India's Economic Reforms: Achievements and Next Steps

This paper reviews the impact of India's reforms since 1991 on the performance of the Indian economy. It shows that the reforms definitely achieved a significant acceleration in growth and they also succeeded in reducing poverty. However, they have been less successful in generating good quality jobs. There was progress in providing better access to education, health services ,and clean drinking water and sanitation, but less than was hoped. The area where performance has been most disappointing is environmental sustainability. The paper concludes by identifying some of the critical policy challenges in the years ahead.     

Where is the GE? Consumption Dynamics in DSGEs

We offer a partial equilibrium perspective on the behavior of consumption in dynamic stochastic general equilibrium (DSGE) models. We consider a benchmark dynamic general equilibrium model and show that a standard calibration implies that the real interest rate is essentially fixed. One manifestation of this feature is that, with separable preferences, the reaction of consumption to total factor productivity (TFP) shocks is flat: the random‐walk permanent income hypothesis holds almost exactly, pretty much as in a partial equilibrium consumption‐savings problem. These results help explain the prominent role of aggregate demand, and how it is achieved, in modern DSGE analysis.     

How justified is abandoning money in the conduct of monetary policy in Australia on the grounds of instability in the money‐demand function?

The role of money in the design and conduct of monetary policy has reemerged as an important issue in both advanced and developing economies, especially since the 2007 global financial crisis. A growing body of recent literature suggests that the causal relationship between money supply growth and inflation remains intact across countries and over time and that this relation is not conditional on the stability of the money‐demand function or whether money is endogenous or exogenous. Moreover, critical for a rule‐based monetary policy is the presence of a long‐run stable money‐demand function, rather than a short‐run money‐demand model that may exhibit instability for many reasons, including problems with estimating a money‐demand model with high‐frequency data. Provided that a stable money‐demand function exists, it could be useful to establish long‐run equilibrium relations among money, output, prices, and exchange rates, as the classical monetary theory suggests. Within this analytical framework, this paper addresses the question of whether money has any role in the conduct of monetary policy in Australia. The conventional wisdom is that the money‐demand function in Australia has been unstable since the mid‐1980s due to financial deregulation and reforms; this led to a change in the strategy of monetary policy for price stability in the form of inflation targeting that ignores money insofar as inflation and its control are concerned. This paper reports empirical findings for Australia, obtained from a longer quarterly data series over the period 1960Q1–2015Q1, which suggest that instability in the narrow‐money‐demand function in Australia was primarily due to the exclusion of variables which have become important in the deregulated environment since the 1980s. These findings are confirmed by an expanded form of the narrow‐money‐demand function that was found stable over the past two decades, although it experienced multiple structural breaks over the study period. The paper draws the conclusion that abandoning the monetary aggregate as an instrument of monetary policy in Australia, under a rule‐based monetary policy such as inflation targeting, cannot be justified by instability in the money‐demand function or even by lack of a causal link between money supply growth and inflation.     

Taxation and the Environment–Health–Poverty Trap: A Policy Experiment Perspective

Under pressures related to economic growth and environmental protection, China is facing an increasingly severe “environment–health–poverty” trap risk. Fuel taxation is generally considered an effective policy to counter such a risk. Since 2009 China has raised the fuel tax rate many times to enhance tax reform. However, the effects of this policy remain unknown. Therefore, it is vitally important to estimate the impacts of China's current fuel taxation policy on environment, public health and the national economy. As the first attempt in existing literature on China, this paper builds a general equilibrium framework with the feedback effect of public health on economy. We find that that the fuel tax policy benefits the adjustment of the economic structure and improves human health; however, it is detrimental to economic growth, public welfare and price stability. In this sense, it plays a limited role in reducing the trap risk and might not be sustainable in the long term.     

