Endogenous Price Flexibility and Optimal Monetary Policy

Much of the literature on optimal monetary policy uses models in which the degree of nominal price flexibility is exogenous. There are, however, good reasons to suppose that the degree of price flexibility adjusts endogenously to changes in monetary conditions. This paper extends the standard New Keynesian model to incorporate an endogenous degree of price flexibility. The model shows that endogenising the degree of price flexibility tends to shift optimal monetary policy towards complete inflation stabilisation, even when shocks take the form of cost-push disturbances. This contrasts with the standard result obtained in models with exogenous price flexibility, which show that optimal monetary policy should allow some degree of inflation volatility in order to stabilise the welfarerelevant output gap.

Local Currency Pricing, Foreign Monetary Shocks and Exchange Rate Policy

The implications of local currency pricing (LCP) for monetary regime choice are analysed for a country facing foreign monetary shocks. In this analysis expenditure switching is potentially welfare reducing. This contrasts with the existing LCP literature, which focuses on productivity shocks and thus analyses a world where expenditure switching is welfare enhancing. This paper shows that, when home and foreign producers follow LCP, expenditure switching is absent and a floating rate is preferred by the home country. But when only home producers follow LCP, expenditure switching is present and a fixed rate can be welfare enhancing for the home country.

Taux sanguins et sériques d'ions métalliques chez les patients porteurs de PHTs à col modulaire - une étude de cohorte prospective comparative

Les évidences s'accumulent concernant des problèmes de corrosion touchant les prothèses à col modulaires. Plusieurs études récentes révèlent des taux d'ions métalliques élevés. Le but de cette étude était de comparer les taux d'ions métalliques (Co, Cr, Mo, Ti), dans le sérum, chez des porteurs de prothèses à col modulaire, à tige monobloc, ainsi que sans implant. Méthodes Nous avons recruté 60 patients, dont 50 porteurs d'une PTH, unilatérale, sans aucun autre implant, non-cimentée, avec tête en céramique, à minimum 1 année postopératoire. Quarante avaient une tige SPS (Symbios) (Ti6Al4 V) modulaire (col en CoCr) et 10 une SPS monobloc (non-modulaire). Les cupules étaient toutes en alliage de Ti (Ti6Al4 V) avec insert céramique ou PE. Nous avons constitué un groupe témoin sans aucun implant. Dans le groupe o modulaires O, le col a été choisi en préopératoire sur la base d'une planification 3D et assemblé à sec avant implantation. Nous avons prélevé un échantillon sérique, un autre sanguin, qui ont été analysés par spectrométrie de masse, permettant une détermination atomique quantitative. Le résultat clinique a été estimé à l'aide du o Oxford Hip Score O. Résultats Nous avons trouvé un Co sérique moyen à 1,54 Ig L dans le groupe O modulaires O et à 0,32 Ig L dans le groupe o monobloc O avec un p < 0,001. Pour le Cr, on a 1,12 Ig L (modulaires) vs 0,60 Ig L (monoblocs) avec un p < 0,001, pour le Ti 31 Ig L (modulaires) vs 22 Ig L (monoblocs) avec p < 0,001 et pour le Mo, 0,96 Ig L (modulaires) vs 0,74 (monoblocs) avec p = 0,254. Deux patients avaient des valeurs de Co supérieures à 7 Ig L et 11 étaient au-dessus de 1 Ig L, valeur considérée comme limite. Les valeurs dans le sang complet étaient similaires. Nous n'avons pas trouvé de différence significative selon les types de col modulaires (longs vs courts et rétro vs normaux). Curieusement, le taux de Cr était significativement plus élevé chez les patients sans aucun implant que chez les porteurs de SPS monobloc, par contre les différences n'étaient pas significatives pour les autres éléments. Conclusion Les taux sériques et sanguins de ions Co, Cr et Ti étaient significativement plus élevés dans le groupe des patients avec col modulaire, avec 2 valeurs 40 extrêmement hautes et plus de la moitié (11 40) anormalement hautes. Bien que ces valeurs soient inférieures à celles d'autres études, nous avons arrêter d'utiliser de tiges à cols modulaires, et avons initié un suivi annuel des patients porteurs, similaire à celui instauré pour les grosses têtes métal-métal.

