The monetary pillar and the great financial crisis

Since its inception, a most distinctive (and controversial) feature of the ECB monetary policy strategy has been its emphasis on money and monetary analysis, which constitute the basis of the so-called monetary pillar. The present paper examines the performance of the monetary pillar around the recent financial crisis episode, and discusses its prospects in light of the renewed emphasis on financial stability and the need for enhanced macro-prudential policies.

Bridging DSGE models and the raw data

A method to estimate DSGE models using the raw data is proposed. The approachlinks the observables to the model counterparts via a flexible specification which doesnot require the model-based component to be solely located at business cycle frequencies,allows the non model-based component to take various time series patterns, andpermits model misspecification. Applying standard data transformations induce biasesin structural estimates and distortions in the policy conclusions. The proposed approachrecovers important model-based features in selected experimental designs. Twowidely discussed issues are used to illustrate its practical use.

Competing engines of growth: Innovation and standardization

We study a dynamic general equilibrium model where innovation takes theform of the introduction of new goods whose production requires skilled workers.Innovation is followed by a costly process of standardization, whereby these newgoods are adapted to be produced using unskilled labor. Our framework highlightsa number of novel results. First, standardization is both an engine of growth anda potential barrier to it. As a result, growth is an inverse U-shaped function ofthe standardization rate (and of competition). Second, we characterize the growthand welfare maximizing speed of standardization. We show how optimal protection of intellectual property rights affecting the cost of standardization vary withthe skill-endowment, the elasticity of substitution between goods and other parameters. Third, we show that, depending on how competition between innovatingand standardizing firms is modelled and on parameter values, a new type of multiplicity of equilibria may arise. Finally, we study the implications of our model forthe skill-premium and we illustrate novel reasons for linking North-South trade tointellectual property rights protection.

Identifying monetary policy shocks in Japan

It is sometimes argued that the central banks influence the private economy in the short run through controlling a specific component of high powered money, not its total amount. Using a structural VAR approach, this paper evaluates this claim empirically, in the context of the Japanese economy. I estimate a model based on the standard view that the central bank controls the total amount of high powered money, and another model based on the alternative view that it controls only a specific component. It is shown that the former yields much more sensible estimates than thelatter.

Spanish monetary policy: A structural VAR analysis

Some past studies analyzed Spanish monetary policy with the standard VAR. Their problem is that this method obliges researchers to impose a certain extreme form of the short run policy rule on their models. Hence, it does not allow researchers to study the possibility of structural changes in this rule, either. This paper overcomes these problems by using the structural VAR. I find that the rule has always been that of partial accommodation. Prior to 1984, it was quite close to money targeting. After 1984, it became closer to the interest rate targeting, with more emphasis on the exchange rate.

Asymmetric effects of monetary policy in the US: Positive vs. negative or big vs. small?

This paper reconsiders the empirical evidence on the asymmetricoutput effects of monetary policy. Asymmetric effects is a common feature ofmany theoretical models, and there are many different versions of suchasymmetries. We concentrate on the distinctions between positive andnegative money-supply changes, big and small changes in money-supply, andpossible combinations of the two asymmetries. Earlier research has foundempirical evidence in favor of the former of these in US data. Using M1 asthe monetary variable we find evidence in favor of neutrality of big shocksand non-neutrality of small shocks. The results may, however, be affected bystructual instability of M1 demand. Thus, we substitute M1 with the federalfunds rate. In these data we find that only small negative shocks affectreal aggregate activity. The results are interpreted in terms of menu-costmodels.

