Institutional Economics as Theory of Policy Change: Impact of Past Policy Failures on Present Policy

Social scientists have developed several theories for understanding or evaluating policy change over time. Since all costs or benefits are not internalized owing to positive transaction costs, policymaking is always implemented under cost underestimation conditions and, therefore, is imperfect. I call this trait policy failure in this article. Furthermore, I show that a new framework combining the social costs approach and the legal/economic approach in institutional economics is suitable and can be applied to evaluating how past policy failures affect present policy, providing as an example the Fukushima nuclear disaster in Japan.     

Does the Reserve Bank of Australia follow a forward-looking nonlinear monetary policy rule?

ABSTRACT

The conventional monetary policy rule describes a simple linear relationship between the domestic interest rate, inflation rate and output gap. An important extension to this rule is to incorporate the forward-looking behaviour of central banks, where it is assumed that they target an expected level of inflation instead of its current realised value. Using quarterly observations for the period 1993:1-2018:2, this paper investigates whether the conduct of monetary policy in Australia can be described by a forward-looking linear monetary policy rule, or by a nonlinear forward-looking monetary policy rule. In particular, the nonlinear forward-looking monetary policy rule is analysed in a regime-switching framework using a smooth logistic transition regression model. While the results show that the conventional forward-looking linear monetary policy rule describes the application of monetary policy in Australia reasonably well, the interest rate setting behaviour of the RBA is best described by a nonlinear forward-looking monetary policy rule.     

Aid,policies and growth: a nonlinear reassessment

ABSTRACT

The association between foreign aid and growth has been controversial for decades and the evidence is quite mixed with results sensitive to data samples and modelling approaches. We reassess the relationship between aid, policy and growth implementing a novel semiparametric estimation method that allows for nonlinearities and controls for endogeneity. The results show that the aid-policy-growth relationship is complex. Aid inflows do not seem growth-enhancing, except at very high levels (above 7% of Aid/GDP), whereas the effect may arrive with a lag at lower levels. Policy improvements are positively correlated with growth at high policy levels (above the median value) but better policies do not increase aid effectiveness.     

Is external research assessment associated with convergence or divergence of research quality across universities and disciplines? Evidence from the PBRF process in New Zealand

ABSTRACT

Performance-based research evaluations have been adopted in several countries both to measure research quality in higher education institutions and as a basis for the allocation of funding across institutions. Much attention has been given to evaluating whether such schemes have increased the quality and quantity of research. This paper examines whether the introduction of the New Zealand Performance-Based Research Fund process produced convergence or divergence in measured research quality across universities and disciplines between the 2003 and 2012 assessments. Two convergence measures are obtained. One, referred to as β-convergence, relates to the relationship between changes in average quality and the initial quality level. The second concept, referred to as σ-convergence, relates to the changes in the dispersion in average research quality over time. Average quality scores by discipline and university were obtained from individual researcher data, revealing substantial β- and σ-convergence in research quality over the period. The hypothesis of uniform rates of convergence across almost all universities and disciplines is supported. The results provide insights into the incentives created by performance-based funding schemes.     

The impact of (un)conventional expansionary monetary policy on income inequality – lessons from Japan

ABSTRACT

This paper analyzes the impact of conventional and unconventional monetary policy on income inequality in Japan, using hitherto unexplored data from the Japan Household Panel Survey. Empirical evidence shows that expansionary monetary policy in Japan has contributed to diminishing the gender pay gap through an increase in working time of women relative to men, but also to increasing the education pay gap. These effects may have materialized via the aggregate demand channel and the labour productivity channel. In contrast, expansionary monetary policy has had no significant impact on the development of the age pay gap.     

The effectiveness of monetary policy and output fluctuations: An asymmetric analysis

Previous studies have investigated asymmetries in the effects of monetary policy on the real economic activity by using either vector autoregressive (VAR)-based regime-switching models with smooth transition technique or Gaussian functions to parameterise the dynamic effects of structural shocks on the economy. These kinds of VAR models assume asymmetry as a short-run relationship between the series since the long-run neutrality hypothesis of money states that monetary policy can only affect productive capacity of the economy in the short run, but not in the long run. The recent theoretical literature shows that this hypothesis is not quite right. Thus, this paper examines the extent to which monetary policy has a long-run asymmetric effect on output in a number of Organisation for Economic Co-operation and Development countries by using a nonlinear hidden cointegration analysis within a likelihood-based panel framework. The findings indicate that there is a long-run relationship between the real interest rate as an indicator of monetary policy and the growth rate of real output in five countries out of nine under review. This gives support for the view that output has responded asymmetrically to the real interest rate changes. The economic implication of our results is that monetary policy affects positive and negative output fluctuations differently.     

Policy Dimensions of Progressive Institutional Change: Lessons from China’s Construction of a Socialist Market Economy

Abstract:

Through a comprehensive review of the progressive institutional change (PIC) literature, I first discuss four possible trajectories of PIC by considering the forces of societal reaction that might frame the path, as well as the scale and scope of the changes. Thus, I pose four questions that need to be asked when related policies are formulated for PIC. To illustrate this method, I scrutinize the evidence from the construction of a socialist market economy by the Chinese government since the 1980s and argue that related policies have successfully promoted PIC from three dimensions: (1) curbing potential conflicts with power groups; (2) promoting a sense of awareness among stakeholders; and (3) minimizing disturbances to the community. Actually, the related changes demonstrate a dynamic “displacement process” for PICs. Despite the success of this sociosystem, it is found that the sustaining of PIC which requires policy factors that enhance instrumental efficiency in the Chinese context will serve as a challenge to the Chinese government ahead.     

The health issues of the homeless and the homeless issues of the ill-health

In public policy planning and budgeting, the health issues and homeless issues tend to be interrelated and reinforced by each other, but this mutual causality is usually ignored in the existing literature. This paper provides an unbiased estimate of a structural equation model taking endogeneity into account. A questionnaire is designed based on the health-related quality of life (EQ-5D) framework and is given to 322 homeless individuals. Evidence shows that, without timely support, the homeless state and health state will fast deteriorate and reinforce each other. It is therefore arguable to broaden the definition of statutory homelessness, and the “preventative approach” can save, rather than increase, the public resources spent on the homeless.     

基于人工神经网络的互联网公司估值方法研究

资本市场认为互联网公司市值的驱动因素应包括盈利因子、运营因子、流量因子和协同因子。将协同效应指标考虑到公司估值体系中,意图构造互联网公司优化估值模型。使用美股上市的互联网企业数据建立了评价指标体系,通过因子分析实现了二级指标降维,通过实证分析确认了四个因子与公司市值的相关关系,最后构建了基于人工神经网络BP算法的互联网公司估值模型,通过预测数据的检验发现模型的准确度较高。随着2018年互联网公司美股上市潮的持续,该模型能有效为资本市场估值提供参考。     

控股家族涉入能促进企业履行环境责任吗？——基于中国A股上市公司的证据

基于2009—2017年我国沪深A股上市公司样本，比较了家族企业与非家族企业所履行的环境责任差异，研究了控股家族涉入对企业环境责任行为的影响。研究结果发现：家族企业比非家族企业更少地履行环境责任；在家族企业中，所有权比例的增加会显著降低环境责任水平，家族成员出任董事长会象征性地披露更多环境责任信息，家族涉入时间与环境责任之间总体上呈现出倒U型关系。进一步研究表明，家族企业会有选择地履行环境责任以维护家族声誉同时减少经济利益损失，控股家族涉入对环境责任的影响在创业型和非创业型家族企业中有所不同，在强制披露的企业中所有权比例对企业环境责任的消极影响会有所减弱。