The design and communication of systematic monetary policy strategies

The efficacy of central bank communications is inextricably linked to the characteristics of the monetary policy framework. Therefore, this paper presents a set of fundamental principles regarding the joint design of monetary policy strategy and communications. The practical implications of these principles are illustrated by considering a number of significant policy challenges faced by central banks in the advanced economies.     

Factor substitution and taxation in a finance constrained economy

In this paper, we examine the effects of constant-rate factor taxation on macroeconomic stability in the Woodford (1986) model. Our focus is on how the degree of factor substitution, as measured by the elasticity of factor substitution (EOS) in production, affects different balanced-budget tax rules. Analytically, we show that indeterminacy can occur under capital income taxation only when the EOS is very low, whereas indeterminacy under labor income taxation is not subject to the EOS restriction. This finding is robust when we tax all of the factor incomes with equal rates. Thus, in terms of macroeconomic stability, taxing capital income is preferred to taxing labor income.     

Asset price targeting in an open economy with cognitive limitations: The best for macroeconomic and financial stability?

The choices of policy targets and the formation of agent expectations have been critical issues addressed by monetary policy management since the financial crisis of 2008. This paper evaluates macroeconomic stability in a new Keynesian open economy in which agents experience both cognitive limitations and asset market volatility. The (im)perfect credibility of various monetary policies (e.g., a Taylor-type rule with- or without asset price targeting, strict domestic inflation targeting, strict CPI inflation targeting, and exchange rate peg) may lead agents to react according to their expectation rules, and thus create various degrees of booms and busts in output and inflation. Simulations confirm that a Taylor-type CPI inflation targeting including an asset price target is the best choice. In contrast, the business cycles induced by Keynesian “animal spirits” are enhanced by strict inflation targeting. Furthermore, a credible exchange rate pegging system with an international reserve pooling arrangement can improve social welfare and stability in an open economy, even though its absolute value of the loss function is slightly lower than a Taylor-type CPI inflation targeting including an asset price target.     

Does personal background influence a finance minister to cook the books? An investigation of creative accounting in Swiss cantons

This article aims to identify the factors influencing the use of creative accounting in the public sector. Its distinctive feature is that it sheds light on creative accounting when used, not to hide public deficits, but to conceal surpluses. It especially explores the impact of the finance minister’s (FM)’s background on the phenomenon. We take advantage of the quasi-experimental settings of the Swiss cantons in which the financial management act sets out the possibility of implementing certain accounting gimmicks, including mainly additional ‘depreciation’ charges. These charges, which are depreciations in name only, enable the FM to artificially inflate expenses, thus increasing the deficit or reducing the surplus. Our panel data set of the 26 cantons over the period 1980–2012 includes a new data set of creative accounting and of 116 cantonal FMs. Our results indicate that the FMs cook the books irrespective of their personal or ideological background with the exception that trained economists tend to apply creative accounting more. Additionally, stringent fiscal rules urge FMs towards more surplus-hiding accounting.     

The rise and fall of technical trading rule success

The purpose of this paper is to examine the performance of an important set of momentum-based technical trading rules (TTRs) applied to all members of the Dow Jones Industrial Average (DJIA) stock index over the period 1928–2012. Using a set of econometric models that permit time-variation in risk-adjusted returns to TTR portfolios, the results reveal that profits evolve slowly over time, are confined to particular episodes primarily from the mid-1960s to mid-1980s, and rely on the ability of investors to short-sell stocks. These findings are demonstrated to be consistent with theoretical models that predict a relationship between TTR performance and market conditions.     

Currency substitution,risk premia and the Taylor principle

This paper studies the equilibrium determinacy properties of a simple interest rate rule in a small open economy subject to currency substitution (i.e., the use of a foreign currency for domestic transactions) and risk premia on foreign borrowing. It shows that if currencies are substitute in the provision of liquidity services the rule׳s response to inflation has to be sufficiently above unity for the equilibrium to be locally determinate. This reinforced Taylor principle requirement appears to be more binding in economies characterized by a larger elasticity of currency substitution, more debt-elastic country risk premia, and intermediate degrees of dollarization in transactions.     

国家标准《数值修约规则与极限数值的表示和判定》在车用汽油胶质含量测定中的应用

本文根据胶质含量测定试验方法的要求，以车用汽油中胶质含量（包括未洗胶质含量和溶剂洗胶质含量）测定为例，探讨了0．5单位数值修约、极限数值的表示和判定在胶质含量测定数据处理和结果判定中的应用。目的在于使车用汽油产品检测工作中在数据处理、报告和结果判定方面更加规范和统一。     

Monetary policy rules with PID control features: evidence from the UK,USA and EU

ABSTRACT

This paper considers the extent to which the monetary policy operations of three major central banks can be regarded as an application of Proportional-Integral-Derivative (PID) control rules. The paper outlines the general PID framework and estimates a series of dynamic models to identify how interest rate policy adjustments are affected by the rate of inflation and the level of macroeconomic activity. The paper examines data for the UK, the USA and the Eurozone. The results suggest that the PID rules can provide a useful theoretical and empirical framework for estimating central bank responses to the inflation and macroeconomic activity variables by improving the explanatory power of the Taylor rule model and determining the effect of the parameters.     

Can Bitcoin become money? The monetary rule problem

The growing literature on Bitcoin can be divided into two groups. One performs an economic analysis of Bitcoin focusing on its monetary characteristics. The other one takes a financial look at the price of Bitcoin. Interestingly, both of these groups have not given much more than passing comments to the problem of whether or not Bitcoin has the right monetary rule in order to become a well‐established currency. This paper argues that Bitcoin in particular, and cryptocurrencies in general, do not have a good monetary rule and that this shortcoming seriously limits its prospect of becoming widely used money.