Flexible Regime Research Articles

Monetary policy transmission dynamics: evidence from Indian financial markets

ABSTRACT Our study employs a non-recursive Structural Vector Autoregressive Model (SVAR) to examine to how monetary policy signals transmit across the money, treasury bills, bonds, forex, and the stock market in India and in the process unravel the relative efficacy of various monetary policy signalling instruments on these financial market variables. This exercise is conducted for two distinct monetary policy regimes -Multiple Indicator Regime and Flexible Inflation Targeting Regime. Our results indicate that the transmission of monetary policy differs not only across various segments of the financial markets, but is also sensitive to the choice of monetary policy instruments used by the Reserve Bank of India (RBI) under different regimes. In a bid to heighten the efficacy of monetary policy signals it is hence suggestive that developing economies with high inflation should move towards an inflation targeting regime.

The case for nominal GDP level targeting

AbstractIn this paper, I make the case for a nominal GDP level target in the United States. I begin by arguing that the Federal Reserve's current flexible average inflation targeting regime is deficient. I then argue that since a competitive monetary equilibrium is optimal, monetary policy should seek to replicate the competitive monetary model. Doing so resembles nominal GDP targeting. I also offer the following practical reasons why policymakers might prefer a nominal GDP target. Nominal GDP targeting (a) does not require policymakers to determine whether current economic fluctuations are demand‐driven or supply‐driven nor does it require real‐time estimates of the output gap, (b) automatically prevents the central bank from exacerbating supply shocks, and (c) leads to greater financial stability. Finally, I make the case for targeting the level, rather than the growth rate, of nominal GDP. Doing so prevents the path of nominal GDP from deviating arbitrarily far from its intended growth path, which anchors expectations and aids in long‐run economic decision‐making.

Systematics and paleobiology of new bison occurrences from the Late Pleistocene of central Mexico

This study presents new findings of bison remains associated with alluvial plains in central Mexico dating back to the Late Pleistocene. These discoveries encompass eight sites in Hidalgo (Conejos, Ventoquipa, Barranca del Berrendo, Barranca Jagüey Viejo, Las Cajas, El Barrio, Monte Alegre, and San Gabriel Azteca) and two sites in Puebla (Barranca Policarpio and Barranca Xocoa). Biometrical analysis was conducted on the herein studied material, consisting of a horn core fragment, a skull fragment, two mandible fragments, five isolated teeth, and several postcranial remains. A comparative study with selected specimens indicates the presence of Bison antiquus and B. cf. latifrons. The record represents the first reported occurrences of these species for the states of Hidalgo and Puebla respectively. Furthermore, the analysis of carbon (δ13C) and oxygen (δ18O) isotopes in tooth enamel apatite from the material of Hidalgo and Puebla was used to characterize the bison's diet and habitat, providing evidence of the flexible dietary regime observed in Pleistocene bison populations and that were common inhabitants of mixed environments. Body mass estimation of some individuals (average weight ≈ 450 kg) is in the lower limit of B. antiquus populations from the Late Pleistocene of North America. New knowledge about the geographical presence of Bison antiquus and B. cf. latifrons in central Mexico is provided. Comparison with another bison record of these species from North America suggests a biochronological delay between them, representing a younger time interval for Bison antiquus (maximum age at 50 ka), allowing us to biostratigraphically constrain some Mexican localities containing bison remains.

Decentralized energy management regime for prosumer community Microgrids using flexible tube model predictive control

Achieving reliable, cost-effective, and low-carbon energy management for community microgrids (CMs) under suitable computational complexity is challenging due to uncertainties in renewable generation and load demand. To address this challenge, this paper proposes a flexible tube model predictive control-based energy management regime (EMR) for prosumer CMs, enabling robustness against system uncertainties in the energy management strategy with fewer sacrifices in economic performance and computational efficiency. The proposed EMR adopts a multistage receding horizon optimization structure, which allows the prosumers to dynamically adjust their energy scheduling according to the updated energy price and forecast information. Further, a decentralized algorithm with a conditional communication strategy is developed, highlighting less communication burden and private information preservation. Case studies on a typical prosumer CM demonstrate the effectiveness of the proposed method in confronting high system uncertainties. Notably, the proposed method ensures that CMs operate with high reliability (having a maximum energy supply shortage probability of just 0.42 %), in a low-carbon and economical manner (the local accommodation rate of renewable energy generation with low costs reaches 98.83 %), even in scenarios where disturbances occur simultaneously on both the energy supply and demand sides.

