monetary policy housing and heterogeneous regional markets we quantify the importance of heterogeneity for monetary policy using a new heterogeneous agent var havar model that integrates national monetary financial markets with regional housing markets via the mortgage rate although the havar model has linear regional vars its aggregate impulse responses exhibit two nonlinearities 1 time variation stemming from aggregation over heterogeneous regions and 2 state dependence on initial economic conditions in regions thus monetary policy has long and variable lags because monetary transmission depends on the extent and nature of regional heterogeneity which both vary over time the model is estimated with data for u s regions from 1986 to 1996 and simulated to show how coastal housing booms might influence the efficacy of monetary policy

interpreting the macroeconomic time series facts the effects of monetary policy existing theory and evidence on the effects of monetary policy are reviewed substantial room for disagreement among economists remains new evidence based on multivariate time series studies of several countries is presented while certain patterns in the data consistent with effective monetary policy are strikingly similar across countries others particularly the tendency of interest rate increases to predict high inflation are harder to reconcile with effective monetary policy

regime switching approach to monetary policy effects even though monetary policy has kept interest rates at historically low levels the japanese economy has experienced long lasting recessions since the 1990s in this paper japanese data are employed to conduct an empirical analysis of changes in the effects of monetary policy on the real economy it is found that monetary policy effects vary depending on the phase of the business cycle and the lending attitudes diffusion indices more precisely policy effects are larger in recession but diminish in extreme recession and monetary policy is more effective when lenders attitudes are severe but less effective when they are excessively severe

child labor and multinational conduct a comparison of international business andstakeholder codes increasing attention to the issue of child labor has been reflected in codes of conduct that emerged in the past decade in particular this paper examines the way in which multinationals business associations governmental and non governmental organizations deal with child labor in their codes with a standardized framework it analyzes 55 codes drawn up by these different actors to influence firms external societal behavior the exploratory study helps to identify the main issues related to child labor and the use of voluntary instruments such as codes of conduct apart from a specific indication of the topics covered by the code especially minimum age requirements this also includes monitoring systems and monitoring parties most important to company codes are the sanctions imposed on business partners in case of non compliance severe measures may be counterproductive as they do not change the underlying causes of child labor and can worsen the situation of the child workers by driving them to more hazardous work in the informal sector this underlines the importance of a broad rather than a restrictive approach to child labor in codes of conduct the paper discusses the implications of this study offering suggestions for future research

changing effects of monetary policy in the u s evidence from a time varying coefficient var we estimate a time varying coefficient var model for the us economy to analyse i if the effect of monetary policy on output has been changing systematically over time and ii if monetary policy has asymmetric effects over the business cycle we find that the impact of monetary policy shocks has been gradually declining over the sample period 1962 to 2002 as some theories of the monetary transmission mechanism imply in addition our results indicate that the effects of monetary policy are greater in a recession than in a boom

market concentration macroeconomic uncertainty and monetary policy abstract this paper studies the effect of market structure and macroeconomic uncertainty on the transmission of monetary policy we motivate our analysis with a simple model which predicts that 1 investment and production in more concentrated sectors are more affected by demand shocks and 2 high uncertainty makes investment and production more sensitive to demand shocks the empirical analysis estimates the effect of monetary shocks on sectoral output for different sectors in the us using a structural vector autoregressive var approach the results are generally consistent with the theoretical predictions

is the response of output to monetary policy asymmetric evidence from a regime switching coefficients model this paper investigates regime switching in the response of u s output to a monetary policy action we find substantial statistically significant time variation in this response that corresponds to high response and low response regimes we then investigate whether the timing of the regime shifts are consistent with three particular manifestations of asymmetry by modeling the transition probabilities governing the switching process as functions of state variables we find strong evidence that policy actions taken during recessions have larger effects than those taken during expansions we find less evidence of asymmetry related to the direction or size of the policy action

