Financial frictions and the ratio in UK manufacturing

This note concerns an asymptotic distribution result from the literature on nonlinear estimation with integrated variables. It points out a way of strengthening local asymptotic distribution results towards results that hold for the global minimizer of the criterion function.     

Modelling changes in seasonality in Indian manufacturing production: an application of the STAR model

This paper attempts to identify the factors responsible for changes in seasonal patterns in manufacturing production in India. This is done in the framework of the Smooth Transition Autoregressive (STAR) models. We find that the variations in seasonal patterns in manufacturing production are driven by the rate of growth of rainfall. The gradual changes in the structure of the economy have not yet had any discernible effect on the seasonality, although the overall dynamics of this variable have been affected.     

Application of local projections in the monetary policy in Brazil

This article examines the relationship between selected monetary aggregates and inflation and output in Brazil. Impulse responses under VAR and local projections were used to discover the leading or lagging role of the monetary aggregates. In addition, the information provided by the monetary aggregates as predictors of output and inflation was examined. This was assessed by examining their predictive power for subsequent observations on an in-sample basis. Overall, the results indicate that in order to control inflation rates, Brazilian authorities should focus on restricting money supply rather than increasing interest rates.     

Even more on monetary policy in a small open economy

It is well known that in a small open economy with full capital mobility and a fixed exchange rate, monetary policy is ineffective in influencing real output (e.g. the works of Fleming [Int. Monetary Fund Staff Pap. 9 (1962) 369.] and Mundell [Can. J. Econ. Polit. Sci. 29 (1963) 475.]). However, Wu [Int. Rev. Econ. Finance 8 (1999) 223.] finds that when the credit channel is added to this model, monetary policy can have real effects under a fixed exchange rate system. This conclusion hinges on the assumption that open market operations have no effect on foreign exchange reserves of the central bank when evaluating how a change in monetary policy affects the loan market. This assumption is incorrect because under a fixed exchange rate regime, the quantity of foreign reserves becomes endogenous in the model. It is shown that when this assumption is relaxed, monetary policy is still ineffective in influencing output under a fixed exchange regime, even with an operative credit channel.     

Measuring progress towards carbon reduction in the UK

The UK Climate Change Bill proposes to establish legally binding targets for a 60% reduction in carbon dioxide emissions by 2050. This paper discusses the challenges posed by measuring progress towards this target. It takes as a premise that the conventional production-based accounting framework, enshrined in the UNFCCC emissions accounting guidelines, is inappropriate for this task because it fails to account for the carbon ‘traded’ across the UK national boundary. Accordingly, it sets out a consumption-based accounting framework – using a two-region Environmental Input–Output (EIO) model – which could in principle measure progress in reducing the emissions attributable to final consumers in the UK. It illustrates the use of this framework to measure the reduction in carbon dioxide achieved by the UK between 1990 (the Kyoto base year) and the year 2004 and compares this against the production perspective. The results indicate that any progress towards the UK's carbon reduction targets (visible under a production perspective) disappears completely when viewed from a consumption perspective. But the robustness of this conclusion depends critically on the accuracy of underlying economic and environmental datasets as well as specific assumptions concerning imports. By analysing the consistency of UK Input–Output data, we conclude that EIO is still some way from being able to answer the critical question of the carbon trade balance for the UK. In these circumstances, measuring real progress towards carbon reduction in the UK remains elusive.     

The CO2 ‘trade balance’ between Scotland and the rest of the UK: Performing a multi-region environmental input–output analysis with limited data

In this paper we attempt an empirical application of the multi-region input–output (MRIO) method proposed by Turner, Lenzen, Wiedmann and Barrett [Turner, K., Lenzen, M., Wiedmann, T., Barrett, J., 2007. Examining the global environmental impact of regional consumption activities — part 1: a technical note on combining input–output and ecological footprint analysis. Ecological Economics 62 (1), 37–44] in a recent issue of this journal in order to enumerate the CO2 pollution content of interregional trade flows between Scotland and the rest of the UK (RUK). We extend the analysis to account for direct emissions generation by households, as final consumers, and to a social accounting matrix (SAM), where a more comprehensive account of incomes and expenditures is possible. While the existence of significant data problems mean that the quantitative results of this study should be regarded as provisional, the interregional economy-environment IO and SAM framework for Scotland and RUK allows an illustrative analysis of some very important issues in terms of the nature and significance of interregional environmental spillovers within the UK and the existence of a CO₂ ‘trade balance’ between Scotland and RUK.