Expansionary Policy Research Articles

Continuities and Changes of India’s Foreign Policy since its Independence for Making a better India

Foreign policy means a policy pursued by a nation in its dealings with other nations, designed to achieve its national objectives. This is the same in the case of India also. However, the quintessential strands of India’s foreign policy are peaceful co-existence, non-interference, peaceful resolution of disputes, non-alignment, anti-colonialism, anti-racism, multilateralism, pluralism, general and complete disarmament, opposition to all forms of terrorism, extremism and fundamentalism and pro-development. In recent decades, India has pursued a more expansive foreign policy that encompasses the neighborhood first policy embodied by SAARC as well as the Look East policy to forge more extensive economic and strategic relationships with other East Asian countries. This article has explored the major continuities and changes that had been happened in India’s foreign policy since its independence.

Empirical evaluation of monetary policy transmission to stock markets and further transfer of macroeconomic shocks to the real sector

The study focuses on revealing key monetary policy instruments that can influence stock market development and elaborating whether shocks from financial markets and other macroeconomic conditions are further transferred to the real sector, as expected under the monetary transmission mechanism. This paper is an extension of our previous theoretical and empirical research expanding to ten developed and eight developing economies for the period of 1999-2020 using panel data and vector autoregressive models, impulse response functions, and scenario analysis. Firstly, it was examined that actions of monetary policymakers were efficient for stimulating the development of stock markets mostly for developed countries, whereas stock indices in most developing countries seemed not to be sensitive to changes in monetary conditions. Using scenario analysis and impulse response functions, it was discovered that in developing countries, including Poland and Ukraine, an expansionary policy focused on increasing money supply would mitigate deceleration and facilitate the growth of stock indices in the next four quarters, whereas, in developed countries, including the USA, a decline in interest rates under expansionary regime would stimulate the development of stock markets. Finally, the evolution of financial markets together with macroeconomic, social, and political conditions was concluded to be a statistically important factor of economic growth, as initially expected.

Modelling the Effects of Unconventional Monetary Policy in a Heterogeneous Monetary Union

This paper focuses on the effects of the ECB’s unconventional monetary policy on the member countries of the euro area. The analysis is based on a Global VAR model, which allows to take into account mutual influences of processes in the countries of the currency union. Identification of unconventional monetary policy shock is conducted using a shadow interest rate which reflects changes in economic agents’ expectations following the announcement of unconventional monetary policy measures. The model is estimated using data for the euro area from 2007 to 2018 and covers all of the key instances of implementation of unconventional measures by the ECB. The results show that expansionary policy leads to a significant rise in output and prices in the euro area. Additionally, the effects of unconventional monetary policy are heterogeneous across countries: the response to unconventional monetary policy shock is insignificant in countries that are strongly affected by the crisis, and the effectiveness of the measures varies across countries with different levels of banking sector capitalisation. It was also found that the efficiency of unconventional monetary policy measures against deflation depends upon spillovers of the interaction between core and periphery countries in the monetary union.

Markups, inequality and monetary‐fiscal policies

AbstractThis paper reexamines the cyclical behaviors of price markup, profits, and labor share when responding to monetary and fiscal policy shocks in a two‐agent, two‐branch, and two‐sector model. We show that this framework is able to generate procyclical price markup and profits, and countercyclical labor share conditional on expansionary policy shocks. These results are in line with empirical evidences but at odds with the prediction of canonical New Keynesian models. As the share of nondurables in total production decreases, the results reverse. This finding implies expansionary monetary and fiscal policies widen the income inequality between Ricardian households and collateral‐constrained households.

Effects of New York City’s Neighborhood Policing Policy

Between 2015 and 2018, New York City adopted “neighborhood policing,” an expansive policy to encourage interactions between police officers and community members. Among other changes, the initiative established hundreds of new “neighborhood-coordination” officers and gave “steady-sector” officers time away from 911 response to dedicate to resident interactions. This study evaluates the initiative’s effects on crime, complaints of police misconduct, racial disparities, and arrests. Using monthly data on New York City’s 76 police precincts between 2006 and 2019, we estimate the policy’s causal effect using high-dimensional time series models. This approach accounts for the policy’s staggered adoption, addresses potential correlation among outcomes and between precincts, and controls for unobserved precinct characteristics. We find neighborhood policing reduced misdemeanor and proactive arrests, especially in higher-poverty precincts outside of Manhattan, though it did not change the racial disparities of such arrests. The policy did not affect crime. It briefly increased complaints against police.