the slave trade and the origins of mistrust in africa in a recent study nunn 2008 examines the long term impacts of africa s slave trade he finds that the slave trade which occurred over a period of more than 400 years had a significant negative effect on long term economic development although the article arguably identifies a negative causal relationship between the slave trade and income today the analysis is unable to establish the exact causal mechanisms underlying this reduced form relationship in this article we examine one of the channels through which the slave trade may affect economic development today combining contemporary individual level survey data with historical data on slave shipments by ethnic group we ask whether the slave trade caused a culture of mistrust to develop within africa initially slaves were captured primarily through state organized raids and warfare but as the trade progressed the environment of ubiquitous insecurity caused individuals to turn on others including friends and family members and to kidnap trick and sell each other into slavery sigismund wilhelm koelle 1854 p e h hair 1965 charles piot 1996 we hypothesize that in this environment a culture of mistrust may have evolved which may persist to this day we show that current differences in trust levels within africa can be traced back to the transatlantic and indian ocean slave trades combining contemporary individual level survey data with historical data on slave shipments by ethnic group we find that individuals whose ancestors were heavily raided during the slave trade are less trusting today evidence from a variety of identification strategies suggests that the relationship is causal examining causal mechanisms we show that most of the impact of the slave trade is through factors that are internal to the individual such as cultural norms beliefs and values jel j15 n57 z13

loss aversion and the asymmetric transmission of monetary policy there is widespread evidence that monetary policy exerts asymmetric effects on output over contractions and expansions in economic activity while price responses display no sizeable asymmetry to rationalize these facts we develop a dynamic general equilibrium model where households utility depends on consumption deviations from a reference level below which loss aversion is displayed state dependent degrees of real rigidity and elasticity of intertemporal substitution in consumption generate competing effects on output and inflation contractions face the central bank with higher responsiveness of output to interest rate changes as well as a flatter aggregate supply schedule

the legacies of forced freedom china s treaty ports abstract this paper investigates the long run development of china s treaty ports from the mid eighteenth century until today focusing on a sample of prefectures on the coast or on the yangtze river i document the dynamic development paths of treaty ports and their neighbors in alternate phases of closedness and openness i also provide suggestive evidence on migration and sector wise growth to understand the advantage of treaty ports in the long run

post crisis business investment in the euro area and the role of monetary policy business investment in the euro area strongly declined during the global financial crisis and the sovereign debt crisis it has not yet rebounded to its pre crisis trend despite the very expansiona

inflation and output dynamics with state dependent pricing decisions this paper studies a state dependent pricing model in which firms face a fixed cost of changing their pricing plans a pricing plan specifies an entire sequence of time varying future prices allowing firms to choose a pricing plan rather than a single price generates inflation inertia in the response of the economy to small changes in the growth rate of money allowing firms to choose when to change their pricing plan generates a non linear response of inflation and output to small and large changes in the money growth rate the non linear solution method also reveals that the model generates an asymmetric response of output and inflation to monetary expansions and contractions

asymmetric nominal flexibility and economic fluctuations recent research has produced strong evidence that supports the asymmetric effects of positive and negative money supply shocks using quarterly data for the united states the evidence of cover 10 suggests that positive money supply shocks do not have an effect on output while negative money supply shocks do the asymmetric impact of demand shocks on real output growth is not addressed in the context of mainstream business cycle theories which include the equilibrium explanation pioneered by lucas 21 and neo keynesian models emphasizing nominal wage rigidity 14 15 or price rigidity 2 in the context of lucas s paradigm agents are scattered in informationaly isolated islands across the economy an unexpected positive or negative change in aggregate demand may be misperceived by agents as being specific to their markets in the case of a positive demand shock producers and workers expand the output and labor supplied to take advantage of the perceived increased demand in their island similarly agents are expected to contract the output produced in response to a perceived reduction in the demand for their output this scenario does not provide an obvious theoretical channel through which the slope of the short run supply curve can be differentiated depending on the direction of the change in aggregate demand in the context of a contractual wage rigidity framework the nominal wage is fixed for a duration that is determined by contractual agreements according to this framework a change in aggregate demand deviates the real wage from its market clearing value for a duration that is determined by the contract length a positive demand shock will raise the price level decrease the real wage and in turn cause an expansion in labor demand and the output produced in the short run a negative demand shock in contrast raises the realized real wage which has a negative impact on labor demand and the output produced in the short run in the absence of any stipulation in contracts that differentiates the degree of wage rigidity in response to a positive and negative demand shock the slope of the short run supply curve is not likely to be differentiated based on the direction of change in aggregate demand in the context of the sticky price explanation of business cycles the price level across sectors of the economy is fixed for a specific duration a change positive or negative in aggregate demand will be absorbed in output as long as the price level remains fixed in the short run in the absence of any stipulation that differentiates the upward and downward stickiness of the price

