nominal income targeting in an open economy optimizing model abstract this paper presents simulation results regarding the performance of nominal income targeting a monetary policy rule that sets interest rates in response to deviations of nominal gdp growth from a target path the macroeconomic model is one in which agents solve dynamic optimization problems with rational expectations but in an environment with slow price adjustments in the present version consumption choices reflect habit formation and the economy is open to international flows of goods and securities when calibrated to quarterly us data the model s results suggest that nominal income targeting performs well in relation to inflation targeting and taylor rules

quasi balance sheet measures of u s monetary policy a closer look both the board of governors and the federal reserve bank of st louis calculate monetary base and total reserve series adjusted for changes in reserve requirement ratios many analysts apparently believe there is little measurable difference in these series this hypothesis is empirically examined in this paper first time series procedures are used to examine similarities and differences in the alternative measures then nominal gnp growth equations provide the basis comparing the four different monetary policy measures as they relate to economic activity the evidence suggests that significant differences exist between these measures both in their time series properties and in their relationships to nominal gnp growth copyright 1995 by ohio state university press

competitive equilibrium with unawareness in economies with production abstract this paper investigates an extension of the gei unawareness framework by modica et al econ theory 12 1998 259 to economies with entrepreneurial production existence of equilibrium is guaranteed given decreasing returns to scale firm s value and investment decision in equilibrium are characterized an example of commodity innovation shows that the effect of different degrees of awareness on investment decisions depend upon the degree of risk aversion in the case of log preferences unawareness may not matter for commodity innovation although this depends on other preference features

targeting rules for monetary policy abstract we develop a framework for the analysis of targeting rules for monetary policy derive the optimal money supply rule and use an explicit criterion to evaluate the relative desirability of other targeting rules governing the money supply process

contratos curva de phillips y politica monetaria this paper shows how to obtain a short run aggregate supply curve when there are explicit orimplicit contracts in the same way it is possible to obtain an expectation augmented phillips curve then a monetary policy is incorporated to the short run aggregate supply curve or to the phillips curve in order to model the central bank reaction when the actual inflation deviates from the target inflation then a model with a central bank welfare lost function is developed in order to obtain an optimal monetary policy rule which modifies the synthetic version of the taylor rule this model allows making short run comparative static analyses

monetary policy and multiple equilibria in a cash in advance economy abstract this article shows that whether active interest rate rules can generate equilibrium uniqueness or indeterminacy depends upon 1 the magnitude of the intertemporal elasticity of substitution and 2 the value of the steady state inflation rate in particular if the intertemporal elasticity is smaller than one then an active interest rate rule renders equilibrium indeterminate when the steady state inflation rate is sufficiently high and ensures uniqueness of equilibrium when it is sufficiently low

macroeconomic stabilization and intervention policy under an exchange rate band abstract macroeconomic stabilization and foreign exchange market interventions are investigated for a small open economy with a nominal exchange rate band in a first best situation a band is not advisable from a stabilization perspective even though with money demand shocks no welfare losses are incurred with goods demand shocks narrowing the band affects the optimal coefficient of intramarginal monetary accommodation with restrictions on intramarginal interventions a band may be desirable in particular with supply shocks and no intramarginal interventions a narrower band is desirable when the central bank attaches a relatively smaller weight to price as opposed to output stability

targeting nominal income in a dynamic model the author analyzes the choice of monetary policy rule in a perfect foresight planning model maximizing agents plan their lifetime consumption decisions in the face of two rigidities first households hold money to aid trade second today s price level is inherited from past contracting decisions so that changes in nominal aggregate demand fall on output in the short run given these rigidities the central bank can set real balances in the short run and the author compares two mu percent rules his theoretical results suggest that the choice between fixed money growth and fixed nominal income growth rules is an empirical assessment that depends on the distribution of shocks to the economy copyright 1990 by ohio state university press

