterrence Effects of Merger Policy Tools

Antitrust policy involves not just the regulation of anti-competitive behavior, but also an important deterrence effect. Neither scholars nor policymakers have fully researched the deterrence effects of merger policy tools, as they have been unable to empirically measure these effects. We consider the ability of different antitrust actions – Prohibitions, Remedies, and Monitorings – to deter firms from engaging in mergers. We employ cross-jurisdiction/pan-time data on merger policy to empirically estimate the impact of antitrust actions on future merger frequencies. We find merger prohibitions to lead to decreased merger notifications in subsequent periods, and remedies to weakly increase future merger notifications: in other words, prohibitions involve a deterrence effect but remedies do not

Environmental Policy Tools and Firm-Level Management Practices : Empirical Evidence for Germany.

On the basis of abundant facility and firm-level data for German manufacturing, originating from a recent OECD-survey, this paper empirically investigates the relevance of a variety of incentives for environmentally innovative behavior of facilities, the respective influence of pressure groups, and the impact of both regulatory and market-based policy instruments, such as eco-taxes. Since the early 1990s, Environmental Management Systems (EMS), specifically, have become a vital voluntary complement to mandatory environmental policies based on regulation and legislation. EMS may be perceived as an organizational environmental innovation that may lead to improved environmental performance. While the paper provides a descriptive analysis of the determinants for EMS-adoption and incentives that may trigger environmental innovation activities within German facilities, the major questions that will be addressed in this paper are: (1) How can public authorities support the introduction of management practices that may lead to improved environmental performance? (2) What are the main determinants of environmentally innovative behavior of firms? Specifically, we are interested in the role that market forces and regulation play in the process of complex firm decisions on innovation and environmental performance. While the relevant literature on these issues is dominated by case studies, our large-scale survey indicates that the most important reasons why firms contemplate introducing EMS are to improve the efforts to achieve regulatory compliance, to improve the corporate image, and to create cost savings with respect to both waste management and resource input. Among pressure groups, internal stakeholders - management employees and corporate headquarters - appear to be more influential with respect to EMS-adoption and environmental innovation than external forces, such as public authorities. --Environmental Management Systems,EMAS,Environmental Policy Instruments

Crisis in the Euro area: coopetitive game solutions as new policy tools

The crisis within the euro area have become frequent during 2010. First was the Greek economy to face a default problem of its sovreign debt, in November it was Ireland who has been in a serious financial situation at the verge of collapse causing difficulties to the euro. In this contribution we focus on the Greek crisis and we suggest, through a model of coopetition based on game theory and conceived at a macro level, feasible solutions in a cooperative perspective for the divergent interests which drive the economic policies in Germany and Greece, with the aim of improving the position of Greece, Germany and the whole euro area, also making a contribution to expand the set of macroeconomic policy tools. By means of our general analytical framework of coopetition, we show the strategies that could bring to feasible solutions in a cooperative perspective for Germany and Greece,where these feasible solutions aim at offering a win-win outcome for both countries, letting them to share the pie fairly within a growth path represented by a non-zero sum game. A remarkable analytical result of our work consists in the determination of the win-win solution by a new selection method on the transferable utility Pareto boundary of the coopetitive game.European Monetary Union, Coopetitive Games, Macroeconomic Policy, Bargaining solutions

Living Wage Laws: Answers to Frequently Asked Questions

[Excerpt] Although most communities that have considered living wage proposals have adopted them, questions invariably arise about the desirability and effectiveness of these ordinances as public policy tools and the relation of such measures to local economic development. Here are some frequently asked questions and answers about living wage ordinances