the informational content of prices when policy makers react to financial markets abstract when can policy makers use policy relevant information from financial market prices and how does policy affect price informativeness i analyze a novel setting with noise where a policy maker tries to infer information about a state variable from prices to improve policy decisions and policy in turn affects asset values i derive a necessary and sufficient condition for the possibility of information revelation in equilibrium which might not be possible if the policy reaction to prices punishes traders for revealing their information if the policy maker is uninformed then policy objectives do not change price informativeness but they do if the policy maker has independent information about the state i also analyze policy maker transparency and find that policy makers with objectives having a large impact on asset values should publish their information before trading to make prices more informative in other cases intransparency can be optimal

the historical slave trade and firm access to finance in africa access to finance helps explain the link between the historical african slave trade and current gross domestic product we first present mistrust weakened institutions and ethnic fractionalization as plausible historical channels linking the slave trade to modern finance and development we then show i the slave trade is consistently linked to reduced access to the formal and trade credit needed by modern firms ii this shortage particularly reduces capital investment in smaller firms not in business groups and iii the slave trade cannot explain most other business obstacles suggesting that long term societal shocks are exceptionally important for finance received december 16 2014 editorial decision june 29 2017 by editor philip strahan

did colonization matter for growth an empirical exploration into the historical causes of africa s underdevelopment we investigate the impact of 20th century european colonization on growth we 5nd that colonial heritage as measured by the identity of the metropolitan ruler and by the degree of economic penetration matters for the heterogeneity of growth performances in africa colonial indicators are correlated with economic and sociopolitical variables that are commonly employed to explain growth and there are growth gains from decolonization colonial indicators also add signi5cant explanatory power to worldwide growth regressions and are correlated with the sub saharan africa and the latin america dummies c

nonlinear autoregressive leading indicator models of output in g 7 countries this paper studies linear and nonlinear autoregressive leading indicator models of business cycles in g 7 countries our models use the spread between short term and long term interest rates as leading indicators for gdp we examine data admissibility by determining whether these models have the ability to produce time series with classical cycles that resemble the observed classical cycles in the data and then we ask whether this data admissibility lends itself to better predictions of the probability of recession copyright 2007 john wiley sons ltd

credit growth monetary policy and economic activity in a three regime tvar model we employ a threshold vector autoregression tvar methodology in order to examine the nonlinear nature of the interactions among credit market conditions monetary policy and economic activity we depart from the existing literature on the subject along two dimensions first we focus on a model in which the relevant threshold variable describes the state of economic activity rather than credit market conditions second in contrast to the existing tvar literature which concentrates exclusively on single threshold models we allow for the presence of a second threshold which is overwhelmingly supported by all relevant statistical tests our results indicate that the dynamics of the interactions among credit market conditions monetary policy and economic activity change considerably as the economy moves from one phase of the business cycle to another and that single threshold tvar models are too restrictive to fully capture the nonlinear nature of those interactions the impact of most shocks tends to be largest during periods of sub par economic growth and smallest during times of moderate economic activity by contrast credit risk shocks have the largest impact when output growth is considerably above it long term trend

history institutions and economic performance the legacy of colonial land tenure systems in india we analyze the colonial land revenue institutions set up by the british in india and show that differences in historical property rights institutions lead to sustained differences in economic outcomes areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post independence period than areas in which these rights were given to the cultivators these areas also have significantly lower investments in health and education these differences are not driven by omitted variables or endogeneity problems they probably arise because differences in historical institutions lead to very different policy choices

the asymmetric effects of monetary policy a nonlinear vector autoregression approach this paper tests for nonlinearity in a standard vector autoregression including output prices and money supply using an estimation strategy that is consistent with a wide range of structural macroeconomic models shocks to the money supply are found to have stronger output effects and weaker price effects when output growth is initially low positive and negative monetary shocks are found to have nearly symmetric effects in addition there is some evidence that shocks of different magnitudes have asymmetric effects these results are consistent with the view that the aggregate supply curve is convex