the impact of foreign direct investment on environmental quality a bounds testing and causality analysis for turkey abstract this study aims to investigate the impact of foreign direct investment fdi together with gross domestic product gdp the square of gdp and energy consumption on carbon dioxide co2 emissions in turkey over the period 1974 2010 we employ both the bounds test approach which has superior properties especially in small samples and the hatemi j test which takes structural breaks into consideration in the co integration analysis due to the co integration relationship between co2 emissions and other variables the autoregressive distributed lag ardl model is used in order to investigate short and long run elasticity between the variables the long run coefficients of the ardl model indicate that the effect of fdi on co2 emissions is positive but relatively small while the effects of the gdp and energy consumption on co2 emissions are quite considerable moreover the short run coefficients obtained by the error correction model ecm are found to be similar to those of the long run model the findings support the validity of the environmental kuznets curve ekc hypothesis in both time horizons the vector ecm based granger causality test is also applied to investigate the causal link the causality test results indicate the existence of a causality running from all explanatory variables to co2 emissions in the long run overall the findings suggest that turkey should promote energy efficiency with sustainable growth and encourage more fdi inflows particularly in technology intensive and environment friendly industries to improve environmental quality

exchange rate versus price level targets and output stability two alternative targets for monetary policy are considered stability of the price level or the rate of inflation and stability of the exchange rate the interest rate is the main instrument of the central bank credibility requires low output variability the advantages of the alternative policy rules from the point of view of output stability are considered in the simplest possible model conditions favoring a price level rule are high volatility of aggregate demand low volatility of aggregate supply high volatility of the foreign price level a low price elasticity of aggregate demand and a high price elasticity of aggregate supply copyright 1996 by the editors of the scandinavian journal of economics

activist monetary policy under rational expectations the purpose of this paper is to argue that the pursuit of an activist monetary policy may make economic sense even when people s expectations are formed rationally the paper presents a simple model in which 1 prices are costly to adjust 2 there is uncertainty concerning the parameters affecting aggregate demand and 3 there are positive costs of gathering and processing information by reference to this model it can be shown that an activist monetary policy may or may not be useful in offsetting aggregate disturbances depending upon the extent of information costs and of parameter uncertainty

price level targeting vs inflation targeting a free lunch price level targeting without base drift and inflation targeting with base drift are compared under commitment and discretion with persistence in unemployment price level targeting is often said to imply more short run inflation variability and thereby more employment variability than inflation targeting counter to this conventional wisdom under discretion a price level target results in lower inflation variability than an inflation target if unemployment is at least moderately persistent a price level target also eliminates the inflation bias under discretion and as is well known reduces long term price variability society may be better off assigning a price level target to the central bank even if its preferences correspond to inflation targeting a price level target thus appears to have more advantages than commonly acknowledged

employment impacts of solar energy in turkey abstract solar energy is considered a key source for the future not only for turkey also for all of the world therefore the development and usage of solar energy technologies are increasingly becoming vital for sustainable economic development the main objective of this study is investigating the employment effects of solar energy industry in turkey some independent reports and studies which analyze the economic and employment impacts of solar energy industry in the world have been reviewed a wide range of methods have been used in those studies in order to calculate and to predict the employment effects using the capacity targets of the photovoltaic pv and concentrated solar power csp plants in the solar roadmap of turkey the prediction of the direct and indirect employment impacts to turkey s economy is possible as a result solar energy in turkey would be the primary source of energy demand and would have a big employment effects on the economics that can only be achieved with the support of governmental feed in tariff policies of solar energy and by increasing research development funds

on the performance of nominal income targeting as a strategy for monetary policy in a small open economy abstract there is a great deal of support for nominal income targeting in the literature on strategies for monetary policy in a closed economy framework is nominal income targeting equally attractive in a small open economy this paper compares nominal income targeting to alternative monetary policy rules in a stochastic macro model for a small open economy we find that both the weighting in the overall price level of the exchange rate and foreign prices and the elasticity of output supplied with respect to the real exchange rate are important factors in assessing the attractiveness of nominal income targeting in a small open economy where the size of both parameters is not negligible a rule targeting the overall price level may actually be preferred to nominal income targeting

on the causal dynamics between hydroelectricity consumption and economic growth in latin america countries abstract the aim of this study is to examine the relationship between hydroelectricity consumption and economic growth in seven latin america countries including argentina brazil chile colombia ecuador peru and venezuela the analysis is conducted within a neoclassical model involving capital and labour force for the period of 1970 2012 we utilize a recently developed cointegration test to investigate the long run relationship in the variables having established that the variables are cointegrated the results indicate long run bidirectional causality between hydroelectricity consumption and economic growth in argentina and venezuela there is evidence for long run unidirectional causality from hydroelectricity consumption to economic growth in brazil chile colombia ecuador and peru the long run coefficients from the regression analyses suggest that hydroelectricity consumption positively affect the economies of these latin american countries however limited evidence of causality between the two variables is found in the short run the ensuing policy implications of the findings are discussed