Efficacy of Monetary Policy Transmission During the Flexible Inflation Targeting Regime in India

This article builds a Structural Vector Autoregressive model and employs non-recursive identification restrictions to examine the effectiveness of the Monetary policy transmission mechanism in India during the Flexible Inflation Targeting regime (2016–2023). The results indicate that policy rate shocks have a significant negative impact on domestic output and prices during this regime. The findings further, reveal evidence of an exchange rate puzzle during the Flexible Inflation Targeting regime. Our results give credence to the RBI’s move towards a Flexible indicator targeting approach as all the macroeconomic variables of interest, that is, Domestic output and inflation produce plausible estimates in response to a monetary policy shock. JEL Classification: C32, E52, E5, E52, F41

Uncertainty shocks and monetary policy rules in a small open economy

Abstract Post the great financial crisis (GFC) of 2008–2009, there has been a surge in the macroeconomics literature on aggregate uncertainty. Although the recent literature has recognized the adverse real effects of global uncertainty shocks in emerging market economies (EMEs), the role of monetary policy in offsetting these adverse effects and their link with the exchange rates is not explored in the literature. We find that the currently followed interest rate rules (IRRs) under a flexible inflation-targeting regime are ineffective in stabilizing the domestic economy during periods of high global uncertainty in the EMEs. Using a small open economy new Keynesian DSGE model with Epstein–Zin preferences and second-moment demand shocks, we compare and propose alternate monetary policy rules that significantly reduce welfare losses. We find that the best monetary policy rule in terms of welfare depends on the nature of shock that is, first-moment or second-moment shock.

THE IMPACT OF INFLATION TARGETING ON ENSURING ECONOMIC STABILITY

The article provides an analysis of the dynamics of changes in the monetary policy of modern Ukraine. The importance of inflation targeting in the history of Ukraine is global and significant. At this stage, Ukraine uses a managed exchange rate flexibility regime, which is a direct descendant of the exchange rate targeting regime, but this solution is only temporary. In the future, it is the regime built on inflation that will play a key role in the development of a prosperous Ukraine, being the main policy of the National Bank of Ukraine, but the significance of this process is somewhat lost against the background of the country’s socio-economic transformations, which only emphasizes the significance of this analysis. The return to this regime must be gradual and with the rejection of the exchange rate fixation, even in a flexible form, which seems impossible today. Despite this, such a refusal is part of the central bank’s strategy, so it is extremely important to focus attention and analyze such a transition.

Heterogeneity in the nominal exchange rate response to oil price shocks in oil-exporting countries: a new episode of the ‘fear of floating’?

ABSTRACT In this paper, we propose that the heterogeneity in the nominal exchange rate response to oil price shocks in oil-exporting countries with flexible regimes is influenced by monetary authority interventions. Thus, we identify three structural oil price shocks, and we estimate pooled OLS regressions for a panel of 27 oil-exporting economies. The results show that economies with higher international reserve accumulation experience lower exchange rate appreciation during oil-specific demand shocks.

EVERYDAY POLITICS OF ONLINE OJEK DRIVERS: TAKING COVER AND FIGHTING APPLICATORS FROM THE COMMUNITY BASECAMP

The platform-based transportation business model has swept across almost all regions in Indonesia. Millions of workers have been absorbed into the workforce in this business model. However, the lack of government protection, compounded by the absence of regulations governing working conditions and safety for workers, often leads to working conditions that favor the applicator side. In this less-than-ideal situation, some workers (online motorcycle taxi drivers) have formed online motorcycle taxi communities as an alternative to cope with these less-than-ideal conditions. This article will look at how the online motorcycle taxi community is used as a medium of indirect resistance against applicators. Using a qualitative method, we adopt Browney Frey's (2020) framework on how the vulnerability of the platform workforce is produced by exploring the online motorcycle taxi community and resistance in Indonesia. Data collection is conducted through interviews and observations. We interviewed at least two communities and more than six drivers. This article argues that the organization of online motorcycle taxis that are formed through the community is part of political expression to get security guarantees. At a certain level, the existence of the community is used as a covert medium of everyday resistance. This fieldwork took place in Palu, Central Sulawesi. This article contributes to understanding the nature of organizers and models of workers' resistance to flexible work regimes sponsored by digital work platforms.

Trust in the central bank, financial literacy, and personal beliefs

This paper examines trust in the central bank across ten Central, Eastern and Southeastern European countries, using survey data collected from 61,398 individuals. Our results show that financially literate individuals are more likely to trust central banks. The association is stronger in countries with inflation targeting and flexible exchange rates regimes. Distrust in the central bank is associated with higher inflation expectations, savings in foreign currency or a preference for cash. Even when the sample is restricted to individuals with high inflation expectations, financial literacy remains associated with greater trust in the central bank. We find that trust in the central bank correlates negatively with financial inclusion but positively with wealth. Financially literate citizens express less trust in the government, which highlights that trust in the central bank is not entirely indicative of trust in the government. However, individuals who think that prices will rise and the local currency will depreciate distrust both the central bank and the government.

