Bounds on policy relevant parameters with discrete policy variation

When estimating policy parameters, also known as treatment effects, the assignment to treatment mechanism almost always causes endogeneity and thus bias many of these policy parameters estimates. Additionally, heterogeneity in program impacts is more likely to be the norm than the exception for most social programs. In situations where these issues are present, the Marginal Treatment Effect (MTE) parameter estimation makes use of an instrument to avoid assignment bias and simultaneously to account for heterogeneous effects throughout individuals. Although this parameter is point identified in the literature, the assumptions required for identification may be strong. Given that, we use weaker assumptions in order to partially identify the MTE, i.e. to stablish a methodology for MTE bounds estimation, implementing it computationally and showing results from Monte Carlo simulations. The partial identification we perfom requires the MTE to be a monotone function over the propensity score, which is a reasonable assumption on several economics' examples, and the simulation results shows it is possible to get informative even in restricted cases where point identification is lost. Additionally, in situations where estimated bounds are not informative and the traditional point identification is lost, we suggest a more generic method to point estimate MTE using the Moore-Penrose Pseudo-Invese Matrix, achieving better results than traditional methods.

Shocking policy coefficients

This paper proposes an empirical framework to study the effects of a policy regime change defined as an unpredictable and permanent change in the policy parameters. In particular I show how to make conditional forecast and perform impulse response functions and counterfactual analysis. As an application, the effects of changes in fiscal policy rules in the US are investigated. I find that discretionary fiscal policy has become more countercyclical over the last decades. In absence of such a change, surplus would have been higher, debt lower and output gap more volatile but only until mid 80s. An increase in the degree of counter-cyclicality of fiscal policy has a positive effect on output gap in periods where the level of debt-to-GDP ratio is low and a zero or negative effect when the ratio is high. This explains why a more countercylical stance of the systematic fiscal policy taking place in 2008:II is predicted to be rather ineffective for recovering from the crisis.

La seguridad humana canadiense y su aplicación en la construcción de paz en Sierra Leona

Canadá actuó en la construcción del post-conflicto en Sierra Leona como respuesta a los parámetros de su política exterior y basándose específicamente en los principios que se desprenden de la seguridad humana. En este contexto Canadá se desempeñó como constructor de paz y participo de manera activa a lo largo de todas las etapas del post-conflicto en Sierra Leona. Esta participación fue un poco tímida e indirecta en el marco de los procesos de desarme y desmovilización, mientras que en los de reinserción y reintegración desempeñó un papel determinante.

La ausencia de Políticas Públicas sobre combustibles de origen biológico en Colombia y sus efectos sobre el medio ambiente

El cambio climático ha sido una de las mayores preocupaciones de los Estados en las últimas décadas como resultado de más de un siglo de explotación y empleo de un recurso natural no renovable que fue el motor del mundo en el siglo pasado y aún hoy mantiene a flote la economía de los países, el petróleo. En la actualidad, las reservas de petróleo han empezando a escasear. Por tanto, se han empezado a desarrollar estrategias para evitar una crisis energética global. La más importante la constituye la investigación y puesta en práctica de energías renovables y ambientalmente amigables como los biocombustibles. Los biocombustibles se perciben como una solución energética para el país. Sin embargo, la falta de articulación en la gestión de los actores de gobierno encargados de su puesta en práctica y de parámetros normativos fragmentarios al respecto, ocasiona una ausencia de políticas públicas de biocombustibles en Colombia; generando así que los compromisos ambientales y de reducción de emisiones de gas carbónico sean hoy, una meta por conquistar.

European Union: Shadow WTO agricultural domestic support notifications

The notification of the level of domestic support to the World Trade Organization (WTO) is intended to reflect compliance with obligations entered into at the time of the Uruguay Round. WTO members have often been slow to provide notification of domestic support levels. This makes the process of notification less useful as an indicator of the degree to which changes in policy have or have not benefited the trade system as a whole and exporting countries in particular. The notification of domestic support in the E.U. illustrates the value of a measure that reflects current policies and can therefore act as a basis for negotiation of further disciplines where these are necessary. The E.U. has made major changes in its Common Agricultural Policy (CAP) over the period since 1992 when the MacSharry reforms were implemented. Payments originally notified in the blue box (related to supply control) have over time been changed until in their present form they are unrelated to current production or price levels, and hence can satisfy the criteria for the green box. The E.U. has therefore much more latitude in trade talks to agree to reductions in the allowable trade-distorting support. This paper reproduced the E.U. notifications relating to 2003/04 and extends these with official statistics to the year 2006/07. It then projects forward the components of domestic support until the year 2013/14, based on forecasts of future production and estimates of policy parameters. The impact of a successful Doha Round is simulated, showing that the constraints envisaged in the WTO draft modalities document of May 19, 2008, would be binding by the year 2013, at about the time the next budget cycle in the E.U. starts. Without the Doha Round constraints, further reform might still happen for domestic reasons, but the framework provided by the WTO for domestic policy spending would be less relevant. In that case, much could hinge on the legitimacy of the Single Farm Payment system under the current rules governing the green box.