institutional arrangements for monetary policy when output is persistent a discretionary monetary policy gives rise to a constant average inflation bias a state contingent inflation bias and a stabilization bias when output is persistent the paper considers institutional arrangements contracts for central banks that remove these policy imperfections the average and state contingent inflation biases can be removed by directing the central bank to target the growth of nominal income and appoint a central banker with a specific relative weight attached to output stabilization an alternative to this institutional solution is to direct central banks to aim for a feasible output target although this would remove the inflationary biases the government must appoint a liberal as opposed to conservative central banker in order to implement optimal stabilization

targeting nominal income a note this paper compares nominal income and monetary targets in a standard aggregate demand aggregate supply framework if the desirability of policies is measured by their effect on the unconditional variance of output nominal income targeting is preferable if and only if the aggregate elasticity of demand for real balances is greater than one this is precisely the opposite of the condition that in bean 1984 is sufficient to make nominal income targeting preferable this points out the importance of specification of supply and of objective function in work on nominal income targeting this abstract was borrowed from another version of this item

alternative nominal anchors in this paper the choice of an intermediate target for monetary policy is considered using a model that allows each alternative to be judged based on its welfare effects measured using a representative household s utility function the results show that nominal income targeting is preferable to money supply targeting since it provides an appropriate response to money demand shocks price level targeting dominates nominal income targeting however since it also provides an appropriate response to technology shocks in fact these results imply that price level targeting represents the optimal monetary policy

indeterminacy and increasing returns abstract we investigate properties of the one sector growth model with increasing returns under two organizational structures capable of reconciling the existence of aggregate increasing returns with competitive behavior by firms the first involves input externalities the second involves monopolistic competition we show for parameters in close accord with recent literature on real business cycles that the model displays an indeterminate steady state that can be exploited to generate a model of business fluctuations driven by self fulfilling beliefs in our first class of models growth is generated by exogenous increases in factor productivity in the second class the marginal product of capital is large enough for endogenous growth journal of economic literature classification numbers e00 e3 o40

the meaning of internal balance thirty years on in his nobel prize lecture meade advocated allocating demand management policies to pursuing price stability reformed wage fixing institutions to achieving full employment and foreign exchange policies to maintaining balance of payments equilibrium but with respect to the first he advocated a target for nominal income rather than the price level i evaluate meade s programme with the benefit of hindsight and in the light of experience with inflation targets i also discuss some of the issues associated with the application of flexible inflation targets as well as the extent to which financial stability considerations should affect the conduct of monetary policy

inflation targeting some extensions previous analyses of the implementation of inflation targeting are extended to monetary policy responses to different shocks consequences of model uncertainty and effects of interest rate smoothing and stabilization model uncertainty output stabilization and interest rate stabilization or smoothing all call for a more gradual adjustment of the conditional inflation forecast toward the inflation target the conditional inflation forecast is the natural intermediate target during inflation targeting the optimal way of reacting to shocks is hence to check how they affect the inflation forecast and then take the appropriate action jel classification e42 e52 e58

on consequences and criticisms of monetary targeting the purpose of this paper is to review and evaluate the most important existing criticisms of policy strategies that feature adherence to money stock targets four main categories of criticism and counterargumerits are analyzed the first of these involves the claim that accurate money stock control is infeasible while the second contends that such control can only be obtained along with extreme volatility of interest rates the third emphasizes difficulties resulting from technical change and deregulation and the fourth concerns strategic issues of rules vs discretion activist vs non activist policy and the logical function of intermediate targets this abstract was borrowed from another version of this item

targeting nominal income further results there has been a great deal of interest in designing optimal policy in stochastic macroeconomic models under rational expectations many authors including turnovsky 11 and benavie and froyen 2 have stressed that pure policy rules such as a strict money rule or an interest rate peg are generally not the optimal policy response to both demand and supply shocks recently however bean 1 has disputed this claim using a version of the standard sargent and wallace 10 model he shows that nominal income targeting provides an optimal response to both demand and supply shocks as long as labor supply is perfectly inelastic extending this analysis bradley and jansen 3 report that the argument in favor of nominal income targeting is substantially strengthened by considering optimal wage indexing they show that the combination of nominal income targeting and optimal wage indexing to price is perfectly stabilizing regardless of the elasticity of labor supply this paper extends the work by bean 1 and bradley and jansen 3 to the case of an interest elastic and wealth elastic labor supply the goal is to determine if nominal income targeting continues to provide the optimal response to both demand and supply disturbances in a more general model bean and bradley and jansen utilize the so called lucas supply curve a standard construct in new classical models that is often justified by reference to the work of lucas and rapping 7 however lucas and rapping actually derive a supply curve in which both the ex ante real rate of interest and wealth affect aggregate supply 2 this paper employs a supply curve which includes both interest rate and wealth effects and finds that with this more general supply curve nominal income targeting even in combination with wage indexing is not perfectly stabilizing prior results by bean 1 and bradley and jansen 3 are the result of the lucas supply