Experimental study on surface wave interaction with submerged tensioned barriers using IoT image processing

The present study investigated experimentally the dynamic interactions between surface waves and submerged vertical tensioned barriers with full and partial penetrations. The range of tension for the barrier was set within the flexible membrane regime in the experiments which measurements have not been reported in the literature so far. In addition, an extensive Internet of Things (IoT) system with five GoPro cameras was developed for the measurements to quantify both the surface wave transformation as well as dynamic response of the barrier. The cameras were synchronized through the IoT system to cover the entire wave flume, and the recorded videos were converted to spatial and temporal data using image processing techniques. The experimental results were found to agree with the analytical predictions based on the linear wave theory reasonably well. In particular, the measured reduction in the tensioning effect on the wave transmission and reflection with decreased barrier length was in close argument with the predictions. Similar good agreement was also observed for the dynamic response of the tensioned barrier during the wave interaction. However, additional energy loss was noted in the experiments possibly due to energy dissipation at the boundary ends of the experimental barrier and wave-induced flow separation with partial penetration which are not considered in the analytical analysis.

Rework and Repair Options for Steam Turbine Components Subject to Flexible Operation

Abstract The increase in renewable energy penetration on the grid has accelerated the need to transition conventional fossil-based energy sources from their traditional base load operation to more flexible operational regimes. The mode of operation changed dramatically in terms of number of starts, operating hours per annum, and variation in load level. This results in greater thermal transients on operational equipment leading to an increase in Low Cycle Fatigue damage. To ensure the continued integrity of the steam turbine components, it is essential to assess the lifetime status by applying residual lifetime analysis methods. Depending on the amount of lifetime consumption and the extend of potential crack findings, different component repair options are possible. The rework or repair options can be divided into two main groups, namely, cold- and hot-rework. These two options can also be carried out consecutively. All rework or repair options provide the opportunity to improve the application of a component by applying profiling with improved stress fields and even superior materials, in the case of hot rework. The aim of the rework/reconditioning is to ensure that the steam turbine component is suitable for future operation. This ensures that plants are well placed to deliver more flexible operation in the energy industry through carefully tailored refurbishments and reworks.

When should the regulator be left alone in the commons? How fishing cooperatives can help ameliorate inefficiencies

This paper examines a common-pool resource where quotas and fines are set by a regulator, an artisanal organization (cooperative), or both. We analyze the interaction between these two regulatory agencies under a flexible policy regime, where quotas and fines can be revised across periods, and under an inflexible policy regime, where they cannot. We show that inefficiencies arise in the inflexible regime, but they are reduced when the two agencies coexist. Overall, we demonstrate that the artisanal organization may be preferred when environmental damages are low, but the regulator may be preferable otherwise.

Brain flexibility increases during the peri-ovulatory phase as compared to early follicular phase of the menstrual cycle

The brain operates in a flexible dynamic regime, generating complex patterns of activity (i.e. neuronal avalanches). This study aimed at describing how brain dynamics change according to menstrual cycle (MC) phases. Brain activation patterns were estimated from resting-state magnetoencephalography (MEG) scans, acquired from women at early follicular (T1), peri-ovulatory (T2) and mid-luteal (T3) phases of the MC. We investigated the functional repertoire (number of brain configurations based on fast high-amplitude bursts of the brain signals) and the region-specific influence on large-scale dynamics across the MC. Finally, we assessed the relationship between sex hormones and changes in brain dynamics. A significantly larger number of visited configurations in T2 as compared to T1 was specifically observed in the beta frequency band. No relationship between changes in brain dynamics and sex hormones was evident. Finally, we showed that the left posterior cingulate gyrus and the right insula were recruited more often in the functional repertoire during T2 as compared to T1, while the right pallidum was more often part of the functional repertoires during T1 as compared to T2. In summary, we showed hormone-independent increased flexibility of the brain dynamics during the ovulatory phase. Moreover, we demonstrated that several specific brain regions play a key role in determining this change.

The Public Interest Requirement in the Secondary Use of Health Data in Scientific Research: The Examples of Estonia and Finland

The General Data Protection Regulation (GDPR) foresees a flexible data processing regime for conducting scientific research with health data. This regime also enables extensive limitations on data subjects' rights to privacy and self-determination. Concern has been expressed that the notion of 'scientific research' may encompass conducting also profit-oriented commercial research that might not justify such limitations to data subjects' rights. Some authors have suggested a restriction on benefiting from the flexible scientific research regime: public interest should be set as a prerequisite for any scientific research employing health data without the data subject's consent. While the GDPR does not explicitly require that scientific research be in the public interest, it allows Member States to choose their policies. In light of this, the article examines the examples of Estonia and Finland to analyse whether national law should require the processing of health data in scientific research in the absence of the data subject's consent to be in the public interest. The article demonstrates on the basis of the two countries’ examples that it is possible to set a public interest standard without explicitly requiring the existence of a public interest via national legislation. Considering the future, the article also shows that, under the proposed European Health Data Space regulation, Member States may retain the public interest standard through the ethics-review requirement in their national law.

