monetary policy with asset backed money we study the use of asset backed money in a neoclassical growth model with illiquid capital a mechanism is delegated control of productive capital and issues claims against the revenue it earns these claims constitute a form of asset backed money the mechanism determines i the number of claims outstanding ii the dividends paid to claim holders and iii the structure of redemption fees we find that for capital rich economies the first best allocation can be implemented and price stability is optimal however for sufficiently capital poor economies achieving the first best allocation requires a strictly positive rate of inflation in general the minimum inflation necessary to implement the first best allocation is decreasing in capital wealth

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

the monetary approach to exchange rate determination under rational expectations the dollar deutschmark rate abstract this paper reformulates the monetary approach after ascertaining that a money demand function with a partial adjustment mechanism had more empirical support than a money demand function which assumed instantaneous stock adjustment the resulting exchange rate equation is estimated by two rational expectations techniques the parameter estimates are reasonable and are robust to the estimation technique used to different specifications of the driving processes and to changes in the estimation period the structural model outperforms the random walk model and its own unconstrained equivalent a pure time series equation in outof sample forecasts

pricing free bank notes abstract during the pre civil war period us banks issued distinct private monies called bank notes a bank note is a perpetual risky non interest bearing debt claim with the right to redeem on demand at par in specie this paper investigates the pricing of this private money taking into account the enormous changes in technology during the period namely the introduction and rapid diffusion of the railroad a contingent claims pricing model for bank notes is proposed and tested using monthly bank note prices for all banks in north america together with indices of the durations and costs of trips back to issuing banks constructed from pre civil war travelers guides evidence is produced that market participants properly priced the risks inherent in these securities suggesting that wildcat banking was not common because of market discipline

can currency competition work abstract can competition among privately issued fiat currencies work only sometimes and partially to show this we build a model of competition among privately issued fiat currencies a purely private arrangement fails to implement an efficient allocation even though it can deliver price stability under certain technological conditions although currency competition creates problems for monetary policy it is possible to design a policy rule that uniquely implements an efficient allocation

why interest rates react to money announcements an explanation from the foreign exchange market abstract when the fed announces a money supply greater than had been expected interest rates rise why one explanation is that the market raises its estimate of the future rates of money growth and inflation and bids up nominal interest rates we offer contrary evidence on such days the dollar appreciates not depreciates an alternative explanation is that the market perceives the change in the money stock as a transitory fluctuation that the fed will reverse in the future the anticipated future tightening raises today s real interest rate causes a capital inflow and appreciates the dollar the result in fact observed

trust and communication mechanisms for increasing farmers participation in water quality trading trust and communication barriers have contributed significantly to the lethargic performance of many point nonpoint source water quality trading programs farmers are often reluctant to participate despite direct financial incentives yet the literature lacks a comprehensive investigation of how the social context affects trading outcomes we draw on social embeddedness theory to analyze three mechanisms of communicating with farmers and conduct a case study analysis of 12 water quality trading programs we find that employing trustworthy third parties or embedded ties may reduce farmers reluctance to participate although the most effective mechanism ultimately depends on local conditions and program objectives

on the economics of private money abstract the application of laissez faire to the monetary system is a key ingredient of important proposals for monetary reform both new and old that seek to discipline government creation of money through competition this paper provides an overview of issues to be encountered in the construction of theoretical models of private monetary economies including consideration of market imperfections that have been hypothesized to arise in these systems further some descriptive history of the less regulated monetary systems of 19th century new york is undertaken with an emphasis on discussing the nature of market generated banking and monetary institutions in light of these critiques

currency competition a hayekian perspective on international monetary integration currency internationalization is examined from the vantage point of friedrich hayek s contributions in the 1970s compared with received commentaries in which only an idealized case for private money is attributed to hayek this paper underscores other dimensions of hayek s work on money and currency hayek s case for choice in currency draws on his theory of competition anticipates competition between government suppliers of fiat money accommodates many aspects of international monetary integration and embodies a distinctive approach to monetary independence choice of exchange rate regime and the transnationalization of currency hayekian predictions are outlined for future developments in currency competition

