Economic policy uncertainty in the US: Does it matter for the Euro area?

We investigate the effects of a US economic policy uncertainty shock on some Euro area macroeconomic aggregates via Structural VARs. We model the indicators of economic policy uncertainty recently developed by  Baker et al. (2013) jointly with the aggregate price indexes and alternative indicators of the business cycle for the two above indicated economic areas. According to our SVARs, a one standard deviation shock to US economic policy uncertainty leads to a statistically significant fall in the European industrial production and prices of −0.12% and −0.06%, respectively. The contribution of the US uncertainty shock on the European aggregates is shown to be quantitatively larger than the one exerted by an Euro area-specific uncertainty shock.     

Prices vs. quantities in a dynamic problem: Externalities from resource extraction

This paper shows how a stationary tax policy can optimally address a flow externality associated with resource extraction when the policymaker faces asymmetric information. In the model I consider, the policymaker must set policy in each period before the realization of a price shock. Resource owners then learn the value of the shock, and the owners choose extraction quantities. The optimal policy is a stationary tax rule that responds to a positive shock to the current price by reducing next period's tax rate. Intuitively, a reduction in next period's tax rate makes extraction next period less expensive and thus dampens the resource owner's current response to a price increase. This policy is robust to some, but not necessarily all, boundary solutions.     

MISPERCEPTIONS AND MONETARY POLICY IN A NEW-KEYNESIAN MODEL

This paper studies the consequences for the monetary policy design of information shortages on the part of the private sector. We model these shortages as exogenous shocks to expected income, which through an IS curve, disturb aggregate demand. We constrain policymakers to follow Taylor‐like rules but allow them to optimise coefficients: we find that the presence of misperceptions makes the optimised Taylor rule respond more aggressively to inflation and the output gap. We also find that if the policymaker is uncertain about misperceptions, then it is less costly to assume they are pervasive when they are not than the reverse. In other words, setting policy on the basis that the private sector is subject to misperceptions is a ‘robust’ policy.     

The Impact of Visibility on Trade: Evidence from the World Cup

Success in the FIFA World Cup provides countries with substantial international visibility. This paper uses this information shock associated with the World Cup to show that visibility has a significant impact on trade flows. In isolating the visibility effect, two identification problems are solved. Match outcomes in the World Cup are subject to significant uncertainty. This uncertainty, when combined with controls for economic development, makes World Cup success exogenous to exports. By contrast, hosting the World Cup is potentially endogenous owing to self‐selection issues. The paper exploits FIFA's host selection policy to construct exogenous instruments for hosting. The results show that success in the World Cup raises exports temporarily by around 5%.     

Regime switches under policy uncertainty in monetary unions

This paper analyzes the effects of policy uncertainty on the stability of a monetary union. Focusing on peripheral countries, we study how uncertainty over the consequences of a possible exit affects regime switches. Applying game theory and a cost-benefit analysis, we model a regime switch as the endogenous result of a two-stage policy game. We find that the effects of uncertainty are not trivial. Unilateral exits are less probable, but contagion is more likely to be observed. Our results are driven by two opposite forces: a traditional conservative effect induced by policy uncertainty in a single policymaker framework, which calls for more stability, and a strategic effect, arising from the strategic interaction, which may undermine the monetary union's foundation and strengthen incentives for contagion.     

MONETARY POLICY UNCERTAINTY AND ECONOMIC FLUCTUATIONS

We investigate the relationship between uncertainty about monetary policy and its transmission mechanism, and economic fluctuations. We propose a new term structure model where the second moments of macroeconomic variables and yields can have a first‐order effect on their dynamics. The data favor a model with two unspanned volatility factors that capture uncertainty about monetary policy and the term premium. Uncertainty contributes negatively to economic activity. Two dimensions of uncertainty react in opposite directions to a shock to the real economy, and the response of inflation to uncertainty shocks varies across different historical episodes.     