State-Level Social and Economic Policies and Their Association With Perinatal and Infant Outcomes.

Rates of preterm birth and infant mortality are alarmingly high in the United States. Legislated efforts may directly or indirectly reduce adverse perinatal and infant outcomes through the enactment of certain economic and social policies. We conducted a narrative review to summarize the associations between perinatal and infant outcomes and four state-level US policies. We then used a latent profile analysis to create a social and economic policy profile for each state based on the observed policy indicators. Of 27 articles identified, nine focused on tax credits, eight on paid parental leave, four on minimum wages, and six on tobacco taxes. In all but three studies, these policies were associated with improved perinatal or infant outcomes. Thirty-three states had tax credit laws, most commonly the earned income tax credit (n = 28, 56%). Eighteen states had parental leave laws. Two states had minimum wage laws lower than the federal minimum; 14 were equal to the federal minimum; 29 were above the federal minimum; and 5 did not have a state law. The average state tobacco tax was $1.76 (standard deviation = $1.08). The latent profile analysis revealed three policy profiles, with the most expansive policies in Western and Northeastern US states, and the least expansive policies in the US South. State-level social and economic policies have the potential to reduce adverse perinatal and infant health outcomes in the United States. Those states with the least expansive policies should therefore consider enacting these evidence-based policies, as they have shown a demonstratable benefit in other states.

The Association of Emergency Contraception Legislation with Adolescent Births from 2000 to 2014

Study ObjectiveThe objective of the study was to examine the association of state-specific emergency contraception (EC) legislation and adolescent births. Design, Setting, and ParticipantsThis was an observational cohort study of adolescents aged 15-19 years in the United States from 2000 through 2014 to determine the association of adolescent birth estimates with EC legislation. Main Outcome MeasuresState-specific birth and abortion estimate data were obtained from the Centers for Disease Control and Prevention's National Vital Statistics and Abortion Surveillance for the years 2000 through 2014. ResultsAfter controlling for year, abortion estimates, and oral contraception pill utilization, estimated adolescent births for states with an expansive EC policy was 14% lower as compared with states without an expansive policy. Estimated adolescent births were 43% higher in states with a restrictive EC policy as compared with states without a restrictive policy. ConclusionRestrictive EC policies are associated with increased adolescent birth estimates, whereas expansive EC policies are associated with decreased adolescent birth estimates. Targeted advocacy strategies to reduce legislation that aims to restrict access to contraception may prove to be most beneficial to reducing unintended pregnancies.

Financial deepening and human development in Nigeria: A non-linear approach

Objective: The study investigated the effect of credit supply on GDP on Human Development and as well examined the impact of Money supply on GDP on human development. It equally assessed the link between bank penetration and human development and the link between financial intermediation and human development. Research Design & Methods: This study used ex-post facto research design and a Non-Linear Autoregressive Distributed Lag (Asymmetry ARDL) to estimate the effect of financial deepening on human development. Eview 11 was used for the analysis. Findings: This research work discovered that the positive contribution of credit supply and money supply to human development in Nigeria is weak and the relationship between financial deepening and development is not always linear. The study revealed that the effect of branch expansion in Nigeria is negative because of limited bank products or services. Implications & Recommendations: The implication of this study is that expansionary monetary policies have the most significant positive impact on human development in Nigeria. The expansionary policy can as well worsen human development through inflationary pressure while a contractionary policy is an anti- human development approach and its effects on human development are negative. The study therefore recommends that: The central bank of Nigeria should place more emphasis on expansionary monetary tools to drive development and be cautious of inflation. CBN and banks should monitor their credit to avoid loan diversion by the beneficiaries and to beat extreme poverty. Contribution & Value Added: The study used asymmetry ARDL model as an improvement over the conventional regressions that the previous authors have been using to examine the link between financial deepening and human development.

The Botswana Defence Force’s Policy of Arms Procurement in the Late Cold War Period and beyond

This article highlights some key aspects in the development of the Botswana Defence Force (BDF), in particular the politics surrounding its major arms purchases during the late Cold War period and afterwards. It argues that between 1980 and 1990 the BDF’s attempts to bolster its lethal capabilities in response to growing regional contentions were stifled by political pressure emanating from apartheid South Africa, the region’s superpower. During the 1980s, the South African government had ramped up its efforts to destabilise neighbouring countries that were sympathetic to the African National Congress (ANC) including Botswana. In light of this coercive environment, the BDF’s policy of procuring armaments was driven by the regional security context within the Cold War but was also complicated by the geopolitics of the continent. The article also explores the post-Cold War political dynamics following the independence of South West Africa (now Namibia) and the end of apartheid in South Africa. While these two key events and Botswana’s good diamond revenues favoured a more expansive procurement policy for the BDF, they presented new challenges to BDF efforts to develop certain lethal capabilities.