the ban on indexed bonds 1933 77 in a recent article in this review nissan liviatan and david levhari attempt to explain the phenomenon that in spite of recent marked inflationary trends the important capital markets have not developed a significant free private enterprise market for cost of living linked bonds p 366 they note that the familiar theoretical complete dominance of indexed bonds over nonindexed bonds holds unambiguously only in an economy in which there are no nominal assets they demonstrate that borrowers may in theory insist on hedging the inflation risk on their nonindexed cash balances by issuing some nonindexed bonds at a discount that makes them attractive in spite of the risk they impose on lenders their model leads them to conclude that indexed bonds might not completely dominate nonindexed bonds however they do not claim that their model explains the phenomenon they set out to explain why is it that the free market to use their expression has come up with virtually no indexed bonds at all fortunately a simple explanation for the nonexistence of indexed bonds in the united states was provided two years

local rulemaking enforcement and compliance in state owned forest commons abstract the literature on rule compliance is divided between those urging greater autonomy for stakeholders in rulemaking processes and those arguing for increased enforcement however recent experimental evidence highlights the potential for synergies between participatory rulemaking and enforcement this paper therefore seeks to build upon these findings to explore the relationship between local rulemaking local monitoring and compliance in field settings the results which draw upon data about the behavior of 93 fuelwood user groups in state owned forest commons in asia africa and latin america suggest that the average group is more likely to comply with rules when local rulemaking is combined with local monitoring however in some contexts it appears that local rulemaking in particular and other institutional arrangements in general may yield similar results

information learning and the stability of fiat money abstract we analyze the stability of monetary regimes in an economy where fiat money is endogenously created by the government information about its value is imperfect and learning is decentralized we show that monetary stability depends crucially on the speed of information transmission in the economy our model generates a dynamic on the acceptability of fiat money that resembles historical accounts of the rise and eventual collapse of overissued paper money it also provides an explanation of the fact that despite its obvious advantages the widespread use of fiat money is only a recent development

optimal monetary policy in open versus closed economies an integrated approach in clarida et al 1999 hereafter cgg we presented a normative analysis of monetary policy within a simple optimization based closedeconomy framework we derived the optimal policy rule and among other things characterized the gains from commitment also we made precise the implications for the kind of instrument feedback rule that a central bank should follow in practice in this paper we show how our analysis extends to the case of a small open economy openness complicates the problem of monetary management to the extent the central bank must take into account the impact of the exchange rate on real activity and inflation how to factor the exchange rate into the overall design of monetary policy accordingly becomes a central consideration here we show that under certain conditions the monetary policy design problem for the small open economy is isomorphic to the problem of the closed economy that we considered earlier hence all our qualitative results for the closed economy carry over to this case openness does affect the parameters of the model suggesting quantitative implications though the general form of the optimal interest rate feedback rule remains the same as in the closedeconomy case for example how aggressively a central bank should adjust the interest rate in response to inflationary pressures depends on the degree of openness in addition openness gives rise to an important distinction between domestic inflation and consumer price inflation as defined by the cpi to the extent that there is perfect exchange rate pass through we find that the central bank should target domestic inflation and allow the exchange rate to float despite the impact of the resulting exchangerate variability on the cpi kosuki aoki 1999 gali and tommaso monacelli 2000

oil price stabilization and global welfare abstract oil price stabilization polices are adopted extensively in developing countries some argue that developed economies especially the us may gain from these policies through trade this paper studies this issue in a two country model with dollar currency pricing we find that the optimal level of oil price stabilization chosen by developing countries and its implications for global welfare depend critically on whether monetary policy can effectively respond to oil shocks in an environment without monetary shocks when optimal monetary policies are considered there is no role for oil price stabilization in developing countries however to make the oil price stabilization policy redundant optimal monetary policy is not necessary some non optimal endogenous monetary policies satisfying certain conditions can also make the developing countries choose zero oil price stabilization the results change when there are monetary shocks even with optimal monetary policies the developing countries will choose a positive level of oil price stabilization however due to dollar currency pricing the us actually loses from the stabilization policy our results are well supported by the quantitative analysis in a full fledged dynamic stochastic general equilibrium model

