Forward Looking Banking Stress in EMU Countries

Based on contingent claims analysis, CCA, this paper tries to estimate the systemic risk build-up in the European Economic and Monetary Union, EMU countries using a market based measure distance-to-default, DtD. It analyzes the individual and aggregated series for a comprehensive set of banks in each eurozone country over the period 2004-Q4 to 2013-Q2. Given the structural differences in financial sector and banking regulations at national level, the indices provide a useful indicator for monitoring country specific banking vulnerability and stress. We find that average DtD indicators are intuitive, forward-looking and timely risk indicators. The underlying trend, fluctuations and correlations among indices help us analyze the interdependence while cross-sectional differences in DtD prior to crisis suggest banking sector fragility in peripheral EMU countries.

Emergence and development of a financial cluster: the evolution of Andorra’s banking deposits in the long-term, 1931-2007

This paper explores the origins of Andorra’s financial cluster. It shows that the free movement of currency, the protection of infant industry, and geographical concentration lie at the foundation of the cluster’s competitive advantage. Drawing on a new set of data, the paper also provides for the first time an estimate of the total deposits held by Andorra’s banks between 1931 and 2007. Based on this new information, the paper reaches the conclusion that the development of the cluster went through four distinct phases in which large companies, acting as leaders, played an important role in enhancing the cluster’s business capabilities.

Empowering local democracy in Catalonia: tools and policy domains to implement a top-down solution

This article is the result of an ongoing research into a variety of features of Spanish local government. It aims, in particular, at providing a profile of the tools implemented by local authorities to improve local democracy in Catalonia. The main hypothesis of the work is that, even though the Spanish local model is constrained by a shared and unique set of legal regulations, local institutions in Catalonia have developed their own model of local participation. And the range of instruments like these is still now increasing. More specifically, the scope of this research is twofold. On the one hand, different types of instruments for public deliberation in the Catalan local administration system are identified and presented, based on the place they take in the policy cycle. On the other hand, we focus on policy domains and the quality of the decision-making processes. Researching the stability of the participation tools or whether local democracy prefers more 'ad hoc' processes allows us to analyze the boundaries/limits of local democracy in Catalonia. The main idea underlying this paper is that, despite the existence of a single legal model regulating municipalities in Catalonia, local authorities tend to use their legally granted selfmanagement capacities to design their own instruments which end up presenting perceivable distinct features, stressing democracy in different policy domains, and in diverse policy cycles. Therefore, this paper is intended to identify such models and to provide factors (variables) so that an explanatory model can be built.

Fiscal Regime Shifts in Portugal

We estimate changes in fiscal policy regimes in Portugal with a Markov Switching regression of fiscal policy rules for the period 1978-2007, using a new dataset of fiscal quarterly series. We find evidence of a deficit bias, while repeated reversals of taxes making the budget procyclical. Economic booms have typically been used to relax tax pressure, especially during elections. One-off measures have been preferred over structural ones to contain the deficit during economic crises. The EU fiscal rules prompted temporary consolidation, but did not permanently change the budgeting process.

Multicointegration, polynomial cointegration and I(2) cointegration with structural breaks. An application to the sustainability of the US external deficit

In this paper we model the multicointegration relation, allowing for one structural break. Since multicointegration is a particular case of polynomial or I(2) cointegration, our proposal can also be applied in these cases. The paper proposes the use of a residualbased Dickey-Fuller class of statistic that accounts for one known or unknown structural break. Finite sample performance of the proposed statistic is investigated by using Monte Carlo simulations, which reveals that the statistic shows good properties in terms of empirical size and power. We complete the study with an empirical application of the sustainability of the US external deficit. Contrary to existing evidence, the consideration of one structural break leads to conclude in favour of the sustainability of the US external deficit.

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 Role of Universities in the Triple Helix model of innovation management within the biotechnology industry, Case example: Turku Science Park Network

