Asymmetric Policy Research Articles

Effects of asymmetric policies to achieve emissions reduction on energy trade: A North American perspective

Effects of asymmetric policies to achieve emissions reduction on energy trade: A North American perspective

Algeria's pathway to COP28 and SDGs: Asymmetric impact of environmental technology, energy productivity, and material resource efficiency on environmental sustainability

This study examines the asymmetric effects of material resource efficiency (MRE), energy productivity (EP), and environmental technology (ENT) on environmental sustainability (ES) in Algeria from 1990/Q1 to 2022/Q4. Using a nonlinear autoregressive distributed lag model (NARDL), we find that both positive and negative shocks to both MRE and ENT contribute to ES, highlighting their effectiveness. Interestingly, positive EP shocks have a stronger mitigating effect compared to negative shocks. This suggests a magnified benefit during periods of efficiency gains. Additionally, asymmetric causality analysis verifies a causal link between MRE, EP, ENT, and ES. Given these results, it is recommended that Algerian policymakers should prioritize investments in MRE and ENT while emphasizing policies that enhance EP due to its magnified benefit on ES. Asymmetric policy responses for green practices alongside alignment with SDGs 7, 8, 12 and COP-28 objectives will optimize Algeria's ES.

Multi-Criteria Evaluation of the Institutional and Tax Environment for Business in the EU Economies

The purpose of this study is to evaluate the institutional and tax environment for businesses in 21 countries of the European Union (EU), using a multi-criteria analysis and, in particular, the PROMETHEE II method, based on thirteen evaluation criteria and the ranking of the European economies. Through the research, the importance of factors related to the efficiency of the tax administration, the tax capacity of the country, the growth rate of the economy, the quality of institutions, the level of corruption, the tax burden, the time of tax compliance and the political stability of the country is studied, in the formation of an attractive environment for the development of entrepreneurship in the EU economies. Moreover, the results of the analysis revealed the existence of significant fiscal and institutional differences between the EU economies under investigation, regarding the development of entrepreneurship. These differences are due to the size of the economy, the institutions, the history, the economic crises of each country and a wide range of dissimilar policy recommendations, which reflect asymmetric policy responses. The study concludes by offering theoretical and political recommendations to improve the institutional and fiscal environment in EU economies so that entrepreneurship can play an important role in improving the economic and social situation of a country.

Climate policy options: A comparison of economic performance

Countries are increasingly willing to implement climate policy. However, many countries prefer policy instruments other than carbon pricing. In this paper, we implement carbon taxes, feebates, subsidies and regulation in a computable general equilibrium (CGE) model. This allows quantifying the trade-offs between policy options for the major emitters. We find that in the electricity sector, where technology alternatives are very substitutable, the different policy instruments generate similar outcomes. In the energy-intensive and trade-exposed sectors, where substitution is much more difficult, carbon pricing provides the highest flexibility and thus lowest cost. Further, we provide the first analysis of asymmetric policies, that is the simultaneous use of different policy instruments by the major emitters. Using regulation or subsidies instead of carbon pricing in the electricity sector allows countries to gain small amounts of market shares internationally. Applying regulation to the energy-intensive and trade-exposed sectors, however, backfires by costing regulating countries market shares.

Housing Boom‐Bust Cycles and Asymmetric Macroprudential Policy

AbstractIn this paper, I argue that occasionally binding borrowing constraints are a source of nonlinearity that warrant an appropriate nonlinear macroprudential policy response. Nonlinear policy responses likely better capture the spirit of macroprudential policy. I show that an asymmetric macroprudential policy rule, which lowers the borrowing limit more aggressively during credit booms, obtains better economic outcomes compared to an optimized symmetric rule that is typically studied in the literature. An asymmetric policy response reduces output and inflation tail risks, generating not only better economic stabilization but also positive externalities to monetary policy.

Do turbulent business environments shape asymmetric trade policy responses? Insights into the Covid-19 pandemic and the Great Recession

Today's pandemic and the Great Recession are the most turbulent moments of the 21st century. The aim of the paper is to explore the pattern of response through mixes of harmful trade policy interventions during these two systemic crises.The descriptive assessment focuses on two broad categories of measures, i.e. import-related and export-related harmful interventions. Some stylized facts emerged from this analysis and conclude that the two major crises led to different responses from governments, driven by specific reasons and needs. These patterns of response challenge the future of international trading system and the behavior of companies in the global business environment. Therefore, this research provides valuable information not only for the business community, but also for policymakers.

