Realized and Optimal Monetary Policy Rules in an Estimated Markov‐Switching DSGE Model of the United Kingdom

This paper investigates underlying changes in the UK economy over the past 35 years using a small open economy dynamic stochastic general equilibrium model. Using Bayesian analysis, we find UK monetary policy, nominal price rigidity and exogenous shocks, are all subject to regime shifts. A model incorporating these changes is used to estimate the realized monetary policy and derive the optimal monetary policy rule for the United Kingdom. This allows us to assess the effectiveness of the realized policy in terms of stabilizing economic fluctuations, and, in turn, provide an indication of whether there is room for the monetary authorities to further improve their policies.     

Altering Perceptions Through Repositioning: An Exercise in Framing

This research was conducted to examine the efficacy of repositioning public parks and recreation services in the public mind. Respondents were recruited at various venues throughout a large Canadian city and randomly assigned to one of five groups. After reading hypothetical newspaper format articles, respondents completed questionnaires investigating their beliefs, attitudes, and behavioral intentions regarding a local recreation agency's efforts to reduce youth crime. Four treatment messages contained various combinations of real, psychological, and competitive repositioning messages, while a control group received no information. All types of repositioning messages were effective in improving beliefs and behavioral intentions, but not attitudes. There was no significant evidence that numerical treatment messages were more effective than non-numerical messages or that the cumulative effects of various repositioning messages were more effective than a single type of message. Discussion focuses on efficacy of various framing messages, on suggestions for future research related to repositioning, and on considerations related to social marketing efforts of this nature.     

Legal Penalties and Audit Quality: An Experimental Investigation*

The purpose of this paper is to investigate the impact of legal penalties on audit quality under different legal regimes. We investigate whether audit quality is affected differentially due to the complexity inherent in legal regimes and the frequency of imposing legal penalties. Economic theory predicts that players adopt equilibrium strategies that reflect the expectation that a penalty will be incurred, but the actual occurrences of penalties, if consistent with this expectation, should not prompt an individual to modify his or her strategy. However, learning theory suggests that players' choices will be repeated in the future based on outcomes. We found that penalties triggered both increases and decreases in effort, and seemed to introduce a “shock” that increased the variability of effort. We also observed a “funnel” effect — that is. greater changes in effort closer to the imposition of penalties, and smaller changes as more periods go by without a penalty.     

Consumption Theories and Consumers' Assessments of Subjective Well-Being

The purpose of this research is to examine the relationship between psychological well-being and objective, economic well-being as measured using three different economic theories of consumption behavior. The theories examined are the life cycle income hypothesis, the relative income hypothesis, and a resource deficit hypothesis. The results from analyses of the Wisconsin Basic Needs Study data demonstrate the importance of careful economic variable construction and support the economic presumption that income and life satisfaction are positively related. The relative income hypothesis model accounts for the greatest explained variance and is also superior in that it is easier to specify.     

Neuromarketing and Consumer Free Will

This article examines the impact of discoveries and methods of neuroscience on marketing practices as they relate to the exercise of individual free will. Thus, our focus centers on ethical questions involving consumers’ awareness, consent, and understanding to what may be viewed as invasion of their privacy rights. After a brief introduction, the article turns to scientific literature on the brain, followed by discussion of marketing persuasion models. Ethical dilemmas within the free will paradigm and Rawlsian justice developed in moral philosophy are delineated next. The article closes with policy implications and a revised consideration of consumer privacy.