Monetary policy rules and macroeconomic stability: Evidence and some theory

We estimate a forward-looking monetary policy reaction function for thepostwar United States economy, before and after Volcker's appointmentas Fed Chairman in 1979. Our results point to substantial differencesin the estimated rule across periods. In particular, interest ratepolicy in the Volcker-Greenspan period appears to have been much moresensitive to changes in expected inflation than in the pre-Volckerperiod. We then compare some of the implications of the estimated rulesfor the equilibrium properties of inflation and output, using a simplemacroeconomic model, and show that the Volcker-Greenspan rule is stabilizing.

Toward a theory of labor market institutions

Standard economic analysis holds that labor market rigidities are harmfulfor job creation and typically increase unemployment. But many orthodoxreforms of the labor market have proved difficult to implement because ofpolitical opposition. For these reasons it is important to explain why weobserve such regulations. In this paper I outline a theory of how they may arise and why they fit together. This theory is fully developed in aforthcoming book (Saint-Paul (2000)), to which the reader is referred forfurther details.

Capital, wages and growth: Theory and evidence

Returns to scale to capital and the strength of capital externalities play a key role for the empirical predictions and policy implications of different growth theories. We show that both can be identified with individual wage data and implement our approach at the city-level using US Census data on individuals in 173 cities for 1970, 1980, and 1990. Estimation takes into account fixed effects, endogeneity of capital accumulation, and measurement error. We find no evidence for human or physical capital externalities and decreasing aggregate returns to capital. Returns to scale to physical and human capital are around 80 percent. We also find strong complementarities between human capital and labor and substantial total employment externalities.

Property as an economic concept: Reconciling legal and economic conceptions of property rights in a Coasean framework

Adopting a simplistic view of Coase (1960), most economic analyses of property rightsdisregard both the key advantage that legal property rights (that is, in rem rights) provide torightholders in terms of enhanced enforcement, and the difficulties they pose to acquirers interms of information asymmetry about legal title. Consequently, these analyses tend to overstatethe role of "private ordering" and disregard the two key elements of property law: first, theessential conflict between property (that is, in rem) enforcement and transaction costs; and,second, the institutional solutions created to overcome it, mainly contractual registries capable ofmaking truly impersonal (that is, asset-based) trade viable when previous relevant transactionson the same assets are not verifiable by judges. This paper fills this gap by reinterpreting bothelements within the Coasean framework and thus redrawing the institutional foundations of bothproperty and corporate contracting.

Behavioural alteration in chronic pain: are brain glia involved?

Behavioural symptoms such as abnormal emotionality (including anxious and depressive episodes) and cognition (for instance weakened decision-making) are highly frequent in both chronic pain patients and their animal models. The theory developed in the present article posits that alterations in glial cells (astrocytes and microglia) in cortical and limbic brain regions might be the origin of such emotional and cognitive chronic pain-associated impairments. Indeed, in mood disorders (unipolar depression, anxiety disorders, autism or schizophrenia) glial changes in brain regions involved in mood control (prefrontal and cingulate cortices, amygdala and the hippocampus) have been recurrently described. Besides, glial cells have been undoubtedly identified as key actors in the sensory component of chronic pain, owing to the profound phenotypical changes they undergo throughout the sensory pathway. Hence, the possibility arises that brain astrocytes and microglia react in upper brain structures as well, mediating the related mood and cognitive dysfunctions in chronic pain. So far, only very few studies have provided results in this prospect, mainly indirectly in pain-independent researches. Nevertheless, the first scant available data seem to merge in a unified description of a brain glial reaction occurring after chronic peripheral lesion. The present article uses this scarce literature to formulate the provocative theory of a glia-driven mood and cognitive dysfunction in chronic pain, expounding upon its validity and putative therapeutical impact as well as its current limitations and expected future developments.

The implicit theory of historical change in the work of Alan S. Milward

Alan S. Milward was an economic historian who developed an implicit theory ofhistorical change. His interpretation which was neither liberal nor Marxist positedthat social, political, and economic change, for it to be sustainable, had to be agradual process rather than one resulting from a sudden, cataclysmicrevolutionary event occurring in one sector of the economy or society. Benignchange depended much less on natural resource endowment or technologicaldevelopments than on the ability of state institutions to respond to changingpolitical demands from within each society. State bureaucracies were fundamentalto formulating those political demands and advising politicians of ways to meetthem. Since each society was different there was no single model of developmentto be adopted or which could be imposed successfully by one nation-state onothers, either through force or through foreign aid programs. Nor coulddevelopment be promoted simply by copying the model of a more successfuleconomy. Each nation-state had to find its own response to the political demandsarising from within its society. Integration occurred when a number of nation states shared similar political objectives which they could not meet individuallybut could meet collectively. It was not simply the result of their increasinginterdependence. It was how and whether nation-states responded to thesedomestic demands which determined the nature of historical change.

Title IIIB Legal Assistance Program Activity Report for SFY 2006

This report is prepared from data submitted by the Title IIIB legal providers and Area Agencies on Aging.

