This paper explores the reasons for the suboptimal fiscal-monetary policy mix in the euro area in the aftermath of the global financial crisis and ways in which the status quo can be improved. A comparison of fiscal and monetary policies and of economic outcomes in the euro area and the United States suggests that both fiscal and monetary policy in the euro area have been overly tight. Fiscal policy has been hampered by the institutional framework which constrains individual states and lacks instruments to secure an appropriate aggregate stance. ECB monetary policy has been hampered by the distributional effects of balance sheet policies which needed to be adopted at the zero lower bound, and by discretionary decisions taken before the crisis such as the reliance on credit rating agencies for determining collateral eligibility for monetary operations. The compromising of the "safe asset" status of euro area sovereign debt during the crisis complicated fiscal and monetary policy. Changes in the discretionary decisions governing the implementation of monetary policy in the euro area can potentially reduce the distributional effects of policy and improve the fiscal-policy mix and longer-term prospects for the euro area.
{"title":"The fiscal–monetary policy mix in the euro area: challenges at the zero lower bound","authors":"Athanasios Orphanides","doi":"10.1093/EPOLIC/EIAA017","DOIUrl":"https://doi.org/10.1093/EPOLIC/EIAA017","url":null,"abstract":"This paper explores the reasons for the suboptimal fiscal-monetary policy mix in the euro area in the aftermath of the global financial crisis and ways in which the status quo can be improved. A comparison of fiscal and monetary policies and of economic outcomes in the euro area and the United States suggests that both fiscal and monetary policy in the euro area have been overly tight. Fiscal policy has been hampered by the institutional framework which constrains individual states and lacks instruments to secure an appropriate aggregate stance. ECB monetary policy has been hampered by the distributional effects of balance sheet policies which needed to be adopted at the zero lower bound, and by discretionary decisions taken before the crisis such as the reliance on credit rating agencies for determining collateral eligibility for monetary operations. The compromising of the \"safe asset\" status of euro area sovereign debt during the crisis complicated fiscal and monetary policy. Changes in the discretionary decisions governing the implementation of monetary policy in the euro area can potentially reduce the distributional effects of policy and improve the fiscal-policy mix and longer-term prospects for the euro area.","PeriodicalId":43996,"journal":{"name":"Ekonomicheskaya politika","volume":"35 1","pages":"461-517"},"PeriodicalIF":0.5,"publicationDate":"2021-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42864914","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The European Union’s Emissions Trading System (EU ETS) is complemented by a Market Stability Reserve (MSR). After a major revision of the EU ETS in 2018, the MSR effectively makes the supply of allowances responsive to demand. In this paper, we show that a cap-and-trade scheme with an endogenous cap such as the EU ETS produces a Green Paradox. Abatement policies announced early but realized in the future are counter-effective because of the MSR: they increase cumulative emissions. We present the mechanisms in a two-period model, and then provide quantitative evidence of our result for an annual model disciplined on the price rise in the EU ETS that followed the introduction of the MSR. Our results point to the need for better coordination between different policies, such as the ‘European Green Deal’. We conclude with suggestions to improve the workings of an endogenous cap, ahead of the MSR review scheduled for 2021.
{"title":"An Endogenous Emissions Cap Produces a Green Paradox","authors":"R. Gerlagh, R. Heijmans, K. E. Rosendahl","doi":"10.1093/EPOLIC/EIAB011","DOIUrl":"https://doi.org/10.1093/EPOLIC/EIAB011","url":null,"abstract":"\u0000 The European Union’s Emissions Trading System (EU ETS) is complemented by a Market Stability Reserve (MSR). After a major revision of the EU ETS in 2018, the MSR effectively makes the supply of allowances responsive to demand. In this paper, we show that a cap-and-trade scheme with an endogenous cap such as the EU ETS produces a Green Paradox. Abatement policies announced early but realized in the future are counter-effective because of the MSR: they increase cumulative emissions. We present the mechanisms in a two-period model, and then provide quantitative evidence of our result for an annual model disciplined on the price rise in the EU ETS that followed the introduction of the MSR. Our results point to the need for better coordination between different policies, such as the ‘European Green Deal’. We conclude with suggestions to improve the workings of an endogenous cap, ahead of the MSR review scheduled for 2021.","PeriodicalId":43996,"journal":{"name":"Ekonomicheskaya politika","volume":"1 1","pages":""},"PeriodicalIF":0.5,"publicationDate":"2021-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/EPOLIC/EIAB011","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42089731","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Christina Greßer, Daniel Meierrieks, D. Stadelmann
We study the link between temperature and economic development at the sub-national level, employing cross-sectional data from two distinct sources. In contrast to much of the existing cross-country literature on the temperature-income relationship, our setting allows for the inclusion of country fixed effects. Once we account for country fixed effects, we do not find a statistically robust relationship between regional temperature and three different measures of regional economic development (per capita GDP, nightlights and gross cell production). We also test whether temperature is non-linearly related to regional income (with hotter regions being potentially particularly prone to adverse effects of temperature on income) but find no systematic evidence in favor of such a relationship. Finally, we examine whether the effect of temperature on economic development is especially pronounced in poorer regions (e.g., due to weaker adaptation). Again, we find no statistically robust link.