the use of trade measures against illicit fishing economic and legal considerations illegal unreported and unregulated iuu fishing activities are a threat for both the marine environment and society by undermining effective management systems iuu fishing activities affect economic performance social welfare and compliance decisions so far traditional control and surveillance like measures have had a limited success in deterring iuu fishing so this paper aims at throwing light on several forms of trade related initiatives that can be more effective the paper suggests that both the effectiveness and further development of such measures strongly depend on the way they are designed especially with respect to their trade law compatibility however current discussions on future trade based policy developments within some key economic areas suggest that trade measures are a sound option for policy makers while the paper focuses on fisheries issues it is also expected to inform the international debate surrounding the sustainable use of natural resources in general as many sectors face similar biodiversity and trade challenges e g tropical forest mangroves etc

a re assessment of the relationship between real exchange rates and real interest rates 1974 1990 abstract this paper uses cointegration techniques and error correction models to re examine the link between real exchange rates and real interest rate differentials the results show that real exchange rates and real interest rates are nonstationary however they are not cointegrated with each other on the other hand the dynamic models indicate that there might be a long run relationship between these variables but this cannot be verified the final conclusion is that there is little empirical evidence in support of a systematic relationship and this result is robust across exchange rates time periods and measures of expected inflation

financial futures markets and tabular standards the goal of a monetary system that provides assurance against fluctuations in purchasing power is ancient one frequently suggested and repeatedly rediscovered proposal is to attain that result by linking the currency unit to a price index that device was proposed in the nineteenth century by w stanley jevons and by alfred marshall who named it a tabular standard it has been repeatedly rediscovered in marshall s version it required no governmental action except the issuance of a price index number something which has of course become widely prevalent individuals would simply in their own interest be led to make contracts specified not in terms of the nominal number of monetary units the number of dollars but in terms of the purchasing power equivalent of the present number of monetary units that is the contract would call for paying a given number of dollars multiplied by the ratio of a price index as of that date to the date on which the contract was entered into despite the theoretical attractiveness of this idea and the absence of any effective hindrance to its adoption it has never become popular it is a particular version of the generally attractive idea of widespread indexation yet indexation has been extensive only when inflation has been extremely high and variable as in some south american countries and israel and has generally fallen into disuse when inflation has been conquered the only area in which there are any large number of indexed contracts is the area of labor contracts and even here the use of indexation is by no means dominant and tends to rise and decline as inflation rises and declines

integration and productivity satellite tracked evidence this paper introduces satellite tracked real time data from a large fishing firm managing its vertically horizontally and geographically linked ships to study the causal impact of integration on total factor productivity tfp after the firm acquired its vertically unintegrated contractual fish suppliers tfp increased 16 among newly integrated ships whereas it did not vary for already owned ships some classic mechanisms such as increased effort due to monitoring do not systematically explain tfp gains under integration whereas evidence on hold up threat alleviation is mixed importantly enhanced knowledge transfer and hierarchical authority enacting productivity improving operational practices among newly integrated ships are more likely explanations of the results this paper was accepted by bruno cassiman business strategy

dynamic use of closures and imperfectly enforced quotas in a metapopulation the dynamic efficiency of closures in bioeconomic systems depends upon stock levels and in situ values that evolve over time and on relative costs of implementation a model of a harvested metapopulation is presented in which second best reduction of harvest from open access levels using input quotas balances monitoring costs against dynamic benefits of mitigating overharvesting temporary or permanent closures though generally still second best are preferable to quotas under certain conditions as demonstrated for a representative patch and time period interactions between patches are discussed numerical solutions illustrate comparative dynamics of closure use and show their potential benefits in a dynamic regulatory path

