Credibility and monetary policy in a model with growth

We examine the implications for monetary policy design of includinglearning-by-doing effects in a macroeconomic model. We showthat an inflation bias arises because monetary surprises maybe exploited to maximise potential output by temporarily raisingthe rate of human capital accumulation. Our model also providesan alternative explanation for the empirical evidence linkinginflation and growth, where the causal link goes from slow growthto high inflation. Unlike traditional credibility models, aninflationary bias can persist even when the authorities do notwish to offset labour market distortions through monetary surpriseswhich undercut the median voter's income.     

Coupling urban expansion models and hydrological models: How important are spatial patterns?

It is well known that urban expansion has a severe impact on the surface water balance by transforming vegetated covers into sealed surfaces. This transformation causes changing fluxes of evapotranspiration, surface runoff and groundwater recharge. In order to estimate the impact of land cover changes on the surface hydrology, hydrological models are often coupled with different types of land cover change models. It is, however, not clear to what extent spatially-explicit urban expansion scenarios provide an added value in comparison with non-spatial urban expansion models at different scale levels. The objective of this paper is to acquire a better insight in the importance of scale effects involved in the coupling of urban expansion scenarios and hydrological models. The relative importance of using different projections of both (i) quantity and (ii) spatial patterns of urban expansion was analysed at four different scale levels. The highly urbanised Flanders–Brussels region was taken as an example application. Twelve different urban expansion scenarios for 2025 and 2050 were developed and subsequently used as an input in a spatially-distributed water balance model. The results obtained suggest that at the level of the Flanders–Brussels region, an accurate estimation of the quantity of urban expansion should get priority over an accurate projection of the spatial patterns. However, the importance of using accurate projections of the spatial pattern of urban expansion increases systematically at local scale levels. A uniform strategy for coupling urban expansion models and hydrological models thus seems inappropriate. These findings are highly relevant for water management and spatial planning policymakers that typically operate at different administrative levels.     

Detecting the impact of the “Grain for Green” program on the mean annual vegetation cover in the Shaanxi province, China using SPOT-VGT NDVI data

In order to reduce the soil erosion rate on the Chinese Loess Plateau, the Chinese government launched in 1999 the “Grain for Green” program (GfG). The objective of this program was to increase the forest cover on steep slopes in the landscape by planting trees and sowing grasses on former cropland. The program was a massive investment by the Chinese government. By the end of 2005 the GfG-program was implemented in an area of 87,000 km² in which about 400–600 million trees were planted. At present it is not known to what extent this program was successful. This paper examines the effects of the GfG-program on the mean annual vegetation cover in the Shaanxi province. A decadal time series of SPOT VEGETATION imagery from 1998 till 2005 were used to calculate NDVI-values in four counties with different rainfall regimes. By means of a regression between preceding rainfall and NDVI-values the effects of rainfall variability were filtered out. A trend analysis of the corrected NDVI time series pointed out that the GfG-program resulted in a significant increase of the vegetation cover on farmland in the northern part of Shaanxi province. In the southern part of the province, which has a more humid climate and large areas of irrigation farmland no significant increase of the vegetation cover on farmland could be detected.     

Predicting crude oil prices: Replication of the empirical results in “What do we learn from the price of crude oil?”

In addition to their theoretical analysis of the joint determination of oil futures prices and oil spot prices, Alquist and Kilian (Journal of Applied Econometrics, 2010, 25(4), 539–573) compare the out‐of‐sample accuracy of the random walk forecast with that of forecasts based on oil futures prices and other predictors. The results of my replication exercise are very similar to the original forecast accuracy results, but the relative accuracy of the random walk forecast and the futures‐based forecast changes when the sample is extended to August 2016, consistent with the results of several other recent studies by Kilian and co‐authors.     

Macroeconomic shocks, structural change and real exchange rates: Evidence from historical data

We present empirical evidence on the forces driving real exchange rates in the long-run. Using data from the US, UK and Italy across different exchange rate regimes, we find support for the hypothesis that productivity and fiscal shocks matter. However, in some cases fiscal shocks cause depreciations, likely triggered by the monetary accommodation of fiscal shocks. We also find that the traditional Harrod–Balassa–Samuelson effect of productivity on real exchange rates is reversed in some cases, which confirms the importance of the distributive sector in driving productivity gains.     

The Sale of Ideas: Strategic Disclosure, Property Rights, and Contracting

Ideas are difficult to sell when buyers cannot assess an idea's value before it is revealed and sellers cannot protect a revealed idea. These problems exist in a variety of intellectual property sales ranging from pure ideas to poorly protected inventions and reflect the nonverifiability of key elements of an intellectual property sale. An expropriable partial disclosure can be used as a signal, allowing the seller to obtain payment based on the value of the remaining (undisclosed) know-how. We examine contracting after the disclosure and find that seller wealth is pivotal in supporting a partial disclosure equilibrium and in determining the payoff size.     

Analyzing the Interaction of Monetary and Fiscal Policy: Does Fiscal Policy Play a Valuable Role in Stabilisation?

This paper provides an overview of recent papers which use estimatedNew Keynesian models to study the extent to which fiscal policycan be used to stabilize the economy. We use a variety of differentNew Keynesian models, estimated on data for both the US andfor the Euro area, and highlight the diverse transmission channelsthrough which fiscal policy acts in these models. Although wefind that fiscal policy can provide a useful complement to monetarypolicy, especially in models where consumers have finite horizons,there are important limitations to the value added of fiscalpolicy. (JEL E58, E62, E63)     

International Economic Sanctions Against a Dictator

Wintrobe's (1990, 1998) dictatorship model is adapted to examine the impacts of economic sanctions on an autocrat. It is shown that the dictator's choice of the level of power, and the quantities of loyalty and repression used as inputs in the production of power, are affected by the type and magnitude of sanctions and by the impact of sanctions on the political effectiveness of opposition groups. Sanctions have direct and indirect effects on the prices of loyalty and repression as well as potentially generating rents that might be captured either by the dictator or by the opposition.