Superreplication with proportional transaction cost under model uncertainty

We consider a discrete‐time financial market with proportional transaction cost under model uncertainty, and study a superreplication problem. We recover the duality results that are well known in the classical dominated context. Our key argument consists in using a randomization technique together with the minimax theorem to convert the initial problem to a frictionless problem on an enlarged space. This allows us to appeal to the techniques and results of Bouchard and Nutz to obtain the duality result.     

徐州市科技创新能力综合评价及应用研究

从科技创新投入、科技创新产出、科技创新环境支撑和科技促进可持续发展等4个方面,在26个备选具体指标的基础上,通过反复测试检验,最终选取14个具体指标,建立科技创新评价模型,对淮海经济区核心区城市和江苏省十三市的科技创新能力予以定量评价,并进行横向比较分析。最后从科技创新投入、成果转化等七个方面对徐州市提高科技创新能力给出了建设性建议。     

The virtuous circle of human resource investments: A precrisis and postcrisis analysis

We propose a dynamic model of positive feedback between human resource (HR) investments and companies' economic performance. The model assumes that HR investment increases profitability through labor productivity and, in turn, profitability improves HR investment through organizational slack. Based on data from a sample of 2,497 industrial companies over a 7‐year period (2005–2011), longitudinal analysis corroborates the existence of a two‐way relationship between HR investment and profitability over time. However, the emergence of an economic crisis weakens this feedback, identifying the effect of organizational slack on HR investment as the weakest causal chain link. In a postcrisis period, HR investment is not such a high priority for managers.     

Terrorism and international economic policy

We add to the ongoing discussion regarding the policy consequences of terrorism by analyzing the effect of terrorism on international economic policy for a panel of 170 countries between 1970 and 2016. We find that countries resort to less liberal international economic policies when facing the threat of terrorism. This effect is especially relevant to smaller (less populated) countries. Our main finding is robust to an instrumental-variable approach. We argue that governments pursue less liberal international economic policies in response to terrorism to interrupt the organization and financing of terrorism, limit capital flight, stabilize public finances and signal political resolve.     

应对新冠疫情冲击的货币政策国际协调*

新冠疫情冲击了世界经济增长和金融市场稳定。很多国家推出极度宽松货币政策应对危机。从经典货币政策国际协调的博弈理论来看，应对本次疫情冲击的各国货币政策协调性不足，“以邻为壑”的非合作均衡效果明显。为数不多的货币政策协调也存在执行力不足、深度与广度不够、新兴市场国家话语权低等问题。在世界经济紧密联系、货币政策溢出效应加强的背景下，为了应对疫情冲击，国际组织需要创设协议和合作剩余分配机制，寻找货币政策刺激效果和防止国际资产泡沫之间的平衡，加强政策沟通和信息共享，提高新兴市场国家话语权，建设有效的应对危机的货币政策国际协调机制。中国应在“一带一路”倡议的框架下建立长期货币政策协调机制，在现有的IMF和G20等平台上发挥发达国家与新兴市场国家之间的协调桥梁作用，通过持续开展央行间技术性合作等措施参与和推进协调进程。     

地方财政政策逆周期调节：财政分权还是债务增发*

财政政策工具实际操作偏离最初设计将会降低政策工具的调控效果，导致宏观经济波动加剧。针对地方政府财政政策的逆周期性调控目标，本文关注财政分权深化和政府债务增发的逆周期性效应。研究发现：地方政府财政政策总体呈现顺周期特征。财政分权程度的提高放大了地方财政政策的顺周期性。地方政府债务增发使地方财政政策呈现逆周期特征。地方政府财政政策及其收入面、支出面均呈现顺周期性，由“顺”转“逆”的债务平衡点分别为0137，0113，0209。当前绝大部分地区的债务规模都在债务平衡点之下。驱动地方政府债务逆周期调控的内在因素是官员晋升激励。晋升激励的程度越高，地方债务逆周期调控的力度就越大。但外部市场融资环境的波动削弱了地方政府债务逆周期调控的力度。本文的政策主张是，不宜过度财政分权，应该扩大地方债发行规模，促使地方财政政策逆周期调节。