multinational corporations economic and human rights impacts on developing countries a review and research agenda developing countries are attracting a significant portion of global foreign direct investments governments of such countries often compete fiercely for attracting multinational corporations mncs in the expectation of the advantages they will bring to their economies often prioritising economic goals over fundamental human rights for a long time economists have analysed the economic impacts of mncs while a parallel strand of work in political science business ethics and international law investigates the repercussions of mnc operations on human rights despite the significant relatedness and complementarities these two bodies of literature have so far poorly interacted this paper addresses this limitation and systematically analyses and integrates existing micro level empirical evidence on the economic and human rights impacts of mncs on developing countries it provides a critical analysis of what is known and highlights what we do not know about the factors that mediate the positive and or negative impacts of mnc operations on host developing countries based on a critical analysis of the literature it discusses avenues for future research in this field and sets the grounds for a new interdisciplinary research agenda on this subject

colonialism and modern income islands as natural experiments abstract using a new database of islands throughout the atlantic pacific and indian oceans we find a robust positive relationship between the number of years spent as a european colony and current gdp per capita we argue that the nature of discovery and colonization of islands provides random variation in the length and type of colonial experience we instrument for length of colonization using variation in prevailing wind patterns we argue that wind speed and direction had a significant effect on historical colonial rule but do not have a direct effect on gdp today the data also suggest that years as a colony after 1700 are more beneficial than earlier years we also find a discernable pecking order among the colonial powers with years under u s british french and dutch rule having more beneficial effects than spanish or portuguese rule our finding of a strong connection between modern income and years of colonization is conditional on being colonized at all since each of the islands in our da

climate and the emergence of global income differences the latitude gradient in comparative development is a striking fact as one moves away from the equator economic activity rises while this regularity is well known it is not well understood in the present paper we take a step towards unpacking this gradient perhaps the strongest correlate with absolute latitude is the intensity of ultraviolet radiation uv r which epidemiological research has shown to be a cause of a wide range of diseases we establish that uv r is strongly and negatively correlated with economic activity both across and within countries we propose and test a mechanism that links uv r to current income differences via the impact of disease ecology on the timing of the take off to sustained growth

the asymmetry of the impact of oil price shocks on economic activities an application of the multivariate threshold model this paper applies the multivariate threshold model to investigate the impacts of an oil price change and its volatility on economic activities changes in industrial production and real stock returns the statistical test on the existence of a threshold effect indicates that a threshold value does exist using monthly data of the us canada and japan during the period from 1970 to 2002 we conclude i the optimal threshold level seems to vary according to how an economy depends on imported oil and the attitude towards adopting energy saving technology ii an oil price change or its volatility has a limited impact on the economies if the change is below the threshold levels iii if the change is above threshold levels it appears that the change in oil price better explains macroeconomic variables than the volatility of the oil price and iv if the change is above threshold levels a change in oil price or its volatility explains the model better than the real interest rate

the enso effect and asymmetries in wheat price dynamics summary climate has historically played a critical role in the development of nations primarily due to its intrinsic linkage with agricultural production and prices this study examines one such relationship between the better known and most talked about climate anomaly el nino southern oscillation enso and the international prices of wheat one of the most produced and consumed grain cereals in the world the enso price relationship moreover is assumed to be characterized by nonlinear dynamics because of the known asymmetric nature of enso cycles as well as that of wheat prices this study applies a vector smooth transition autoregressive vstar modeling framework to monthly spot prices of wheat from the united states the european union australia canada and argentina as well as the sea surface temperature anomalies from the nino3 4 region which serves as a proxy for the enso variable results show that overall wheat prices tend to increase after la nina events and decrease after el nino events the regime dependent dynamics are apparent with more amplified price responses after la nina shocks and with more persistent price responses during the la nina conditions this is consistent with the economics of storage wherein shocks related to expected supply and demand are known to have a more pronounced effect in a low inventory regime findings of this study have strong implications for development economics as they point to an additional channel of adversity due to the enso related climate shocks moreover the enso induced price fluctuations are likely to affect the dynamics of international food and cash programs during extreme episodes of this climate anomaly