notes on sequence economies transaction costs and uncertainty abstract a sequence economy is an economy with trade at every date and state it is inessential if its equilibria coincide with those of the corresponding arrow debreu economy we examine some of the conditions for essentiality 1 if there are transaction costs then even if all states of nature are spanned by the securities the economy is generically essential 2 in the absence of transaction costs we show by examples that spanning is neither necessary nor suficient for inessentiality the former because some state distinctions may be irrelevant the latter because of possible multiple spot equilibria for a given state 3 we speculate on the possibility that price contingent securities might complete the markets and more generally on the idea of endogenous uncertainty journal of economic literature classification number c62

long term contracts and the effectiveness of demand and supply policies in recent years the economy has been characterized by simultaneous labor market slack accelerating inflation and a progression of real shocks in response to these events nontraditional aggregate control measures have been introduced that seek to affect the supply side of the economy these policies include controls on wages and prices general and targeted employment credits and wage subsidies and tax based incomes policies this paper compares the effectiveness of monetary policy and one type of supply management policy in controlling fluctuations in output and the price level the supply side program which is a variant of the employment tax credit acts directly on the firm s cost of labor and thereby on aggregate supply monetary policy on the other hand directly affects aggregate demand and only indirectly affects the firm s cost of labor through its impact on the price level since these programs have different transmission mechanisms a principal question of the analysis concerns whether they exhibit differences in their ability to respond to demand versus supply shocks an additional question addressed by the analysis concerns the interaction between the length of wage contracts and the policy parameters the framework consists of log linear representations of aggregate demand and supply functions that are subject to random disturbances fluctuations in output occur as a consequence of both the random disturbances and the underlying wage rigidity caused by long term contracts the presence of long term contracts is

inflation expectations and the stability properties of nominal gdp targeting ball 1999 uses a small closed economy model to show that nominal gdp targeting can lead to instability this paper extends ball s model to uncover the role inflation expectations play in generating this instability allowing inflation expectations to be formed by the more general mixed expectations process which encompasses ball s model we show that nominal gdp targeting is unlikely to lead to instability we further show that in ball s model where exact targeting causes instability that moving to inexact targeting restores stability

equilibrium in economies with incomplete financial markets abstract this paper analyses an exchange economy in the absence of arrow debreu complete markets it is assumed that trading takes place in the sequence of spot markets and futures markets for securities payable in units of account unlimited short selling in securities is allowed a general equilibrium in such an economy is a set of current and future prices contingent on uncertain events and a set of individual plans such that all markets are cleared the existence of such an equilibrium is proved under usual assumptions this is in contrast to the case of futures markets for contingent futures commodities where an equilibrium may not exist the optimality of equilibrium allocations is also discussed

the perils of taylor rules abstract since john taylor s 1993 carnegie rochester conf ser publ policy39 195 214 seminal paper a large literature has argued that active interest rate feedback rules that is rules that respond to increases in inflation with a more than one for one increase in the nominal interest rate are stabilizing in this paper we argue that once the zero bound on nominal interest rates is taken into account active interest rate feedback rules can easily lead to unexpected consequences specifically we show that even if the steady state at which monetary policy is active is locally the unique equilibrium typically there exist an infinite number of equilibrium trajectories originating arbitrarily close to that steady state that converge to a liquidity trap that is a steady state in which the nominal interest rate is near zero and inflation is possibly negative journal of economic literature classification numbers e52 e31 e63

new classical macroeconomics a sympathetic account the essential ingredients of new classical nc macroeconomics are 1 adoption of the equilibrium approach to model construction 2 acceptance of the natural rate hypothesis 3 a belief in the superiority of policy based on rules and 4 a strong skepticism regarding the empirical relevance for macroeconomic issues of rational bubble phenomena recent keynesian analyses stressing the interaction of monopolistic competition with pricechange menu costs are not incompatible with the nc approach but have not been highly successful a nc policy strategy that recognizes current weaknesses in macroeconomic understanding is described and rationalized and an analytical basis for nc skepticism regarding bubbles sunspots etc is outlined