Asymmetric Effects of Fiscal Deficit Financing and Inflation Dynamics in Ghana

Fiscal Deficit Financing (FDF) has been unsustainably high in Ghana and this has led to unstable and high inflation episodes since 1980. The FDF averaged 4.6% from 2005-2011 and 6.9% to 2012-2018, while inflation averaged 11.0% and 13.1% relative to medium-term to long-term inflation target of 8.0% in the same periods, respectively. Previous studies on deficit financing-inflation nexus in Ghana have primarily focused on linear and symmetric relationship, thereby ignoring the asymmetric policy effects of FDF on inflation dynamics. Disregarding the asymmetry of FDF could impact negatively on efforts of Bank of Ghana in forecasting and controlling inflation effectively. To address this problem, this study was therefore designed to investigate the asymmetric policy effects of FDF on inflation dynamics in Ghana over the period 1980-2018. The fiscal theory of the price level provided the theoretical framework. The Non-linear Autoregressive Distributed Lag (NARDL) econometric methodology was deployed to examine the asymmetric effects of FDF on inflation dynamics. The paper found that FDF had asymmetric effects on inflation dynamics in Ghana as the positive outcome of FDF had a significant positive asymmetric effect of 29.0% on inflation while its negative outcome had a relatively less asymmetric effect of 22% on inflation dynamics, suggesting that consolidating fiscal policy was disinflationary. The paper finally recommends that fiscal authorities should adopt consolidating and prudent fiscal policies that could lead to fiscal solvency and sustainability, which could potentially moderate the effect of FDF on inflation dynamics.

Asymmetric reinforcement learning facilitates human inference of transitive relations

Humans and other animals are capable of inferring never-experienced relations (for example, A > C) from other relational observations (for example, A > B and B > C). The processes behind such transitive inference are subject to intense research. Here we demonstrate a new aspect of relational learning, building on previous evidence that transitive inference can be accomplished through simple reinforcement learning mechanisms. We show in simulations that inference of novel relations benefits from an asymmetric learning policy, where observers update only their belief about the winner (or loser) in a pair. Across four experiments (n = 145), we find substantial empirical support for such asymmetries in inferential learning. The learning policy favoured by our simulations and experiments gives rise to a compression of values that is routinely observed in psychophysics and behavioural economics. In other words, a seemingly biased learning strategy that yields well-known cognitive distortions can be beneficial for transitive inferential judgements.

Examining the effect of credit on monetary policy with Markov regime switching: Evidence from Turkey

This paper analyses the effect of credit on monetary policy responses for different regimes in Turkey. To do so, the Taylor rule augmented with the credit gap is estimated by using a Markov regime switching model from January 2006 to December 2019. The empirical findings identify two regimes: the low- and high-interest rate regimes. The prevalence of the former indicates policy authorities’ growth priorities. Furthermore, differing responses across the regimes reflect that the Central Bank of the Republic of Turkey has an asymmetric policy stance. In the low-interest rate regime, the monetary policy only significantly responds to inflation. In the high-interest rate regime, both inflation and credit have significant positive impacts on interest rate setting. This indicates that credit conditions affected the tightening of the monetary policy stance in Turkey despite the use of macroprudential tools after the global financial crisis.

Institutional flexibility, political alternation, and middle-of-the-road policies

This paper presents a novel explanation for political alternation in democracies, rooted in the benefit for the median voter of keeping policy from drifting too far to either extreme. Central to this argument is the idea that policy change is gradual and that this gradualism depends on the institutional flexibility/rigidity of the country. Built on this idea, we propose a model of dynamic elections and show that institutional rigidities cause alternation. We also show that, though institutional rigidities prevent governments from implementing extreme policies, they incentivize parties to polarize as much as they can. However, more flexible institutions can foster moderation. Last, we analyze the resilience of equilibrium policies to players’ impatience and discuss extensions of our model, including office-motivated parties, the cost of alternation, alternation every two terms, and asymmetric policies.