labour relations and ethical dilemmas of extractive mnes in nigeria south africa and zambia 1950 2000 this article examines the ethical characteristics of mnes employee relations in developing countries specifically it addresses various ethical issues relating to labour relations and trade unions in extractive industries in nigeria south africa and zambia data collected in these countries indicate that criticisms against mnes relating to labour issues and labour practices in developing countries are not lessening the discussion is lent focus and direction through the analysis of critical incidents from the perspectives of various stakeholders government oil and mining companies and leaders of trade unions tensions over pay expatriate employments as against the locals negotiation rights and employees well being are evident the argument advanced is that the mnes operating in the extractive industries of africa will have to improve their relations with local employees in order to bridge the legitimacy gaps that exist an improved mutual understanding between the mnes and trade unions is required for both actors to have a smooth working relationship

are economic time series asymmetric over the business cycle it has long been argued that major cyclical variables such as the unemployment rate display an asymmetric behavior over various phases of the business cycle the paper provides a statistical test for this hypothesis using the framework of finite state markov processes i implement a test to see if the behavior of the unemployment rate is characterized by sudden jumps and slower drops it is argued that the framework provided in the paper can also be used to test other sample path properties of economic time series

characterizing nonlinearities in business cycles using smooth transition autoregressive models during the past few years investigators have found evidence indicating that various time series representing business cycles such as production and unemployment may be nonlinear in this paper it is assumed that if the time series is nonlinear then it can be adequately described by a smooth transition autoregressive star model the paper describes the application of these models to quarterly logarithmic production indices for 13 countries and europe tests reject linearity for most of these series and estimated star models indicate that the nonlinearity is needed mainly to describe the responses of production to large negative shocks such as oil price shocks

the asymmetric effects of monetary shocks the case of turkey this paper examines whether there is an asymmetry in the effects of positive versus negative and small versus big money supply shocks and whether the effects of the shocks on output and prices vary over the business cycles in the case of turkey negative shocks to money are found to have greater output and smaller price effects compared to the effects of positive shocks irrespective of the initial state of the economy it is also found that monetary shocks of different size affect output growth and inflation rates proportionately these findings can be interpreted as evidence for the view that the short run aggragate supply curve is convex in such a country like turkey

do recessions permanently change output abstract this paper examines whether negative innovations to gnp are more or less persistent than positive innovations we find that once we allow for the impulse response of gnp to be asymmetric negative innovations to gnp are observed to be much less persistent than positive ones in particular the effect of a recession on the forecast of output is found to be negligible after only eight to twelve quarters while the effect of a positive shock is estimated to be persistent and amplified over time our results may therefore help reconcile two antagonistic views about the nature of business cycle fluctuations

the mis behaviour of the aggregate price level this paper investigates the response of the price level to random monetary shocks through a model of the fixed cost of changing a nominal price it shows that in an inflationary environment an expansionary monetary shock is accommodated faster than a contractionary monetary shock furthermore when the average rate of monetary expansion increases the lag in response to a positive shock decreases the study also proves that the relationship between the expected rate of inflation and the variance of real prices is positive only above a critical level of expected inflation the most striking result in this area appears in the work of caplin and spulber 1987 they show that in the aggregate when inflation is monotone stickiness disappears even when all firms follow a strict s s rule in their model since firms are uniformly distributed discontinuous price adjustment at the firm level does not create stickiness at the aggregate level caballero and engel 1992 extend this analysis to incorporate idiosyncratic shocks they show that in the presence of monotone idiosyncratic shocks the long run stationary distribution of prices is the uniform distribution but in the short run when the distribution of prices is arbitrary aggregate stickiness can result from firms discontinuous price adjustments in the present work the focus shifts i use a model where aggregate stickiness emerges naturally from firms discontinuous price setting to investigate the effects of the rate of inflation on aggregate stickiness this work shows that aggregate stickiness is negatively correlated with the rate of inflation the higher the rate of inflation the less sticky the response of the aggregate price level with respect to positive nominal shocks and the closer the economy approaches the caplin and spulber model therefore when modeling a dynamic inflation tax one must account not only for the decrease in the monetary base but also for the increase in the speed at which the aggregate price level 889