the stabilizing properties of a nominal gnp rule the author examines the ability of a nominal gnp rule for monetary policy to stabilize output and inflation other regimes considered are a money rule an exchange rate rule a price level rule and discretion the rules compare favorably to discretion to the extent that a time consistent commitment to a nominal anchor is needed to eliminate an inflationary bias in the economy the choice among the four rules depends on the relative magnitudes of the disturbances considered supply shocks velocity shocks and exchange rate shocks the nominal gnp rule dominates the exchange rate and other rules for plausible parameter values copyright 1995 by ohio state university press

flexible inflation targeting and financial stability is it enough to stabilize inflation and output abstract we investigate empirically whether a central bank can promote financial stability by stabilizing inflation and output and whether additional stabilization of asset prices and credit growth would enhance financial stability in particular we employ an econometric model of the norwegian economy to investigate the performance of simple interest rate rules that allow a response to asset prices and credit growth in addition to inflation and output we find that output stabilization tends to improve financial stability additional stabilization of house prices equity prices and or credit growth enhances stability in both inflation and output but has mixed effects on financial stability in general financial stability as measured by e g asset price volatility improves while financial stability measured by indicators that depend directly on interest rates deteriorates mainly because of higher interest rate volatility owing to a more active monetary policy

recent developments in the theory of rules versus discretion policymaker this perspective on rules versus discretion was changed by kydland and prescott 1977 who looked at rules as a form of commitment a commitment amounts to a binding contract which specifies in advance the actions that someone will take possibly contingent on some exogenous variables that everyone can observe in contrast under discretion a person promises only to take those future actions that will best further his objectives later on such promises are easy to keep thus discretion is the special case of a rule or contract in which none of today s provisions restrict a person s future actions in the area of private business dealings it is natural to think about optimal forms of contracts which would not usually be pure discretion similarly for public policy the perspective becomes the optimal form of rules or prior restrictions even the smart benevolent policymaker is likely to desire and use

the optimality of nominal income targeting when wages are indexed to price in the last decade there has been renewed interest in alternative monetary regimes institutions and policy procedures one policy proposal that has received increased attention is nominal income targeting this proposal has been suggested for instance by feldstein 9 gordon 13 hall 16 meade 21 and tobin 25 26 taylor 24 discusses this proposal in some detail and mccallum 20 presents a statistical analysis of a particular nominal income targeting rule in a variety of contexts bean 3 presents a theoretical analysis of nominal income targeting examining the properties of such a policy in a stochastic macro model in which rational agents sign nominal wage contracts given that the monetary authority s objective is to minimize the divergence of output from its full information level nominal income targeting is the optimal policy if labor supply is perfectly inelastic with an elastic labor supply however nominal income targeting provides the optimal response to demand side shocks but not to supply side shocks the problem of designing optimal policy in the face of both demand and supply side shocks is not new authors such as benavie and froyen 4 craine and havenner 8 parkin 22 and turnovsky 27 have stressed that pure policy rules such as a strict money rule or an interest rate peg are generally not the optimal policy response to both demand and supply shocks thus bean s result that nominal income targeting provides the optimal policy response to all shocks as long as labor supply is perfectly inelastic is rather impressive one avenue of research that attempts to provide a partial solution to the problem of suboptimal policy rules in the face of demand and supply shocks is the investigation of wage indexing work by gray 14 15 drew attention to the properties of nominal wage contracts indexed to the price level the relation between the monetary authority s choice of policy rule and the degree of indexing in the labor market has been investigated by fethke and policano 11 fethke and

