Is bank debt special for the transmission of monetary policy? Evidence from the stock market

We combine existing balance sheet and stock market data with two new datasets to studywhether, how much, and why bank lending to firms matters for the transmission of monetarypolicy. The first new dataset enables us to quantify the bank dependence of firms precisely,as the ratio of bank debt to total assets. We show that a two standard deviation increase inthe bank dependence of a firm makes its stock price about 25% more responsive to monetarypolicy shocks. We explore the channels through which this effect occurs, and find that thestock prices of bank-dependent firms that borrow from financially weaker banks display astronger sensitivity to monetary policy shocks. This finding is consistent with the banklending channel, a theory according to which the strength of bank balance sheets mattersfor monetary policy transmission. We construct a new database of hedging activities andshow that the stock prices of bank-dependent firms that hedge against interest rate riskdisplay a lower sensitivity to monetary policy shocks. This finding is consistent with aninterest rate pass-through channel that operates via the direct transmission of policy ratesto lending rates associated with the widespread use of floating-rates in bank loans and creditline agreements.

The effects of monetary policy on stock market bubbles: Some evidence

We estimate the response of stock prices to exogenous monetary policy shocks usinga vector-autoregressive model with time-varying parameters. Our evidence points toprotracted episodes in which, after a a short-run decline, stock prices increase persistently in response to an exogenous tightening of monetary policy. That responseis clearly at odds with the "conventional" view on the effects of monetary policy onbubbles, as well as with the predictions of bubbleless models. We also argue that it isunlikely that such evidence be accounted for by an endogenous response of the equitypremium to the monetary policy shocks.

The Europeanisation of the measurement of diversity in education: a soft instrument of public policy

Faced with an increasing number of data and rankings, the author questions the roles of the different groups of actors who were originally involved in questioning the use of statistical indicators as a means of addressing issues of access to higher education. The comparison and nature of these international (UNESCO, OECD, EUROSTAT) and national (Germany, England, France, Switzerland) indicators in matters of inequalities of access to higher education question the tension between the discourses and the indicators they generate, and their recording at the national level. Who says what and with what consequences? What range of actors are involved in this process? What kind of power relations forms them? The author discusses how the issue of inequalities of access to higher education got on to the agendas of European organisations, identifies the policies that were defined, and sets them against an array of indicators, showing the discrepancy between the discourses and what the indicators reveal, the gap between the recommendations and the available tools. Why is there such a contrast? What are the mechanisms at work? Is it a technical or a political problem? What does this discrepancy reveal as far as national specificities within the construction of social inequalities are concerned?

Toward partial redirection of energy policy for responsible development

This paper addresses the surprising lack of quality control on the analysis and selection on energy policies observable in the last decades. As an example, we discuss the delusional idea that it is possible to replace fossil energy with large scale ethanol production from agricultural crops. But if large scale ethanol production is not practical in energetic terms, why huge amount of money has been invested in it and is it still being invested? In order to answer this question we introduce two concepts useful to frame, in general terms, the predicament of quality control in science: (i) the concept of “granfalloons” proposed by K. Vonnegut (1963) flagging the danger of the formation of “crusades to save the world” void of real meaning. These granfalloons are often used by powerful lobbies to distort policy decisions; and (ii) the concept of Post-Normal science by S. Funtowicz and J. Ravetz (1990) indicating a standard predicament faced by science when producing information for governance. When mixing together uncertainty, multiple-scale and legitimate but contrasting views it becomes impossible to deal with complex issue using the conventional scientific approach based on reductionism. We finally discuss the implications of a different approach to the assessment of alternative energy sources by introducing the concept of Promethean technology.

Estimating the effects of fiscal policy under the budget constraint

I reconsider the short-term effects of fiscal policy when both government spending and taxes are allowed to respond to the level of public debt. I embed the long-term government budget constraint in a VAR, and apply this common trends model to US quarterly data. The results overturn some widely held beliefs on fiscal policy effects. The main finding is that expansionary fiscal policy has contractionary effects on output and inflation. Ricardian effects may dominate when fiscal expansions are expected to be adjusted by future tax rises or spending cuts. The evidence supports RBC models with distortionary taxation. We can discard some alternative interpretations that are based on monetary policy reactions or supply-side effects.

The effects of fiscal policy after the global recession: assessing the evidences

This paper offers a commented review of the most recent empirical studies of the effects of fiscal contraction on economic growth, which have helped underpin the prescription that fiscal policy should be expansionary in coming years in order to contain economic semi-stagnation in the developed countries. The paper shows that there is ample literature showing that fiscal expansion helps the economy grow, and that fiscal contraction tends to reduce output and employment in the short term.

Scales, networks and uncertainty : an examination of environmental policy-making in Ontario

Through a case-study analysis of Ontario's ethanol policy, this thesis addresses a number of themes that are consequential to policy and policy-making: spatiality, democracy and uncertainty. First, I address the 'spatial debate' in Geography pertaining to the relevance and affordances of a 'scalar' versus a 'flat' ontoepistemology. I argue that policy is guided by prior arrangements, but is by no means inevitable or predetermined. As such, scale and network are pragmatic geographical concepts that can effectively address the issue of the spatiality of policy and policy-making. Second, I discuss the democratic nature of policy-making in Ontario through an examination of the spaces of engagement that facilitate deliberative democracy. I analyze to what extent these spaces fit into Ontario's environmental policy-making process, and to what extent they were used by various stakeholders. Last, I take seriously the fact that uncertainty and unavoidable injustice are central to policy, and examine the ways in which this uncertainty shaped the specifics of Ontario's ethanol policy. Ultimately, this thesis is an exercise in understanding sub-national environmental policy-making in Canada, with an emphasis on how policy-makers tackle the issues they are faced with in the context of environmental change, political-economic integration, local priorities, individual goals, and irreducible uncertainty.

The Transmission of Monetary Policy in a Multi-Sector Economy

This paper constructs and estimates a sticky-price, Dynamic Stochastic General Equilibrium model with heterogenous production sectors. Sectors differ in price stickiness, capital-adjustment costs and production technology, and use output from each other as material and investment inputs following an Input-Output Matrix and Capital Flow Table that represent the U.S. economy. By relaxing the standard assumption of symmetry, this model allows different sectoral dynamics in response to monetary policy shocks. The model is estimated by Simulated Method of Moments using sectoral and aggregate U.S. time series. Results indicate 1) substantial heterogeneity in price stickiness across sectors, with quantitatively larger differences between services and goods than previously found in micro studies that focus on final goods alone, 2) a strong sensitivity to monetary policy shocks on the part of construction and durable manufacturing, and 3) similar quantitative predictions at the aggregate level by the multi-sector model and a standard model that assumes symmetry across sectors.