Carnegie-Rochester Conference Series on Public Policy最新文献

The paper discusses the choice between inflation targeting and monetary targeting for the Eurosystem, the announced Eurosystem strategy, the appropriate framework for policy decisions, exchange rate management in the EMU, and Eurosystem accountability and transparency. The announced monetary strategy is deficient, since it proposes a prominent role for an essentially irrelevant money-growth indicator in analysis and communication, but will keep secret the inflation forecast that will, in practice, be the decisive input in policy decisions. Effective outside monitoring and evaluation of Eurosystem policy decisions seem to require published inflation forecasts and Governing Council minutes and voting records.

This paper examines the process of European political integration. We start with a political-economy model of monetary policy, illustrating a general principle: economic integration requires setting up European institutions endowed with the authority to enact Europe-wide policies. On the other hand, when countries can take advantage of scale effects thanks to economic integration, the need for large countries is reduced. Thus increased economic integration reduces the need for political integration in Europe. To reconcile these views, we propose a model for the optimal allocation of prerogatives across levels of government. When the provision of public goods is characterized by cross-border spillovers, some centralization of policies is needed to internalize the externality. These gains from centralization must be traded-off against the costs from imposing the same policies upon heterogeneous groups. The optimal allocation of prerogatives results from this trade-off. Using our model as a benchmark, we analyze the institutional incentives at play for the allocation of political prerogatives in Europe and conclude that the EU has gone too far on most issues.

This paper reviews the assumptions and methodologies underlying “EMU probability calculators,” which infer from financial data the probability of specific countries joining the European Monetary Union. Some historical evidence is presented in support of the expectations hypothesis for intra-European interest-rate differentials underlying most calculators, while various potential biases are deemed negligible. The various EMU calculators differ primarily in their scenarios for intra-European interest-rate differentials conditional upon EMU not occurring. This paper also discusses what can be inferred from financial data regarding future policies of the European Central Bank.

How much risk-sharing takes place between regions within countries, between countries internationally, and what are the lessons for EMU? We study these questions based on regional data from the U.S., Canada, the UK, and Italy, and national data from an international sample of 23 OECD countries, including all 15 EU members, and do so with the aid of a modified version of a model by Asdrubali, Sørensen, and Yosha. In conclusion, we find that even though the surrender of monetary policy will reduce the capacity of the members of EMU to smooth shocks via macroeconomic policy, the regime will promote smoothing of shocks via market channels.

Social security system old-age insurance systems are devices for the sharing of income risks of elderly people with others. Risks can be shared intergenerationally (with the young of the same country), intragenerationally (with other elderly of the same country), or internationally (with foreigners).

Barriers to individuals themselves sharing their risks intergenerationally, intragenerationally, or internationally are described. Optimal design of government-sponsored social security systems is considered in light of these barriers. Alternative benefits and contributions formulas for pay-as-you-go social security systems are defined and compared with existing and proposed formulas in terms of their ability to fulfill the government's role in promoting risk-sharing. Benefits for each retired person may be tied to that person's lifetime income without causing (as with the U.S. benefits formula today) aggregate benefits for all elderly today to be tied to their past aggregate income.