anticipated monetary policy in canada some new evidence abstract in this note i examine the policy ineffectiveness proposition for canada using monthly income data due to milbourne et al 1988 i find that anticipated monetary policy altered the evolution of real output in canada recent work by ambler and phaneuf 1988 can be used to attribute this result to a purely new keynesian model of the business cycle although this inference is found to be fragile with respect to the choice of the level of significance used in the hypothesis tests

does it matter how monetary policy is implemented abstract in the u s existing monetary base measures add an adjustment factor for changes in reserve requirement ratios to high powered money implicitly the monetary base assumes that the economic effects of changes in reserve requirements are identical to those due to changes in high powered money theory however does not generally support the prediction that the two policy tools will have the same economic effects structural vars are estimated to compare the short run paths of inflation and output growth under two different types of policy shocks in doing so this analysis gives one a measure of the costs associated with this implicit equivalence assumption the evidence is consistent with the hypothesis that the federal reserve at least partially offsets reserve requirement changes with open market operations and the hypothesis that dynamic explanations of macroeconomic variables are improved by separating reserve requirement changes from other monetary policy moves

does money matter the robustness of evidence from vector autoregressions traditionally empirical macroeconomic research begins with the use of theory to construct a highly restricted structural econometric model the determination of the nature of those restrictions is fraught with difficulty and thus many specification decisions turn out to be largely ad hoc and of dubious validity once these specification issues have been probably inadequately addressed and a structural model constructed it is then estimated using complicated econometric techniques requiring sophisticated computer programs recently an alternative approach to modeling macroeconomic time series has come into wide use this alternative introduced by sims 1980a 1980b suggests the use of vector autoregression var models to analyze time series relationships among macroeconomic variables the fact that the use of this approach has proliferated widely in a relatively brief period of time is due not only to the very persuasive criticisms of traditional methods made by sims see especially sims 1980a but perhaps even more to the perception that specification and estimation problems are greatly simplified the user of the var approach imposes few restrictions and can generally use ordinary least squares estimation procedures the var approach is thus believed to be largely free of the spurious specification assumptions and consequent specification errors necessitated by traditional macroeconometric procedures

linking economic and ecological models for a marine ecosystem increasingly economists and ecologists have begun to recognize the value to public policy of combining information and results from each discipline into multidisciplinary studies here we present a methodological approach that links economic and ecological analyses we develop an economic ecological model by merging an input output model of a coastal economy with a model of a marine food web we describe distinct linear system sub models of the economy and the ecosystem and we develop a method for linking the two our method extends the work of earlier researchers by incorporating an ecosystem matrix into resource multipliers and by showing how these multipliers may be calculated we present a numerical example for the new england region using coastal economic and marine ecological data from the region for a restricted set of industry sectors and food web trophic levels we calculate resource multipliers for the example and we simulate the economic impacts of changes in primary production in the ecosystem on final demands for fishery products the results illustrate the effects of incorporating the impacts of habitat destruction and ecosystem structure on resource multipliers our approach can be extended to incorporate the full range of sectors in the economy and trophic levels in a linked ecosystem 2003 elsevier b v all rights reserved

monetary policy theory and practice in respect of the theory of monetary policy i am reminded of the comment that jacob viner made many years ago at a meeting of the american economic association about alfred marshall s economics what is new is highly unlikely at this late date also to be true and significant 1 consequently i shall restrict my remarks on theory to trying to summarize what i regard as the present intellectual position

quantification of interdependencies between economic systems and ecosystem services an input output model applied to the seine estuary abstract the aim of this paper is to assess the possible contribution of an input output model towards two of the basic principles of the sustainability strategy of integrated coastal zone management iczm and post normal science according to these principles decision support tools should offer a holistic perspective and handle high uncertainty the difficulties in reaching sustainability are due partly to the prevailing use of narrow system boundary tools that are non holistic consequently they fail to capture important ecosystem services and ignore interdependencies between them to comply with the basic principles our method allows environmental assets to be evaluated in multiple units and integrates results from recent researches in natural sciences both enable coverage of interdependencies between ecosystem services thereby we enlarge input output modelling from the two conventional ecosystem services of sink and provisioning to the most vital ones the supporting services an application to the seine estuary addresses the impacts of maritime transportation infrastructures on nursery habitats for commercial fish the ecosystem services covered are life support and resource provisioning our results show that the restoration of a total of 73 7 km 2 of nursery areas over the period 2004 2015 would result in a stock of sole in 2015 that exceeds the business as usual scenario by 44 2 uncertainty range 35 9 69 9 in spite of high restoration costs the negative macro economic impact is very low however on the sector level a trade off results between nurseries and three economic sectors the quantification of such trade offs in our model is particularly useful to public participation in decision making

