Looking into the black box of boosting: the case of Germany

This article looks into the ‘fine print’ of boosting for economic forecasting. By using German industrial production for the period from 1996 to 2014 and a data set consisting of 175 monthly indicators, we evaluate which indicators get selected by the boosting algorithm over time and four different forecasting horizons. It turns out that a number of hard indicators like turnovers, as well as a small number of survey results, get selected frequently by the algorithm and are therefore important to forecasting the performance of the German economy. However, there are indicators such as money supply that never get chosen by the boosting approach at all.     

Net Equity and Debt Flows to Emerging Market and Developing Economies in the Post-Crisis Era

We investigate the determinants of net equity and debt flows into 60 emerging and developing countries during 1986–2012, with a special focus on the period following the onset of the global financial crisis (GFC). Our results controlling for endogeneity show that net equity flows to emerging markets were mostly influenced by global risk factors, while net debt flows were affected by country-specific factors. We further distinguish the factors that were more pronounced in determining net portfolio flows to emerging markets since the GFC. The US real interest rate had significant spillover effects on net equity flows after the GFC. An increase in country’s domestic credit attracted net debt inflows before the GFC, while it was associated with net equity outflows after the GFC. We also find that capital controls moderated net debt flows since the GFC.     

The effectiveness of quantitative easing: new evidence on private investment

This paper examines the effect of Federal Reserve’s large-scale purchases of securities on private investment. We find tentative evidence that quantitative easing (QE) stimulated the level of aggregate investment through the interest rate channel by narrowing corporate bond spread. In particular, the Fed’s purchases of mortgage-backed securities were found to have a statistically significant effect on aggregate private investment. Moreover, using a GARCH model, we find that QE has led to a reduction in the volatility of private investment. This finding remains robust with a QE dummy variable as an alternative measure of the unconventional monetary policy. The study also indicates how different aspects of QE influence private investment and its volatility.     

European farmers and participatory rural appraisal: A systematic literature review on experiences to optimize rural development

Farmers are those who daily supervise and manage rural areas, but still their collaborations with those institutions entitled to decide the transformation of these territories are not managed properly. The experiences of participatory processes with the involvement of farmers are analyzed in many agricultural studies. A systematic review has allowed us to analyse experiences related to 35 participation paths aimed at rural regions’ development. The analysis has been made on the basis of 14 variables describing the path followed and its purpose, the agricultural holding involved and the areas surveyed.The work has the objectives to identify some strengths and weaknesses in the involvement of farmers in decision-making and the strengths and weaknesses of the processes themselves. The review has shown that too often in participatory processes farmers are considered only as a source of information to be used by researchers rather than as active participants in the choices for the protection, management and transformation of the rural territory. An effective participatory rural appraisal requires greater empowerment of farmers. In general, compared to the methods and tools used, farmers are wary of paths that are too complex and prefer the use of low-tech tools. This result can be attributed to the farmers’ demand of direct contact with the researchers to build trust and also to the average age of European farmers, which is pretty high.In participation contexts, it is not possible to establish standardized methods and tools, because each process should be tailored for the community that expresses it. Nevertheless, the work has highlighted the need to establish some minimum principles to avoid considering unsuccessful some participation paths which, in reality, have been only scarcely participated. In the work, these principles have been presented through the development of key questions, to which those who design the path for an effective engagement of agricultural stakeholder must respond: representativeness, empowerment, empirical knowledge, relationships, group type, numerosity and involvement stage.     

Policy Instruments,Patents, and International Technology Diffusion in a North-South Duopoly

This article analyzes the relationship between policy instruments and technology diffusion in a North-South duopoly within an inter-temporal model. The North benefits from a monopoly period with a new technology. At the end, there is then technology diffusion from the North to the South. The Northern firm files a patent in order to slow down the diffusion. This article studies the impact of several policy instruments. The results show that the Northern government’s policy instruments slow down technology diffusion, except for an import quota. The Southern government’s policy instruments accelerate the new technology diffusion.     