Biotechnology has been recognized as the key strategic technology for industrial growth. The industry is heavily dependent on basic research. Finland continues to rank in the top 10 of Europe's most innovative countries in terms of tax-policy, education system, infrastructure and the number of patents issued. Regardless of the excellent statistical results, the output of this innovativeness is below acceptable. Research on the issues hindering the output creation has already been done and the identifiable weaknesses in the Finland's National Innovation system are the non-existent growth of entrepreneurship and the missing internationalization. Finland is proven to have all the enablers of the innovation policy tools, but is lacking the incentives and rewards to push the enablers, such as knowledge and human capital, forward. Science Parks are the biggest operator in research institutes in the Finnish Science and Technology system. They exist with the purpose of speeding up the commercialization process of biotechnology innovations which usually include technological uncertainty, technical inexperience, business inexperience and high technology cost. Innovation management only internally is a rather historic approach, current trend drives towards open innovation model with strong triple helix linkages. The evident problems in the innovation management within the biotechnology industry are examined through a case study approach including analysis of the semi-structured interviews which included biotechnology and business expertise from Turku School of Economics. The results from the interviews supported the theoretical implications as well as conclusions derived from the pilot survey, which focused on the companies inside Turku Science Park network. One major issue that the Finland's National innovation system is struggling with is the fact that it is technology driven, not business pulled. Another problem is the university evaluation scale which focuses more on number of graduates and short-term factors, when it should put more emphasis on the cooperation success in the long-term, such as the triple helix connections with interaction and knowledge distribution. The results of this thesis indicated that there is indeed requirement for some structural changes in the Finland's National innovation system and innovation policy in order to generate successful biotechnology companies and innovation output. There is lack of joint output and scales of success, lack of people with experience, lack of language skills, lack of business knowledge and lack of growth companies.

The Impact of the 2007-2009 Financial Crisis on the Relationship between Central Bank Rates and the Corresponding Interbank Interest Rates in 2002-2014

The role of central banks throughout the global financial system has become even more important during and after the events of the financial crisis. In order to stabilize the market conditions and provide solid ground for future development, the central banks use discount rate as their primary monetary policy tool in many developed and emerging economies. The purpose of this thesis is to examine how the relationship between central bank rates and corresponding interbank rates has developed before, during and after the crisis period of 2007-2009 in five developed countries and five emerging market countries. The results indicate that during the before-crisis period the interest rate markets reacted diversely but the joint recovery attempts of global economies seem to have stabilized the reactions during and especially after the crisis. The crisis also seems to have highlighted the characteristics of each country’s survival strategy as the role of other policy instruments arose.

“Who is steering the ship and which constellation guides the way? Exploring transparency in the European Central Bank during the time of crisis”

This paper explores transparency in the decision-making of the European Central Bank (ECB). According to ECB´s definition, transparency means that the central bank provides the general public with all relevant information on its strategy, assessments and policy decisions as well as its procedures in an open, clear and timely manner. In this paper, however, the interpretation of transparency is somewhat broader: Information is freely available and directly accessible to those who will be affected by the decisions. Moreover, the individuals shall be able to master this material. ECB´s negative attitude towards publication of documents has demonstrated central bank´s reluctance to strive towards more extensive transparency. By virtue of the definition adopted by the ECB the bank itself is responsible for determining what is considered as relevant information. On the grounds of EU treaties, this paper assesses ECB`s accountability concentrating especially on transparency by employing principal-agent theory and constitutional approach. Traditionally, the definite mandate and the tenet of central bank independence have been used to justify the limited accountability. The de facto competence of the ECB has, however, considerably expanded as the central bank has decisively resorted to non-standard measures in order to combat the economic turbulences facing Europe. It is alleged that non-standard monetary policy constitutes a grey zone occasionally resembling economic policy or fiscal policy. Notwithstanding, the European Court of Justice has repeatedly approved these measures. This dynamic interpretation of the treaties seems to allow temporarily exceptions from the central bank´s primary objective during extraordinary times. Regardless, the paper suggests that the accountability nexus defined in the treaties is not sufficient in order to guarantee the accountability of the ECB after the adoption of the new, more active role. Enhanced transparency would help the ECB to maintain its credibility. Investing in the quality of monetary dialogue between the Parliament and the ECB appears to constitute the most adequate and practicable method to accomplish this intention. As a result of upgraded transparency the legitimacy of the central bank would not solely rest on its policy outputs.

New-consensus macroeconomic governance in a Keynesian world, and the Keynesian alternative

The paper presents both the New Consensus and Keynesian equilibrium within the usual four competitive macro-markets structure. It gives theoretical explanations of the pernicious effects that the NCM governance, which has been designed for ergodic stationary regimes, brings about in Keynesian non-ergodic regimes. It put forward Keynesian principles of governance which include monetary, budgetary and fiscal instruments, and suggest new directions for the positive and normative analysis of macro-policies.

A note on inflation targeting and economic growth in Brazil

This paper analyzes the relation between monetary policy and economic performance in Brazil during the period 1999-2006. In particular, it discusses the growth effects of the inflation targeting regime through its effects on aggregate demand. It is argued that monetary policy under IT reacts in a procyclical and asymmetric way to fluctuations in economic activity (too "tight" during recessions, not so "loose" during expansions). Such pattern may generate a downward bias in aggregate demand, with negative real effects on output growth and employment. Our results suggest that monetary policy has been procyclical and asymmetrical in Brazil under inflation targeting. The main economic policy implication of this study is that central banks should consider more seriously the real effects of monetary policy on output and employment.