an analysis of risks for biodiversity under the dpsir framework abstract this paper reviews definitions and uses of the driving forces pressures state impacts responses dpsir framework and argues that it is a relevant tool for structuring communication between scientists and end users of environmental information while it is inappropriate as an analytical tool an apparently deterministic causal description of environmental issues inevitably downplays the uncertainty and multiple dimensions of causality inherent in complex environmental and socio economic systems consequently the paper comoplements and reframes dpsir using a complex system methodology based on the distinction between four spheres of sustainability environmental economic social and political and the analysis of their functioning and relationships the pair wise interface aspects are characterised through investigation of the demands and supply of each sphere relative to the others within the resulting conceptual framework each of the five d p s i and r concepts are specified for application in integrative analysis of relationships between policy society economy and biodiversity in one of the world s largest european integrated research projects on biodiversity alarm

the effects of monetary policy using structural factor analysis the traditional vector autoregression var method is widely used to trace out the effects of monetary policy innovations on the economy however this method suffers from the curse of dimensionality so that in practice vars are estimated on a limited number of variables leading to a potential missing information problem in this article we use the method of structural factor analysis to evaluate the effects of monetary policy on key macroeconomic variables in a data rich environment this methodology allows us to extract information on monetary policy and its impact on the economy from a much larger data set than is possible with the traditional var method we propose two structural factor models one is the structural factor augmented vector autoregressive sfavar model and the other is the structural factor vector autoregressive sfvar model compared to the traditional var both models incorporate information from hundreds of data series series that can be and are monitored by the central bank in

social multi criteria evaluation methodological foundations and operational consequences in order to address contemporary issues economics and decision sciences need to expand their empirical relevance by introducing more and more realistic thus more complex assumptions in their models one of the most interesting research directions in the field of public economics is the attempt to introduce political constraints interest groups and collusion effects explicitly j j laffont incentives and political economy 2000 the main argument developed here is the proposal of the concept of social multi criteria evaluation smce as a possible useful framework for the application of social choice to the difficult policy problems of our millennium where as stated by funtowicz and ravetz facts are uncertain values in dispute stakes high and decisions urgent this paper starts from the following main questions 1 why social multi criteria evaluation 2 how should such an approach be developed the foundations of smce are set up by referring to concepts from complex system theory and philosophy such as reflexive complexity post normal science and incommensurability to give some operational guidelines on the application of smce basic questions to be answered are 1 how is it possible to deal with technical incommensurability 2 how can we deal with the issue of social incommensurability to answer these questions using theoretical considerations and lessons learned from real world case studies is the main objective of the present article

price level determinacy with an interest rate policy rule and rational expectations abstract this paper reconsiders a result obtained by sargent and wallace namely that price level indeterminacy obtains in their model if the monetary authorities adopt a feedback rule for the interest rate rather than the money stock it is shown that the indeterminacy vanishes if the interest rate rule is chosen so as to have a desired effect on the expected quantity of money demanded this holds even if considerable weight is given in the choice of a rule to the aim of smoothing interest rate fluctuations

operationalizing sustainable development dynamic ecological economic models abstract since the mid eighties a vast literature has evolved around the concept of sustainable development it shows a wide support for changes in policy making and decision making for instance to integrate environmental interests in national and international political processes remarkably recommendations of contours and new elements of research methods and policy analysis for sustainable development are rare although this is just as essential as the renewed attention for the political dimension a clear view on how to use and change adequately existing techniques and models for sustainable development will contribute to a more satisfactory operationalization of it this paper examines the implications of ecologically sustainable economic development for integrated dynamic modelling after a concise discussion of sustainable development it is suggested that five concepts are central to it intergenerational equity the regional scale multiple use long term uncertainty and economic ecological integration the discussion of each of these issues is focused on the implications for model elements and uses thereby old ideas are reviewed and new ones are proposed the aim is not to come up with a rigid framework for dealing with sustainable development but rather to suggest which alternatives are available to deal with the central concepts although in a section on economic ecological integration general requirements for dynamic economic ecological models are mentioned explicitly in order to offer a general frame of reference these requirements are fairly general and may be taken up in ensuing discussions of the methodological aspects related to sustainable development the main conclusions are the following we view economic ecological integration in the sense of combining processes instead of one process and a variable to deal with intergenerational equity one may choose objectives various constraints or a combination of both for regional models one may consider various types of conditions on cross boundary flows and external factors of regional processes multiple use can be modelled as an intermediate stage between single resource models with a partial view and complex models with a general view sensitivity probability and scenario analyses can be used to deal partially with the various types of long term uncertainty although this remains difficult for the very important class of unexpected events or catastrophes such surprises can at best be turned into risk by scenario analyses and examination of dynamic behaviour of the system as a whole

