insiders versus outsiders in monetary policymaking this paper looks at the voting patterns of internal and external members of the mpc to investigate how far there are differences between insiders and outsiders we make three contributions first we assess the extent to which the bank of england internally generated forecasts explain the mpc members voting decisions this is important as generating forecasts on a quarterly basis is a key part of the process used by the bank of england the forecast for inflation is made public in the inflation report while the output gap forecast is not second we use a random coefficient method of estimation in which the parameters of the interest rate rule are allowed but not required to be different across members third we find evidence of some heterogeneity in the intercept a measure of experience on the mpc and the interest rate smoothing parameter but no significant differences in the members reaction to the forecasts of inflation and the output gap this abstract was borrowed from another version of this item

the overvaluation of sterling since 1996 how the policy makers responded and why a large and sustained nominal appreciation in 1996 8 led to a serious and continuing overvaluation of sterling which has been associated with severe pressure on the manufacturing sector the policy makers had difficulty in understanding past and forecasting future movements of sterling they considered but rejected suggestions for foreign exchange market intervention and suggestions that interest rates should be set differently to reduce the overvaluation and relieve pressure on the tradable goods sector one reason was that the exchange rate might react to such decisions in an erratic way but if that is so the monetary framework needs to be revisited

monetary policy under the labour government the first 13 years of the mpc this paper examines the performance of monetary policy under the new framework established in 1997 up to the end of the labour government in may 2010 performance was relatively good in the years before the crisis but much weaker from 2008 the new framework largely neglected open economy issues while the treasury s emu assessment in 2003 can be interpreted in different ways the new framework may have contributed to some extent to the eruption and depth of the financial crisis from 2008 but mon etary policy eventually responded in a bold and innovative way overall the design and operation of mon etary policy were much better than in earlier periods but there is room for significant further evolution

an equilibrium efficiency frontier data envelopment analysis approach for evaluating decision making units with fixed sum outputs abstract based on the minimal reduction strategy yang et al 2011 developed a fixed sum output data envelopment analysis fsodea approach to evaluate the performance of decision making units dmus with fixed sum outputs however in terms of such a strategy all dmus compete over fixed sum outputs with no memory that will result in differing efficient frontiers evaluations to address the problem in this study we propose an equilibrium efficiency frontier data envelopment analysis eefdea approach by which all dmus with fixed sum outputs can be evaluated based on a common platform or equilibrium efficient frontier the proposed approach can be divided into two stages stage 1 constructs a common evaluation platform via two strategies an extended minimal adjustment strategy and an equilibrium competition strategy the former ensures that original efficient dmus are still efficient guaranteeing the existence of a common evaluation platform the latter makes all dmus achieve a common equilibrium efficient frontier then based on the common equilibrium efficient frontier stage 2 evaluates all dmus with their original inputs and outputs finally we illustrate the proposed approach by using two numerical examples

outsiders at the bank of england s mpc the monetary policy committee mpc of the bank of england which was established in may 1997 consists of five internal and four external members we study the voting record and show that insiders dissent rarely and typically for higher rather than lower rates whereas outsiders dissent more often prefer lower rates and disagree with the majority when economic growth slows moreover their dissents forecast future interest rate changes we show that a model in which outsiders dislike output below potential more than output above replicates the observed voting pattern well

are monetary policy reaction functions asymmetric the role of nonlinearity in the phillips curve abstract this paper investigates the implications of a nonlinear phillips curve for the derivation of optimal monetary policy rules combined with a quadratic loss function the optimal policy is also nonlinear with the policy maker increasing interest rates by a larger amount when inflation or output are above target than the amount it will reduce them when they are below target specifically the main prediction of our model is that such a source of nonlinearity leads to the inclusion of the interaction between expected inflation and the output gap in an otherwise linear taylor rule we find empirical support for this type of asymmetries in the interest rate setting behaviour of four european central banks but none for the us fed

