Fiscal and monetary interdependence

Where classical economics integrates the quantity theory of money with the concept of Ricardian equivalence, the tendency of recent macroeconomic presentations is to focus either upon money and inflation or upon taxation and debt. That neglect of classical monetary–fiscal integration is surprising, given an initiative by the International Monetary Fund that set credit, money, and fiscal policy within a single structure. This article places those ‘credit counterparts of broad money’ in the context of the Great Depression and the recent global financial crisis. The upshot is a set of conclusions: that, to counter the prospect of deflation, quantitative easing is a weak policy response; that fiscal deficits are better; and that cuts in taxation are preferable to increased government spending.     

EFFECTS OF SECTOR AGGREGATION ON CO2 MULTIPLIERS IN MULTIREGIONAL INPUT–OUTPUT ANALYSES

The past few years have seen the emergence of several global multiregional input–output (MRIO) databases. Due to the cost and complexity of developing such extensive tables, industry sectors are generally represented at a rather aggregate level. Currently, one of the most important applications of input–output analysis is environmental assessments, for which highly aggregate sectors may not be sufficient to yield accurate results. We experiment with four of the most important global MRIO systems available, analyzing the sensitivity of a set of aggregate CO₂ multipliers to aggregations in the MRIO tables used to calculate them. Across databases, we find (a) significant sensitivity to background system detail and (b) that sub-sectors contained within the same aggregate MRIO sector may exhibit highly different carbon multipliers. We conclude that the additional information provided by the extra sector detail may warrant the additional costs of compilation, due to the heterogeneous nature of economic sectors in terms of their environmental characteristics.     

Financial market stability—A test

This paper proposes a definition for financial market stability and an econometric test. It analyzes the impact of systematic and systemic shocks on developed and emerging market stock indices in normal and extreme market conditions. Financial market stability is defined as a constant impact of systematic shocks in normal and extreme market situations. Empirical results show that the impact of systematic shocks is significantly larger in extreme market conditions than in normal conditions for emerging markets. In contrast, the relationship is stable for developed markets. Hence, only developed markets meet an essential condition for financial market stability.     

Cybersecurity: Stakeholder incentives,externalities, and policy options

Information security breaches are increasingly motivated by fraudulent and criminal motives. Reducing their considerable costs has become a pressing issue. Although cybersecurity has strong public good characteristics, most information security decisions are made by individual stakeholders. Due to the interconnectedness of cyberspace, these decentralized decisions are afflicted with externalities that can result in sub-optimal security levels. Devising effective solutions to this problem is complicated by the global nature of cyberspace, the interdependence of stakeholders, as well as the diversity and heterogeneity of players. The paper develops a framework for studying the co-evolution of the markets for cybercrime and cybersecurity. It examines the incentives of stakeholders to provide for security and their implications for the ICT ecosystem. The findings show that market and non-market relations in the information infrastructure generate many security-enhancing incentives. However, pervasive externalities remain that can only be corrected by voluntary or government-led collective measures.     

A multivariate analysis of work–life balance outcomes from a large‐scale telework programme

A multivariate analysis identified six predictors to explain positive work–life balance (WLB) among 1,566 teleworkers. Time flexibility variables were found to be most dominant. Gender or having dependent children was not significant. These results demonstrated that controlling working hours was the most important ability for sampled teleworkers to achieve positive WLB.     

Financial distress,financial constraint and investment decision: Evidence from Brazil

This paper analyses the presence of financial constraint in the investment decisions of 367 Brazilian firms from 1997 to 2004, using a Bayesian econometric model with group-varying parameters. The motivation for this paper is the use of clustering techniques to group firms in a totally endogenous form. In order to classify the firms we used a hybrid clustering method, that is, hierarchical and non-hierarchical clustering techniques jointly. To estimate the parameters a Bayesian approach was considered. Prior distributions were assumed for the parameters, classifying the model in random or fixed effects. Ordinate predictive density criterion was used to select the model providing a better prediction. We tested thirty models and the better prediction considers the presence of 2 groups in the sample, assuming the fixed effect model with a Student t distribution with 20 degrees of freedom for the error. The results indicate robustness in the identification of financial constraint when the firms are classified by the clustering techniques.