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The unintended consequences of the debt ... will increased government expenditure hurt the economy?
(2011)
In 2008, governments in many countries embarked on large fiscal expenditure programmes, with the intention to support the economy and prevent a more serious recession. In this study, the overall impact of a substantial increase in fiscal expenditure is considered by providing a novel analysis of the most relevant recent experience in similar circumstances, namely that of Japan in the 1990s. Then a weak economy with risk-averse banks seemed to require some of the largest peacetime fiscal stimulation programmes on record, albeit with disappointing results. The explanations provided by the literature and their unsatisfactory empirical record are reviewed. An alternative explanation, derived from early Keynesian models on the ineffectiveness of fiscal policy is presented in the form of a modified Fisher-equation, which incorporates the recent findings in the credit view literature. The model postulates complete quantity crowding out. It is subjected to empirical tests, which were supportive. Thus evidence is found that fiscal policy, if not supported by suitable monetary policy, is likely to crowd out private sector demand, even in an environment of falling or near-zero interest rates. As a policy conclusion it is pointed out that by changing the funding strategy, complete crowding out can be avoided and a positive net effect produced. The proposed framework creates common ground between proponents of Keynesian views (as held, among others, by Blinder and Solow), monetarist views (as held in particular by Milton Friedman) and those of leading contemporary macroeconomists (such as Mankiw).
The aim of this paper is to give the semantic profile of the Greek verb-deriving suffixes -íz(o), -én(o), -év(o), -ón(o), -(i)áz(o), and -ín(o), with a special account of the ending -áo/-ó. The patterns presented are the result of an empirical analysis of data extracted from extended interviews conducted with 28 native Greek speakers in Athens, Greece in February 2009. In the first interview task the test persons were asked to force(=create) verbs by using the suffixes -ízo, -évo, -óno, -(i)ázo, and -íno and a variety of bases which conformed to the ontological distinctions made in Lieber (2004). In the second task the test persons were asked to evaluate three groups of forced verbs with a noun, an adjective, and an adverb, respectively, by using one (best/highly acceptable verb) to six (worst/unacceptable verb) points. In the third task nineteen established verb pairs with different suffixes and the ending -áo/-ó were presented. The test persons were asked to report whether there was some difference between them and what exactly this difference was. The differences reported were transformed into 16 alternations. In the fourth task 21 established verbs with different suffixes were presented. The test persons were asked to give the "opposite" or "near opposite" expression for each verb. The rationale behind this task was to arrive at the meaning of the suffixes through the semantics of the opposites. In the analysis Rochelle's Lieber's (2004) theoretical framework is used. The results of the analysis suggest (i) a sign-based treatment of affixes, (ii) a vertical preference structure in the semantic structure of the head suffixes which takes into account the semantic make-up of the bases, and (iii) the integration of socioexpressive meaning into verb structures.
This paper addresses the open debate about the usefulness of high-frequency (HF) data in large-scale portfolio allocation. Daily covariances are estimated based on HF data of the S&P 500 universe employing a blocked realized kernel estimator. We propose forecasting covariance matrices using a multi-scale spectral decomposition where volatilities, correlation eigenvalues and eigenvectors evolve on different frequencies. In an extensive out-of-sample forecasting study, we show that the proposed approach yields less risky and more diversified portfolio allocations as prevailing methods employing daily data. These performance gains hold over longer horizons than previous studies have shown.
The lessons from QE and other 'unconventional' monetary policies - evidence from the Bank of England
(2011)
This paper investigates the effectiveness of the ‘quantitative easing’ policy, as implemented by the Bank of England in March 2009. Similar policies had been previously implemented in Japan, the U.S. and the Eurozone. The effectiveness is measured by the impact of Bank of England policies (including, but not limited to QE) on nominal GDP growth – the declared goal of the policy, according to the Bank of England. Unlike the majority of the literature on the topic, the general-to-specific econometric modeling methodology (a.k.a. the ‘Hendry’ or ‘LSE’ methodology) is employed for this purpose. The empirical analysis indicates that QE as defined and announced in March 2009 had no apparent effect on the UK economy. Meanwhile, it is found that a policy of ‘quantitative easing’ defined in the original sense of the term (Werner, 1994) is supported by empirical evidence: a stable relationship between a lending aggregate (disaggregated M4 lending, i.e. bank credit for GDP transactions) and nominal GDP is found. The findings imply that BoE policy should more directly target the growth of bank credit for GDP-transactions.
Existing studies from the United States, Latin America, and Asia provide scant evidence that private schools dramatically improve academic performance relative to public schools. Using data from Kenya—a poor country with weak public institutions—we find a large effect of private schooling on test scores, equivalent to one full standard deviation. This finding is robust to endogenous sorting of more able pupils into private schools. The magnitude of the effect dwarfs the impact of any rigorously tested intervention to raise performance within public schools. Furthermore, nearly twothirds of private schools operate at lower cost than the median government school.
Ernst Bloch pointed out in a particularly emphatic way that the concept of human dignity featured centrally in historical struggles against different forms of unjustified rule, i.e. domination – to which one must add that it continues to do so to the present day. The “upright gait,” putting an end to humiliation and insult: this is the most powerful demand, in both political and rhetorical terms, that a “human rights-based” claim expresses. It marks the emergence of a radical, context-transcending reference point immanent to social conflicts which raises fundamental questions concerning the customary opposition between immanent and transcendent criticism. For within the idiom of demanding respect for human dignity, a right is invoked “here and now,” in a particular, context-specific form, which at its core is owed to every human being as a person. Thus Bloch is in one respect correct when he asserts that human rights are not a natural “birthright” but must be achieved through struggle; but in another respect this struggle can develop its social power only if it has a firm and in a certain sense “absolute” normative anchor. Properly understood, it becomes apparent that these social conflicts always affect “two worlds”: the social reality, on the one hand, which is criticized in part or radically in the light of an ideal normative dimension, on the other. For those who engage in this criticism there is no doubt that the normative dimension is no less real than the reality to which they refuse to resign themselves. Those who critically transcend reality always also live elsewhere.
Since World War II, direct stock ownership by households has largely been replaced by indirect stock ownership by financial institutions. We argue that tax policy is the driving force. Using long time-series from eight countries, we show that the fraction of household ownership decreases with measures of the tax benefits of holding stocks inside a pension plan. This finding is important for policy considerations on effective taxation and for financial economics research on the long-term effects of taxation on corporate finance and asset prices. JEL Classification: G10, G20, H22, H30 Keywords: Capital Gains Tax, Income Tax, Stock Ownership, Bond Ownership, Inflation, Bracket Creep, Pension Funds
It has become commonplace to say that, in the past, international governance has been legitimated mainly, if not exclusively, by its welfare-enhancing ‘output’. There has been very little research, however, on the history of legitimating international governance by its output to validate this point. In this essay I begin to address this gap by inquiring into the origins of output-oriented strategies for legitimating international organizations. Scrutinizing the programmatic literature on international organizations from the early 20th century, I illustrate how a new and distinctive account of technocratic legitimation emerged and in the 1920s separated from other types of liberal internationalism. My inquiry, centring on the works of James Arthur Salter, David Mitrany, Paul S. Reinsch and Pitman B. Potter, explores their respective conceptions of ‘good functional governance’, executed by a non-political international technocracy. Their account is explicitly pitched against a notion of ‘international politics’, perceived as violent, polarizing, and irrational. The emergence of such a technocratic legitimation of international governance, I submit, needs to be seen in the context of societal modernization and bureaucratization that unfolded in the first half of the 20th century. I also highlight how in this account the material output of governance is intimately linked to the virtues of the organizational form that brings it about.