{"title":"The link between regional temperature and regional incomes: Econometric evidence with Sub-National data","authors":"Christina Greßer, Daniel Meierrieks, D. Stadelmann","doi":"10.1093/EPOLIC/EIAB007","DOIUrl":"https://doi.org/10.1093/EPOLIC/EIAB007","url":null,"abstract":"\u0000 We study the link between temperature and economic development at the sub-national level, employing cross-sectional data from two distinct sources. In contrast to much of the existing cross-country literature on the temperature-income relationship, our setting allows for the inclusion of country fixed effects. Once we account for country fixed effects, we do not find a statistically robust relationship between regional temperature and three different measures of regional economic development (per capita GDP, nightlights and gross cell production). We also test whether temperature is non-linearly related to regional income (with hotter regions being potentially particularly prone to adverse effects of temperature on income) but find no systematic evidence in favor of such a relationship. Finally, we examine whether the effect of temperature on economic development is especially pronounced in poorer regions (e.g., due to weaker adaptation). Again, we find no statistically robust link.","PeriodicalId":43996,"journal":{"name":"Ekonomicheskaya politika","volume":" ","pages":""},"PeriodicalIF":0.5,"publicationDate":"2021-02-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/EPOLIC/EIAB007","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44999748","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the effects of legislation in Brazil that banned the right to carry guns and provided for a voter referendum regarding whether to ban the sale of all firearms. Using a regression discontinuity design, I find that gun-related homicides decreased by 12.2% and gunshot wounds that were ‘intended to kill’ by 16.3%, with the reduction of the former being especially pronounced in high-crime areas and among black males. There is no evidence of substitution effect as non-gun-related homicides were not affected. Two pieces of evidence suggest that the mechanism explaining this result is a decrease in the number of people carrying guns in response to the legislation: first, the number of cases of illegal gun carrying decreased and second, only gun-related homicides taking place outside the residence were reduced. Analysis of the subsequent voter referendum, which was defeated by a wide margin, shows stronger support for the complete firearms ban in the areas more affected by gun violence.
{"title":"Fewer guns, less crime: evidence from Brazil","authors":"Rodrigo Schneider","doi":"10.1093/EPOLIC/EIAB005","DOIUrl":"https://doi.org/10.1093/EPOLIC/EIAB005","url":null,"abstract":"\u0000 This paper studies the effects of legislation in Brazil that banned the right to carry guns and provided for a voter referendum regarding whether to ban the sale of all firearms. Using a regression discontinuity design, I find that gun-related homicides decreased by 12.2% and gunshot wounds that were ‘intended to kill’ by 16.3%, with the reduction of the former being especially pronounced in high-crime areas and among black males. There is no evidence of substitution effect as non-gun-related homicides were not affected. Two pieces of evidence suggest that the mechanism explaining this result is a decrease in the number of people carrying guns in response to the legislation: first, the number of cases of illegal gun carrying decreased and second, only gun-related homicides taking place outside the residence were reduced. Analysis of the subsequent voter referendum, which was defeated by a wide margin, shows stronger support for the complete firearms ban in the areas more affected by gun violence.","PeriodicalId":43996,"journal":{"name":"Ekonomicheskaya politika","volume":" ","pages":""},"PeriodicalIF":0.5,"publicationDate":"2021-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/EPOLIC/EIAB005","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47598173","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
European Union (EU) fiscal rules have been suspended until at least the end of 2021. When they are reinstated, they will need to be modified, if only because of the high levels of debt. Various proposals have been made and more are to come, suggesting various changes and simplifications. In this paper, we take a step back and discuss how one should think about debt sustainability in the current and likely future EU economic environment. We argue that, given the complexity of the answer, it is an illusion to think that EU fiscal rules can be simple. But it is also an illusion to think that they can ever be complex enough to accommodate most relevant contingencies. This leads us to propose the abandonment of fiscal rules in favor of fiscal standards, that is, qualitative prescriptions that leave room for judgement together with a process to decide whether the standards are met. Central to this process would be country-specific assessments using stochastic debt sustainability analysis , led by national independent fiscal councils and/or the European Commission. Disputes between member states and the European Commission on application of the standards should preferably be adjudicated by an independent institution, such as the European Court of Justice(or a specialized chamber), rather than by the Council of the EU.