Współczesne wymiary bezpieczeństwa społeczno-kulturowego wybranych państw Europy Środkowej i Wschodniej w kontekście zagrożeń militarnych

The information age driving globalization processes determines the increasing importance of socio-cultural factors for international, regional and national security. Due to the interdependence of various security spheres, geopolitics and historical memory of the societies of the Central European region, and the expansionary Russian policy from the beginning of the 21st century, attention is paid to supporting military operations with soft power, in particular, highly effective cultural policy in post-Soviet countries. Research conducted in the years 2012-2017 among security experts provided information on the key aspects of non-military security in Central Europe and to develop recommendations on new socio-cultural threats to Central European countries after 2014. In the course of the research work, literature on the subject, research materials from the University of Warsaw and CBOS (Research Center for Public Opinion, Warsaw) were used, as well as own research conducted in selected countries of the Visegrad Group, analyzed using the SWOT method.

أثر سياسة التقشف التوسعي على الناتج المحلي الإجمالي: حالة مصر Impact of expansionary austerity policy on GDP: Egypt

تهدف الدراسة إلي اختبار فرضية التقشف التوسعي في الاقتصاد المصري، أي قياس أثر سياسات التقشف المالي في الاقتصاد المصري علي النمو الاقتصاد المصري، ولاختبار مدي صحة تلک الفرضية تم تقدير معادلة النمو الاقتصادي في الاقتصاد المصري، تم استخدام بيانات سنوية عن الفترة (1980-2017)، وتم الاعتماد علي نموذج المعادلة الواحدة من خلال استخدام معادلة انحدار متعدد للنمو الاقتصادي، وکانت محددات النمو الاقتصادي التي تم استخدمها کمتغيرات مفسرة مستقلة للنموذج هي: الإنفاق الاستهلاکي الخاص، والإنفاق الاستثماري الخاص، والإنفاق الحکومي بشقيه الاستهلاکي والاستثماري، وصافي التعامل مع العالم الخارجي، والضرائب، وقد تم اختبار جذر الوحدة لمعرفة مدي استقرار السلاسل الزمنية باستخدام اختبار فيلب بيرون، واتضح من نتائج اختبار فيليب بيرون أن جميع السلاسل الزمنية لکل من الناتج المحلي الإجمالي الحقيقي، والإنفاق الاستهلاکي الخاص الحقيقي، والإنفاق الاستثماري الخاص الحقيقي، والإنفاق الحکومي الحقيقي بشقيه الإستثماري والخاص وصافي التعامل مع العالم الخارجي وقوة العمل، مستقرة عند أخذ الفروق الأولى لها سواء بإفتراض وجود مقطع أو وجود مقطع واتجاه عام، عند مستوي معنوية1%. کما توصلت نتائج الدراسة الي عدم فاعلية التقشف المالي التوسعي في تحفيز الناتج المحلي الإجمالي الحقيقي في الاقتصاد المصري، وقد يرجع هذا لأن الإنفاق الحکومي في الإقتصاد المصري يرکز علي البنية التحتية، الأمر الذي يقلل من أثر مزاحمة القطاع الحکومي للقطاع الخاص، بالإضافة إلي وجود موارد معطلة في الاقتصاد المصري، الأمر الذي يعني أن ارتفاع الإنفاق الحکومي محفز للنمو الاقتصادي في الاقتصاد المصري ومن ثم عدم فاعلية سياسات التقشف التوسعي في الاقتصاد المصري. The study aims to test the hypothesis of expansionary austerity in the Egyptian economy, ie to measure the impact of fiscal austerity policies in the Egyptian economy on the growth of the Egyptian economy. To test the validity of this hypothesis, the economic growth equation in the Egyptian economy was estimated. Annual data were used for the period (1980-2017),The single equation model was relied on by using a multiple regression equation for economic growth. The determinants of economic growth that have been used as independent explanatory variables for the model are: private consumption expenditure, private investment spending, government spending in both consumption and consumption, net dealing with the outside world, taxes, The root of the unit was tested to determine the stability of the time series using the Philip Peron test. The results of the Philip Peron test showed that all the time series of real GDP, real private consumption expenditure, real private investment spending, real government spending in both investment and private sectors and net dealing with the outside world and the labour force stable When taking the first differences, either assuming intercept or intercept and trend, at the level of significance of 1%. The study also concluded that expansionary fiscal austerity is not effective in stimulating real GDP in the Egyptian economy. This may be due to the fact that government spending in the Egyptian economy focuses on infrastructure, which reduces the impact of crowding out the government sector to the private sector, in addition to the existence of idle resources. In the Egyptian economy, this means that high government spending is a catalyst for economic growth in the Egyptian economy and hence the ineffectiveness of expansionary policies in the Egyptian economy.