Interplay between population density and mobility in determining the spread of epidemics in cities

The increasing agglomeration of people in dense urban areas coupled with the existence of efficient modes of transportation connecting such centers, make cities particularly vulnerable to the spread of epidemics. Here we develop a data-driven approach combines with a meta-population modeling to capture the interplay between population density, mobility and epidemic spreading. We study 163 cities, chosen from four different continents, and report a global trend where the epidemic risk induced by human mobility increases consistently in those cities where mobility flows are predominantly between high population density centers. We apply our framework to the spread of SARS-CoV-2 in the United States, providing a plausible explanation for the observed heterogeneity in the spreading process across cities. Based on this insight, we propose realistic mitigation strategies (less severe than lockdowns), based on modifying the mobility in cities. Our results suggest that an optimal control strategy involves an asymmetric policy that restricts flows entering the most vulnerable areas but allowing residents to continue their usual mobility patterns.

Multiple Electricity Markets Design Undergoing Asymmetric Policies on Renewables Expansion: Capacity Adequacy and Revenue Sufficiency

Multiple Electricity Markets Design Undergoing Asymmetric Policies on Renewables Expansion: Capacity Adequacy and Revenue Sufficiency

Have Rising Environmental Costs Lead to the Withdrawal of FDI

To control the ecological environment on the verge of the red line, the Chinese government has introduced ever-increasing environmental control policies, making the environmental costs faced by economic entities in production and business activities continue to rise. Meanwhile, foreign direct investment FDI in China has also slowed down. So, is the rise in environmental costs an important driver of the slowdown in growth in recent years?This article regards the incident in 2007 that some provinces have raised the SO2 emission fee collection standard by at least one time as a quasi-natural experiment, and uses the upward adjustment of the pollution fee collection standard, an inter-regional asymmetric policy that directly reflects the increase in environmental costs, to represent environmental regulations, and the annual change in foreign capital flows to measure foreign capital transfer. Firstly, the time-varying DID model is adopted to evaluate the true impact of rising environmental costs on the withdrawal of FDI in China; then the impact mechanism, transfer mechanism and dynamic effects of the rising environmental costs on FDI are tested; finally, the policy heterogeneity test according to the pollution intensity of provinces and industries and the time dynamic effect test of foreign-invested industry layout are carried out. The study finds that:（1）The increase in the sewage fee collection standard significantly leads to the withdrawal of FDI, but this effect does not exist in the long-term.（2）The upward adjustment of pollution collection standards promotes the withdrawal of FDI by increasing RD and promotes the transfer of FDI to other provinces and abroad in the short term, and in the long run it is beneficial to FDI transfers from other provinces and foreign countries, but neither in the short-term nor in the long-term significantly affects the intra-provincial inter-industry transfer of FDI.（3）Compared with SO2 emission-non-intensive industries and provinces that are not controlled by the two control areas, the increase in the pollution fee collection standard has a greater impact on the withdrawal of FDI in SO2 emission-intensive industries and provinces in the two control areas. And it is beneficial to the greening of industrial structure in the long run. This article not only explains the reasons for the “fluid of foreign capital withdrawal”, but also further clarifies the transfer mechanism and influence mechanism through which rising environmental costs affect foreign capital and its long- and short-term effects on the layout of foreign investment industries, which has important reference value for further formulating environmental policies and stabilizing foreign investment policies.

Self-Interest, Asymmetric Policy Effects, and Democratic Backsliding: Expanding the Analytical Toolbox

Self-Interest, Asymmetric Policy Effects, and Democratic Backsliding: Expanding the Analytical Toolbox

기업의 하방경직적 고용 의사결정에 관한 연구：정규직과 비정규직의 근무인원을 중심으로

기업의 하방경직적 고용 의사결정에 관한 연구：정규직과 비정규직의 근무인원을 중심으로

Stuck on the wrong track: 20 years of euro disillusion, denial, and delusion*

This contribution assesses the functioning of Europe's Economic and Monetary Union (EMU) during the first 20 years of the euro's existence. It argues that two formative intellectual currents converged at Maastricht to shape the design and reception of the euro regime: ordoliberalism and neoliberalism. Germany's ordoliberalism inspired and shaped the euro regime design. Neoliberalism fashioned the reception of what was agreed at Maastricht under the influence of Bundesbank dogma and power. As a product of the zeitgeist, Europe got stuck with a deeply flawed euro regime. The Maastricht Treaty institutionalized an asymmetric (growth-unfriendly) policy regime. This suited the macroeconomic mainstream well, fighting the ‘1970s stagflation war’ for the past 40 years. Twenty years of euro disillusion have produced the exact opposite: ‘stagdeflation.’