The state of the youth: prisons, drugs and car crashes

By virtue of the volume and nature of their attributions, including secondary school as well as problem-areas such as security and traffic, the Brazilian states are the ultimate responsible entities for young people. This study argues in favour of granting greater freedom for the states to define their own public policy parameters to deal with local features and to increase the degree of learning about such actions at the national level. In empirical terms, the study assesses the impacts of new laws, such as the new traffic code (from the joint work with Leandro Kume, EPGE/FGV doctor’s degree student) and traces the statistics for specific questions like drugs, violence and car accidents. The findings show that these questions produce different results for young men and women.The main characters in these dramas are young single males, suggesting the need for more distinguished public policies according not only to age, but also by gender. The study also reveals that the magnitude of these problems changes according to the youth’s social class. Prisons concern poorer men (except for the functional illiterate) while fatal car accidents and the confessed use of drugs concern upper-class boys.

Measuring Unemployment Insurance Generosity

In this paper, we develop a methodology to summarize the various policy parameters of an unemployment insurance scheme into a single generosity parameter. Unemployment insurance policies are multdimensional objects. They are typically defined by waiting periods, eligibility duration, benefit levels and asset tests when eligible, which makes intertemporal or international comparisons difficult. To make things worse, labor market conditions, such as the likelihood and duration of unemployment matter when assessing the generosity of different policies. We build a first model with such complex characteristics. Our model features heterogeneous agents that are liquidity constrained but can self-insure. We then build a second model that is similar, except that the unemployment insurance is simpler: it is deprived of waiting periods and agents are eligible forever with constant benefits. We then determine which level of benefits in this second model makes agents indifferent between both unemployment insurance policies. We apply this strategy to the unemployment insurance program of the United Kingdom and study how its generosity evolved over time.

Nonparametric Identication and Structural Estimation of Auction Models

Thesis (Ph.D.)--University of Washington, 2016-06

Cost risk benefit analysis to support chemoprophylaxis policy for travellers to malaria endemic countries

Background: In a number of malaria endemic regions, tourists and travellers face a declining risk of travel associated malaria, in part due to successful malaria control. Many millions of visitors to these regions are recommended, via national and international policy, to use chemoprophylaxis which has a well recognized morbidity profile. To evaluate whether current malaria chemo-prophylactic policy for travellers is cost effective when adjusted for endemic transmission risk and duration of exposure. a framework, based on partial cost-benefit analysis was used Methods: Using a three component model combining a probability component, a cost component and a malaria risk component, the study estimated health costs avoided through use of chemoprophylaxis and costs of disease prevention (including adverse events and pre-travel advice for visits to five popular high and low malaria endemic regions) and malaria transmission risk using imported malaria cases and numbers of travellers to malarious countries. By calculating the minimal threshold malaria risk below which the economic costs of chemoprophylaxis are greater than the avoided health costs we were able to identify the point at which chemoprophylaxis would be economically rational. Results: The threshold incidence at which malaria chemoprophylaxis policy becomes cost effective for UK travellers is an accumulated risk of 1.13% assuming a given set of cost parameters. The period a travellers need to remain exposed to achieve this accumulated risk varied from 30 to more than 365 days, depending on the regions intensity of malaria transmission. Conclusions: The cost-benefit analysis identified that chemoprophylaxis use was not a cost-effective policy for travellers to Thailand or the Amazon region of Brazil, but was cost-effective for travel to West Africa and for those staying longer than 45 days in India and Indonesia.

A generalized multi-period mean-variance portfolio optimization with Markov switching parameters

In this paper, we deal with a generalized multi-period mean-variance portfolio selection problem with market parameters Subject to Markov random regime switchings. Problems of this kind have been recently considered in the literature for control over bankruptcy, for cases in which there are no jumps in market parameters (see [Zhu, S. S., Li, D., & Wang, S. Y. (2004). Risk control over bankruptcy in dynamic portfolio selection: A generalized mean variance formulation. IEEE Transactions on Automatic Control, 49, 447-457]). We present necessary and Sufficient conditions for obtaining an optimal control policy for this Markovian generalized multi-period meal-variance problem, based on a set of interconnected Riccati difference equations, and oil a set of other recursive equations. Some closed formulas are also derived for two special cases, extending some previous results in the literature. We apply the results to a numerical example with real data for Fisk control over bankruptcy Ill a dynamic portfolio selection problem with Markov jumps selection problem. (C) 2008 Elsevier Ltd. All rights reserved.