monetary policy committees and interest rate setting abstract this paper shows that it is preferable for monetary policy to be conducted by a committee instead of a single policy maker if there is uncertainty about potential output we examine three decision procedures an optimal procedure averaging and voting and find that the latter is the appropriate way to reach decisions if policy makers are not equally skilled finally we demonstrate that efficient decision procedures reduce the persistence of shocks

quantitative easing a sceptical survey evaluation of quantitative easing qe is difficult as it is only used in response to severe and unusual economic difficulties despite this we argue that two main conclusions can be drawn from a sceptical reading of the evidence first large scale asset purchases reduce government bond rates especially at the longer end of the yield curve however this effect may be temporary and is small if bond rates are already low while initial waves of qe are more effective than subsequent programs second qe appears to have been effective in late 2008 and 2009 preventing even larger declines in output and inflation than were experienced we argue that the literature is limited relying on similar methodologies and largely originating in central banks exploration of alternative approaches to qe would be useful in widening an evidence base that is currently too narrow

the income distribution frontier and taxation of migrants abstract the output distribution frontier which traces out the economy s output and income distribution options is used to confirm and explain intuitively the bhagwati hamada results on the taxation of migrants from ldcs by their native country it is shown that freedom of migration without taxation may reduce the welfare of those who remain in the ldc but that taxation and free migration can be superior for them to either prevention of migration or freedom of migration without taxation an externalities argument shows why even migrants may benefit

a bi objective weighted model for improving the discrimination power in mcdea lack of discrimination power and poor weight dispersion remain major issues in data envelopment analysis dea since the initial multiple criteria dea mcdea model developed in the late 1990s only goal programming approaches that is the gpdea ccr and gpdea bcc were introduced for solving the said problems in a multi objective framework we found gpdea models to be invalid and demonstrate that our proposed bi objective multiple criteria dea bio mcdea outperforms the gpdea models in the aspects of discrimination power and weight dispersion as well as requiring less computational codes an application of energy dependency among 25 european union member countries is further used to describe the efficacy of our approach

on the role of the production and consumption assumptions for optimum taxation abstract the sensitivity of optimum tax rates to a variety of factors has sustained many different lines of enquiry this paper attempts to demonstrate by computational procedures the role of the production and consumption leisure assumptions in the light of recent research in particular the work of stern will be extended to provide an assessment of the allen analysis it will be shown that optimum negative marginal tax rates are no longer a curiousity and that our production and consumption leisure assumptions are of considerable importance for variable wage tax models

taxation and the international mobility of inventors we study the eect of top tax rates on superstar inventors international mobility since 1977 using panel data on inventors from the u s and european patent oces we exploit the dierential impact of changes in top tax rates on inventors of dierent qualities superstar inventors location choices are signicantly aected by top tax rates in our preferred specication the elasticity to the net of tax rate of the number of domestic superstar inventors is around 0 03 while that of foreign superstar inventors is around 1 these elasticities are larger for inventors in multinational companies an inventor is less sensitive to taxes in a country if his company performs a higher share of its research there

evaluation of china s electric energy efficiency under environmental constraints a dea cross efficiency model based on game relationship abstract the traditional data envelopment analysis dea model ignores the cooperation relationship among decision making units dmus so it is difficult to evaluate the dmus efficiency reasonably in this study we use a cross efficiency model considering the game relationship of dmus to evaluate and analyze the provincial electric energy efficiency of china the power industry panel data of china s 30 provinces from 2005 to 2014 are used to evaluate the energy efficiency of china s provincial power industry under environmental constraints in addition based on the obtained values of electric energy efficiency clustering analysis is implemented and the regional similarity in electric energy efficiency is analyzed the results indicate that in the past decade china s provincial electric energy efficiency has not significantly improved and efficiency values have a certain degree of volatility especially in western china in general the electric energy efficiency of eastern china is significantly higher than central and western china the clustering analysis further demonstrates that there is no polarization phenomenon in china s electric energy efficiency in recent years the electric energy efficiency of western china has been greatly improved with significant volatility it reveals that the electric energy efficiency of western china is sensitive to the environment the implementation of energy policies should be adapted to local conditions in the process of formulating policies for improving electric energy efficiency the provincial government should improve the regional opening up layout and establish effective coordination mechanisms among different regions

