Monetary Policy,Taylor’s Rule and Instability

We analyse the dynamic behaviour of an economy where the central bank (CB) sets interest rates according to a Taylor‐type policy rule. A simple model for a closed and instability‐prone economy is constructed and subjected to formal dynamical analysis and numerical simulation. It is shown that a requirement for local stability is that the two response coefficients in the policy rule be positive. Similarly, it is shown that raising the response coefficient of the output gap increases the likeliness of the economy being stable, whereas raising the response coefficient of the inflation gap has an uncertain and probably negligible effect on local stability. Self‐sustained oscillations may arise for certain parameter values. Policy mistakes in the estimation of the long‐run equilibrium real interest rate or potential real GDP may prevent the CB from achieving its inflation target. A suggestion for enhancing the stabilization capacity of Taylor‐type policy rules in the context of the model presented is made.     

Pro-poor trade policy in Sub-Saharan Africa

This paper examines the presence of a pro-poor bias in the existing structure of protection of six Sub-Saharan African (SSA) countries, Burkina Faso, Cameroon, Côte d'Ivoire, Ethiopia, Gambia, and Madagascar. We build on a simple agricultural household production model and we propose an extension to include adjustments in labor income. Our approach, which can be implemented without repeated cross-sections of household level data, suits well the data constraints in SSA. It also allows us to capture the heterogeneity in trade protection at the tariff line level. The pro-poor bias indicators suggest that SSA's trade policies tend to be biased in favor of poor households, as these policies redistribute income from rich to poor households. This is because protection increases the agricultural prices of goods that are sold by African households and this effect dominates both the impacts of higher consumption prices and the strong Stolper–Samuelson effects that benefit skilled over unskilled workers.     

The Role of Informational and Congruence Clues in Advertisement for an Ethnic Restaurant

This study analyzes the effect of informational clues and Chef-Cuisine congruence, and their relation to advertisements for a Japanese restaurant. Two experiments were conducted with 171 consumers. Findings supported the following: Congruence between a Japanese restaurant and Japanese Chef results in higher approval ratings than the combination of Japanese restaurant with Brazilian Chef. However, if the advertisement states that the restaurant has won an award, then Chef-restaurant congruence is no longer an important factor in consumers’ evaluations.     

Impact of family income in early life on the financial independence of young adults: Evidence from a matched panel data

This study investigates whether the family income level in early life influences the financial independence of young adults. Using a large nationally representative U.S. sample (constructed based on the data from the 1999 to 2015 Panel Study of Income Dynamics, its 2009 to 2015 Transition to Adulthood Supplement and its 1997 to 2007 Child Development Supplement), we find that the relationship between one's family income level during adolescence and the financial independence of young adults follows an inverted U‐shape. We find that the college graduation status plays an important role in determining the financial independence of young adults. Once young adults graduate from the college, their financial independence is no longer influenced by their family income level during adolescence. The results show similar patterns after controlling for cognitive and noncognitive abilities and financial behaviours of young adults when they were children or teenagers. The findings of this study have significant implications for policymakers and educators.     

An integrated approach to supply chain risk analysis

Despite the increasing attention that supply chain risk management is receiving by both researchers and practitioners, companies still lack a risk culture. Moreover, risk management approaches are either too general or require pieces of information not regularly recorded by organisations. This work develops a risk identification and analysis methodology that integrates widely adopted supply chain and risk management tools. In particular, process analysis is performed by means of the standard framework provided by the Supply Chain Operations Reference Model, the risk identification and analysis tasks are accomplished by applying the Risk Breakdown Structure and the Risk Breakdown Matrix, and the effects of risk occurrence on activities are assessed by indicators that are already measured by companies in order to monitor their performances. In such a way, the framework contributes to increase companies’ awareness and communication about risk, which are essential components of the management of modern supply chains. A base case has been developed by applying the proposed approach to a hypothetical manufacturing supply chain. An in-depth validation will be carried out to improve the methodology and further demonstrate its benefits and limitations. Future research will extend the framework to include the understanding of the multiple effects of risky events on different processes.     

Output-inflation tradeoffs in 34 countries

This article examines the responsiveness of real output to the variability of inflation and aggregate demand. In the manner of Lucas (1973), estimates of the output-inflation tradeoff are computed for a large sample of countries. This measure is then correlated with the variances of the inflation rate and the growth rate in nominal income. Because differences in inflation variance (and hence the tradeoff) are viewed as the outcomes of differences in demand variance, correlations between these two variables are also reported. Cross-time and cross-country results provide a good measure of support for Lucas and the notion that attempts to exploit the tradeoff weaken it.     

Corruption, inequality, and fairness

Bigger governments raise the possibilities for corruption; more corruption may in turn raise the support for redistributive policies that intend to correct the inequality and injustice generated by corruption. We formalize these insights in a simple dynamic model. A positive feedback from past to current levels of taxation and corruption arises either when wealth originating in corruption and rent seeking is considered unfair, or when the ability to engage in corruption is unevenly distributed in the population. This feedback introduces persistence in the size of the government and the levels of corruption and inequality. Multiple steady states exist in some cases.     

Financial capability of student loan holders who are college students,graduates, or dropouts

Effective consumer financial education provides relevant information to meet special needs of targeted audiences. The purpose of this study is to examine differences in financial capability among student loan holders who are college students, graduates, and dropouts. Using data from the 2015 U.S. National Financial Capability Study, the results show that student loan holders who have completed their education program have higher scores in all financial capability indicators than college students and dropouts. Further analyses show differences in specific financial knowledge items among college students, graduates, and dropouts. In addition, college graduates are more likely to perform several specific desirable financial behaviors than college students and dropouts. The findings suggest that financial educators should emphasize action taking when they provide financial education for student loan holders who are college students and dropouts.     

Monetary integration vs. real disintegration: single currency and productivity divergence in the euro area #

Productivity slowdown plays a prominent role in the build-up of the euro area crisis. This phenomenon affected member countries asymmetrically, causing divergence in their productivity trends. Recent research traces this divergence back to monetary integration. After reviewing the arguments that link real “disintegration” of the euro area to its monetary integration, we assess them empirically by modelling the evolution of labour productivity using a panel of sectorial data. The results indicate that monetary unification may actually have fostered divergence in productivity trends, and suggest some economic policy measures that could prevent further divergence.