decomposing the declining volatility of long term inflation expectations abstract the level and volatility of survey based measures of long term inflation expectations have come down dramatically over the past several decades to capture these changes in inflation dynamics we embed both short and long term expectations into a medium scale var model with stochastic volatility the model estimates attribute most of the marked decline in the volatility of expectations to smaller shocks to long run inflation expectations according to our estimates the volatility of shocks plummeted in the early to mid 1980s moved to a somewhat higher level that prevailed for much of the 1990s and then declined to and remained at very low levels

institutionalizing the triple helix research funding and norms in the academic system abstract what are the institutional mechanisms that enable or hinder the development of new forms of knowledge production this issue has been slightly neglected in the discussion of the triple helix to redress this shortcoming the authors suggest an institutionalist complement to the triple helix model the article analyzes the institutional regulation of academic research with a special emphasis on how norms in the academic system are constituted via research funding it is argued that funding is a key mechanism of change in the norm system since its reward structure influences the performance and evaluation of research the empirical analysis is based on the public financing of technical research in sweden with comparisons made with other countries the structure of research funding has been reformed in all the countries studied in addition to continuing recognition for scientific merit the reforms have had the effect of emphasizing the commercial potential and the societal relevance of the research supported the two dominant models of research funding an intra academic model and a top down interventionist model seem to be replaced partly with a catalytic one however there are counteracting tendencies some agencies still reproduce a model of reputational control and a collegial orientation among researchers it is concluded therefore that the forces of change and continuity are engaged in a process of negotiation about the normative regulation of academic research

expectations and economic fluctuations an analysis using survey data abstract using survey based measures of future u s economic activity from the livingston survey and the survey of professional forecasters we study how changes in expectations and their interaction with monetary policy contribute to fluctuations in macroeconomic aggregates we find that changes in expected future economic activity are a quantitatively important driver of economic fluctuations a perception that good times are ahead typically leads to a significant rise in current measures of economic activity and inflation we also find that the short term interest rate rises in response to expectations of good times as monetary policy tightens

information rigidities inflation perceptions and the media lessons from the euro cash changeover the objective of theoretical models of information rigidities is to capture the fact that people are constrained in their ability to acquire and process all available information given that most people obtain their information about the economy from the media press coverage of the economy may exert an influence on peoples attitudes this paper tests for this influence by examining consumers inflation perceptions in the aftermath of the euro cash changeover which serves as a natural experiment using a new data set that quantifies the intensity and tone of media reports we document that media reporting has had a statistically significant and economically meaningful impact on inflation perceptions and contributed to their sharp rise in the aftermath of the euro cash changeover and to the divergence between inflation perceptions and actual inflation rates jel e53 d83

the long and large decline in state employment growth volatility this study documents a general decline in the volatility of employment growth during the period 1956 to 2002 and examines its possible sources we use a panel design that exploits the considerable state level variation in volatility during the period the roles of monetary policy oil prices industrial employment shifts and a coincident index of business cycle variables are explored overall these four variables taken together explain as much as 31 percent of the fluctuations in employment growth volatility individually each of the four factors is found to have significantly contributed to fluctuations in employment growth volatility although to differing degrees

monetary policy rules macroeconomic stability and inflation a view from the trenches i estimate a forward looking monetary policy reaction function for the federal reserve for the periods before and after paul volcker s appointment as chairman in 1979 using information that was available to the fomc in real time from 1966 to 1995 the results suggest broad similarities in policy and point to a forward looking approach to policy consistent with a strong reaction to inflation forecasts during both periods this contradicts the hypothesis based on analysis with ex post constructed data that the instability of the great inflation was the result of weak fomc policy responses to expected inflation a difference is that prior to volcker s appointment policy was too activist in reacting to perceived output gaps that retrospectively proved overambitious drawing on contemporaneous accounts of fomc policy i discuss the implications of the findings for alternative explanations of the great inflation and the improvement in macroeconomic stability since then

testing for indeterminacy an application to u s monetary policy reply this paper considers a prototypical new keynesian model in which the equilibrium is undetermined if monetary policy is passive the likelihood based estimation of dynamic equilibrium models is extended to allow for indeterminacies and sunspot fluctuations we construct posterior weights for the determinacy and indeterminacy region of the parameter space and estimates for the propagation of fundamental and sunspot shocks according to the estimated model u s monetary policy post 1982 is consistent with determinacy whereas the pre volcker policy is not we find that before 1979 indeterminacy substantially altered the propagation of shocks

is commercialization good or bad for science individual level evidence from the max planck society abstract based on new data this paper studies the invention disclosure licensing and spin off activities of max planck institute directors over the time period 1985 2004 analyzing their effects on the scientists subsequent publication and citation records consistent with prior findings inventing does not adversely affect research output mixed results are obtained with regard to commercialization activities the analysis suggests qualifications to earlier explanations of positive relationships between inventing and publishing