ranking efficient decision making units in data envelopment analysis based on reference frontier share abstract data envelopment analysis dea is a powerful technique for performance evaluation of decision making units dmus ranking efficient dmus based on a rational analysis is an issue that yet needs further research the impact of each efficient dmu in evaluation of inefficient dmus can be considered as additional information to discriminating among efficient dmus the concept of reference frontier share is introduced in which the share of each efficient dmu in construction of the reference frontier for evaluating inefficient dmus is considered for this purpose a model for measuring the reference frontier share of each efficient dmu associated with each inefficient one is proposed and then a total measure is provided based on which the ranking is made the new approach has the capability for ranking extreme and non extreme efficient dmus further it has no problem in dealing with negative data these facts are verified by theorems discussions and numerical examples

changes in uk monetary policy rules and discretion in practice abstract in october 1992 following sterling s departure from the exchange rate mechanism britain adopted a new framework for monetary policy that comprised two components first an explicit target for inflation and second institutional changes designed to give greater influence to the bank of england by increasing the transparency and openness of the process by which interest rates are set this paper analyses those changes from the perspective of the debate on rules versus discretion and argues that an appropriate design of institutional arrangements can provide incentives for central bankers to pursue the first best state contingent monetary policy

aggregate fiscal policy under the labour government 1997 2010 this paper explores the labour government s fiscal policy performance at the macroeco nomic level this analysis is in two halves the first covers the period up until the great recession which involved a single policy regime subject to two simple fiscal rules after discussing the theoreti cal and practical issues raised by these rules i examine the extent to which they were followed by the government and whether subsequent developments highlighted shortcomings of these rules to what extent was the eventual failure of these rules down to over optimistic forecasts or unforeseeable events the second half involves the response to the great recession and the abandonment of the fiscal rules

is the mpc s voting record informative about future uk monetary policy it is shown that the voting record of the monetary policy committee of the bank of england helps predict future policy rate changes this result is robust to the inclusion of market participants expectations as measured by the slope of the term structure of money market rates and interest rate futures moreover expectations seem to adjust to the information contained in the voting record which suggests that publishing the minutes of mpc meetings increases the transparency of monetary policy

a general equilibrium model of guest worker migration the source country perspective abstract this paper examines the problem of guest worker migration from an economy populated by identical utility maximizing individuals with finite working lives the decision to migrate the rate of saving while abroad as well as the length of a migrant s stay in the foreign country are all viewed as part of a solution to an intertemporal optimization problem in addition to studying the microeconomic aspects of temporary migration the paper analyses the determinants of the equilibrium flow of migrants the corresponding domestic wage and the level of welfare enjoyed by a typical worker effects of an emigration tax are also investigated

redistributive policy with labour mobility across countries it is generally believed that international labour mobility lowers the level of redistribution each country wishes to undertake this paper considers a model with two countries where each government redistributes income between two types of individuals using a general equilibrium model it is shown that there are situations where the level of redistribution in one of the two countries is in fact higher than in the absence of individual mobility this higher level of redistribution is explained by the migration induced changes in the structure of the population in both countries namely by the increase in the proportion of high income individuals in the country that may experience excessive redistribution

central bank independence an update of theory and evidence this paper reviews recent research on central bank independence cbi after we have distinguished between independence and conservativeness research in which the inflationary bias is endogenised is reviewed finally the various challenges that have been raised against previous empirical findings on cbi are discussed we conclude that the negative relationship between cbi and inflation is quite robust