A critical examination of the involvement of Canadian high-performance athletes in the development of anti-doping policy

The use of certain perfonnance enhancing substances and methods has been defined as a major ethical breach by parties involved in the governance of highperfonnance sport. As a result, elite athletes worldwide are subject to rules and regulations set out in international and national anti-doping policies. Existing literature on the development of policies such as the World Anti-Doping Code and The Canadian antiDoping Program suggests a sport system in which athletes are rarely meaningfully involved in policy development (Houlihan, 2004a). Additionally, it is suggested that this lack of involvement is reflective of a similar lack of involvement in other areas of governance concerning athletes' lives. The purpose ofthis thesis is to examine the history and current state of athletes' involvement in the anti-doping policy process in Canada's high-perfonnance sport system. It includes discussion and analysis of recently conducted interviews with those involved in the policy process as well as an analysis of relevant documents, including anti-doping policies. The findings demonstrate that Canadian athletes have not been significantly involved in the creation of recently developed antidoping policies and that a re-evaluation of current policies is necessary to more fully recognize the reality of athletes' lives in Canada's high-perfonnance sport system and their rights within that system.

Aging policy: a case study of co-ordination in Canadian governments

ABSTRACT Canada is an aging society. The number of people aged sixty-five and over is rising, while the number of people under twenty is declining. These two concurrent changes in the age structure have produced a sh~ft in the demographic composition of Canada which is commonly referred to as the aging phenomenon. Regardless of whether or not the number of people under twenty continues to decline, the number of elderly in Canada will almost double over the next twenty years. This rapidly growing elderly clientele will doubtless have an impact on Canadian governments. Federal, provincial and municipal governments are presently providing a variety of programs that have a special bearing on the aged and most senior citizens are beneficiaries of one or more of these programs. The ramifications of a rapidly growing elderly clientele are obvious. In order to cope with the impact of a significant increase in the number of elderly persons, the development and implementation of aging policy must be co-ordinated at each level of government and between and among levels of government. If aging policy is not co-ordinated, the results are likely to be: inappropriate policy decisions; duplication and overlap; and, ineffective and irresponsive services. No one benefits from these results. The need for co-ordination is apparent. The purpose of this thesis is to examine existing governmental efforts to co-ordinate policy in the field of aging. These efforts are examined by focusing on interactions directed at co-ordination between and among major actors in aging policy. A framework is used to structure the description and analysis of these interactions. The variables of formalisation and intensity and the concept of power are instrumental in analysing interactions for co-ordination. The underlying intent of this thesis is to discover some of the main gaps in existing governmental efforts to co~ordinate aging policy. Gaps are, in fact, discovered. Several explanations for the existence of gaps in interactions for co-ordination are discussed. A major hypothesis involving a relationship between a bureaucratic form of organisation and interactions for coordination is suggested. Finally, three recommendations for improving co-ordination in aging policy are offered.

Habit Formation and the Persistence of Monetary Shocks

This paper studies the persistent effects of monetary shocks on output. Previous empirical literature documents this persistence, but standard general equilibrium models with sticky prices fail to generate output responses beyond the duration of nominal contracts. This paper constructs and estimates a general equilibrium model with price rigidities, habit formation, and costly capital adjustment. The model is estimated via Maximum Likelihood using US data on output, the real money stock, and the nominal interest rate. Econometric results suggest that habit formation and adjustment costs to capital play an important role in explaining the output effects of monetary policy. In particular, impulse response analysis indicates that the model generates persistent, hump-shaped output responses to monetary shocks.

Credibility and Signaling in Disinflation- a Cross Country Examination

This paper develops a model of money demand where the opportunity cost of holding money is subject to regime changes. The regimes are fully characterized by the mean and variance of inflation and are assumed to be the result of alternative government policies. Agents are unable to directly observe whether government actions are indeed consistent with the inflation rate targeted as part of a stabilization program but can construct probability inferences on the basis of available observations of inflation and money growth. Government announcements are assumed to provide agents with additional, possibly truthful information regarding the regime. This specification is estimated and tested using data from the Israeli and Argentine high inflation periods. Results indicate the successful stabilization program implemented in Israel in July 1985 was more credible than either the earlier Israeli attempt in November 1984 or the Argentine programs. Government’s signaling might substantially simplify the inference problem and increase the speed of learning on the part of the agents. However, under certain conditions, it might increase the volatility of inflation. After the introduction of an inflation stabilization plan, the welfare gains from a temporary increase in real balances might be high enough to induce agents to raise their real balances in the short-term, even if they are uncertain about the nature of government policy and the eventual outcome of the stabilization attempt. Statistically, the model restrictions cannot be rejected at the 1% significance level.