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

understanding carbon lock in abstract this paper narrative argues that industrial economies have been locked into fossil fuel based energy systems through a process of technological and institutional co evolution driven by path dependent increasing returns to scale it is asserted that this condition termed carbon lock in creates persistent market and policy failures that can inhibit the diffusion of carbon saving technologies despite their apparent environmental and economic advantages the notion of a techno institutional complex is introduced to capture the idea that lock in occurs through combined interactions among technological systems and governing institutions while carbon lock in provides a conceptual basis for understanding macro level barriers to the diffusion of carbon saving technologies it also generates questions for standard economic modeling approaches that abstract away technological and institutional evolution in their elaboration the question of escaping carbon lock in is left for a future paper

the great moderation of the term structure of uk interest rates abstract the conduct of monetary policy the term structure of interest rates and the structure of the economy in the uk have changed over the post wwii period we model the interaction between the macroeconomy and financial markets using a time varying var augmented with the factors from the yield curve there is evidence of a great moderation in the dynamics of the yield curve with the factors being persistent and volatile before the introduction of inflation targeting in 1992 but becoming stable afterwards the introduction of time variation in the factor augmented var improves the fit of the model and results in expectation hypothesis consistent yields that are close to actual yields even at long maturities monetary policy shocks had a significant impact on the volatility of inflation output and the policy rate over the pre inflation targeting era but their contribution has been negligible under the current regime shocks to the level of the yield curve accounted for a large fraction of inflation variability only before 1992

institutionalized biases in the award of research grants a preliminary analysis revisiting the principle of accumulative advantage abstract accumulative advantage in the research system may allow elite groups to secure a disproportionate share of resources using grant submissions data to a uk research council associations between success in securing grants and potential sources of advantage are explored including membership of the peer review cadre departmental standing track record gender and ethnicity success in securing grants is associated with several potential sources of advantage suggesting that factors other than the quality of the research proposed influence outcomes differential access to these may contribute to the observed biases in the number of grants won against women and non white groups

navigating the impact innovation double hurdle the case of a climate change research fund this paper analyses how the funding for research grants was allocated from a specific research fund which aimed to support innovative research projects with the potential to have research impact by reducing carbon emissions the fund received a total of 106 proposals of which 27 were successful at obtaining financial support our aims were to test which factors influenced the funding decision and to discover whether or not and to what extent the fund met its intended objectives through the allocation of monies the allocation process and its outcomes were analysed using correlation logistical and linear regression to test our research hypotheses using this research funding process as a single study we found that trying to clear the impact innovation double hurdle in a single funding initiative ultimately compromises both goals this paper therefore contributes to our understanding of innovation management within the context of carbon emission reduction and explains which factors influenced success in securing research monies through the funding process

what lies beneath a time varying favar model for the uk transmission mechanism we use a time varying factor augmented var to investigate changes in the transmission mechanism of economic shocks in the uk our estimates demonstrate the importance of time variation and suggest that monetary policy shocks had a bigger impact on inflation equity prices and the exchange rate during the inflation targeting period changes in the transmission of policy shocks to bond yields point to more efficient management of long run inflation expectations finally we investigate responses of disaggregated prices with the median becoming more negative and cross sectional patterns consistent with a decrease in the role of cost channels

survey measures of expected inflation and the inflation process the accuracy of inflation forecasts obtained from household and professional surveys has deteriorated noticeably of late to the extent that a simple autoregressive specification outperforms survey forecasts the decline in absolute and relative accuracy has taken place at about the same time as an apparent change in the inflation process projections of household forecasts on realized inflation suggests that households have not recognized this change for the professionals projections of expected inflation on headline inflation have changed but on core inflation have not by contrast projections of realized headline inflation on core have changed sharply