in search of the liquidity effect abstract a short run negative relationship between monetary aggregates and interest rates the liquidity effect is central to discussions of monetary policy this paper searches for this empirical relationship we investigate whether the characterization of the liquidity effect is sensitive to i changes in sample period ii conditioning the correlations on past information iii assuming money growth is exogenous and iv treating monetary changes as anticipated or unanticipated the correlations change substantially in each case we conclude that the traditional analysis and modern models which rely completely on demand side behavior cannot explain the observed correlations a successful characterization of the liquidity effect requires identification of both private and policy behavior

money and economic activity revisited abstract recent literature has concluded that money no longer plays a fundamental role in determining us economic activity especially when post 1982 data are included in the analysis we re examine the issue using annual and quarterly data sets ranging back to the civil war cointegration tests show that an equilibrium relationship holds between money and income in all data samples of 35 years or longer but frequently fails to hold for many shorter samples however when the normal monetary lags are explicitly imposed a cointegrating relationship is frequently captured even in quite short samples examining the issue in a standard five variable var model we find that money is the most important variable in explaining real output for the full 1874 1993 as well as 1952 1993 periods even allowing for interest rate effects finally using monthly data over the troublesome 1983 1994 sample we show that when appropriate adjustments are made to capture recent structural changes such as the growing importance of the international economy on us output money still granger causes economic activity

money and output under alternative exchange rate regimes in the usa abstract economic theory suggests that the effects of money on output will depend on the exchange rate regime this paper examines the relationship between money and output under fixed and flexible exchange rates in the usa johansen s maximum likelihood estimation method is utilized to test for cointegration in a system consisting of money the interest rate prices the trade balance and output during 1959 1971 and 1973 1990 with the exchange rate included in the analysis fo the second period the results indicate that the variables are cointegrated suggesting the existence of long run equilibrium relationships between the domestic and external variables vaiance decompositions reveal a much larger role for money in explaining forecast error vaiance of output during the flexible exchange rate period money and the interest rate explain a substantial proportion of the variances of the trade balance and the exchange rate this suggests that effects on the exchange rate and trade balance are an important component of the transmission mechanism of monetary policy jel f41

does anticipated monetary policy matter more evidence this note provides more evidence on whether anticipated monetary policy alters the evolution of real output in the united states the results are shown to be sensitive to the model selection criterion used to choose the design matrix

has the effect of money shocks on interest rates really vanished further evidence of the liquidity effect the liquidity effect of money shocks on the short term interest rate has been an integral part of traditional macroeconomic policies and has witnessed renewed interest in recent years the paper reports contrary to some previous work extensive evidence of the effect in several non g7 countries using the single equation distributed lag garch p q estimation and the systems var estimation the liquidity effect is shown to be alive and well in a sample of nine countries and this will shed much light on policy implications

a reconsideration of sims evidence concerning monetarism abstract in var systems such as those of sims 1980 monetary policy surprises may be more accurately represented by interest rate than money stock innovations especially if the monetary authority uses an interest rate instrument

tests of the relation between money and output in the real business cycle model abstract the paper contains tests of the relation between money and output implied by a real business cycle model the tests control for a variety that may affect economic growth and the growth rates of monetary aggregates using u s data from 1953 1 1984 4 we find almost no evidence that the empirical relations between real growth and measures of monetary policy violate the restrictions imposed by the model changes in a set of real variables explain a majority of the variation in gnp growth however substantial variation in gnp growth remains unexplained by the real factors that we consider

on interest rate innovations and anticipated monetary policy abstract in this note i investigate whether anticipated money matters by following mccallum s 1983 suggestion that nominal interest rates be included in a var system estimated on data spanned by a policy of interest rate targeting the evidence is in favour of gordon s 1982 natural rate hypothesis gradual price adjustent model of policy ineffectiveness ambler and phaneuf 1988 have shown the results can be interpreted as evidence in favour of contract based models of the business cycle

causality and correlations of output and nominal variables in a real business cycle model abstract a dynamic general equilibrium economy in which output is exogenous with respect to money is calibrated and simulated following a procedure commonly used in the real business cycle literature it is then confronted with key comovement patterns of output and nominal variables in post war u s time series data the model economy performs well in matching second moment patterns involving output money and price the model economy with its embedded reverse causation from output to money also provides the means for carrying out a probabilistic appraisal of the observed money to output granger causality in u s data repeated applications of the granger causality test to simulated data lead to the rinding that money causes output more often than expected