Monetary Policy and Heterogeneous Expectations

This paper studies the implications for monetary policy of heterogeneous expectations in a New Keynesian model. The assumption of rational expectations is replaced with parsimonious forecasting models where agents select between predictors that are underparameterized. In a Misspecification Equilibrium agents only select the best-performing statistical models. We demonstrate that, even when monetary policy rules satisfy the Taylor principle by adjusting nominal interest rates more than one for one with inflation, there may exist equilibria with Intrinsic Heterogeneity. Under certain conditions, there may exist multiple misspecification equilibria. We show that these findings have important implications for business cycle dynamics and for the design of monetary policy.

Global Warming And Extreme Events: Rethinking The Timing And Intensity Of Environmental Policy

The possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real options model with “tail risk”. In a nutshell, our results indicate the importance of tail risk and call for foresighted pre-emptive climate policies.

“Policy Scepticism” and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution

A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. Its denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the public-sector expenditure constraints that are binding under devolution. We show how conventional impact analyses can be augmented to accommodate regional public sector budget constraints. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity.

Traitement pharmacologique de la schizophrénie: évaluation comparative de la qualité des recommandations de pratique clinique [Comparative evaluation of clinical practice guidelines for the treatment of schizophrenia]

INTRODUCTION: Many clinical practice guidelines (CPG) have been published in reply to the development of the concept of "evidence-based medicine" (EBM) and as a solution to the difficulty of synthesizing and selecting relevant medical literature. Taking into account the expansion of new CPG, the question of choice arises: which CPG to consider in a given clinical situation? It is of primary importance to evaluate the quality of the CPG, but until recently, there has been no standardized tool of evaluation or comparison of the quality of the CPG. An instrument of evaluation of the quality of the CPG, called "AGREE" for appraisal of guidelines for research and evaluation was validated in 2002. AIM OF THE STUDY: The six principal CPG concerning the treatment of schizophrenia are compared with the help of the "AGREE" instrument: (1) "the Agence nationale pour le développement de l'évaluation médicale (ANDEM) recommendations"; (2) "The American Psychiatric Association (APA) practice guideline for the treatment of patients with schizophrenia"; (3) "The quick reference guide of APA practice guideline for the treatment of patients with schizophrenia"; (4) "The schizophrenia patient outcomes research team (PORT) treatment recommendations"; (5) "The Texas medication algorithm project (T-MAP)" and (6) "The expert consensus guideline for the treatment of schizophrenia". RESULTS: The results of our study were then compared with those of a similar investigation published in 2005, structured on 24 CPG tackling the treatment of schizophrenia. The "AGREE" tool was also used by two investigators in their study. In general, the scores of the two studies differed little and the two global evaluations of the CPG converged; however, each of the six CPG is perfectible. DISCUSSION: The rigour of elaboration of the six CPG was in general average. The consideration of the opinion of potential users was incomplete, and an effort made in the presentation of the recommendations would facilitate their clinical use. Moreover, there was little consideration by the authors regarding the applicability of the recommendations. CONCLUSION: Globally, two CPG are considered as strongly recommended: "the quick reference guide of the APA practice guideline for the treatment of patients with schizophrenia" and "the T-MAP".

The Significance of Identifying Industrial clusters The Case of Scotland

Industrial clustering policy is now an integral part of economic development planning in most advanced economies. However, there have been concerns in some quarters over the ability of an industrial cluster-based development strategy to deliver its promised economic benefits and this has been increasingly been blamed on the failure by governments to identify industrial clusters. In a study published in 2001, the DTI identified clusters across the UK based on the comparative scale and significance of industrial sectors. The study identified thirteen industrial clusters in Scotland. However the clusters identified are not a homogeneous set and they seem to vary in terms of their geographic concentration within Scotland. This paper examines the spatial distribution of industries within Scotland, thereby identifying more localised clusters. The study follows as closely as possible the DTI methodology which was used to identify such concentrations of economic activity with particular attention directed towards the thirteen clusters identified by the DTI. The paper concludes with some remarks of the general problem of identifying the existence of industrial clusters.

