Wage Policy of Firms: an Empirical Investigation.

This paper analyzes the dynamics of wages and workers' mobility within firms with a hierarchical structure of job levels. The theoretical model proposed by Gibbons and Waldman (1999), that combines the notions of human capital accumulation, job rank assignments based on comparative advantage and learning about workers' abilities, is implemented empirically to measure the importance of these elements in explaining the wage policy of firms. Survey data from the GSOEP (German Socio-Economic Panel) are used to draw conclusions on the common features characterizing the wage policy of firms from a large sample of firms. The GSOEP survey also provides information on the worker's rank within his firm which is usually not available in other surveys. The results are consistent with non-random selection of workers onto the rungs of a job ladder. There is no direct evidence of learning about workers' unobserved abilities but the analysis reveals that unmeasured ability is an important factor driving wage dynamics. Finally, job rank effects remain significant even after controlling for measured and unmeasured characteristics.

Ethique du policy maker et dynamique macroéconomique en régime de Currency Board : le cas de Djibouti

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De lo micro a lo macro prudencial: Un análisis de la supervisión bancaria desde la econometría espacial

La crisis que se desató en el mercado hipotecario en Estados Unidos en 2008 y que logró propagarse a lo largo de todo sistema financiero, dejó en evidencia el nivel de interconexión que actualmente existe entre las entidades del sector y sus relaciones con el sector productivo, dejando en evidencia la necesidad de identificar y caracterizar el riesgo sistémico inherente al sistema, para que de esta forma las entidades reguladoras busquen una estabilidad tanto individual, como del sistema en general. El presente documento muestra, a través de un modelo que combina el poder informativo de las redes y su adecuación a un modelo espacial auto regresivo (tipo panel), la importancia de incorporar al enfoque micro-prudencial (propuesto en Basilea II), una variable que capture el efecto de estar conectado con otras entidades, realizando así un análisis macro-prudencial (propuesto en Basilea III).

Overcoming Gender Disadvantages. Social Policy Analysis of urban middle-class women in Colombia

The World Bank Report 2012 starts with this statement: “Gender equality matters in itself andit matters for development because, in today’s globalized worlds, countries that use the skillsand talents of their women would have an advantage over those which do not use it.” With theframe that suggest that gender equality matters, this paper describes some policy alternativesoriented to overcome gender disadvantages in the formal labor market incorporation of theurban middle class women in Colombia. On balance, the final recommendation suggest that itis desirable to adopt policy alternatives as Community Centers, which are programs orientedto a social redistribution of the domestic work as a way to encourage women participationin the formal labor market with the social support of the members of their own community.The problem that the social policy needs to address is the segregation of women in the formallabor market in Colombia. Although the evidence shows that the women overcome theeducational gap by showing better performance in education that their male peers, womenare still segregated of the labor market. The persistence of high rates of unemployment on thefemale population, the prevalence of the informal labor market as a women labor market, andthe presence of the payment difference between men and women with similar professionaltrainings are circumstances that sustain the segregation statement. These circumstances areinefficient for the society because an economic analysis shows that the cost of maintain the statuquo is externalized in the social security system that includes health, pension and maternityleave regimens. Therefore, the women segregation involves a market failure.This paper evaluates five policy alternatives each directed to the progress of a different causaldimension of the problem: (i) Quotas in the private market, (ii) Flexible working hours,(iii) replace the maternity leave with a family leave, (iv) Increase the Community Centers forredistributing the care work, and (v) Equal payment enforcement. The first alternative looksto increase women’s participation in the formal labor market. The second, third, and fourthalternatives constitute a package addressed at redistributing care work by reducing women’sresponsibility for reproductive work in the household with the help of husbands and the localgovernment. The fifth alternative intervenes to resolve the equal payment problem.After a four criteria evaluation that measure effectiveness, robustness and improbability inimplementation, efficiency and political acceptability or social opposition, the strongest alternativeis the fostering of Community Centers that promote a redistribution of care work. Thispolicy performs well in the assessment process because it combines gender focus with importantindirect effects: child support and human capabilities. The policy also shows a bottomup implementation process that overcomes the main adoption difficulties in the gender focusprograms and is supported by strong evidence of success in the Colombian context; this evidenceis produced by both transnational actors as a World Bank and also in local accountabilityreporters executed by local institutions like Colombian Institute of Family Welfare (ICBF).

The policy mix and macroeconomic adjustment in the Euro area. CEPS Commentary, 15 October 2012

Against the background of the IMF’s latest global economic forecast, Jørgen Mortensen and Cinzia Alcidi raise questions in a new CEPS Commentary about the timing of the implementation and the effects of the three main categories of economic policy – fiscal, monetary and structural.