managing interacting species in unassessed fisheries abstract this paper addresses the management of multispecies fisheries and suggests the use of restricted fishing policies as an interesting option for unassessed fisheries as is the case within developing countries specifically we consider a predator prey system under two potential management policies an unrestricted regime where agents can compete to harvest from both species and a second one where they are allowed to harvest only predators the performance of both policies is compared from an ecological and an economic point of view for a sufficiently large number of agents or for strong biological interaction parameters the assumed restricted fishing policy yields both higher long run stock levels and profits thus this contribution suggests that such a policy while requiring weaker monitoring governance than instruments based on outputs such as quotas or taxes would meet environmental and economic objectives finally several features of the analysis are discussed including targeting prey instead of predator and the issue of compliance

economic man as a moral individual first there is the broadly ethical question how should one live to emphasize this connection is not the same as asserting that people will always act in ways they will themselves morally defend but only to recognize that ethical deliberations cannot be totally inconsequential to actual human behavior sen 1988 3 4 i introduction it is a plausible proposition that some people s behavior is affected significantly by moral considerations a growing literature in economics and related disciplines reviewed and analyzed in earlier work by two of the authors goldfarb and griffith 1991a griffith and goldfarb 1991b explores the possibility and desirability of incorporating these moral considerations into the economic analysis of individual behavior 1 a variety of approaches to introducing moral considerations into economic analysis have been put forward by contributors within economics including sen 1974 1977 1988 hirschman 1985 phelps 1975 vanberg 1988 brunner 1987 frank 1987 1988 hirshleifer 1985 mueller 1986 and schotter 1981 among others among related disciplines the philosophers gauthier 1986 and ulman margalit 1977 the sociologists coleman 1987 and etzioni 1986 1988 and the political scientist axelrod 1984 all present relevant analyses as our earlier review indicated these authors pursue three competing approaches introducing moral values as part of preference functions introducing moral norms or rules as constraints and introducing such norms as decision rules for coping with strategic interaction gaming situations we propose here a concrete method for including moral values in the economist s model of preferences our method maintains the standard economic framework of an agent maximizing his or her utility subject to constraints but modifies the utility function so that the enjoyment or utility from consuming a given set of goods varies in a lumpy or discontinuous way depending on the concurrent moral content of the individual s behavior moreover it offers an analytical representation of the linkage between preferring to act morally and the individual s being faced with possibly significant differences in constraints because of such moral considerations 2 the paper proceeds as follows section ii indicates where our approach fits in the existing literature incorporating moral values into preference functions section iii sets forth our approach to specifying these utility functions section iv suggests some extensions section v presents further discussion and conclusions ii relation to the literature while not directly inspired by the occupational choice literature our approach can be usefully viewed as an application of the economic model of occupational choice to modelling moral preferences 3 this approach helps fill an analytical gap between hochman and rodgers 1969 small modification of the standard microeconomic framework and the more extensive departures suggested by etzioni 1986 and sen 1974 1977 our model helps fill this gap by providing what we think is an intuitively appealing treatment of the discontinuous or lumpy content of important classes of moral decisions hochman and rodgers 1969 present an analysis of the possible relationship between moral and other values in the context of charitable transfers their analysis is now a standard ingredient in intermediate microeconomics textbooks 4 their interdependent utility approach puts impoverished individual y s income or utility into individual x s utility function one then analyzes the conditions under which individual x will either himself transfer resources to individual y or vote for a government program to make such a transfer this approach allows transfers that vary continuously from zero to very large amounts of money with decisions involving trade offs at the margin for our purposes this marginal trade off feature so useful for analyzing charitable transfers presents a very significant limitation when attempting to apply the model to a wider range of moral behavior