can monetary policy influence long term interest rates it depends i introduction a stated goal of u s monetary policy is to maintain full employment in the u s economy 1 to do so however means the federal reserve must be capable of stabilizing aggregate demand particularly the historically volatile category of investment spending as this form of spending is highly sensitive to long term interest rates one implication of the full employment goal for u s monetary policy is that the federal reserve should be able to influence long term interest rates an important question then is whether u s monetary policy actually has any meaningful influence over long term interest rates a number of studies in recent years have examined this question but have come to different conclusions some studies show monetary policy has a sizeable and statistically significant effect on long term interest rates whereas others show the opposite the uncertainty created by this lack of consensus makes it difficult for the federal reserve to determine its impact on long term interest rates it is our objective in this paper to shed new empirical light on this murky relationship between monetary policy and long term interest rates we do so by looking at monetary policy innovations to the monetary base in an estimated vector autoregression var to see how monetary policy shocks impact the entire term structure of u s treasury interest rates 2 other studies that have used vars to examine this relationship have relied on innovations to the federal funds rate as their measure of monetary policy shocks berument and froyen 2006 berument and froyen 2009 edelberg and marshall 1996 evans and marshall 1998 this approach has become problematic as the federal funds rate has grown to be more predictable in recent times and thus less capable of generating monetary policy surprises in estimated vars our approach does not have this problem our study also has richer results than found in previous studies because we identify shocks to the money multiplier and real money demand in addition to the policy shock to the monetary base this allows us to examine the effect of all three monetary shocks on long term interest rates a final improvement that our study brings to this literature is that it uses long run identifying restrictions previous studies rely on short run contemporaneous restrictions that constrain the short run dynamics of the var our long run restrictions avoid this issue while at the same time imposing long run monetary neutrality on the monetary shocks for these reasons our study provides a fresh take on the relationship between monetary policy and long term interest rates using this approach we find that contrary to what the previous var studies show the federal reserve can meaningfully influence the entire term structure of interest rates we also find however that federal reserve can do so only if it maintains its inflation fighting credibility the rest of the paper proceeds as follows first we review previous findings on this issue and use them to help motivate our study second we outline the empirical methods we use to estimate the relationship between monetary policy shocks and long term interest rates third we discuss our data and construction of endogenous variables fourth we report our findings and examine how the results change over sub periods fifth the robustness of our findings are checked by examining how important the faust and leeper 1997 critique is to our identification strategy finally we conclude by discussing the implications for monetary policy ii previous findings motivating this study over the past decade there has been a spate of studies on the relationship between monetary policy and long term interest rates the methods and findings from this empirical research can be grouped into two categories on one hand there have been a number of studies using single equation models with daily data that find unanticipated changes in the federal funds rate can have a statistically significant and sizeable effect on long term interest rates beechey 2007 berument and froyen 2009 cochrane and piazzesi 2002 ellingsten and soderstrom 2003 ellingsen soderstrom and masseng 2004 gurkaynak sack and swanson 2005 kuttner 2001 poole et al

escaping carbon lock in this article explores the climate policy implications of the arguments made in understanding carbon lock in unruh 2000 which posited that industrial countries have become locked into fossil fuel based energy systems through path dependent processes driven by increasing returns to scale carbon lock in arises through technological organizational social and institutional co evolution culminating in what was termed as techno institutional complex tic in order to resolve the climate problem an escape from the lock in condition is required however due to the self referential nature of tic escape conditions are unlikely to be generated internally and it is argued here that exogenous forces are probably required

expectation traps and discretion abstract we develop a dynamic model with optimizing private agents and a benevolent optimizing monetary authority that cannot commit to future policies we characterize the set of sustainable equilibria and discuss the implications for institutional reform we show that there are equilibria in which the monetary authority pursues inflationary policies because that is what private agents expect we call such equilibria expectation traps alternative institutional arrangements for the conduct of monetary policy which impose limited forms of commitment on the policymaker can eliminate expectation traps journal of economic literatureclassification numbers e31 e42 e50 e51 e58

ethiopian power sector development renewable based universal electricity access and export strategies abstract this paper presents an assessment of alternative long term energy supply strategies for the ethiopian power sector during 2015 2045 using the markal energy system model this study also identifies alternative sustainable energy supply options to meet ethiopia s rising demand for energy while also achieving the policy goals of universal electrification zero greenhouse gas emissions increased electricity exports and improved energy security in all scenarios the results show a large potential for renewable energy technologies such as hydropower solar pv and wind these technologies have implications for neighboring countries in the region and will also affect the agriculture sector in ethiopia hydropower for example is a renewable energy source that can contribute to rural electrification while also providing water to support irrigation expansion an alternative policy scenario prioritizing renewable energy technologies reduces dependence on fossil fuel completely at minimal cost while providing long term environmental benefits expansion of electricity access to the entire population entails large investments in power generation capacity as well as substantial increases in the total system cost of energy production such a scenario would also increase the country s reliance on fossil fuels and geothermal energy sources most alternative policy options show higher investment costs will be required to achieve policy goals in the near term with the exception of the export scenario however the analysis shows long term benefits from investing in energy supply including sustainable energy system development expansion of access to modern sources of energy and the development of a low carbon society