Policy making in divided government. A pivotal actors model with party discipline

This article presents a formal model of policy decision-making in an institutional framework of separation of powers in which the main actors are pivotal political parties with voting discipline. The basic model previously developed from pivotal politics theory for the analysis of the United States lawmaking is here modified to account for policy outcomes and institutional performances in other presidential regimes, especially in Latin America. Legislators' party indiscipline at voting and multi-partism appear as favorable conditions to reduce the size of the equilibrium set containing collectively inefficient outcomes, while a two-party system with strong party discipline is most prone to produce 'gridlock', that is, stability of socially inefficient policies. The article provides a framework for analysis which can induce significant revisions of empirical data, especially regarding the effects of situations of (newly defined) unified and divided government, different decision rules, the number of parties and their discipline. These implications should be testable and may inspire future analytical and empirical work.

Structural changes in the US economy: is there a role for monetary policy?

This paper investigates the contribution of monetary policy to the changes in outputgrowth and inflation dynamics in the US. We identify a policy shock and a policy rule ina time-varying coefficients VAR using robust sign restrictions. The transmission of policyshocks has been relatively stable. The variance of the policy shock has decreased over time,but policy shocks account for a small fraction of the level and of the variations in inflationand output growth volatility and persistence. We find little evidence of a significant increasein the long run response of the interest rate to inflation. A more aggressive inflation policyin the 1970s would have produced large output growth costs.

Gender gaps in policy making: Evidence from direct democracy in Switzerland

In spite of increasing representation of women in politics, little is known about their impact onpolicies. Comparing outcomes of parliaments with different shares of female members does not identifytheir causal impact because of possible differences in the underlying electorate. This paper usesa unique data set on voting decisions to sheds new light on gender gaps in policy making. Ouranalysis focuses on Switzerland, where all citizens can directly decide on a broad range of policiesin referendums and initiatives. We show that there are large gender gaps in the areas of health,environmental protection, defense spending and welfare policy which typically persist even conditionalon socio-economic characteristics. We also find that female policy makers have a substantial effect onthe composition of public spending, but a small effect on the overall size of government.

Introducing a first AIDS vaccine in Switzerland: a Policy Delphi analysis.

This preliminary exploration was limited by a number of factors. The format of the study has necessarily induced some form of selection bias of the panelists, because of the complexity of some questions, and the time required to complete the questionnaires. Several issues have not been addressed. One example could be the response to HIV infection occurring in a vaccinee. The study also did not address the difficulties related to the licensing of the vaccine. Indeed, the proposed scenario assumed that the vaccine had been registered as a starting point for the analysis. Finally, it has not been possible to conduct a sensitivity analysis, in order to evaluate how the responses would have been modified if some important characteristics of the vaccine had been modified.Very diverse evaluations were given in response to questions related with attitudes and perception of AIDS and AIDS vaccine. The possibility that vaccine availability or usage can be associated with an increased frequency in risky behaviors was spontaneously mentioned by half of the panelists. The estimation of the proportion of persons at highest risk who would choose to use this vaccine also indicated a high degree of uncertainty. This study offers important lessons. According to a broad and diverse panel of individuals, an incompletely effective AIDS vaccine would result in an additional level of complexity for the AIDS prevention strategy, rather than a simplification. The use of such a vaccine would have to be coupled with counselling. This implies a sustained emphasis on the recommendations which have been central to the STOP AIDS campaigns until now. In addition, consensual issues, as well as other issues more likely to be controversial have been identified. This should greatly help focusing the work of any committee designated to develop and implement a vaccination policy if an AIDS vaccine became available. Finally, our experience with the Policy Delphi indicates that this mode of structured communication could be usefully applied to other public health issues presenting a high visibility as well as a complex relationship with public perception.

Gazelle companies: Growth drivers and an evolution analysis

Gazelle companies are relevant because they generate much more employment than other companies and deliver high returns to their shareholders. This paper analyzes their behavior in the years of high growth and their evolution in the following years. The main factors that explain their success are competitive advantages based on human resources, innovation, internationalization, the excellence in processes and a conservative financial policy. Nevertheless, as time goes by they can be divided in two groups: a group which continues having growth, but most of them with lower growth rates; and the rest which face great problems or even disappear. The present study identifies several key factors that explain this different evolution.