Distributional impact of monetary policy in the UK: from conventional to unconventional policy

ABSTRACT We evaluate the income distributional effect of monetary policy in the UK for the period 1993–2019 using a mixed frequency approach and a high-frequency identification. Our results indicate that expansionary monetary policy increased income inequality during the unconventional policy subperiod 2009–2019. Looking at the income brackets, we find that this increase in inequality is primarily due to the positive impact of expansionary policy on the upper share of income distribution. Our counterfactual analysis reveals that unconventional monetary policy contributed to the increase in inequality and that the response to COVID-19 is likely to do the same.

Making a Global Image of the World: Science, Cosmography and Navigation in Times of the First Circumnavigation of Earth, 1492-1522

The voyages of exploration and discovery during the period of European maritime expansion and the immense amount of information and artefacts they produced about our knowledge of the world have maintained a difficult, if not non-existent, relationship with the main historiographical lines of the history of early modern science. This article attempts to problematize this relationship based on a historical account that seeks to highlight the scientific and institutional mechanisms that made the Magellan-Elcano voyage, the first modern voyage, possible. The text argues that this voyage was the first modern voyage because it allowed the construction of a new scientific and cartographic image of the globe and contributed to our understanding of the world as a global world, altering the foundations on which modern European economic and geographic thought was based. In that sense, the voyage was something extraordinary, but not completely unexpected. It responded to a complex process of expansionary policy and technical development that dated back to the 15th century, which in 1519 was sufficiently articulated to carry out a great feat.

Leading from Behind? Gender Equality in Germany During the Merkel Era

Whilst maintaining its status as an economic engine in Europe, Germany has historically been a laggard in adopting gender equality measures. The European Gender Equality Index, however, now ranks Germany relatively high and shows substantial progress since 2005. While this has gone mostly unnoticed, Germany has passed far-reaching legislation in major policy fields relevant for gender equality. This expansive policy adoption occurred during the chancellorship of Angela Merkel, but we still know little about the actors and processes that explain it. The divergent perceptions of Germany in relation to gender invite deeper scholarly investigation. In general, we lack knowledge about how conservative women and their parties lead on gender policy. More specifically, we need to know more about how policy measures introduced by conservative governments affect gender norms and gender culture, and if they ultimately lead to effective implementation and greater equality. Investigating the effects of Merkel's tenure on gender equality, we assess policy output and outcomes with a focus on internal power dynamics in Germany, as well as international and EU-level pressures in the policy domains of political representation, LGBTI rights, migration, the labour market, and care.

The effect of oil uncertainty shock on real GDP of 33 countries: a global VAR approach

ABSTRACT In this paper, we investigate the effect of oil price uncertainty shock on real Gross Domestic Product (GDP) of 33 developed and emerging economies using the Global Vector Autoregressive (VAR) framework that allows us to capture the transmission of global shocks while simultaneously accounting for distinct characteristics of individual countries. Utilizing quarterly data over the period of 1980Q1 to 2019Q2, we show that, in general, oil price uncertainty shock has a statistically significant negative impact on GDP for 28 out of the 33 countries, but with varying magnitude and persistence. Overall though, we find the adverse effect on real GDP to be relatively stronger for the developed group of countries than the emerging ones. Hence, our results suggest that policymakers must be ready to undertake expansionary policies (of varying order) in the wake of an oil price uncertainty shock to prevent deep recessions, except in the cases of Norway, Philippines and Saudi Arabia, for which output tends to increase in a statistically significant manner.

The north-south divide, the euro and the world

The European north–south divide has been an issue of a long-standing debate. We employ a Global VAR model for 28 developed and developing countries to examine the interaction between the global trade imbalances and their impact within the euro-area framework. The aim is to assess the propagation mechanisms of real shocks, focusing on the interconnections among the north euro area and the south euro area. We incorporate theory-based long-run over-identifying restrictions and examine the effects of (i) non-export real output shocks, (ii) expansionary shocks and (iii) real exchange rate shocks. An expansionary policy of the north euro area and increased competitiveness in the south euro area could alleviate trade imbalances of the debtor euro area economies. From the south euro area perspective, internal devaluation decreases output but at the same time, it also reduces current account deficits. North euro area origin shocks to domestic output exert a dominant influence in the rest of the Europe and Asia.