Does easing monetary policy increase financial instability?

This paper develops a model featuring both a macroeconomic and a financial friction that speaks to the interaction between monetary and macro-prudential policy and to the role of US monetary and regulatory policy in the run up to the Subprime mortgage crisis. There are two main results. First, interest rate rigidities in a monopolistic banking system increase the probability of a financial crisis (relative to the case of flexible interest rate) in response to contractionary shocks to the economy, while they act as automatic macro-prudential stabilizers in response to expansionary shocks. Second, when the interest rate is the only available instrument, monetary policy faces a trade-off between macroeconomic and financial stability. This trade off is both qualitative and quantitative in response to contractionary shocks, while it is only quantitative in response to positive shocks. We show that a second instrument, such as a Pigouvian tax on credit to households on the demand side of the market, is needed to restore efficiency in the economy when both frictions are at work.     

Adding Value to Applied Policy Models： The Case of the WTO and OECD Support Classification Systems

Both the OECD and the WTO have accumulated systematic data on the magnitude of support going to farmers as a result of farm policies. The datasets are collected for different purposes, but both give a detailed picture of the evolution of these policies. This paper extends recent work on the compatibility or otherwise of the two attempts at policy monitoring by considering the categorization of individual policy instruments in Norway, Switzerland, the US, and the EU. The results show how the OECD dataset, particularly with respect to the link between direct payments and production requirements, complements that of the WTO. Many payments classified in the WTO Green Box require production, raising the possibility that they may distort production and trade. Though the issue of correct notifications to the WTO is the province of lawyers, the implications for modeling and policy analysis are of interest to economists, and the broader question of improving the consistency of the two datasets is of importance in the quest for transparency in the interpretation of changes in farm policies.     

CO‐INTEGRATING VAR MODELS AND ECONOMIC POLICY

This paper surveys some relevant contributions to the economic literature on co‐integrating vector autoregressive (VAR) models [vector error correction mechanisms (VECMs)], emphasizing their usefulness for economic policy. It further discusses some theoretical aspects that are necessary for a complete understanding of their potential. The theoretical introduction of the co‐integrating VAR model is followed by an illustration of its applications to monetary policy, fiscal policy and exchanges rates as well as in establishing the effects of structural bilateral shocks between countries (the so‐called global VAR, or GVAR, models). Special attention is paid to the VECM capacities of being used in conjunction with dynamic stochastic general equilibrium models and of jointly specifying the short‐ and long‐run dynamics, thus representing the steady‐state of economic systems (by means of the co‐integration relations) and the short‐run dynamics around it.     

Spatial takeoff in the first industrial revolution

Using the framework of Desmet and Rossi-Hansberg (forthcoming), we present a model of spatial takeoff that is calibrated using spatially-disaggregated occupational data for England in c. 1710. The model predicts changes in the spatial distribution of agricultural and manufacturing employment which match data for c. 1817 and 1861. The model also matches a number of aggregate changes that characterise the first industrial revolution. Using counterfactual geographical distributions, we show that the initial concentration of productivity can matter for whether and when an industrial takeoff occurs. Subsidies to innovation in either sector can bring forward the date of takeoff while subsidies to the use of land by manufacturing firms can significantly delay a takeoff because it decreases spatial concentration of activity.     

MACROPRUDENTIAL POLICY – A LITERATURE REVIEW

The recent financial crisis has highlighted the need to go beyond a purely micro approach to financial regulation and supervision. As a consequence, the number of policy speeches, research papers and conferences that discuss a macro perspective on financial regulation has grown considerably. The policy debate is focusing in particular on macroprudential tools and their usage, their relationship with monetary policy, their implementation and their effectiveness. Macroprudential policy has recently also attracted considerable attention among researchers. This paper provides an overview of research on this topic. We also identify important future research questions that emerge from both the literature and the current policy debate.