欧盟(EU)财政规则已暂停执行，至少要到2021年底。当它们恢复时，它们将需要被修改，哪怕只是因为高水平的债务。已经提出了各种建议，并将提出更多建议，建议进行各种更改和简化。在本文中，我们退后一步，讨论在当前和未来可能的欧盟经济环境中，人们应该如何思考债务可持续性。我们认为，鉴于答案的复杂性，认为欧盟财政规则可以很简单的想法是一种错觉。但如果认为它们能够复杂到足以适应大多数相关的偶然性，那也是一种错觉。这导致我们建议放弃财政规则，转而采用财政标准，即定性的规定，为判断留出空间，并制定一个决定是否满足标准的过程。这一进程的核心是由国家独立财政委员会和(或)欧洲委员会牵头，利用随机债务可持续性分析对具体国家进行评估。成员国与欧盟委员会(European Commission)之间关于标准应用的争议，最好由一个独立机构裁决，比如欧洲法院(European Court of Justice)(或一个专门法庭)，而不是由欧盟理事会(Council of EU)裁决。
{"title":"Redesigning EU fiscal rules: from rules to standards","authors":"O. Blanchard, Álvaro Leandro, Jeromin Zettelmeyer","doi":"10.1093/EPOLIC/EIAB003","DOIUrl":"https://doi.org/10.1093/EPOLIC/EIAB003","url":null,"abstract":"\u0000 European Union (EU) fiscal rules have been suspended until at least the end of 2021. When they are reinstated, they will need to be modified, if only because of the high levels of debt. Various proposals have been made and more are to come, suggesting various changes and simplifications. In this paper, we take a step back and discuss how one should think about debt sustainability in the current and likely future EU economic environment. We argue that, given the complexity of the answer, it is an illusion to think that EU fiscal rules can be simple. But it is also an illusion to think that they can ever be complex enough to accommodate most relevant contingencies. This leads us to propose the abandonment of fiscal rules in favor of fiscal standards, that is, qualitative prescriptions that leave room for judgement together with a process to decide whether the standards are met. Central to this process would be country-specific assessments using stochastic debt sustainability analysis , led by national independent fiscal councils and/or the European Commission. Disputes between member states and the European Commission on application of the standards should preferably be adjudicated by an independent institution, such as the European Court of Justice(or a specialized chamber), rather than by the Council of the EU.","PeriodicalId":43996,"journal":{"name":"Ekonomicheskaya politika","volume":" ","pages":""},"PeriodicalIF":0.5,"publicationDate":"2021-01-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/EPOLIC/EIAB003","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43883055","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-01-01DOI: 10.18288/1994-5124-2021-3-44-81
M. Elkina
{"title":"Financial Repression and Financial Sector Effi ciency in a General Equilibrium Model","authors":"M. Elkina","doi":"10.18288/1994-5124-2021-3-44-81","DOIUrl":"https://doi.org/10.18288/1994-5124-2021-3-44-81","url":null,"abstract":"","PeriodicalId":43996,"journal":{"name":"Ekonomicheskaya politika","volume":"1 1","pages":""},"PeriodicalIF":0.5,"publicationDate":"2021-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68187728","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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