Integrating Financial Stability into Monetary Policy

The global financial crisis has highlighted the importance of integrating financial stability concerns into monetary policy. In the Bank of Canada’s view, monetary policy should be the last line of defence against threats to financial stability, behind the joint responsibility of borrowers and lenders, appropriate regulatory oversight, and sound macroprudential policies. Still, it is critical to understand the interlinkages between monetary policy and financial stability, given that the objectives are not always consistent. This implies the necessity of trade-offs. At the Bank of Canada, this is regarded as a problem of risk management rather than policy optimization. That is why the Bank operates a risk-management approach to monetary policy—keeping inflation control as its primary mission.     

Poor institutions as a comparative advantage

Classic theories of comparative advantage point to factor productivity and factor abundance as determinants of specialization and trade. Likewise, geography and topography can determine trade patterns. Institutions, however, are increasingly seen as important sources of comparative advantage. A global drug prohibition regime implies that institutional quality matters more than traditional sources in the drug trade. This paper theoretically models trade patterns of illicit goods and confirms the role of institutions empirically with respect to the drug trade. In particular, illicit enterprises gain force in countries where resources are scarce, drug enforcement is uncertain, and institutions are weak in absolute terms and relative to neighboring countries. I propose several policy alternatives that emphasize economic opportunity for the poor and institutional quality that complement drug prohibition.     

Your Governance or Mine?

In response to criticism directed at the resource sector's corporate governance, this paper examines the corporate governance and underlying firm characteristics of resource development stage entities (DSEs) relative to a size‐matched sample of non‐resource firms. We find that resource DSEs have different governance characteristics in the measures of board independence, chair/CEO duality and CEO cash bonuses. Furthermore, there are differences in the information environment measures of analyst following, debt levels, stock market return and stock turnover. Considering we document substantial differences in underlying firm characteristics, corporate governance differences are likely appropriate to the mining industry and should not be uniformly labelled as ‘bad’. Our results suggest that media rankings based on corporate governance scores may not accurately portray the resource sector. Overall, our results are of interest to Australian investors and regulators and contribute to a broader understanding of contextually contingent corporate governance.     

When does economic model type become a decisive factor in health technology appraisals? Learning from the expanding treatment options for relapsing–remitting multiple sclerosis

Objectives: Specific economic model types often become de facto standard for health technology appraisal over time. Markov and discrete event simulation (DES) models were compared to investigate the impact of innovative modeling on the cost-effectiveness of disease-modifying therapies (DMTs) in relapsing–remitting multiple sclerosis (RRMS). Fingolimod was compared to dimethyl fumarate (DMF; in highly active [HA] RRMS), alemtuzumab (in HA RRMS) and natalizumab (in rapidly evolving severe RRMS). Comparator DMTs were chosen to reflect different dosing regimens.

Materials and methods: Markov and DES models used have been published previously. Inputs were aligned in all relevant respects, with differences in the modeling of event-triggered attributes, such as relapse-related retreatment, which is inherently difficult with a memoryless Markov approach. Outcomes were compared, with and without different attributes.

Results: All results used list prices. For fingolimod and DMF, incremental cost-effectiveness ratios (ICERs) were comparable (Markov: £4206/quality-adjusted life year [QALY] gained versus DES: £3910/QALY gained). Deviations were observed when long-term adverse events (AEs) were incorporated in the DES (Markov: £25,412 saved/QALY lost, versus DES: £34,209 saved/QALY lost, fingolimod versus natalizumab; higher ICERs indicate greater cost-effectiveness). For fingolimod versus alemtuzumab, when relapse-triggered retreatment was included in the DES, large cost differences were observed (difference between incremental cost is £35,410 and QALY is 0.10).

Limitations: UK payer perspective, therefore societal approach was not considered. Resource utilization and utilities for both models were not derived from the subpopulations; as the focus is on model type, input limitations that apply to both models are less relevant.

Conclusions: Whilst no model can fully represent a disease, a DES allows an opportunity to include features excluded in a Markov structure. A DES may be more suitable for modeling in RRMS for health technology assessment purposes given the complexity of some DMTs. This analysis highlights the capabilities of different model structures to model event-triggered attributes.     

A Holy Alliance: Collusion in the Renaissance Europe Alum Market

On June 11, 1470, representatives of Pope Paul II and Ferdinand, King of Naples concluded a cartel agreement to restrict competition in the sale of alum. The agreement was one element of a broader plan to monopolize the sale of alum throughout Christendom. We discuss the background of the cartel agreement and analyze its terms (which include arrangements to facilitate detection of and reduce the profitability of defection) and the constraints that limited, but did not eliminate, Rome’s ability to extract economic profit from the European alum market.     

Using Compulsory Mobility to Identify School Quality and Peer Effects

Education production functions that feature school and student fixed effects are identified using students' school mobility. However, student mobility is driven by factors like parents' labour market shocks and divorce. Movers experience large achievement drops, are more often minority and free meal students, and sort endogenously into peer groups and school types. We exploit an English institutional feature whereby some students must change schools between grades 2 and 3. We find no evidence of endogenous sorting of such compulsory movers across peer groups or school types. Non‐compulsory movers bias school quality estimates downward by as much as 20% of a SD.     

A Perfect Impasse? Cuba's Move Towards the Market and the United States' Move Towards Cuba

This article first analyses the internal economic trajectory of the Cuban economic reforms and evaluates their effectiveness in delivering the extensive and intensive development needed to correct Cuba's structural and economic imbalances. It concludes that without the lifting of the US economic sanctions success will at best be only partial, with serious implications for long‐term stability. The article then evaluates the reasons for the US economic sanctions against Cuba and argues that while the embargo policy might have failed to topple the Cuban communist regime, it has served other, largely unacknowledged, purposes that are important in explaining why the policy has persisted. The article concludes by suggesting that the US is not likely to jettison the sanctions regime while Cuba's single‐party, state‐led economic system remains. At the same time, Cuba is not likely to jettison its single‐party system while the sanctions remain.     

Differential Tariffs and Income Inequality in the United States: Some Evidence from the States

Open Economies Review - This paper explores the macroeconomic and distributional consequences of consumption tariffs and materials tariffs. It highlights the contrasting effects of consumption and...     

The Moral Disillusionment Model of Organizational Transgressions: Ethical Transgressions Trigger More Negative Reactions from Consumers When Committed by Nonprofits

Journal of Business Ethics - We tested whether the impact of an organizational transgression on consumer sentiment differs depending on whether the organization is a nonprofit. Competing hypotheses...