where to draw lines stability versus efficiency what kinds of assets should financial intermediaries be permitted to hold what kinds of liabilities should they be allowed to issue should a government or a central bank offer explicit deposit insurance or implicit deposit insurance by acting as a lender of last resort this paper reviews how tensions involving stability versus efficiency and regulation versus laissez faire have for centuries run through macroeconomic analysis of these questions

the evolution of monetary policy rules abstract this article examines the evolutionary forces involved in the development of monetary policy rules over time considering in particular how these relate to proposals made by milton friedman and walter bagehot the lines between money and credit and between monetary and fiscal policy are given special focus

endogenous supply of fiat money abstract we consider whether reputation concerns can discipline the behavior of a long lived self interested agent who has a monopoly over the provision of fiat money we obtain that when this agent can commit to a choice of money supply there is a monetary equilibrium where it never overissues we show however that monetary equilibria with no overissue do not exist when there is no commitment this happens because the incentives this agent has to maintain a reputation for providing valuable currency disappear once its reputation is high enough more generally we prove that in the absence of commitment overissue happens infinitely often in any monetary equilibrium we conclude by showing that imperfect memory can restore the positive result obtained with commitment

a stochastic dominance analysis of yen carry trades abstract yen carry trades have made headline news for over a decade we examine the profitability of such trades for the period 2001 2009 yen carry trades generated high mean returns and sharpe ratios prior to the recent financial crisis they continued to outperform major stock markets for the full sample period given the non normality of carry trade returns we apply non parametric tests based on stochastic dominance sd to evaluate whether the high returns of yen carry trades are compatible with risk as reflected in returns on us and global stock market indices we apply a general test for sd developed recently by linton maasoumi and whang 2005 to six currencies as well as portfolios of these currencies for a large class of risk averse investors profits from yen carry trades cannot be attributed to risks

has government any role in money abstract recent interest in monetary reform has been sparked by the emergence of a world irredeemable paper money system in light of this interest we review the current validity of four good reasons friedman advanced in 1960 to rationalize government intervention we conclude that the forces that produced government involvement in the past will persist deregulation of financial intermediaries is desirable on grounds of market efficiency though it is an open question whether government should continue as lender of last resort we expect that the present world fiat money standard will neither degenerate into hyperinflation nor revert to a commodity standard

taylor rules and the deutschmark dollar real exchange rate we explore the link between an interest rate rule for monetary policy and the behavior of the real exchange rate the interest rate rule in conjunction with some standard assumptions implies that the deviation of the real exchange rate from its steady state depends on the present value of a weighted sum of inflation and output gap differentials the weights are functions of the parameters of the interest rate rule an initial look at german data yields some support for the model

further investigations into the factors affecting compliance with uk fishing quotas this paper reports the results of a more recent study of quota compliance in the u k fishery that was investigated in an earlier article in this journal hatcher et al 2000 the study collected more detailed data on fishermen s perceptions and experience of enforcement and sought to measure the financial incentive to cheat in addition whereas the earlier study used a binary approach to modelling the data we employed an orderedresponse model and included a number of scale regressors without transformation although we still find some evidence of normative influences on violation levels the results suggest that conventional economic incentives predominate in the fishery

accounting for exchange rate variability in present value models when the discount factor is near 1 a well known stylized fact about nominal exchange rates among low inflation advanced countries particularly u s exchange rates is that their logs are approximately random walks michael i mussa 1979 is most frequently cited for observing this regularity in a famous pair of papers richard a meese and kenneth rogoff 1983a b found that the structural models of the 1970 s could not beat a random walk in explaining exchange rate movements recently some authors menzie chinn and meese 1995 nelson mark 1995 mark and donggyu sul 2001 have argued that the models can outforecast the random walk at long horizons but a comprehensive recent study by yin wong cheung et al 2003 documents that no model consistently outperforms a random walk why one obvious explanation is that the macroeconomic variables that determine the exchange rate themselves follow random walks if the log of the nominal exchange rate is a linear function of forcing variables that are random walks then it will inherit the random walk property the problem with this explanation is that the economic fundamentals proposed in the most popular models of exchange rates do not in fact follow simple random walks one resolution to this problem is that there may be some other fundamentals ones that have been proposed in some models but are not easily measurable or ones that have not yet been proposed at all that are important in determining exchange rates if these unobserved fundamentals follow random walks and dominate the variation in exchange rate changes then exchange rates will nearly be random walks even if the standard observed fundamentals are not in engel and west 2003a hereinafter ew we propose an alternative explanation we consider linear models of the exchange rate that are in the asset market approach to exchange rates these models emphasize the role of expectations of future economic fundamentals in determining the current exchange rate the exchange rate expressed as the home currency price of foreign currency in this paper can be written as a discounted sum of the current and expected future fundamentals