A sociolinguistic approach to applied epistemology: Examining technocratic values in global 'knowledge' policy

This special issue presents an excellent opportunity to study applied epistemology in public policy. This is an important task because the arena of public policy is the social domain in which macro conditions for ‘knowledge work’ and ‘knowledge industries’ are defined and created. We argue that knowledge-related public policy has become overly concerned with creating the politico-economic parameters for the commodification of knowledge. Our policy scope is broader than that of Fuller (1988), who emphasizes the need for a social epistemology of science policy. We extend our focus to a range of policy documents that include communications, science, education and innovation policy (collectively called knowledge-related public policy in acknowledgement of the fact that there is no defined policy silo called ‘knowledge policy’), all of which are central to policy concerned with the ‘knowledge economy’ (Rooney and Mandeville, 1998). However, what we will show here is that, as Fuller (1995) argues, ‘knowledge societies’ are not industrial societies permeated by knowledge, but that knowledge societies are permeated by industrial values. Our analysis is informed by an autopoietic perspective. Methodologically, we approach it from a sociolinguistic position that acknowledges the centrality of language to human societies (Graham, 2000). Here, what we call ‘knowledge’ is posited as a social and cognitive relationship between persons operating on and within multiple social and non-social (or, crudely, ‘physical’) environments. Moreover, knowing, we argue, is a sociolinguistically constituted process. Further, we emphasize that the evaluative dimension of language is most salient for analysing contemporary policy discourses about the commercialization of epistemology (Graham, in press). Finally, we provide a discourse analysis of a sample of exemplary texts drawn from a 1.3 million-word corpus of knowledge-related public policy documents that we compiled from local, state, national and supranational legislatures throughout the industrialized world. Our analysis exemplifies a propensity in policy for resorting to technocratic, instrumentalist and anti-intellectual views of knowledge in policy. We argue that what underpins these patterns is a commodity-based conceptualization of knowledge, which is underpinned by an axiology of narrowly economic imperatives at odds with the very nature of knowledge. The commodity view of knowledge, therefore, is flawed in its ignorance of the social systemic properties of ��knowing’.

Response Time Analysis for Fixed-Priority Tasks with Multiple Probabilistic Parameters

Demo presented in 12th Workshop on Models and Algorithms for Planning and Scheduling Problems (MAPSP 2015). 8 to 12, Jun, 2015. La Roche-en-Ardenne, Belgium. Extended abstract.

Expectations, Learning and Monetary Policy: An Overview of Recent Research

Expectations about the future are central for determination of current macroeconomic outcomes and the formulation of monetary policy. Recent literature has explored ways for supplementing the benchmark of rational expectations with explicit models of expectations formation that rely on econometric learning. Some apparently natural policy rules turn out to imply expectational instability of private agents’ learning. We use the standard New Keynesian model to illustrate this problem and survey the key results about interest-rate rules that deliver both uniqueness and stability of equilibrium under econometric learning. We then consider some practical concerns such as measurement errors in private expectations, observability of variables and learning of structural parameters required for policy. We also discuss some recent applications including policy design under perpetual learning, estimated models with learning, recurrent hyperinflations, and macroeconomic policy to combat liquidity traps and deflation.

How Optimal is US Monetary Policy?

Most of the literature estimating DSGE models for monetary policy analysis assume that policy follows a simple rule. In this paper we allow policy to be described by various forms of optimal policy - commitment, discretion and quasi-commitment. We find that, even after allowing for Markov switching in shock variances, the inflation target and/or rule parameters, the data preferred description of policy is that the US Fed operates under discretion with a marked increase in conservatism after the 1970s. Parameter estimates are similar to those obtained under simple rules, except that the degree of habits is significantly lower and the prevalence of cost-push shocks greater. Moreover, we find that the greatest welfare gains from the ‘Great Moderation’ arose from the reduction in the variances in shocks hitting the economy, rather than increased inflation aversion. However, much of the high inflation of the 1970s could have been avoided had policy makers been able to commit, even without adopting stronger anti-inflation objectives. More recently the Fed appears to have temporarily relaxed policy following the 1987 stock market crash, and has lost, without regaining, its post-Volcker conservatism following the bursting of the dot-com bubble in 2000.