The distorted entrepreneurial decision‐making of zombie firms

AbstractQuantitative easing policies have resulted in a significant increase in credit, posing a threat to developed countries' economic stability. This research aims to analyze the impact of distorted interest rates and readily available capital on creating “zombie firms” in the context of Mises–Hayek's malinvestment theory. The study highlights the importance of understanding these factors to prevent firm failure and recommends limited intervention in interest rates and capital availability before crises. Additionally, the study advocates for implementing flexible insolvency regimes for insolvent firms post‐crisis to mitigate the risk of corporate zombification.

Application of flexible working hours in comparison with other types of special working hours

In this scientific article, the author analyzes the features of the application of a flexible working time regime in comparison with other types of special working time regimes, in particular irregular working hours, the shift method of work organization, as well as shift work. It was established that these special regimes have both common and distinctive features. Thus, the author stated that flexible working hours and irregular working hours have in common that: they are established exclusively on a contractual basis; are not implemented where their application is objectively impossible; the employee is not paid extra for the performance of a labor function beyond the normal duration of the working day. The differences are that: an employee with an irregular working day does not have the opportunity to self-regulate working hours, additional social guarantees are provided for an irregular working day. Common to shift and flexible regimes is that: employees are provided with equal guarantees regarding annual leave; the implementation of the specified regimes requires a bilateral will. What is special is that: the shift method directly assumes the place where the employee performs his work function; the shift method is applied exclusively to the enterprise, institution and organization as a whole, or individual divisions, and not to specific employees. From the analysis of flexible working hours and shift work, the author states that the common feature is that the use of the latter does not impose on the employee the obligation to actually work a greater number of hours; special guarantees of social and economic protection do not apply to employees. The difference comes down to the fact that: under a variable working time regime, the employee is obliged to perform a work function in a certain specified place; under variable working hours, the employee is obliged to perform the work function also at night, and under flexible working hours, the employee does not have this obligation.

Urban Regeneration, Rent Regulation and the Private Rental Sector in Portugal: A Case Study on Inner-City Lisbon’s Social Sustainability

Rent regulation has a significant impact on tenant–landlord relations and the overall functioning of the private rented sector. Different forms of rent regulation—in relation to rent levels, rent increases, security of tenure, etc.—also affect the quality, the social composition and, ultimately, the size of the private rented sector. Together they affect the character of much urban regeneration and renewal. The introduction in Portugal of more flexible rent regimes that aimed to gradually replace open-ended tenancies with freely negotiated contracts led researchers to classify the country as a free market system. In this paper, by using a mixed methods approach that combined desk-based research with census data and in-depth interviews, we test the) classification of Portugal’s rented sector as a free market against empirical evidence and examine the impacts of the main rent regulation regimes on social sustainability-oriented urban regeneration. Our results show that open-ended contracts, which were signed before the 1990s, still account for a significant part of the private rented sector, thus the classification of Portugal’s rent regulation regime as a free-market system does not capture the country’s most significant features. This is particularly evident in inner-city Lisbon, where various extreme rent regimes (in terms of contract duration, tenant security and prices) coexist, giving rise to tensions between housing quality and demographic shifts that threaten the overall social sustainability of the city.

Heterogeneous international monetary transmissions: The role of inflation

In the context of the trilemma hypothesis, we document heterogeneous international monetary transmissions, emphasizing the essential role of inflation. Periphery countries' monetary policy autonomy is subject to their inflation. Facing an interest rate hike of a center country, periphery countries are more willing to follow when their inflation levels are high. Following an interest rate hike helps ease periphery countries' domestic inflation pressure. In contrast, those countries with low inflation are more inclined to follow the center country's interest rate cut. We further confirm that periphery countries' monetary policy autonomy is enhanced by capital controls and flexible exchange regimes, consistent with the trilemma hypothesis.

ESG Reputational Risk, Corporate Payouts and Firm Value

AbstractThis study explores the relationship between ESG reputational risk, corporate payouts and firm value. Using a sample of 2021 US‐listed firms between 2007 and 2019, we provide robust evidence that ESG reputational risk relates to higher payouts, and that free cash flows amplify this relationship. Turning to payout composition, we document that ESG reputational risk associates with a payout mix comprising a higher analogy of share repurchases versus dividends; and that this relationship is more pronounced under financial constraints. Furthermore, we show that the market places a premium on payouts from high ESG reputational risk firms. Our findings are in line with the notion that ESG reputational risk represents agency problems and raises financial risk, inducing firms to disgorge cash via a more flexible payout regime. Results are robust to several estimation techniques that address endogeneity, self‐selection and censored observations.