exchange rate predictability the main goal of this article is to provide an answer to the question does anything forecast exchange rates and if so which variables it is well known that exchange rate fluctuations are very difficult to predict using economic models and that a random walk forecasts exchange rates better than any economic model the meese and rogoff puzzle however the recent literature has identified a series of fundamentals methodologies that claim to have resolved the puzzle this article provides a critical review of the recent literature on exchange rate forecasting and illustrates the new methodologies and fundamentals that have been recently proposed in an up to date thorough empirical analysis overall our analysis of the literature and the data suggests that the answer to the question are exchange rates predictable is it depends on the choice of predictor forecast horizon sample period model and forecast evaluation method predictability is most apparent when one or more of the following hold the predictors are taylor rule or net foreign assets the model is linear and a small number of parameters are estimated the toughest benchmark is the random walk without drift

laissez faire monetary theorists in late nineteenth century america economists have recently begun to reconsider many forms of regulation of money and banks from what may be termed a laissez faire perspective some have questioned fundamentally the rationale for any government role this development raises an interesting question for historians of thought what intellectual support did the concept of a free market monetary system receive in the 19th century the heyday of classical liberalism and laissez faire thought this paper takes up the question by critically surveying american monetary writings from the last half of the 19th century 2 we find that the idea of a laissez faire monetary policy was never very popular in the united states though it did have proponents whose work was often insightful most of the relevant literature was written in response to consequences wrought by the monetary legislation of the civil war that legislation included not only the national bank acts 1863 4 but also an ancillary measure effective 1866 placing a prohibitive tax on state bank notes these laws forced banks of issue to become national banks and thus to buy federal bonds as collateral for their notes which had the intended effect of creating an extra demand for the federal government s wartime debt in addition congress authorized the issue of legal tender greenback currency by the treasury a frequent theme in the post bellum monetary literature was the alleged deficiency or inelasticity of the currency supply some the greenbackers and silverites wanted the government to increase its contributions to the money supply others especially toward the end of the century argued for the establishment of a centralized agency with special powers of note issue a handful of writers renewed the radical jacksonians campaign for laissez faire in money and banking 3 in their view the defects of existing arrangements could best be solved by deregulation of banking and by removal of the federal government from the business of supplying money

taylor rules with real time data a tale of two countries and one exchange rate abstract using real time data that reflects information available to monetary authorities at the time they are formulating policy we find that estimated taylor rules based on revised and real time data differ more for germany than for the u s taylor rules using real time data suggest differences between u s and german monetary policies and taylor rules for the u s using inflation forecasts are nearly identical to those using lagged inflation rates evidence of out of sample predictability for the dollar mark nominal exchange rate with forecasts based on taylor rule fundamentals is only found with real time data and does not increase if inflation forecasts are used

normative and social influences affecting compliance with fisheries regulations economic models of regulatory compliance in fisheries usually assume an instrumental determination of individual behavior in which the decision to comply or to violate depends primarily on the expected monetary costs and benefits policy implications tend as a result to focus only on deterrence that is increasing the expected monetary costs of violation more complete models of compliance behavior take into account factors such a social influence moral values and the perceived legitimacy of regulations and the regulatory authority the paper describes an investigation into the non monetary factors affecting compliance with output quota restrictions among fishermen in the united kingdom