a political model of monetary policy with application to the real fed funds rate abstract we construct an empirical model of u s monetary policy assuming that the federal reserve is an ordinary federal bureaucracy we use the real federal funds rate as our policy measure and show the existence of significant executive legislative and bureaucratic influence on the real rate of interest from 1961 to 1996 we find that presidential party is an adequate statistical measure of executive influence and that the voting scores of the senate banking committee leadership best represent legislative influence we argue that political changes cause systematic and predictable changes in monetary policy

financial structure and aggregate economic activity an overview this paper surveys literature that explores the possible links between the financial system and aggregate economic behavior the survey is in two parts the first reviews the traditional work and the second discusses new research copyright 1988 by ohio state university press

productivity shocks and real business cycles abstract productivity shocks play a central role in real business cycles as an exogenous impulse to macroeconomic activity however measured solow prescott residuals do not behave as an exogenous impulse rather econometric evidence provided in this paper indicates that 1 money interest rates and government spending granger cause these impulses and 2 a substantial component of the variance of these impulses between one quarter and one half is attributable to variations in aggregate demand these results are robust to a number of econometric issues including measurement errors specification of the production function and certain forms of omitted real variables

do security analysts improve their performance with experience we investigate if sell side security analysts generate more accurate quarterly earnings forecasts and more profitable stock recommendations as their experience following a specific firm increases we measure firmspecific experience as the number of prior quarters for which the analyst has issued an earnings forecast for the firm if analysts improve their forecasting performance with repetition as suggested by the learning by doing lbd model an analyst s earnings forecasts will become more accurate with experience prior empirical work provides mixed evidence on whether analysts exhibit individual forecasting performance differences e g butler and

interest rate innovations and the business cycle abstract recent evidence from vector autoregressions points towards the importance of interest rate innovations in explaining output variations we show that this evidence supports an interpretation of business cycles based on nominal contractual rigidities rather than cotinuous market clearing

macroeconomic activity and monetary policy actions some preliminary evidence monetary policy is conducted through open market operations loans at the discount window and changes in the reserve requirement structure the purpose of this paper is to formally investigate the notion that the effect of changes in reserve requirement ratios is different from the effect of other policy tools this is accomplished by decomposing the monetary base into those changes caused by changes in reserve requirement ratios and those caused by other monetary policy actions some preliminary evidence suggesting differential real effects from the policy tools is provided copyright 1992 by ohio state university press

ecological pricing and economic efficiency abstract there is a need to accurately account for the contributions of environmental assets to the overall economy such accounting would permit policies that allow protection of important natural resources and aid the analytic process to determine an accurate basis for a sustainable economy the aim is to develop an accounting framework for ecology that is sufficiently consistent with the economic framework that the two can be fruitfully combined with appropriate definitions of the flows the two systems can be connected into a common framework no single measure of the system productivity and efficiency can be given for the combined system however until the ecosystem metabolism can be converted into economic terms this could be done with a series of economic valuation techniques ecological prices could then be estimated and a single measure of ecological economic output could be given with the net combined system input and output now in common terms a technical system efficiency measure can logically be proposed because human activity inevitably involves dissipation such emissions would now have a monetary price because such emissions are irrecoverable the total output of the combined system is greater than it is under the current definition giving rise to a technical system wide efficiency measure

industrial output restriction and the kyoto protocol an input output approach with application to canada the objective of this paper is to assess the economic impacts of reducing greenhouse gas emissions by decreasing industrial output in canada to a level that will meet the target set out in the kyoto protocol the study uses an ecological economic input output model combining economic components valued in monetary terms with ecologic components ghg emissions expressed in physical terms economic and greenhouse gas emissions data for canada are computed in the same sectoral disaggregation three policy scenarios are considered the first one uses the direct emission coefficients to allocate the reduction in industrial output while the other two use the direct plus indirect emission coefficients in the first two scenarios the reduction in industrial sector output is allocated uniformly across sectors while it is allocated to the 12 largest emitting industries in the last one the estimated impacts indicate that the results vary with the different allocation methods the third policy scenario allocation to the 12 largest emitting sectors is the most cost effective of the three as the impacts of the kyoto protocol reduces gross domestic product by 3 1 compared to 24 and 8 1 in the first two scenarios computed economic costs should be considered as upper bounds because the model assumes immediate adjustment to the kyoto protocol and because flexibility mechanisms are not incorporated the resulting upper bound impact of the third scenario may seem to contradict those who claim that the kyoto protocol would place an unbearable burden on the canadian economy c 2008 elsevier b v all rights reserved