information aggregation in debate who should speak first abstract privately informed individuals speak openly in front of other members of a committee about the desirability of a public decision each individual wishes to appear well informed for any given order of speech committee members may herd by suppressing their true information with individuals of heterogeneous expertise optimizing over the order of speech can improve the extraction of information but not perfectly so it is not always optimal to use the common anti seniority rule whereby experts speak in order of increasing expertise a committee with more able experts may be afflicted by greater herding problems yielding a worse outcome

fixed cost and resource allocation based on dea cross efficiency abstract in many managerial applications situations frequently occur when a fixed cost is used in constructing the common platform of an organization and needs to be shared by all related entities or decision making units dmus it is of vital importance to allocate such a cost across dmus where there is competition for resources data envelopment analysis dea has been successfully used in cost and resource allocation problems whether it is a cost or resource allocation issue one needs to consider both the competitive and cooperative situation existing among dmus in addition to maintaining or improving efficiency the current paper uses the cross efficiency concept in dea to approach cost and resource allocation problems because dea cross efficiency uses the concept of peer appraisal it is a very reasonable and appropriate mechanism for allocating a shared resource cost it is shown that our proposed iterative approach is always feasible and ensures that all dmus become efficient after the fixed cost is allocated as an additional input measure the cross efficiency dea based iterative method is further extended into a resource allocation setting to achieve maximization in the aggregated output change by distributing available resources such allocations for fixed costs and resources are more acceptable to the players involved because the allocation results are jointly determined by all dmus rather than a specific one the proposed approaches are demonstrated using an existing data set that has been applied in similar studies

some alternative models for dea cross efficiency evaluation abstract cross efficiency evaluation is an effective method for ranking decision making units dmus in data envelopment analysis dea and can be performed with different formulations aggressive or benevolent secondary goals and models this paper proposes some new alternative models for dea cross efficiency evaluation to provide more methodological options for the decision maker dm to choose from the proposed new alternative models are illustrated with two numerical examples the results are believed to be more realistic than those obtained by the alternative secondary goals suggested by liang et al liang l wu j cook w d and zhu j 2008a alternative secondary goals in dea cross efficiency evaluation international journal of production economics 113 2 1025 1030

dea cross efficiency evaluation based on pareto improvement abstract cross efficiency evaluation as an extension tool of data envelopment analysis dea has been widely applied in evaluating and ranking decision making units dmus unfortunately the cross efficiency scores generated may not be pareto optimal which has reduced the effectiveness of this method to solve this problem we propose a cross efficiency evaluation approach based on pareto improvement which contains two models pareto optimality estimation model and cross efficiency pareto improvement model and an algorithm the pareto optimality estimation model is used to estimate whether the given set of cross efficiency scores are pareto optimal solutions if these cross efficiency scores are not pareto optimal the pareto improvement model is then used to make cross efficiency pareto improvement for all the dmus in contrast to other cross efficiency approaches our approach always obtains a set of pareto optimal cross efficiencies under the predetermined weight selection principles for these dmus in addition if the proposed algorithm terminates at its step 3 the evaluation results generated by our approach unify self evaluation peer evaluation and common weight evaluation in dea cross efficiency evaluation specifically the self evaluated efficiency and the peer evaluated efficiency converge to the same common weight evaluated efficiency when the algorithm stops this will make the evaluation results more likely to be accepted by all the dmus

the economic record of the 1997 2010 labour government an assessment we consider the economic record of the 1997 2010 labour government in the uk following a brief review of the government s inheritance from its predecessor we review the assessments made in the other papers in this issue of the oxford review of economic policy the change in the macroeconomic policy framework which apparently worked well for a decade but was then struck by the global financial crisis labour market social security and education policies and inequality public investment and public service delivery especially health and corporate taxation we discuss the constraints under which the government operated how much it broke with the past and the new frameworks it introduced we identify strengths and weaknesses and draw lessons from the government s record about the need to remain receptive to other and critical ideas on the one hand and the need for labour to spell out the kind of economy and society it wants to see develop on the other copyright 2013 oxford university press