interpreting new evidence about china and u s silver purchases abstract this paper offers a reinterpretation of the influence on china of america s silver policy in the early 1930 s recently compiled evidence about events in china are described and interpreted in light of a model of free banking under a commodity standard our interpretation is that the u s silver purchase program did not set off a chain of bad economic events which eventually forced china off silver and onto a fiat standard rather china was forced off silver by its own government which wanted to make itself the beneficiary of the capital gain associated with the appreciation of silver and to relieve itself of the restrictions that are imposed on government finance by a commodity standard

the characteristics of a monetary economy a keynes schumpeter approach mainstream monetary theory considers money only as an instrument meant to facilitate trading without having any effect on income or on the evolution of the economic system the aim of this paper is to elaborate a monetary theory capable of supporting the thesis of money non neutrality based on the arguments developed by keynes and schumpeter the synthesis of the theories of these two great economists will be formulated starting from the two points which are common in the views of keynes and schumpeter first in contrast with mainstream theory keynes and schumpeter state that the diffusion of a fiat money induces a radical modification into the way in which the economic system works second when keynes and schumpeter describe the reasons why money and financial aggregates are not neutral they highlight the fundamental role of the credit market and of banks in contrast with the mainstream theory they do not consider the credit market as the mirror image of the goods market

exchange rate stabilization in the erm identifying european monetary policy reactions abstract we develop the structural var models for european countries france denmark and germany during the erm period to examine the monetary policy reactions especially the within erm exchange rate stabilization in addition to analyzing the impulse responses and variance decomposition we present the full monetary reaction function in an interpretable manner without introducing additional assumptions the results suggest some asymmetry in exchange rate stabilization non german exchange rate stabilization is stronger than german exchange rate stabilization but do not support the hypothesis that german monetary policy was independent of the erm

milton friedman s monetary economics and the quantity theory tradition abstract this article provides a selective review of milton friedman s contributions to monetary economics focusing on five areas in particular the demand for money the joint historical and empirical work with anna j schwartz the theoretical and empirical analyses of the phillips curve monetary policy and monetary dynamics

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

term structure evidence on interest rate smoothing and monetary policy inertia abstract numerous studies have used quarterly data to estimate monetary policy rules or reaction functions that appear to exhibit a very slow partial adjustment of the policy interest rate the conventional wisdom asserts that this gradual adjustment reflects a policy inertia or interest rate smoothing behavior by central banks however such quarterly monetary policy inertia would imply a large amount of forecastable variation in interest rates at horizons of more than 3 months which is contradicted by evidence from the term structure of interest rates the illusion of monetary policy inertia evident in the estimated policy rules likely reflects the persistent shocks that central banks face

private production of scrip money in the isolated community this paper examines the appearance of one type of privately produced currency which had the generic label scrip this money appeared at widely different times and places in the united states between 1820 and 1940 in spite of federal laws prohibiting its issue the most sophistic ated and best developed example of scrip seems to have occurred in th e coal mining regions of appalachia especially in west virginia thi s experience and its implications for monetary behavior are examined here copyright 1987 by ohio state university press

risk aversion experimental evidence from south african fishing communities we estimate the risk attitudes of a large sample of individuals from various fishing communities along the west coast of south africa female fishers and rights holders are found to be more risk averse than their male counterparts while rights holders are found to be less risk averse relative to subjects without fishing rights risk attitudes are found to be correlated with compliance with fisheries regulations in particular a greater degree of risk aversion translates into a reduction in compliance furthermore in the case of gender female fishers and rights holders are more likely to comply with fisheries regulations