经济政策不确定性、会计稳健性与公司投资效率——中国A股上市的民营企业为证据

文章以中国A股上市的民营企业2014-2018年度财务报告数据为研究对象，探讨了经济政策不确定性、会计稳健性对公司投资效率的影响。文章实证显示，经济政策不确定性加重公司非效率性投资；会计稳健性在公司投资活动中具有治理作用，能够有效缓解企业过度投资，提高投资效率，然而会计稳健性对缓解公司投资不足的作用不明显；会计稳健性是对经济政策不确定性的一种谨慎反应，可以抑制经济政策不确定公司投资效率的负面影响。     

Information Exchange and Transnational Environmental Problems

This paper analyzes information exchange in a model of transnational pollution control in which countries use private information in independently determining their domestic environmental policies. We show that countries may not always have an incentive to exchange their private information. However, for a sufficiently high degree of predictability of domestic environmental policy processes, the expected welfare from sharing information is greater than the expected welfare from keeping it private. The minimum degree of policy predictability for which information sharing occurs increases with the level of environmental risk. Intuitively, information exchange can help mitigate the perception of global uncertainty (both political and scientific) that surrounds transnational environmental problems and potentially improve welfare if policymaking processes are sufficiently aligned with evidence-based approaches (predictable).     

Stepping on a rake: The role of fiscal policy in the inflation of the 1970s

The inflation of the 1970s in the US is often discussed as if the only type of policy action that could have prevented the inflation were monetary policy actions and the only type of policy errors that might have induced the inflation were monetary policy errors. Yet fiscal policy underwent dramatic shifts in the 1970s and economic theory makes clear that in an environment of uncertainty about future fiscal policy, monetary policy instruments may lose potency or have perverse effects. This paper documents the vagaries of fiscal policy in this period and argues that people at the time must have been uncertain about fiscal policy's future course. It also lays out a theoretical framework for understanding the effects of fiscal uncertainties on monetary policy and shows that fiscal variables have predictive value in dynamic models, even if traditional monetary policy indicators are included in the system.     

财政支出及其结构的经济效应:国外研究评述

作为宏观经济调控的重要手段,财政支出及其结构的经济效应历来备受瞩目。近年来,该领域的研究文献众多,主要集中在财政支出及其结构对经济增长、居民消费、私人投资和收入分配的影响。本文回顾了从理论分析到实证研究的最新文献,发现上述四个方面的研究结论分歧甚至冲突明显,理论基础、研究方法和数据来源等方面的差异是造成结论分歧的主要原因。今后的财政支出及其结构经济效应研究应该更加关注作用机制、经济环境差异、非线性效应、微观视角和政治因素。     

经济政策不确定性与企业多元化程度选择

多元化是现代企业发展战略中的一个重要问题。近年来多元化程度下降成为我国上市公司发展中一个主要特征。以2003-2017年沪深两市上市公司为研究对象,考察经济政策不确定性对上市公司多元化的影响。结果显示:经济政策不确定性与上市公司多元化程度显著负相关;对内生性问题进行处理后,这种负相关性在民营企业、高成长企业、非受保护行业的企业以及在金融危机爆发后更为明显。进一步研究还表明:上市公司经营实力、治理环境和股东监督力度的提高,会使经济政策不确定性对降低公司多元化程度的影响有所减弱。政府减少政策变动,保持政策的长期性和稳定性,并在制定经济政策时充分考虑企业的异质性特征,有利于企业多元化程度选择;另一方面,公司也需不断提高自身的学习能力,优化治理体系,增强抗风险能力。     

Testing Commitment Models of Monetary Policy in China

In the past decade Chinese inflation was not high on average, but it was quite volatile. Back in the 1980s and 1990s, high inflation was a very real problem. What explains the inflationary dynamics in China? In particular, does monetary policy account for the substantial run-ups of inflation, followed by the equally substantial dis-inflation? In the absence of commitment technologies, the monetary authorities may create surprise inflation to achieve higher growth, while private agents would anticipate that and adjust their decisions accordingly, leading to accelerated inflation without a real impact. Do these types of simple time-inconsistency models of monetary policy explain the dynamic pattern of inflation in China? I show that the long-run and short-run restrictions imposed by discretionary policy, when the time-inconsistent policymaker has a desire to push output above potential, are largely rejected by the data. The estimates of the inflation bias under discretion when the policymaker is asymmetrically averse to recessions are not statistically significant either. The analysis contributes to the understanding of Chinese monetary policy and its inflationary implications and also points to the need of further investigation of inflationary behavior during the economic transition.     