Options for a Euro-area fiscal capacity. Bruegel Policy Brief 2013/01, January 2013

Europe has responded to the crisis with strengthened budgetary and macroeconomic surveillance, the creation of the European Stability Mechanism, liquidity provisioning by resilient economies and the European Central Bank and a process towards a banking union. However, a monetary union requires some form of budget for fiscal stabilisation in case of shocks, and as a backstop to the banking union. This paper compares four quantitatively different schemes of fiscal stabilisation and proposes a new scheme based on GDP-indexed bonds. The options considered are: (i) A federal budget with unemployment and corporate taxes shifted to euro-area level; (ii) a support scheme based on deviations from potential output;(iii) an insurance scheme via which governments would issue bonds indexed to GDP, and (iv) a scheme in which access to jointly guaranteed borrowing is combined with gradual withdrawal of fiscal sovereignty. Our comparison is based on strong assumptions. We carry out a preliminary, limited simulation of how the debt-to-GDP ratio would have developed between 2008-14 under the four schemes for Greece, Ireland, Portugal, Spain and an ‘average’ country.The schemes have varying implications in each case for debt sustainability

The implications of climate policy for the impacts of climate change on global water resources

This paper assesses the implications of climate policy for exposure to water resources stresses. It compares a Reference scenario which leads to an increase in global mean temperature of 4oC by the end of the 21st century with a Mitigation scenario which stabilises greenhouse gas concentrations at around 450ppm CO2e and leads to a 2oC increase in 2100. Associated changes in river runoff are simulated using a global hydrological model, for four spatial patterns of change in temperature and rainfall. There is a considerable difference in hydrological change between these four patterns, but the percentages of change avoided at the global scale are relatively robust. By the 2050s, the Mitigation scenario typically avoids between 16 and 30% of the change in runoff under the Reference scenario, and by 2100 it avoids between 43 and 65%. Two different measures of exposure to water resources stress are calculated, based on resources per capita and the ratio of withdrawals to resources. Using the first measure, the Mitigation scenario avoids 8-17% of the impact in 2050 and 20-31% in 2100; with the second measure, the avoided impacts are 5-21% and 15-47% respectively. However, at the same time, the Mitigation scenario also reduces the positive impacts of climate change on water scarcity in other areas. The absolute numbers and locations of people affected by climate change and climate policy vary considerably between the four climate model patterns.

Social consensus, moral intensity and willingness to pay to address a farm animal welfare issue

An experimental contingent valuation (CV) survey of university students was undertaken to explore the impact of social consensus information on people's stated willingness to pay (wtp) to address a farm animal welfare issue. The survey found that additional information presented to respondents on social consensus concerning the moral dimensions of the issue led to a greater perception of social consensus by respondents. This greater perception of social consensus appeared to result in a higher level of moral intensity associated with the issue and a higher stated wtp by respondents for policy to address the issue. However, as for many CV studies of public goods, a question remains as to whether the estimated wtp is a true measure of people's preferences and relative values or merely a measure of attitudes on an arbitrary monetary scale.

Making robust policy decision using global biodiversity indicators

In order to influence global policy effectively, conservation scientists need to be able to provide robust predictions of the impact of alternative policies on biodiversity and measure progress towards goals using reliable indicators. We present a framework for using biodiversity indicators predictively to inform policy choices at a global level. The approach is illustrated with two case studies in which we project forwards the impacts of feasible policies on trends in biodiversity and in relevant indicators. The policies are based on targets agreed at the Convention on Biological Diversity (CBD) meeting in Nagoya in October 2010. The first case study compares protected area policies for African mammals, assessed using the Red List Index; the second example uses the Living Planet Index to assess the impact of a complete halt, versus a reduction, in bottom trawling. In the protected areas example, we find that the indicator can aid in decision-making because it is able to differentiate between the impacts of the different policies. In the bottom trawling example, the indicator exhibits some counter-intuitive behaviour, due to over-representation of some taxonomic and functional groups in the indicator, and contrasting impacts of the policies on different groups caused by trophic interactions. Our results support the need for further research on how to use predictive models and indicators to credibly track trends and inform policy. To be useful and relevant, scientists must make testable predictions about the impact of global policy on biodiversity to ensure that targets such as those set at Nagoya catalyse effective and measurable change.

The STEP scale: a measure of short-term export performance improvement

This article is a direct response to a recent observation in the literature that managers appear to be short-term oriented in their assessment of the performance of an export venture (Madsen 1998). On the basis of a cross-national survey of exporting firms, the authors present a three-dimensional scale for assessing managerial judgment of short-term export performance (i.e., the STEP scale). The three dimensions are (1) satisfaction with short-term performance improvement, (2) short-term exporting intensity improvement, and (3) expected short-term performance improvement. The scale presents evidence of reliability as well as convergent, discriminant, and nomological validity, and it reveals factorial similarity and factorial equivalence across both samples. The authors outline managerial and public policy implications that stem from the scale and identify avenues for further export marketing research.

Framing evidence: policy design for the zero carbon home

In 2006 the UK government announced a move to zero carbon homes by 2016. The demand posed a major challenge to policy makers and construction professionals entailing a protracted process of policy design. The task of giving content to this target is used to explore the role of evidence in the policy process. Whereas much literature on policy and evidence treats evidence as an external input, independent of politics, this paper explores the ongoing mutual constitution of both. Drawing on theories of policy framing and the sociology of classification, the account follows the story of a policy for Zero Carbon Homes from the parameters and values used to specify the target. Particular attention is given to the role of Regulatory Impact Assessments (RIAs) and to the creation of a new policy venue, the Zero Carbon Hub. The analysis underlines the way in which the choices about how to model and measure the aims potentially transforms them, the importance of policy venues for transparency and the role of RIAs in the authorization of particular definitions. A more transparent, open approach to policy formulation is needed in which the framing of evidence is recognized as an integral part of the policy process.