a voluntary brain drain tax abstract a major roadblock to the implementation of bhagwati s proposal to allow developing countries to tax skilled emigrants residing in developed countries the brain drain is the administrative problems associated with collecting this tax in the absence of developed country cooperation this paper provides a partial solution to these problems involving the tax treatment of emigrants who return to their countries of origin the tax system is structured so that returning emigrants who previously paid the brain drain tax face lower tax payments than those who evaded the brain drain tax given the expected value of this tax benefit emigrants are willing to pay the brain drain tax in the basic model a source country s optimal tax system includes this brain drain tax and does not distort migration decisions

the fed s monetary policy rule and u s inflation the case of asymmetric preferences abstract this paper investigates the empirical relevance of a new framework for monetary policy analysis in which the decision makers are allowed but not required to weight differently positive and negative deviations of inflation and output from the target values the estimates of the central bank s euler equation indicate that the preferences of the fed had been asymmetric only before 1979 with the interest rate response to output contractions being larger than the response to output expansions of the same magnitude we show that this asymmetry on output implied an average inflation bias around 1 5 while the implicit inflation target also declined the asymmetric preferences induced inflation bias appears to account for a sizable fraction of the historical decline in the inflation mean

political and monetary institutions and public financial policies in the industrial countries institutions and policies vittorio grilli donato masciandaro and guido tabellini why do countries as similar as the industrialized oecd countries go through such different experience in terms of public deficits and debts or in terms of inflation the answer cannot come from macroeconomic policy responses to different disturbances nor from the principles of optimal taxation but rather from politics this article focuses on the role that particular institutions exert in providing constraints and incentives which shape the actions of policymakers the electoral process and political traditions affect the ability of governments to deal with deficits and mounting debts what seems to matter most it is found is the effect of the durability of governments governments with short horizons act myopically and never quite tackle the hard choices such governments typically exist in countries with an electoral system favouring many small political parties central bank independence promotes low inflation with no apparent costs in terms of real economic performance irrespective of the political institutions in fact there is no link between monetary and fiscal discipline these findings carry powerful implications for countries facing high indebtedness or stubborn inflation but also for the construction of the european economic and monetary union

the fiscal impact of high skilled emigration flows of indians to the u s abstract what are the fiscal consequences of high skilled emigration for source countries this paper develops methodologies for inferring these consequences and applies them to the recent sizable emigration of high skilled workers from india to the u s this wave of emigration from india to the u s is shown to be unusually concentrated amongst the prime age work force the highly educated and high earners in order to calculate the fiscal losses associated with these emigrants estimates of their counterfactual earnings distributions are generated using two distinct methods and integrated with a model of the indian fiscal system to calculate fiscal consequences conservative estimates indicate that the annual net fiscal impact to india of high skilled emigration to the u s is one half of 1 of gross national income or 2 5 of total fiscal revenues the sensitivity of these results to the method of predicting counterfactual incomes and the implications of these estimates for other developing countries is discussed in detail

the scope for taxation and public expenditure in an open economy in this survey of some central issues of tax and expenditure policy in an open economy we consider the implications for policy of free although not necessarily perfect international mobility of commodities capital and labour we examine the issues both from a positive and a normative point of view trying to identify both the incidence and welfare effects of international mobility one general conclusion is that tax distortions may increase in magnitude in comparison with a closed economy but they may also increase in kind as when otherwise neutral taxes become distortionary because of factor mobility