Three Essays on the Formation and Impact of Economic Policy

Introduction In my thesis I argue that economic policy is all about economics and politics. Consequently, analysing and understanding economic policy ideally has at least two parts. The economics part, which is centered around the expected impact of a specific policy on the real economy both in terms of efficiency and equity. The insights of this part point into which direction the fine-tuning of economic policies should go. However, fine-tuning of economic policies will be most likely subject to political constraints. That is why, in the politics part, a much better understanding can be gained by taking into account how the incentives of politicians and special interest groups as well as the role played by different institutional features affect the formation of economic policies. The first part and chapter of my thesis concentrates on the efficiency-related impact of economic policies: how does corporate income taxation in general, and corporate income tax progressivity in specific, affect the creation of new firms? Reduced progressivity and flat-rate taxes are in vogue. By 2009, 22 countries are operating flat-rate income tax systems, as do 7 US states and 14 Swiss cantons (for corporate income only). Tax reform proposals in the spirit of the "flat tax" model typically aim to reduce three parameters: the average tax burden, the progressivity of the tax schedule, and the complexity of the tax code. In joint work, Marius Brülhart and I explore the implications of changes in these three parameters on entrepreneurial activity, measured by counts of firm births in a panel of Swiss municipalities. Our results show that lower average tax rates and reduced complexity of the tax code promote firm births. Controlling for these effects, reduced progressivity inhibits firm births. Our reading of these results is that tax progressivity has an insurance effect that facilitates entrepreneurial risk taking. The positive effects of lower tax levels and reduced complexity are estimated to be significantly stronger than the negative effect of reduced progressivity. To the extent that firm births reflect desirable entrepreneurial dynamism, it is not the flattening of tax schedules that is key to successful tax reforms, but the lowering of average tax burdens and the simplification of tax codes. Flatness per se is of secondary importance and even appears to be detrimental to firm births. The second part of my thesis, which corresponds to the second and third chapter, concentrates on how economic policies are formed. By the nature of the analysis, these two chapters draw on a broader literature than the first chapter. Both economists and political scientists have done extensive research on how economic policies are formed. Thereby, researchers in both disciplines have recognised the importance of special interest groups trying to influence policy-making through various channels. In general, economists base their analysis on a formal and microeconomically founded approach, while abstracting from institutional details. In contrast, political scientists' frameworks are generally richer in terms of institutional features but lack the theoretical rigour of economists' approaches. I start from the economist's point of view. However, I try to borrow as much as possible from the findings of political science to gain a better understanding of how economic policies are formed in reality. In the second chapter, I take a theoretical approach and focus on the institutional policy framework to explore how interactions between different political institutions affect the outcome of trade policy in presence of special interest groups' lobbying. Standard political economy theory treats the government as a single institutional actor which sets tariffs by trading off social welfare against contributions from special interest groups seeking industry-specific protection from imports. However, these models lack important (institutional) features of reality. That is why, in my model, I split up the government into a legislative and executive branch which can both be lobbied by special interest groups. Furthermore, the legislative has the option to delegate its trade policy authority to the executive. I allow the executive to compensate the legislative in exchange for delegation. Despite ample anecdotal evidence, bargaining over delegation of trade policy authority has not yet been formally modelled in the literature. I show that delegation has an impact on policy formation in that it leads to lower equilibrium tariffs compared to a standard model without delegation. I also show that delegation will only take place if the lobby is not strong enough to prevent it. Furthermore, the option to delegate increases the bargaining power of the legislative at the expense of the lobbies. Therefore, the findings of this model can shed a light on why the U.S. Congress often practices delegation to the executive. In the final chapter of my thesis, my coauthor, Antonio Fidalgo, and I take a narrower approach and focus on the individual politician level of policy-making to explore how connections to private firms and networks within parliament affect individual politicians' decision-making. Theories in the spirit of the model of the second chapter show how campaign contributions from lobbies to politicians can influence economic policies. There exists an abundant empirical literature that analyses ties between firms and politicians based on campaign contributions. However, the evidence on the impact of campaign contributions is mixed, at best. In our paper, we analyse an alternative channel of influence in the shape of personal connections between politicians and firms through board membership. We identify a direct effect of board membership on individual politicians' voting behaviour and an indirect leverage effect when politicians with board connections influence non-connected peers. We assess the importance of these two effects using a vote in the Swiss parliament on a government bailout of the national airline, Swissair, in 2001, which serves as a natural experiment. We find that both the direct effect of connections to firms and the indirect leverage effect had a strong and positive impact on the probability that a politician supported the government bailout.