The monetary benefit of early flood warnings in Europe

Effective disaster risk management relies on science-based solutions to close the gap between prevention and preparedness measures. The consultation on the United Nations post-2015 framework for disaster risk reduction highlights the need for cross-border early warning systems to strengthen the preparedness phases of disaster risk management, in order to save lives and property and reduce the overall impact of severe events. Continental and global scale flood forecasting systems provide vital early flood warning information to national and international civil protection authorities, who can use this information to make decisions on how to prepare for upcoming floods. Here the potential monetary benefits of early flood warnings are estimated based on the forecasts of the continental-scale European Flood Awareness System (EFAS) using existing flood damage cost information and calculations of potential avoided flood damages. The benefits are of the order of 400 Euro for every 1 Euro invested. A sensitivity analysis is performed in order to test the uncertainty in the method and develop an envelope of potential monetary benefits of EFAS warnings. The results provide clear evidence that there is likely a substantial monetary benefit in this cross-border continental-scale flood early warning system. This supports the wider drive to implement early warning systems at the continental or global scale to improve our resilience to natural hazards.

A note on policy, the composition of public expenditures and economic growth

In this article we study the growth and welfare effects of fiscal and monetary policies in economies where public investment is part of the productive process we present four different models that share the same technology with public infrastructure as a separate argument of the production function. We show that growth is maximized at positive levels of income tax and inflation. However, unless there are no transfers or public goods in the economy, maximization of growth does not imply welfare maximization we show that the optimal tax rate is greater than the rate that maximizes growth and the optimal rate of money creation is below the growth maximizing rate. With public infrastructure in the production function we no longer obtain superneutrality in the Sidrausky model.

A note on growth, welfare and public policy

In this note the growth anti welfare effects of fiscal anti monetary policies are investigated in three economies where public investment is part of the productive process It is shown that growth is maximized at positive levels of income tax and inflation but that there is no direct relationship between government size, productivity and growth or between inflation and growth. However, unless there are no transfers or public goods in the economy, maximization of growth does not imply welfare maximization and the optimal tax rate and government size are greater than those that maximize growth. Money is not superneutral anti the optimal rate of money creation is below the maximizing rate of growth.

Assorted topics in monetary economics

Esta tese é uma coleção de quatro artigos em economia monetária escritos sob a supervisão do Professor Rubens Penha Cysne. O primeiro desses artigos calcula o viés presente em medidas do custo de bem-estar da inflação devido a não se levar em conta o potencial substitutivo de moedas que rendem juros, como depósitos bancários.[1] O segundo se concentra na questão teórica de se comparar os escopos dos tradicionais modelos money-in-the-utility-function e shopping-time através do estudo das propriedades das curvas de demanda que eles geram.[2] O terceiro desses trabalhos revisita um artigo clássico de Stanley Fischer sobre a correlação entre a taxa de crescimento da oferta monetária e a taxa de acumulação de capital no caminho de transição.[3] Finalmente, o quarto diz respeito à posição relativa de cada uma de seis medidas do custo de bem-estar da inflação (uma das quais é nova) em relação às outras cinco, e uma estimativa do erro relativo máximo em que o pesquisador pode incorrer devido a sua escolha de empregar uma dessas medidas qualquer vis-à-vis as outras.[4] This thesis collects four papers on monetary economics written under the supervision of Professor Rubens Penha Cysne. The first of these papers assesses the bias occuring in welfare-cost-of-inflation measures due to failing to take into consideration the substitution potential of interest-bearing monies such as bank deposits.[1] The second one tackles the theoretical issue of comparing the generality of the money-in-the-utility-function- and the shopping-time models by studying the properties of the demand curves they generate.[2] The third of these works revisits a classic paper by Stanley Fischer on the correlation between the growth rate of money supply and the rate of capital accumulation on the transition path.[3] Finally, the fourth one concerns the relative standing of each one of six measures of the welfare cost of inflation (one of which is new) with respect to the other five, and an estimate of the maximum relative error one can incur by choosing to employ a particular welfare measure in place of the others.[4] [1] Cysne, R.P., Turchick, D., 2010. Welfare costs of inflation when interest-bearing deposits are disregarded: A calculation of the bias. Journal of Economic Dynamics and Control 34, 1015-1030. [2] Cysne, R.P., Turchick, D., 2009. On the integrability of money-demand functions by the Sidrauski and the shopping-time models. Journal of Banking & Finance 33, 1555-1562. [3] Cysne, R.P., Turchick, D., 2010. Money supply and capital accumulation on the transition path revisited. Journal of Money, Credit and Banking 42, 1173-1184. [4] Cysne, R.P., Turchick, D., 2011. An ordering of measures of the welfare cost of inflation in economies with interest-bearing deposits. Macroeconomic Dynamics, forthcoming.