Welfare costs of monetary policy uncertainty in the economy with shifting trend inflation

We study welfare costs of the uncertainty about monetary policy in the economy featuring shifting trend inflation. We follow Ruge-Murcia (J Econ Dyn Control 36: 914–-938, 2012) to employ the SMM approach to fit the model to the US data (1979Q1-2015Q1). We find that the monetary policy uncertainty affects economic welfare through different dimensions. On the one hand, the policy uncertainty itself distorts the economic welfare negligibly, not only by increasing volatilities of consumption and leisure, but also by decreasing their average levels. A higher level of trend inflation then signifies these changes to produce greater welfare costs. Furthermore, the adverse impacts of policy uncertainty on the economy, documented by the impulse response functions of macroeconomic variables to policy uncertainty shock, become larger when central banks raise their inflation targets. On the other hand, the costs of exogenous variations in trend inflation are larger if there is policy uncertainty.     

Business incentives for sustainability: a property rights approach

Public and private demands for sustainable development put pressure on firms to develop strategies that include environmental concerns. Environmental effects from products often appear as externalities, outside the legal boundary of the producing company. These companies often possess the best competence to optimise the total life cycle environmental performance of its products. They are, however, neither obliged nor stimulated enough by policy incentives to do so from a sustainable development perspective. The policy instruments used today are mostly of a control-and-demand type, i.e. they do not create sufficient incentives to go further than hedging over set requirements. Environmental concerns and tightened environmental policy parameters have mostly been associated with the notion of additional costs and thus a restriction on economic performance. However, since the mid 1990s, several papers have called for corporate win–win situations as well as instruments giving up-stream incentives for change, but not enough abatement of environmental impacts has emerged in reality. Perhaps this is due to the lack of proper connection between economic theory on the one hand, and incentive advocating articles and instruments on the other. We propose a concept for trading of product life cycle (PLC) emission rights, based on property rights and transaction cost theories considering the problem with asymmetric information over the value chain. The initial financial impacts from such PLC instruments are shown to be significant for the system provider, since emissions—and resource use—become production costs. This provides economic incentives to take an increased responsibility for information flow as well as initiatives for product innovations.     

Impact of economic uncertainty in a small open economy: the case of Chile

We construct the first news-based economic uncertainty index for Chile, which allowed us to rebuild 23 years of the history of economic uncertainty in the country and quantify its impact on the economy. We find that an increase in economic uncertainty conveys a fall in GDP, investment, and employment, even after accounting for the small open economy nature of Chile. In contrast to previous studies for big and developed economies, we do not find evidence of an overshooting effect when uncertainty dissipates; therefore, increases in economic uncertainty have negative effects on the economy, even in the long-run. Our estimates suggest that these impacts range from 10% to 20% for aggregate investment, 2.5% to 5% for GDP, and 1.3% to 4.2% for employment. Extensions suggest that economic uncertainty affects both mining and non-mining investment, with the former showing a more pronounced decline. We also find that the bulk of effect of economic uncertainty on aggregate investment is via private investment, with some short-run impacts on public investment. Moreover, compared to the GDP response, aggregate consumption responds in almost the same way to an economic uncertainty shock.     

