Evaluating the Macroeconomic Effects of the ECB's Unconventional Monetary Policies

We quantify the macroeconomic effects of the European Central Bank's unconventional monetary policies using a dynamic stochastic general equilibrium model which includes a set of shadow interest rates. Extracted from the yield curve, these shadow rates provide unconstrained measures of the overall stance of monetary policy. Counterfactual analyses show that, without unconventional measures, the euro area would have suffered (i) a substantial loss of output since the Great Recession and (ii) a period of deflation from mid‐2015 to early 2017. Specifically, year‐on‐year inflation and GDP growth would have been on average about 0.61% and 1.09% below their actual levels over the period 2014Q1–17Q2, respectively.     

Consumers' selection of textile products made from recycled fibres

The purpose of this study was to evaluate consumers' selection patterns of textile products made from recycled fibres. A quasi-experimental design was used. The 125 undergraduate students who participated in the study evaluated six identical sweatshirts and six identical carpet samples that were labelled with two manipulated information cues, price and fibre content. Chi-square tests of independence were calculated to determine if there was a significant relationship between wearing apparel choice and home textile product choice when both price and fibre content were manipulated and when price was controlled and fibre content manipulated. The data indicated that when both price and fibre content were manipulated, over half of the subjects selected the lower priced sweatshirt and lower priced carpet regardless of fibre content. If a consumer selected a lower priced wearing apparel product s/he also selected a lower priced home textile product. When the price and fibre content were controlled, 66% of the respondents selected the sweatshirt labelled recycled polyester and 62% selected the recycled carpet. In addition, a consumer who selected a recycled wearing apparel product also selected a recycled home textile product. Results suggest that apparel and home textile products made from recycled fibres will be sellable if priced competitively with products made from virgin fibres.     

Fiscal Decentralization and Political Budget Cycles

We analyze a problem à la Rogoff where incumbents can distort fiscal policy to signal their competency, but where fiscal policy can be centralized or decentralized. Our main focus is on how the equilibrium probability that fiscal policy is distorted in any region (the political budget cycle, PBC) differs across fiscal regimes. With centralization, there are generally two effects that change the probability of a PBC. One is the possibility of selective distortion: the incumbent can be reelected with the support of just a majority of regions. The other is a cost diversification effect, which is present unless costs are perfectly correlated across regions. Both these effects work in the same direction, with the general result that the PBC probability is lower under centralization when decentralization also involves PBC. Welfare analysis shows that voters tend to be better off when the PBC probability is lower, so voters prefer centralization when decentralization involves PBC. Our results are robust to a number of changes in the specification of the model.     

FOREIGN THREATS,TECHNOLOGICAL PROGRESS AND THE RISE AND DECLINE OF IMPERIAL CHINA

This paper addresses why technological progress occurred off‐and‐on in Imperial China but came to a standstill at around the time of the European Renaissance, leading to the decline of Imperial China. We suggest that the threat of war could have induced innovative activities as well as the accumulation of public capital, which led to the development of a modern sector in Imperial China. Using numerical simulation, we find a stagnated equilibrium in an agrarian economy under low threats of war and another with a high level of technological knowledge, public capital and a vibrant modern sector under strong threats. Long periods of peace would have the opposite effect. Some supportive historical evidence from urbanization is provided.     

OPTIMUM-WELFARE AND MAXIMUM-REVENUE TARIFFS IN MIXED OLIGOPOLY WITH FOREIGN COMPETITORS

This paper re-examines the important tariff ranking issue under a linear mixed oligopoly model with foreign competitors and asymmetric costs. We demonstrate that under Cournot competition, when the size of domestic private and foreign private firms become more unequally distributed, optimum-welfare tariff will exceed maximum-revenue tariff. We also show that under Stackelberg competition, when the domestic government protects its domestic sector, it will levy higher optimum-welfare tariffs versus maximum-revenue tariffs; however, when it decides to open its doors more for foreign competitors, it will need to levy higher maximum-revenue tariffs versus optimum-welfare tariffs. The above results remain valid whether the domestic public firm acts as a leader or a follower.     

Co-operation among groups in developing and delivering programmes to consumers

The purpose of this study was to investigate the feasibility of co-operation among consumer education providers, in developing and delivering education programmes for consumers. Four groups of consumer education providers were identified for this study: business representatives, consumer advocates, government agencies and secondary school educators. Members of each group were presented with a series of 42 objectives which had been grouped into eight categories. They were asked to identify the importance of each objective and providers were compared according to their responses. Similarities and differences among consumer education providers were identified and statistical tests applied. Three objectives identified as most important by participants were: (i) developing guidelines for wise use of credit; (ii) identifying the rights and responsibilities of the consumer in our society; and (iii) establishing the essential factors in the developing of a budget. The median test identified significant differences (P < 0.05) between consumer education suppliers in the importance they assigned to consumer education objectives in three categories. Spearman rank-difference correlation test identified objectives within seven categories of objectives for which consumer educators expressed similar importance. These findings indicate sufficient agreement among consumer educators' importance ranking of objectives to indicate support for co-operative educational programmes.     

The Harmonic Mean and Other Necessary Conditions for Stochastic Dominance

In this paper a systematic procedure is developed to determine necessary conditions for all degrees of stochastic dominance. The previously known necessary conditions are specified as to which degrees of dominance they belong, and two new necessary conditions, a ranking of harmonic means and a ranking of algebraic combinations of the first three moments, are derived.     

THE KYOTO PROTOCOL, CAFE STANDARDS, AND GASOLINE TAXES

The Kyoto Protocol mandates that the U.S. reduce emissions of greenhouse gases to 93% of their 1990 levels by the period 2008–2012. This paper explores the possibility of reducing carbon dioxide emissions in the transportation sector to 7% below their 1990 level by 2010. This paper examines two policies to achieve these reductions Corporate Average Fuel Efficiency standards and gasoline taxes. The introduction of these policies individually makes the task seem daunting, yet when using the policies jointly the objective is achievable. ( JEL Q38, Q48, R48)     

The Political Economy of the (Weak) Enforcement of Indirect Taxes

The objective of this paper is to understand the determinants of the enforcement level of indirect taxation in a positive setting. We build a sequential game where individuals, who differ in their willingness to pay for a taxed good, vote over the enforcement level. Firms then compete à la Cournot and choose the fraction of sales taxes to evade. We assume in most of the paper that the tax rate is set exogenously. Voters face the following trade‐off: more enforcement not only increases tax collection but also increases the consumer price of the goods sold in an imperfectly competitive market. We obtain that the equilibrium enforcement level is the one most preferred by the individual with the median willingness to pay, that it is not affected by the structure of the market (number of firms) and the firms’ marginal cost, and that it decreases with the resource cost of evasion and with the tax rate. We also compare the enforcement level chosen by majority voting with the utilitarian level. In the last section, we endogenize the tax rate by assuming that individuals vote simultaneously over tax rate and enforcement level. We prove the existence of a Condorcet winner and show that it entails full enforcement (i.e., no tax evasion at equilibrium). The existence of markets with less than full enforcement then depends crucially on the fact that tax rates are not tailored to each market individually.