Trade-off between formal and informal care in Spain

The remarkable growth of older population has moved long term care to the front ranks of the social policy agenda. Understanding the factors that determine the type and amount of formal care is important for predicting use in the future and developing long-term policy. In this context we jointly analyze the choice of care (formal, informal, both together or none) as well as the number of hours of care received. Given that the number of hours of care is not independent of the type of care received, we estimate, for the first time in this area of research, a sample selection model with the particularity that the first step is a multinomial logit model. With regard to the debate about complementarity or substitutability between formal and informal care, our results indicate that formal care acts as a reinforcement of the family care in certain cases: for very old care receivers, in those cases in which the individual has multiple disabilities, when many care hours are provided, and in case of mental illness and/or dementia. There exist substantial differences in long term care addressed to younger and older dependent people and dependent women are in risk of becoming more vulnerable to the shortage of informal caregivers in the future. Finally, we have documented that there are great disparities in the availability of public social care across regions.

Cultural Heritage and Records Retention Task Force Report, August 2008

The Rebuild Iowa Cultural Heritage and Records Retention Task Force respectfully submits its report to the Rebuild Iowa Advisory Commission (RIAC) for its consideration of the impacts of the tornadoes, storms, and flooding on Iowans and their cultural, historical, and arts institutions and organizations and records collections and archives. As the RIAC fulfills its obligations to guide the recovery and reconstruction of Iowa, the cknowledgement that culture and records as Iowa’s identity is important, and that if these items of cultural heritage vanish from Iowa’s landscape, the items that Iowans associate with their history, traditions, and sense of place also disappears. Iowa is certainly not the only state that has experienced this type of disaster; however, many states have not recognized culture and records as critical concerns as part of the recovery and rebuilding process. When rebuilding Iowa stronger, smarter, and safer, quality of life is an important consideration for attracting new residents, making it a necessity to keep culture alive and thriving in Iowa. Additionally, the cultural arts constitute a vital economic industry, providing employment to thousands of Iowa’s citizens and generating millions of dollars in local and government revenue across the state. In the case of records, these items are irreplaceable and provide important information for the daily workings of government and life in our state, and maintain vital records of Iowa’s heritage and traditions. This report provides background information on the damages incurred in Iowa from the disasters and additional context for policy and rebuilding discussions. It also offers recommendations to the RIAC for steps that might be taken to address the significant and important challenges faced by Iowa’s cultural, historical, and arts institutions and organizations; individual artists and other cultural workers; and records retention entities and officials.

Public Health and Health Care Task Force Report, August 2008

The Rebuild Iowa Public Health and Health Care Task Force respectfully submits its report to the Rebuild Iowa Advisory Commission (RIAC) for its consideration of the impacts of the tornadoes, storms, and flooding on Iowans. As the RIAC fulfills its obligations to guide the recovery and reconstruction in Iowa, the impact on the health and well-being of Iowans should be of primary concern. With many areas of the state experiencing devastating damage to their communities, public health and health care are but one of the major challenges. There are critical immediate needs to address the health, safety, and well-being of affected Iowans. This report provides background information on the damages incurred in Iowa from the disasters and additional context for policy and rebuilding discussions. It also offers recommendations to the RIAC for steps that might be taken to address these significant and important challenges.

European research funding and regional technological capabilities: Network composition analysis

We use network and correspondence analysis to describe the compositionof the research networks in the European BRITE--EURAM program. Our mainfinding is that 27\% of the participants in this program fall into one oftwo sets of highly ``interconnected'' institutions --one centered aroundlarge firms (with smaller firms and research centers providing specializedservices), and the other around universities--. Moreover, these ``hubs''are composed largely of institutions coming from the technologically mostadvanced regions of Europe. This is suggestive of the difficulties of attainingEuropean ``cohesion'', as technically advanced institutions naturally linkwith partners of similar technological capabilities.