searching for a better proxy for business cycles with supports using us data this study revises the original current depth of recession cdr to prove that the modified cdr mcdr is more suitable as a threshold variable than the cdr we rebuild the cdr indicator and adjust its positive and negative ranges with the estimation results of the threshold autoregressive tar model we construct two tar models utilizing cdr and mcdr as threshold variables respectively estimation and test results of the root mean square error theil s inequality coefficient and the diebold mariano dm 1995 test suggest that mcdr performs better as a threshold variable than cdr

irrigation and autocracy irrigated agriculture makes societies more likely to be ruled by authoritarian regimes ancient societies have long been thought to follow this pattern we empirically show that irrigation affects political regimes even in the present to avoid endogeneity we use geographical and climatic variation to identify irrigation dependent societies we find that countries whose agriculture depended on irrigation are about six points less democratic on the 21 point polity2 scale than countries where agriculture has been rainfed we find qualitatively similar results across regions within countries we argue that the effect has historical origins irrigation allowed landed elites in arid areas to monopolize water and arable land this made elites more powerful and better able to oppose democratization consistent with this conjecture we show that irrigation dependence predicts land inequality both at the country level and in premodern societies surveyed by ethnographers

nonlinearities in the u s corn ethanol oil gasoline price system we use a smooth transition vector error correction model to assess price relationships within the u s ethanol industry monthly ethanol corn oil and gasoline prices from 1990 to 2008 are used in the analysis results indicate the existence of long run relationships among the prices analyzed strong links between energy and food prices are identified

estimating asymmetric output cost of lowering inflation for australia the purpose of this paper is to estimate the output cost associated with lowering inflation for australia the paper is particularly motivated by a strand of theoretical and empirical evidence in the literature suggesting nonlinearity in the output inflation relationship namely a nonlinear phillips curve to accommodate this potentially important departure from linearity a vector autoregression var model of output inflation and the terms of trade is augmented with logistic smooth transition autoregression specifications my empirical results indicate that the model captures the nonlinear features present in the data well based on this nonlinear approximation the output costs for reducing inflation are found to vary depending critically on the state of the economy the size of intended inflation change and whether policymakers seek to disinflate or prevent inflation from rising this implies that inferences based on the conventional linear phillips curve may provide misleading signals about the cost of lowering inflation and thus the appropriate policy stance

who was colonized and when a cross country analysis of determinants the process of colonization has shaped the economic and demographic contours of the modern world in this paper we study the determinants of the occurrence and timing of colonization of non european countries by western european powers of particular interest is the role of early development measures that are known to be strong correlates of present day levels of income we show that non european societies with longer histories of agriculture and statehood and higher levels of technology adoption in 1500 were less likely to be colonized and tended to be colonized later if at all we also find that proximity to the colonizing powers disease environment and latitude are significant predictors of the occurrence and timing of colonization although their impacts are less robust to choice of country sample our models have high explanatory power and their support for the significance of early development is robust to the use of alternative indicators of early development and disease to the use of instruments to focus on the exogenous component of early development and to the joint estimation of the colonization and timing equations to correct for potential selection bias

asymmetric responses of consumer spending to energy prices a threshold var approach abstract we document asymmetric responses of consumer spending to energy price shocks using a threshold vector autoregressive model estimated with bayesian methods on u s data with high and low real energy inflation regimes positive energy price shocks have a greater negative effect on consumption compared with the increase in consumption that arises from negative energy price shocks for large shocks the cumulative consumption responses are three to five times greater for positive than negative shocks in disaggregated spending data the asymmetric responses are strongest for durable goods consumption but asymmetries are also present in the responses of nondurables and services consumption