funding for innovation in small firms the role of government abstract this paper examines some of the issues facing innovative small firms the shortage of enterprise funding for such small firms can be explained by the uncertainty associated with such ventures uncertainty which is magnified in the case of hightechnology firms we characterise the uncertainty as an information gap both technological and commercial which is exacerbated by an asymmetry of interest between the founders of a firm and private sector sources of finance we explore the sources of this uncertainty and examine the effect that one government scheme the small firms merit awards for research and technology smart has had in offsetting such problems some suggestions for improvements in policy in the light of the experience of smart are put forward

stuck between a roc and a hard place barriers to the take up of green energy in the uk abstract this paper examines the uk mechanisms for ensuring future investment in renewable energy through consumer adoption of green energy tariffs and the renewable obligation certificate roc system using a national survey and focus groups the stated willingness by uk customers to pay a premium for renewable or green energy and actual take up of such tariffs is assessed substantial differences between willingness to pay for and the adoption of green energy tariffs are reported this disparity is linked to a range of factors including consumer confusion lack of supply complexities of constructing green source tariffs under the roc system and a lack of customer trust it is concluded that the re definition of the green energy market in favour of green source tariffs greater direct compliance with the renewable obligation by addressing supply constraints and efforts in providing clearer information and choices for consumers via a compulsory green energy accreditation scheme are required if willing consumers are to contribute to investment in renewable energy

self fulfilling expectations and the inflation of the 1970s evidence from the livingston survey abstract using survey data on expectations we examine whether the response of monetary policy to sudden movements in expected inflation contributed to the persistent high inflation of the 1970s the evidence suggests that prior to 1979 the fed accommodated temporary shocks to expected inflation which then led to persistent increases in actual inflation we do not find this behavior in the post 1979 data among commonly cited factors oil and fiscal shocks do not appear to have triggered an increase in expected inflation that eventually resulted in higher actual inflation

the price puzzle reconsidered abstract a large literature has employed structural vector autoregressive svar models to investigate the empirical effects of u s monetary policy many of these models regularly produce a price puzzle a rise in the aggregate price level in response to a contractionary innovation to monetary policy unless commodity prices are included conventional wisdom maintains that commodity prices resolve the price puzzle because they contain information that helps the federal reserve forecast inflation i examine a number of plausible alternative indicator variables and find little correlation between an ability to forecast inflation and an ability to resolve the price puzzle additionally a sub sample investigation reveals that evidence of a price puzzle is associated primarily with the 1959 1979 sample period and that most indicators including commodity prices cannot resolve the puzzle over this period

does the time consistency problem explain the behavior of inflation in the united states abstract this paper derives the restrictions imposed by barro and gordon s theory of time consistent monetary policy on a bivariate time series model for inflation and unemployment and tests those restrictions using quarterly us data from 1960 through 1997 the results show that the data are consistent with the implications of the theory for the long run behavior of the two variables indicating that the theory can explain the initial rise and subsequent fall of inflation over the past four decades the results also suggest that the theory must be extended to account more fully for the short run dynamics that appear in the data

asset prices and expected monetary policy evidence from daily data this article explores the relationships among libor gold prices the exchange rate oil prices fed funds futures prices and stock prices at a daily frequency this article examines whether expected monetary policy measured by changes in the prices of fed funds futures contracts reacts to high frequency changes in asset prices and in turn whether asset prices respond to changes in expected monetary policy the article reveals that there are statistically significant relationships between expected us monetary policy and shocks to libor and exchange rates it also reveals that there is no evidence of a systematic relationship between stock prices and expected monetary policy changes splitting the data into expansionary and recessionary periods using nber dating we find results for the expansionary periods that are very similar to the results for the entire period for the periods of recession we find little evidence of significant linkages between markets

policy regimes policy shifts and u s business cycles abstract using an estimated dsge model with monetary and fiscal policy interactions and allowing for equilibrium indeterminacy we find that a passive monetary and passive fiscal policy regime prevailed in the pre volcker period this gave rise to self fulfilling beliefs and unconventional transmission mechanisms of policy shifts unanticipated increases in interest rates increased inflation and output while unanticipated increases in lump sum taxes decreased inflation and output we show that had the monetary policy regime of the post volcker era been in place pre volcker inflation volatility would have been lower by 25 and the rise of inflation in the 1970s would not have occurred