经济政策有效性的理论分析* ——以货币政策为例

本文在更一般的不完全信息情形下，以货币政策为例，分析了经济政策的时间不一致问题。结果表明，当私人部门与政府部门存在不对称信息，政府部门具有信息优势时，最优经济政策与私人部门所持有的关于经济状态的信念有关。从福利的角度看，当现实经济状态对经济政策灵敏时，政府部门有公开经济状态信息的激励；反之，政府部门则有隐瞒经济状态信息的激励。因此，在市场经济的顶层设计中，除政府部门需要建立相关经济决策咨询机构外，还要推动独立的民间智库发展，使公众逐步摆脱信息劣势。     

Competing for Attention: Lobbying Time‐Constrained Politicians

We develop a model of lobbying in which a time and resource constrained policymaker first chooses which policy proposals to learn about, before choosing which to implement. The policymaker reviews the proposals of the interest groups who provide the highest contributions. We study how policy outcomes and contributions depend on policymaker constraints and the design of the “Contest for Attention.” Among other results, awarding attention to the highest contributors generally guarantees the first best policy outcome. It can also lead to the highest possible contributions, suggesting that a policymaker may not need to sacrifice policy in order to maximize contributions. Our results also give insight into other settings where agents compete for a decision maker's attention.     

Exchange rate uncertainty and firm investment plans evidence from Swiss survey data

A sudden change in monetary policy happened in Switzerland on January 15th, 2015. The Swiss National Bank removed the lower exchange rate bound vis-à-vis the Euro. We believe that uncertainty concerning a vital economic indicator as the exchange rate should influence economic activities. We argue that the unexpected removal of the lower bound induced a temporary uncertainty about future prices in foreign markets and believe that this influenced firm investment in the short term. We exploit the unexpected change in monetary policy as a natural experiment and use the continuous nature of business tendency surveys to determine the role of uncertainty in the immediate aftermath of the event. Changes in firm-level expectations are measured by specially designed survey questions. We use this information to disentangle first and second moment effects. We find that uncertainty negatively affects investment in equipment and machinery through real-option effects and believe that uncertainty positively influences expenditures in research and development through growth-option effects. Finally, we argue that focusing on aggregate gross fixed capital formation masks important insights and suggest the use of disaggregated investment data in future research on the relationship between uncertainty and investment.     

经济政策不确定性是否驱动制造业企业的“脱实向虚”*——基于中介效应及调节效应识别

当前，实体经济投资回报率低，制造业企业逐渐显现出“脱实向虚”的特征，主要表现为制造业企业金融化程度较为明显。本文使用2009—2019年中国A股制造业上市公司数据，研究了经济政策不确定性对制造业企业“脱实向虚”的影响。本文基于现金持有、实物期权和委托代理理论，进一步识别了两者关系的中介效应及调节效应，通过实证分析发现：（1）经济政策不确定性增加了制造业企业的“脱实向虚”程度；（2）融资约束对于经济政策不确定性和制造业企业“脱实向虚”之间的关系具有中介效应；（3）企业的股权集中度、客户集中度、银行监督程度均减弱了经济政策不确定性对制造业企业“脱实向虚”的正向影响。通过替换核心变量，本文在考虑所有制和规模异质性、政府补助的影响后，其主要结论仍然稳健。本文针对监管部门政策实施、流动性支持、资金流向监管等方面，提出了有针对性的建议。     

The welfare implications of resource allocation policies under uncertainty: The case of public education spending

In this paper, we examine whether policy interventions, aimed at improving resource allocation, also have important stabilization effects over the business cycle. To this end, we employ a dynamic stochastic general equilibrium model in which public education expenditures, financed by distorting taxes, enhance the productivity of private education choices. We then calculate the welfare implications of competing operating targets using a state-contingent instrument rule for public education spending. Our main findings are: (i) there can be important cyclical effects of different resource allocation policies depending on the operating target used and the degree of macroeconomic uncertainty; (ii) it is important to use an operating target which is as close as possible to the heart of the market imperfection that justifies policy action; (iii) policy action should not be monotonic in the degree of macroeconomic uncertainty.