are the effects of monetary policy asymmetric huntley schaller by building on the hamilton 1989 markov switching model we examine questions like does monetary policy have the same effect in expansions and recessions given that the economy is currently in a recession does a fall in interest rates increase the probability of an expansion does monetary policy have an incremental effect on the growth rate within a given state or does it only affect the economy if it is sufficiently strong to induce a state change e g from recession to expansion as suggested by models with sticky prices or finance constraints interest rate changes have larger effects during recessions jel e52 e32 much of the recent work in macroeconomics has proceeded under the assumption that variables follow linear stochastic processes with constant coefficients as a result some of the richness of the burns mitchell analysis such as its focus on asymmetries between recessions and expansions may well have been lost blanchard and fischer 1989 7 i introduction for decades macroeconomists have debated whether monetary policy has the same effect on real output in expansions and recessions as far back as the 1930s keynes and pigou debated whether monetary policy would have less effect on output during a severe economic downturn in the 1960s there were active debates on a very different proposition namely whether the rightward portion of the aggregate supply curve was vertical so that monetary policy would have less effect on real output during expansions in this article we provide a new type of evidence on whether monetary policy has different effects depending on whether the economy is in an expansion or recession empirical evidence on this issue is particularly relevant in light of new theoretical work in macroeconomics that predicts asymmetric effects of demand shocks conditional on the state of the economy two examples of this work are s s type models of price adjustment and models in which there are agency costs of financial intermediation 1 the intuition for the latter class of models is simple 2 when there is information asymmetry in financial markets agents may behave as if they were constrained for a variety of reasons these finance constraints are more likely to bind during recessions when the net worth of agents is low an increase in interest rates will then have two effects on investment the standard effect of increasing the cost of capital and therefore reducing investment demand and an additional effect of reducing liquidity e g by increasing debt service obligations and thus reducing investment demand for constrained agents as a result monetary policy actions that change interest rates will have greater effects during a recession 3 the s s type price adjustment models of ball and mankiw 1994 caballero and engel 1992 and tsiddon 1993 lead to a convex aggregate supply curve and therefore also imply that monetary policy will have stronger effects during recessions one of the more frequently cited empirical papers on the potentially asymmetric effects of monetary policy is cover 1992 which finds evidence that positive monetary shocks have different effects from negative monetary shocks we are looking at a different type of asymmetry namely between booms and recessions we study asymmetries using an extension of the markov switching model developed by hamilton 1989 estimated over the period 1955 93 in hamilton s econometric specification the growth rate of output depends on a state variable that corresponds to an expansion or recession this approach has several advantages first unlike linear projections it allows for nonlinearities and asymmetries second in estimating the recession coefficients it gives greater relative weight to observations that most clearly correspond to recessions and similarly for the expansion coefficients

union wage settlements during a disinflation this paper examines the role of union wage contracts in the persistence of inflation and the implication of these contracts for the problem of disinflation in the united states a quantitative model of overlapping con tracts explicitly oriented toward the major union sector is developed the model takes account of expectations of future wage price and employment conditions as in more aggregated models that have been used in macroeconomic research in addition the distribution of workers according to contract length as well as deferred wage increases and escalator clauses are explicitly used in the model the main aim of the model is to determine the constraints which these contracts impose on disinflation paths the model indicates that the maximum speed of disinflation is extremely slow in the early phases if a rise in unemployment is to be avoided but increases considerably before the new lower rate of inflation is reached the disinflation path is considerably slower than that observed after hyperinflation periods however the existence of a path of inflation reduction raises questions about whether the institution of union wage con tracts is really the direct cause of costly disinflations or whether their influence works indirectly by raising credibility problems about a monetary disinflation this abstract was borrowed from another version of this item

an empirical characterization of the dynamic effects of police spending on violent and property crime the study estimates the dynamic effects of shocks to police expenditures on measures of violent and property crime rates using annual u s state level data for the period 1960 2015 we employ a structural panel var model and achieve identification by imposing the restriction that police spending responds to structural shocks to crime with at least a lag of 1 year results indicate that a shock to police spending leads to a persistent and significant decreases in violent and property crime rates and b significant and persistent negative impacts on crime rates in periods of high crime but little impacts in periods of low crime variance decompositions show that shocks to police spending account for moderate to large proportions of the variability of u s state level crime rates our findings are robust across separate measures of violent and property crime rates as well as to the inclusion of additional variables to the baseline panel var model jel k42