targeting nominal income an appraisal the practice of setting target growth rates for a year or more ahead for some measure of the mofiey supply is now followed by many industrialised countries however it has been suggested by a number of authors e g meade i978 in his nobel prize lecture tobin i980 in his retrospective on stabilisation policy brittan i98i that it would be more sensible to pursue targets for nominal income rather than the money supply meade for instance argues that controlling nominal income is in any case the ultimate goal of those who favour fixed monetary targets and that an excessive concentration on the means rather than the end is confusing to private agents and can lead to undesirable fluctuations in the demand for output when velocity shifts he goes on to advocate that nominal income targets should be linked to the development of wage fixing institutions designed to mimic competitive behaviour in this paper we examine the implications of such a proposal for the performance of the economy in the context of a simple stochastic macroeconomic model under rational expectations a contracting framework is adopted in which the wage is fixed in a state of uncertainty about future levels of demand and productivity the objective of the authorities is to minimise the divergence of output from its full information equilibrium level if labour supply is inelastic then it turns out that maintaining the level of nominal income is actually the optimal policy if labour supply is elastic nominal income targetry provides an optimal response to demand is lm shocks but a suboptimal response to productivity shocks however a sufficient condition for a nominal income target to be preferable to a fixed money supply target is that the price elasticity of aggregate demand be less than unity the paper concludes by examining the implications of pursuing target growth rates rather than levels it should be conceded at the outset that there are several pertinent issues not addressed such as the greater comprehensibility of nominal income targets to private agents or the possibility that nominal income targets may leave the authorities with too much discretion e g poole i980 the issue of labour market reform is also ignored this is an enormous subject which it would be impossible to do justice to here see for instance meade s own analysis of the problem in meade i982 such reforms might be expected to affect the parameters of the model nevertheless since changes in labour market practices are neither a precondition for nor a logical consequence of nominal income targets an independent analysis of the macrceconomic implications of the latter is still highly relevant

monetary nominal income and exchange rate targets in a small open economy abstract in this paper i examine the properties of monetary nominal income and exchange rate targets as stabilization policies in an open economy perfect capital mobility and a wide variety of transitory random shocks is assumed nominal wages are assumed to have been set in advance of the realization of the shocks none of these rules is in general sufficient to minimize the welfare cost of aggregate fluctations and none necessarily dominates all others under the assumption that monetary control is subject to random errors optimal policy implies reactions to all observable shocks and is characterized by heavy exchange market intervention

cooperative responses by public and private agents to aggregate demand and supply disturbances macroeconomic literature concerned with stabilizing aggregate employment often focuses on the monetary authority s ability to react to persistent disturbances in aggregate demand this attention reflects the keynesian emphasis on demand as the primary determinant of fluctuations in real economic activity as well as the historically greater variability of demand as compared with supply disturbances in recent years however it has become increasingly apparent that supply shocks not only disrupt the economy but can lead to movements in employment output and prices that are unlike the movements of these variables in response to demand disturbances since supply side phenomena such as crop failures oil embargoes and general increases in prices of primary materials frequently accompany demand shocks it can be difficult for either public or private economic agents to develop effective methods for stabilizing employment the public authority s response to these conditions includes the consideration and introduction of new policing strategies including wage and price guidelines tax based incomes policies and supply management fiscal programmes the purpose of this analysis is a comparison of monetary policy a wage subsidy programme and a private sector indexation strategy in a setting where observed aggregate disturbances are a composite of demand and supply shocks agents obtain information about current aggregate disturbances by observing the current price level but this information does not permit unique identification of the underlying contributors a price increase for example can result from an increase in aggregate demand a decrease in aggregate supply or a combination of these factors agents rely on information contained in the price level and their knowledge of the properties of underlying demand and supply disturbances to formulate expectations of the relative importance of each shock we initially adopt the position that while all agents form rational predictions of unobservable variables private agents expect the public authority to react via a known rule to the information contained in the price level by adjusting the money supply or by implementing short term fiscal measures this cooperative posture occurs because the public authority is able to formulate contingent rules that are not readily available to private agents a role for monetary and fiscal policy develops from a relative cost advantage of public over private agents in forming these contingent contracts we focus on a comparison of a standard form of monetary policy with one supply side fiscal programme a wage subsidy given to firms since the latter programme has recently been advocated as a way of increasing employment without first requiring an increase in the price level it seems to be a suitable tool to contrast with monetary policy particularly in response to supply side shocks as an alternative to the setting of contingent rules by the public authority we briefly consider the situation where private agents choose to index the nominal wage to changes in the price level

targeting nominal income growth or inflation within a simple new keynesian model emphasizing forward looking behavior of private agents i evaluate optimal nominal income growth targeting versus optimal inflation targeting when the economy is mainly subject to shocks that do not involve monetary policy trade offs for society inflation targeting is preferable otherwise nominal income growth targeting may be superior because it induces inertial policy making which improves the inflation output gap trade off somewhat paradoxically inflation targeting may be relatively less favorable the more society dislikes inflation and the more persistent are the effects of inflation generating shocks jel e42 e52 f58