data envelopment analysis cross like efficiency model for non homogeneous decision making units the case of united states companies low carbon investment to attain corporate sustainability abstract traditional data envelopment analysis dea models assume directly comparability among decision making units dmus however this assumption is not necessarily applied in practice dmus do not always utilize similar inputs to produce similar outputs sometimes a dmu may not choose to produce a certain output e g a steel plant may not produce tool steels or cannot produce the certain output for some certain reasons meanwhile dmus may choose different resources to achieve the general productions or services e g papermaker mills consume different raw materials to produce paper how to compare a dmu to other units objectively becomes an issue when evaluating efficiency in the absence of homogeneity in this study a cross like efficiency model for the dea of non homogeneous dmus is established to handle the aforementioned issue the proposed method can even assign unique rankings to dmus with missing outputs or inputs furthermore prior information on the appropriate bound for the share of resources is not needed the proposed model is applied to an existing data set used in previous studies 39 companies on s p 500 corporations in 2013 are also studied with this model it is confirmed that investors focus on the company s green thoughts and long term sustainability by the empirical investigation furthermore this study shows that the information technology sector has the highest low carbon investment performance among the nine sectors investigated the measurement of low carbon technology investment can be an available benchmark for a specific industry to attain corporate sustainability

tax policy in the presence of emigration recent policy and theoretical discussions of the effects of highly skilled migration from the underdeveloped countries the so called brain drain have focused on a proposal bhagwati 1972 to levy a supplementary income tax on those who migrate the proceeds of such a tax to be transmitted to the developing country of origin or to developing countries en bloc for developmental spending the welfare implications of such a tax were analyzed in an earlier paper of ours bhagwati and hamada 1974 in the context of a model of the country of emigration characterized by sticky wages and harrisstodaro 1971 type of unemployment in subsequent papers the tax has been analyzed also in the context of modified models still incorporating the unemployment phenomena by rodriguez 1975 and mcculloch yellen 1975 2 essentially these models analyze the impact of the income tax on emigrants incomes as arising primarily through the reduced differential

optimum taxation with errors in administration abstract the paper compares the welfare levels which can be achieved by two distinct tax regimes lump sum taxation where one attempts to identify individuals and allocate transfers or subsidies on the basis of characteristics and income taxation where characteristics are not observed but personal incomes are measured and taxed where there are no errors in classifying individuals lump sum taxation is superior but where mistakes are made in the allocation of lump sum grants or subsidies income taxation may be more attractive the level of errors where the regimes are equally desirable in terms of social welfare is computed in simple models following that of feldstein 1973 where there is strong aversion to inequality then income taxation becomes preferable at quite small errors in analysing income taxation it is shown that in the feldstein model with endogenous wages the marginal tax rate in optimum income taxation on the more skilled is negative and that on the less skilled is positive in contrast to the standard results see seade 1977 with exogenous wages

optimal linear income taxation in the presence of emigration abstract this paper examines optimal linear income taxation when individuals are able to escape taxation by migrating a model is presented in which closing the economy to migration must raise the optimal marginal tax however this result may be reversed under an alternative definition of a closed economy

on the choice between capital and labour mobility trade theorists since the pioneering work of kemp 1966 have considered the question of national advantage from international factor mobility by considering only one factor to be so mobile kemp analyzed elegantly the question of optimal policies in 2 x 2 x 2 model and showed that since monopoly power could exist in both the goods and factor markets in consequence of international capital mobility the optimal policy intervention would generally involve two policy instruments tariffs cum subsidies on goods and duties cum subsidies on international capital flows jones 1967 subsequently extended kemp s argument to the secondbest context by examining the optimal level of one of these instruments when the other was arbitrarily set at zero elsewhere in this issue brecher 1983 shows in an elegant and original contribution that the jones policy problem is in fact a third best rather than a second best problem as generally believed and that if only one of the tariff and capital mobility taxes cumsubsidies can be used it is generally possible to improve welfare further by admitting an altogether different domestic policy instrument namely a production or consumption tax cum subsidy as the case may be the research of bhagwati was supported by the german marshall fund grant no l 34015 the problem analyzed in the paper was posed in bhagwati 1979 and an early ingenious and neglected analysis in ramaswami 1968 was noted by bhagwati we have profited greatly from these contributions also from reading webb 1970 ramaswami 1970 and a recent paper of calvo and wellisz 1983 on this problem this result is in consonance with the results of bhagwati ramaswami and srinivasan 1969 for the case without international capital mobility but the consonance is intuitive only after the result was established for the case with international capital mobility