The Timing of Asset Trade and Optimal Policy in Dynamic Open Economies

Using a standard open economy DSGE model, it is shown that the timing of asset trade relative to policy decisions has a potentially important impact on the welfare evaluation of monetary policy at the individual country level. If asset trade in the initial period takes place before the announcement of policy, a national policymaker can choose a policy rule which reduces the work effort of households in the policymaker’s country in the knowledge that consumption is fully insured by optimally chosen international portfolio positions. But if asset trade takes place after the policy announcement, this insurance is absent and households in the policymaker’s country bear the full consumption consequences of the chosen policy rule. The welfare incentives faced by national policymakers are very different between the two cases. Numerical examples confirm that asset market timing has a significant impact on the optimal policy rule.

Distributional and Poverty Consequences of Globalization: A Dynamic Comparative Analysis for Developing Countries

This study examines the impact of globalization on cross-country inequality and poverty using a panel data set for 65 developing counties, over the period 1970-2008. With separate modelling for poverty and inequality, explicit control for financial intermediation, and comparative analysis for developing countries, the study attempts to provide a deeper understanding of cross country variations in income inequality and poverty. The major findings of the study are five fold. First, a non-monotonic relationship between income distribution and the level of economic development holds in all samples of countries. Second, both openness to trade and FDI do not have a favourable effect on income distribution in developing countries. Third, high financial liberalization exerts a negative and significant influence on income distribution in developing countries. Fourth, inflation seems to distort income distribution in all sets of countries. Finally, the government emerges as a major player in impacting income distribution in developing countries.

“Policy Scepticism” and the Impact of Welsh Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints

This paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010b) for the case of Wales in order to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of Welsh HEIs. A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. This denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the publicsector expenditure constraints that are binding under devolution. We show how conventional impact analyses can be augmented to accommodate regional public sector budget constraints. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity.

Discretionary Policy in a Monetary Union with Sovereign Debt

This paper examines the interactions between multiple national fiscal policy- makers and a single monetary policy maker in response to shocks to government debt in some or all of the countries of a monetary union. We assume that national governments respond to excess debt in an optimal manner, but that they do not have access to a commitment technology. This implies that national fi scal policy gradually reduces debt: the lack of a commitment technology precludes a random walk in steady state debt, but the need to maintain national competitiveness avoids excessively rapid debt reduction. If the central bank can commit, it adjusts its policies only slightly in response to higher debt, allowing national fiscal policy to undertake most of the adjustment. However if it cannot commit, then optimal monetary policy involves using interest rates to rapidly reduce debt, with signifi cant welfare costs. We show that in these circumstances the central bank would do better to ignore national fiscal policies in formulating its policy.

Affirmative Action Policy and Effort Levels. Sequential-Move Contest Game Argument

In this paper we analyse a simple two-person sequential-move contest game with heterogeneous players. Assuming that the heterogeneity could be the consequence of past discrimination, we study the effects of implementation of affirmative action policy, which tackles this heterogeneity by compensating discriminated players, and compare them with the situation in which the heterogeneity is ignored and the contestants are treated equally. In our analysis we consider different orders of moves. We show that the order of moves of contestants is a very important factor in determination of the effects of the implementation of the affirmative action policy. We also prove that in such cases a significant role is played by the level of the heterogeneity of individuals. In particular, in contrast to the present-in-the-literature predictions, we demonstrate that as a consequence of the interplay of these two factors, the response to the implementation of the affirmative action policy option may be the decrease in the total equilibrium effort level of the contestants in comparison to the unbiased contest game.

“Policy Scepticism” and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure

This paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010a) for the case of London-based HEIs’ impact on the English economy in order to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of London HEIs. A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. This denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of alternative uses of public expenditure, and show how conventional impact analyses can be augmented to accommodate this. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity.

On monetary policy and stock market anomalies

This study utilizes a macro-based VAR framework to investigate whether stock portfolios formedon the basis of their value, size and past performance characteristics are affected in a differentialmanner by unexpected US monetary policy actions during the period 1967-2007. Full sample results show that value, small capitalization and past loser stocks are more exposed to monetary policy shocks in comparison to growth, big capitalization and past winner stocks. Subsample analysis, motivated by variation in the realized premia and parameter instability, reveals that monetary policy shocks’ impact on these portfolios is significant and pronounced only during the pre-1983 period.