Using serious gaming to explore how uncertainty affects stakeholder decision-making across the science-policy divide during disasters

The asymmetric policy and science domains, face a number of challenges when it comes to managing disaster risk. On the one hand, policy stakeholders require reliable, high-quality information in order to make well-informed decisions in a timely manner, while on the other, creation of sound scientific information upon which such decisions can and should be made, requires time and thoroughness. As a result, uncertainty plays a crucial role when it comes to integrating scientific information into the decision-making process.To explore further the ways in which uncertainty affects decision-making, the ESPREssO Project developed a serious game for disaster risk reduction (DRR) stakeholders to “play,” termed RAMSETE III. It aims to assess how uncertainty impacts processing of early warning information and subsequent decision-making (such as ordering evacuations), embedded within a fictitious geographic, policy and practice setting. Serious gaming can serve as an useful tool to allow stakeholders with very different backgrounds to work closer together in a simulated environment. Different operational timescales and misunderstandings arising from differing perceptions of risk and uncertainty between policy stakeholders and scientists, are identified as key barriers hindering effective integration of policy and science in disaster management. Hence, RAMSETE III was employed to initiate open discourse between DRR stakeholders across the science-policy spectrum.The main outcome of this game emphasizes that to overcome these identified barriers, a collaborative, interdisciplinary, and inclusive approach is needed as a first-step foundation, with enhanced efforts in communication and development of common terminologies to assist strengthening of mutual understanding.

The European Commission’s ideas on integrating underrepresented groups into the labour market

ABSTRACT The paper explores the European Commission’s ideas on social policy. It contributes to the debate on asymmetric economic and social policies in the EU from an ideational perspective. Analysing Commission reports on labour markets, employment, and social affairs over a fifteen-year period (2004–2018), I seek to understand what ideas on employment of underrepresented labour market groups are prominent in the reports and whether there is variation over time. To do so, I draw on the theoretical literature on ideas. The paper concludes that the Commission’s approach to underrepresented groups in the labour market has been and remains justified by an economic growth-discourse, leading to frames and policy ideas dominated by supply-side thinking. Thus, there has been a lack of new policy solutions to underrepresented labour market groups over the past fifteen years, revealing a lack of ideational innovation in the Commission’s early-stage policy formulation.

Asymmetric Policy on Border Management

The management of state borders between Indonesia and PNG holds potential problems in the form of differences in socio-economic conditions between the two countries. While socially and culturally, people in the two countries have close kinship ties. This paper intends to recommend an asymmetric policy for managing national border areas, especially between Merauke and PNG. The conclusion of this study is that the adoption of the ChinaVietnam border management model can be applied in the management of the Indonesia-PNG border. This adoption is accompanied by several strategies in the form of: acceleration of construction of facilities and infrastructure, strengthening the socio-economic conditions of border communities, human resource development and strengthening of good institutional aspects.

Examining the asymmetric monetary policy response to foreign exchange market conditions in emerging and developing economies

In many emerging market economies that have adopted inflation targeting, policymakers are concerned with the effects that strong appreciation/depreciation pressures and excessive volatility in exchange rates may have on economic stability and their ability to reach their inflation targets. The research in this paper addresses whether central banks have an asymmetric response to exchange rate conditions with respect to meeting their monetary policy objectives. Using a panel of 30 emerging market and developing economies, we employ a panel threshold regression analysis to determine whether policymakers respond differently during appreciation versus depreciation periods, during periods of high versus low exchange rate volatility, or when the country has a relatively high exchange rate pass-through effect. We find that policymakers react more strongly and significantly to depreciations with increases in domestic interest rates, while remaining inactive during periods of appreciation. Yet, during appreciationary periods, they react more strongly to deviations in output from its potential, suggesting a concern over competitiveness. Furthermore, volatility in exchange rates is a significant concern to policymakers, as they regularly claim, and when volatility is sufficiently high, policymakers react with higher interest rates to maintain stability and mitigate capital outflows. Lastly, with a stronger exchange rate pass-through effect, policymakers are more responsive to depreciationary pressure as it affects their ability to reach inflation targets.