innovation systems and inertia in r d location norwegian firms and the role of systemic lock in abstract this paper seeks to enquire why firms ceteris paribus tend to concentrate their r d activities at home using a systems of innovation si approach we argue that r d inertia is associated with structural inertia and resultant systemic lock in interaction within an si is a self reinforcing mechanism which may or may not lead to ex post efficiency lock in can be efficient when technologies and institutions maintain the competitiveness of firms on the other hand radical innovations or technological discontinuities may require new institutions and resources but systemic lock in may prevent rapid reaction firms can use a voice strategy by intervening to modify the appropriate institutions in the existing si or an exit strategy by seeking alternative si which more closely fit their needs in the case of norway two groups of firms exist group a benefit from a systemic lock in these are large firms in traditional sectors which are highly embedded and around whom the norwegian si has been built these firms engage in voice and loyalty group b are in science based sectors for whom lock in results in inefficiencies and use exit slowly expanding r d abroad to seek competences in technologies not available domestically

does self fulfilment of the inflation expectation exist abstractthis study examines the causal relationship between the actual and expected inflation in the u s using the bootstrap granger full sample causality test and sub sample rolling window estimation test to illustrate the self fulfilment of inflation expectations the full sample result indicates that there is a bidirectional causality between the actual and expected inflation showing the possibility of self fulfilment of inflation expectations which illustrates that inflation is driven by inflation expectation however considering structural changes in two series we find that the short run causal nexus between the actual and expected inflation using full sample data are fraudulent by adopting a time varying rolling window approach to revisiting the dynamic causal relationships this article identifies that the actual inflation has both positive and negative impacts on the expected inflation in distinct sub periods nevertheless inflation expectation exerts only negative effects on the actual inf

fitting observed inflation expectations abstract the paper provides evidence on the extent to which inflation expectations generated by a standard christiano et al 2005 smets and wouters 2003 type dsge model are in line with what observed in the data we consider three variants of this model that differ in terms of the behavior of and the public s information on the central banks inflation target allegedly a key determinant of inflation expectations we find that i time variation in the inflation target is needed to capture the evolution of expectations during the post volcker period ii the variant where agents have imperfect information is strongly rejected by the data iii inflation expectations appear to contain information that is not present in the other series used in estimation and iv none of the models fully capture the dynamics of this variable

the dynamics of innovation from national systems and mode 2 to a triple helix of university industry government relations abstract the triple helix of university industry government relations is compared with alternative models for explaining the current research system in its social contexts communications and negotiations between institutional partners generate an overlay that increasingly reorganizes the underlying arrangements the institutional layer can be considered as the retention mechanism of a developing system for example the national organization of the system of innovation has historically been important in determining competition reorganizations across industrial sectors and nation states however are induced by new technologies biotechnology ict the consequent transformations can be analyzed in terms of neo evolutionary mechanisms university research may function increasingly as a locus in the laboratory of such knowledge intensive network transitions

the role of funding agencies in the cognitive development of science abstract the influence of the policies of funding agencies on cognitive developments in science has never been systematically evaluated in this paper it is endeavoured to gather the knowledge we have on this subject and to answer two questions by what means and processes is the distribution of funding resources transformed into scientific information and knowledge processes who is deciding on the distribution of funds within funding agencies and how is this related to incremental or innovative cognitive developments in science the major argument is that because funding resources contribute significantly to the chances of doing research and therefore to the maintenance or contesting of existing power relations in the scientific field the policy making in funding agencies is the focus of diverse interests the structure norms and interests within funding agencies explain both the divergence in policy output and the often conservative implications with regard to cognitive scientific developments

oil shocks and aggregate macroeconomic behavior the role of monetary policy a recent paper by bernanke gertler and watson 1997 suggests that monetary policy could be used to eliminate any recessionary consequences of an oil price shock this paper challenges this conclusion on two grounds first we question whether the federal reserve actually has the power to implement such a policy for example we consider it unlikely that additional money creation would have succeeded in reducing the fed funds rate by 900 basis points relative to the values seen in 1974 second we point out that the size of the effect that bernanke gertler and watson attribute to oil shocks is substantially smaller than that reported by other researchers primarily due to their choice of a shorter lag length than that used by other researchers we offer evidence in favor of the longer lag length employed by previous research and show that under this specification even the aggressive federal reserve policies proposed would not have succeeded in averting a downturn