using taxes to deter illegal fishing in itq systems we study the effects of different tax schemes used in fisheries management in combination with an individual transferable quota system we focus on the effects of taxes on equilibrium quota prices and on violations under the assumption that enforcement to induce compliance is imperfect and costly the use of taxes is motivated by the regulator s need to recover costs for enforcement activities we propose the use of a tax on the price of the processed products based on its impact on violations and the information that is required to implement it we also show that this tax has a double pay off for enforcement because it reduces the demand for illegal fishing and increases revenue for enforcement activities without producing a deadweight loss in the quota market we present an application of our model to the case of the red shrimp fishery in chile in our simulation example a tax of 7 on the price of fish exports could sufficiently reduce harvest demand and generate enough funding to completely eliminate quota violations which in the absence of taxes can be more than 100 of the total allowable catch at the same time this tax could increase the equilibrium quota price by 19

the resource cost of irredeemable paper money since 1971 no major currency has a formal link to a commodity for the first time in history every currency is wholly irredeemable not as a temporary expedient but as a permanent matter monetary economists have generally treated irredeemable paper money as involving negligible real resource costs compared with a commodity currency to judge from recent experience that view is clearly false as a result of the decline in long term price predictability a key question for the future is what if any substitute for a commodity standard will emerge as a long term anchor for the price level

the transition from barter to fiat money how did it become possible to exchange apparently valueless pieces of paper for goods this paper provides an equilibrium account of the transition between barter and fiat money regimes the explanation relies on the intervention of a self interested government that must be able to promise credibly to limit the issue of money to achieve credibility the government must offset the benefits of seigniorage by internalizing some of the macroeconomic externalities generated by the issue of fiat money the government s patience and the extent of its involvement in the economy are key determinants of whether the transition can be accomplished copyright 1995 by american economic association

optimal governing instrument operation level and enforcement in natural resource regulation the case of the fishery most regulation studies have used industry output or inputs as the control variable s but these are only indirectly controlled by government action through its choice of governing instrument enforcement procedure and penalty structure and the operational level of each a model is developed which demonstrates how profit maximizing firms will react to these control variables taking into account the benefits extra production and costs possible penalties of noncompliance and the ability to avoid detection of noncompliance the optimal operation level for two sets of control variables is derived and discussed

explaining non compliance in the norwegian coastal cod fishery an application of the multinomial logit establishing motive is central to the analysis of criminal behaviour this article analyses the range of motives for noncompliant behaviour among coastal cod fishermen a multinomial logit model is employed to analyse the reasons that underlie various motives the four motives compared in this study are economic technological and social and motives caused by bureaucracy and legitimacy problems the economic motive is found to be most important for coastal fishermen however the cross sectional data indicate that motives vary with fishing gear vessel length and fishermen s age the results indicate that identifying motives for noncompliant behaviour is not straightforward but is important for reducing the extent of infringements of the regulations fishermen who use gill net seine and long line for example are more often motivated to noncompliance by technical problems and bureaucracy than hand jig fishers the study suggests that in order to prevent noncompliance behaviour the authorities manageme

which fundamentals drive exchange rates a cross sectional perspective standard present value models suggest that exchange rates are driven by expected future fundamentals implying that exchange rates contain information about future fundamentals we test this key empirical prediction of present value models in a sample of 35 currency pairs ranging from 1900 to 2009 employing a variety of tests we find that exchange rates have strong and significant predictive power for nominal fundamentals inflation money balances nominal gdp whereas predictability of real fundamentals and risk premia is much weaker and largely confined to the post bretton woods era overall we uncover ample evidence that future macro fundamentals drive current exchange rates

putting the new open economy macroeconomics to a test abstract this paper explores one way to extend the new open economy macroeconomics in an empirical direction adapting maximum likelihood procedures it estimates and tests an intertemporal small open economy model with monetary shocks and nominal rigidities results offer mixed support for a benchmark model where prices are assumed to be sticky in the currency of the buyer price stickiness seems to be an important element as overall results are poorer for versions of the model in which prices either are flexible or are sticky in the currency of the producer the benchmark model does a better job explaining some variables than others in particular it does a poor job explaining exchange rate movements