Title IIIB Legal Assistance Activity Report for SFY 2005.

This report is prepared from data submitted by the Title IIIB providers and Area Agencies on Aging.

A comment on the Nash program and the theory of implementation

The mechanisms in the Nash program for cooperative games are madecompatible with the framework of the theory of implementation. This is donethrough a reinterpretation of the characteristic function that avoids feasibilityproblems, thereby allowing an analysis that focuses exclusively on the payoff space. In this framework, we show that the core is the only majorcooperative solution that is Maskin monotonic. Thus, implementation of mostcooperative solutions must rely on refinements of the Nash equilibrium concept(like most papers in the Nash program do). Finally, the mechanisms in theNash program are adapted into the model.

Business cycle measurement with some theory

A method to evaluate cyclical models not requiring knowledge of the DGP and the exact specificationof the aggregate decision rules is proposed. We derive robust restrictions in a class of models; use someto identify structural shocks in the data and others to evaluate the class or contrast sub-models. Theapproach has good properties, even in small samples, and when the class of models is misspecified. Themethod is used to sort out the relevance of a certain friction (the presence of rule-of-thumb consumers)in a standard class of models.

Prevalence of overweight and obesity among migrants in Switzerland: association with country of origin.

Migrants tend to present higher overweight and obesity levels, but whether this relationship applies to all nationalities has seldom been studied. The present study aimed to assess the prevalence of overweight and obesity according to nationality in adults. Cross-sectional population-based samples. Five-year nationwide interview surveys (Swiss Health Surveys - SHS) from 1992 to 2007 (n 63 766) and a local examination survey (CoLaus Study in Lausanne 2004-2006, n 6743). Participants were separated into Swiss, French, German, Italian, Portuguese, Spanish nationals, those from the former Republic of Yugoslavia and from other European and other countries. Compared with Swiss nationals, German and French nationals presented a lower prevalence of overweight and obesity, whereas nationals from Italy, Spain, Portugal and the former Republic of Yugoslavia presented higher levels. Adjusting the SHS data for age, gender, education, smoking, leisure-time physical activity and survey year, a lower risk for overweight and obesity was found for German (OR = 0·80, 95 % CI 0·70, 0·92) and French (OR = 0·74, 95 % CI 0·61, 0·89) nationals, whereas higher risks were found for participants from Italy (OR = 1·45, 95 % CI 1·33, 1·58), Spain (OR = 1·36, 95 % CI 1·15, 1·61), Portugal (OR = 1·25, 95 % CI 1·06, 1·47) and the former Republic of Yugoslavia (OR = 1·98, 95 % CI 1·69, 2·32). Similar findings were observed in the CoLaus Study for Italian (OR = 1·63, 95 % CI 1·29, 2·06), Spanish (OR = 1·54, 95 % CI 1·17, 2·04) and Portuguese (OR = 1·49, 95 % CI 1·16, 1·91) participants and for those from the former Republic of Yugoslavia (OR = 5·34, 95 % CI 3·00, 9·50). Overweight and obesity are unevenly distributed among migrants in Switzerland. Migrants from Southern Europe and from the former Republic of Yugoslavia present higher prevalence rates. This suggests that preventive messages should be tailored to these specific populations.

Bringing game theory to hypothesis testing: Establishing finite sample bounds on inference

Small sample properties are of fundamental interest when only limited data is avail-able. Exact inference is limited by constraints imposed by speci.c nonrandomizedtests and of course also by lack of more data. These e¤ects can be separated as we propose to evaluate a test by comparing its type II error to the minimal type II error among all tests for the given sample. Game theory is used to establish this minimal type II error, the associated randomized test is characterized as part of a Nash equilibrium of a .ctitious game against nature.We use this method to investigate sequential tests for the di¤erence between twomeans when outcomes are constrained to belong to a given bounded set. Tests ofinequality and of noninferiority are included. We .nd that inference in terms oftype II error based on a balanced sample cannot be improved by sequential sampling or even by observing counter factual evidence providing there is a reasonable gap between the hypotheses.

The optimum quantity of money: Theory and evidence

In this paper we propose a simple and general model for computing the Ramsey optimal inflation tax, which includes several models from the previous literature as special cases. We show that it cannot be claimed that the Friedman rule is always optimal (or always non--optimal) on theoretical grounds. The Friedman rule is optimal or not, depending on conditions related to the shape of various relevant functions. One contribution of this paper is to relate these conditions to {\it measurable} variables such as the interest rate or the consumption elasticity of money demand. We find that it tends to be optimal to tax money when there are economies of scale in the demand for money (the scale elasticity is smaller than one) and/or when money is required for the payment of consumption or wage taxes. We find that it tends to be optimal to tax money more heavily when the interest elasticity of money demand is small. We present empirical evidence on the parameters that determine the optimal inflation tax. Calibrating the model to a variety of empirical studies yields a optimal nominal interest rate of less than 1\%/year, although that finding is sensitive to the calibration.