The identification of liquidity effects in the EMS: Italy 1991–1992

We study the impact of liquidity shocks in Italy in the 1991–1992 period, when the lira belonged to the narrow ERM band with no exchange controls. We conduct our analysis by constructing (not simply assuming) predetermined measures of liquidity supply shocks, taking into account the institutional features of the money market and the reserve requirements' average computation system. We find that the supply of liquidity did significantly affect short-term interest rates; however, in contrast to earlier periods, most of the interest rate variations were attributable to foreign-exchange-related factors, as predicted by the asymmetric view of the ERM.     

On the derivation of reduced forms of rational expectations models

This paper introduces a more intuitive and straightforward method to obtain the reduced forms of linear models containing expectations of the current endogenous variables formed rationally in various previous periods, besides the two proposed by Lucas and Aoki and Canzoneri. This method is then used, with the aid of some examples, to derive the conditions for complete (i.e., in mean and variance) policy ineffectiveness in this kind of models.     

Input–output-based measures of systemic importance

The analyses of intersectoral linkages of Leontief [The Structure of the American Economy: 1919–1929, 1941] and Hirschman [The Strategy of Economic Development, 1958] provide a natural way to study the transmission of risk among interconnected banks and to measure their systemic importance. In this paper, we show how elements from classic input–output analysis can be applied to banking and how to derive six indicators that capture different aspects of systemic importance, using a simple numerical example for illustration. We also discuss the relationship with other approaches, most notably network centrality measures, both formally and by means of a simulated network.     

How can our cars become less polluting? An assessment of the environmental improvement potential of cars

This paper presents a systematic overview of the environmental impacts of new average diesel and petrol cars from a life cycle perspective. An analysis of different technical and non-technical improvement options that could be achieved at each stage of a car’s life cycle was performed. The consequences of the adoption of these options on the environment were estimated. The results show that some of the options analysed could have a major positive impact on the vehicle efficiency and induce large improvements of the environmental profile of passenger cars. The highest improvements are achievable through more efficient power trains (including hybrid car), and through lightweight cars. For some options, burden shifts from one car life cycle phase to another, or from one environmental problem to another, can occur. The results show that besides the purely technological options, those that imply behavioural changes by the driver may also reduce the environmental burden substantially.     

Beer,brewing, and business history

Abstract

This editorial introduces the eight articles in the special issue on ‘Beer, brewing and business history’. Following the BEERONOMICS conference held at the University of York, 2013, and the subsequent approval of the editorial board of Business History, we received many submissions discussing beer, brewing, and their importance to business history (broadly defined). In this editorial we provide a brief overview of the historical development of beer and brewing; explain the appeal to business historians of the principal themes which have emerged in the historiography of this industry, and provide a short introduction to the articles accepted for publication in this special issue.     

Capital regulation and monetary policy with fragile banks

Optimizing banks subject to runs are introduced in a macro model to study the transmission of monetary policy and its interplay with bank capital regulation when banks are risky. A monetary expansion and a positive productivity shock increase bank leverage and risk. Risk-based capital requirements amplify the cycle and are welfare detrimental. Within a class of simple policy rules, the best combination includes mildly anticyclical capital ratios (as in Basel III) and a response of monetary policy to asset prices or bank leverage.