nominal income targeting versus money growth targeting in an endogenously growing economy abstract we find that local indeterminacy more easily emerges under a regime of nominal income targeting both targeting regimes are equally effective in influencing economic growth and inflation the results thus favor money growth over nominal income as a nominal anchor

nominal budgeting as a stabilization rule the optimal degree of indexation of public spending abstract we analyze here a novel instrument of fiscal policy the degree of adjustment of public spending to price surprises this acts as an automatic stabilizer which fully substitutes for wage indexation partial reliance on nominal budgeting is usually optimal in contrast to the conventional assumption of pegged real government spending unlike what emerges in the wage indexation literature we show that the more pronounced is the relative importance of demand shocks the stronger is the case for lack of indexed public spending we find that a low degree of wage indexation may be the optimal response to government budgets not cast in real terms

targeting nominal income a closer look abstract i derive conditions under which the monetary authority should target nominal spending the relevant spending target is a weighted average of income and consumption despite sticky nominal wages under optimal policy the economy behaves as if all markets clear

educating labour force for a green economy and renewable energy jobs in turkey a quantitave approach abstract today the struggle of man against nature has reached the point where nature has been objectified and dominated by resource exploitation as we are faced with huge problems like decreasing natural resources destruction of climate ozone layer glaciers altering the rhythm of seasons global warming decreasing agricultural areas and more negative conditions brought on by the burgeoning human population these problems threaten the life of all living creatures in the natural world itself one critical factor is that humanity must harness the ability to create truly renewable energy sources instead of depleting the natural resources directly in order to generate the energy to sustain the lifestyles of today one aspect of this struggle is to educate the leadership and labour force to actively realize green economies and jobs in the renewable energy sector in the turkish educational system there is a true disconnect between the educational system and the labour markets that is causing a rise in unemployment rates among graduates educating green collar workers is an important opportunity for turkey to develop consistency within the labour markets that have rapidly weakened since 2000 this paper presents an overview of educational policies regarding the development of a green collar industry by facilitating renewable energy jobs through vocational technical high schools and graduate and post graduate university programmes it also analyses state policies on popularising business and industry to actually create green collar jobs for the development of a new social paradigm of sustainable development

are bilateral remittances countercyclical by putting together a relatively large data set on bilateral remittances of emigrants this paper is able to shed light on the important hypothesis of smoothing the smoothing hypothesis is that remittances are countercyclical with respect to income in the worker s country of origin the recipient of the remittance while procyclical with respect to income in the migrant s host country the sender of the remittance the econometric results confirm the hypothesis this affirmation of smoothing is important for two reasons first it suggests that remittances should be placed on the list of criteria for an optimum currency area second it brings into doubt plans by governments in some developing countries to harness remittances for their own use in that government spending in these countries generally fails the test of countercyclicality which remittances pass

macroeconomic in stability under real interest rate targeting we show that in a one sector monetary endogenous growth model under real interest rate targeting the local stability properties of the economy s balanced growth path depend crucially on the exact formulation of the cash in advance constraint and the degree of productive externalities in particular when a positive fraction including 100 of gross investment is subject to the liquidity constraint the model exhibits indeterminacy and sunspots if and only if the equilibrium wage hours locus is positively sloped and steeper than the labor supply curve on the other hand when real money balances are required only for the household s consumption purchases the economy always displays saddle path stability and equilibrium uniqueness regardless of the strength of productive externalities

the evolution of green jobs in scotland a hybrid approach in support of its ambitious target to reduce co2 emissions the scottish government is aiming to have the equivalent of 100 of scottish electricity consumption generated from renewable sources by 2020 this is at least in part motivated by an expectation of subsequent employment growth in low carbon and renewable energy technologies however there is no official data source to track employment in these areas this has led to a variety of definitions methodologies and alternative estimates being produced building on a recent study bishop and brand 2013 we develop a hybrid approach which combines the detail of bottom up surveys with top down trend data to produce estimates on employment in low carbon environmental goods and services lcegs we demonstrate this methodology to produce estimates for such employment in scotland between 2004 and 2012 our approach shows how survey and official sources can combine to produce a more timely measure of employment in lcegs activities assisting policymakers in tracking consistently developments applying our approach we find that over this period employment in lcegs in scotland grew but that this was more volatile than aggregate employment and in particular that employment in this sector was particularly badly hit during the great recession