Expansionary or restrictive policies in the Eurozone? Dominating trends in the first two decades

Abstract Our aim is to identify periods of restrictive versus expansionary economic policy in the euro area in the last two decades. We firstly conducted the study for identifying the dominant trend in fiscal policies and then in monetary policies. We studied several fiscal outputs, focusing on the cyclical adjusted primary balance. We also analysed the European long-term and short-term interest rates. The study was conducted for several windows, namely for 3-, 4- and 5-year periods. Additional procedures were conducted for robustness checks, namely the study of structural breaks in the analysed time series as well as a study of them recurring to Markov-Switching Regimes models. For most of the analysed periods and subperiods of the series, we concluded for the presence of expansionary policies either in the fiscal or in monetary European domains. Finally, the results and the analysis of dependencies in the euro area economy favour the evidence that economic authorities in the euro area have sought to coordinate monetary and fiscal policy to stabilise the economy.

The macroeconomic effects of default and debt restructuring: An agent based exploration

In this paper we investigate the economic impact of bank reactions to firm financial delinquency. In case of firm liquidity shortage, indeed, the bank commonly proposes two different solutions of debt restructuring to help large firms to recover from their financial distress situation. One option is the debt rescheduling: the bank agrees to an extension of the debt maturity, i.e., to be repaid in the following time periods. The other one is the debt relief: the bank agrees to renegotiate the terms of the debt contract, i.e, to apply a discount rate on the firm past and present debt. We find that higher bank tolerance and debt discount correspond to higher average GDP level, growth rate and volatility. Moreover, the number of recessions decreases while their duration increases. Finally, we perform a monetary policy exercise, finding that an expansionary policy coupled with higher bank tolerance would be very beneficial to the economy.

Bitcoin’s value proposition: shorting expansionary monetary policies

PurposeProfessionals and academics alike hold polarized opinions about Bitcoin’s purpose and its fundamental value. This paper aims to describe Bitcoin’s unique features that make it such an intriguing asset and proposes a new way to consider Bitcoin and its underlying value.Design/methodology/approachIn this paper the author discusses Bitcoin’s defining features that make it a unique asset. The author argues that Bitcoin should not be considered as a single purpose asset only, but rather as a new digital financial asset serving several functions, at least partially. The author discusses the role of Bitcoin in the traditional financial system, contrasts Bitcoin to gold, considers the implications of the continuance of expansionary policies on Bitcoin and discusses the impact of the emergence of cryptocurrencies as a new asset class on public policies.FindingsIn addition to functioning as a means of payment (at least partially) and a diversification tool, part of Bitcoin’s value proposition stems from its worth as a short position on modern expansionary monetary policies. Indeed, Bitcoin’s value should rise if expansionary monetary policies are maintained, amounting to a tool to short these policies, which should be considered in future attempts to value Bitcoin.Originality/valueThe author adds a new layer to the ongoing thought process by arguing of a function played by Bitcoin unaccounted for thus far by the literature. Additionally, the author describes the features and mechanisms, allowing Bitcoin to play that role.

Social Protection after the Pandemic: Lessons Learned from the Eurozone Crisis

As vaccinations against Covid-19 move forward and the health crisis will eventually reside, focus will ultimately turn solely on the economic consequences of the pandemic. Having faced a serious economic turmoil during the past decade and with the perceptions about the role of the welfare state having changed drastically in the meantime, the European Union needs to learn from its mistakes in dealing with such crises and ensure sustainable recovery for its members. In this paper, the correlation between social protection expenditure, income inequality and poverty is examined, as well as the GDP and the employment rates, using the Eurostat database for the period 2007 – 2017 (subject to data availability). By attempting to identify the mechanisms that could lead to such results, the aim of the policy brief is to paint a realistic picture of the role of social protection in the European economies. Among other things, the results show that social protection expenditure correlates positively with employment rates and the GDP per capita, and negatively with income inequality and poverty. We conclude that the welfare state retrenchment during the Eurozone crisis deepened the recession and probably led to long-term adverse effects, broadening the gap between the North and the South. Building on the measures taken during the pandemic to protect employment and the economy, post-pandemic recovery policies should focus on rebuilding strong welfare states, directly create jobs and aim at the convergence of the economies through expansionary policies and growth.