international exchanges as the basis for conceptualizing ethics in international business extant business ethics literature available for application to international business demonstrates some variety but no comprehensive principles while the domains of both international business and business ethics are expanding they are also becoming increasingly divergent at the same time the primacy accorded to the multinational enterprise in both fields ignores the socio cultural and political embeddedness of economic activities and multiple agencies in international business individuals firms nations etc some international business theorists have offered the view that international exchange should be the central building block for theories on international business in this paper it is argued that international exchange could be the fundamental unit of analysis for international business ethics as well the potentially unifying features of exchange norms and ethical principles leads the author to develop some core exchange ethics principles that are tested on three recent international business practices

colonial legacies and economic growth much of the work on colonialism has been theoretical or anecdotal in this paper i close the gap between the literature on development and new growth theory by testing the effect of colonization on subsequent growth and development in a sample of 63 ex colonial states from 1961 1990 i find that colonies that were held for longer periods of time than other countries tend to perform better on average after independence finally i show that the level of education at the time of independence can help to explain much of the development gap between the former british and french colonies in africa

the mission human capital transmission economic persistence and culture in south america this article examines the long term consequences of a historical human capital intervention the jesuit order founded religious missions in 1609 among the guarani in modern day argentina brazil and paraguay before their expulsion in 1767 missionaries instructed indigenous inhabitants in reading writing and various crafts using archival records as well as data at the individual and municipal level i show that in areas of former jesuit presence within the guarani area educational attainment was higher and remains so by 10 15 250 years later these educational differences have also translated into incomes that are 10 higher today the identification of the positive effect of the guarani jesuit missions emerges after comparing them with abandoned jesuit missions and neighboring franciscan guarani missions the enduring effects observed are consistent with transmission mechanisms of structural transformation occupational specialization and technology adoption in agriculture

business cycle asymmetry a deeper look this paper distinguishes two types of asymmetry in business cycles deepness and steepness deepness is defined as the characteristic that troughs are further below trend than peaks are above most previous research has focused exclusively on steepness which refers to cycles in which contractions are steeper than expansions a test for deepness is proposed and applied to u s post war quarterly unemployment real gnp and industrial production evidence of deepness is found for unemployment and industrial production while the evidence for real gnp is weaker previous evidence of steepness in unemployment is confirmed

state dependent transmission of monetary policy in the euro area we estimate a logit mixture vector autoregressive model describing monetary policy transmission in the euro area over the period 1999 2015 in contrast to other classes of nonlinear vector autoregressive models regime affiliation is neither strictly binary nor binary with a transition period and based on multiple variables we show that monetary policy transmission in the euro area can be described as a mixture of two states in both states output and prices are found to decrease after contractionary monetary policy shocks however the effects of monetary policy are less enduring in the crisis state

asymmetric effects of positive and negative money supply shocks this paper examines whether positive and negative money supply shocks have symmetric effects on output the results are consistent with the hypothesis that positive money supply shocks do not have an effect on output while negative money supply shocks do have an effect on output this finding is independent of whether or not expected money is assumed to affect output the results reported in this paper imply that the fed could increase the growth rate of real output by reducing the standard deviation of unexpected changes in the money supply

financial stress regimes and the macroeconomy some financial stress events lead to macroeconomic downturns while others appear to be isolated to financial markets we identify financial stress regimes using a model that explicitly links financial variables to macro economic outcomes the stress regimes are identified using an unbalanced panel of financial variables with an embedded method for variable selection our identified stress regimes are associated with corporate credit tightening and with nber recessions an exogenous deterioration in our financial conditions index has strong negative effects in economic activity and negative amplification effects on inflation in the stress regime these results are obtained with a novel factor augmented vector autoregressive model with smooth transition regimes fastvar

monetary policy effectiveness and stock market cycles in asean 5 this article examines the asymmetric effects of monetary policy on real output in bull and bear phases of stock market in five asean economies malaysia singapore indonesia the philippines and thailand using the recently developed pooled mean group pmg technique stock market cycles are identified by employing markov switching models and the rule based nonparametric approach estimating the models using monthly data from 1991 1 to 2011 12 the results show that monetary policy measured by short term interest rate has a negative and statistically significant long run effect on real output in bull and bear market periods while the effects are stronger in bear periods than bulls in the short run there is no statistically significant relationship between monetary policy and real output these results are consistent with finance constraints capital market imperfection models that predict that monetary policy is more effective during bear periods than bulls