Non-coordinated Policies Research Articles

Institutional complexity traps in policy integration processes: a long-term perspective on Swiss flood risk management

Complexity is inherent to the policy processes and to more and more domains such as environment or social policy. Complexity produces unexpected and counterintuitive effects, in particular, the phenomenon of policy regimes falling short of expectations while made by refined policies. This paper addresses this phenomenon by investigating the process of policy integration and its nonlinearities in the long run. We consider that the increase in the number of policies unexpectedly impacts the policy coherence within a policy regime. We argue that, depending on the degree of policy interactions, this impact varies in direction and intensity over time, which explains nonlinearities in integration. The impact turns negative when the regime is made of numerous policies, which favors non-coordinated policy interactions. Finally, the negative impact prevents further integration as stated by the Institutional Complexity Trap hypothesis and explains the contemporary paradoxical phenomenon of ineffective policy regimes made of refined policies. Empirically, we draw on a relational analysis of policies in the Swiss flood risk policy regime from 1848 to 2017. We study the co-evolution of the number of policies and of their de facto interlinkages, i.e., the co-regulations of a common issue. Findings support that the Institutional Complexity Trap is a structural and long-term dynamic punctuated by periods of policy learning and policy selection. We identify three main phases in the evolution of the regime: the start (1848–1874), the development (1874–1991), and the Institutional Complexity Trap (since 1991).

Interactions and Coordination between Monetary and Macroprudential Policies

I study monetary and macroprudential policy intervention in a general equilibrium economy with recurrent boom-bust cycles. forward-looking variables to also react to policy intervention during phases in which the intervention is inactive. Macroprudential policies that contain systemic risk in financial markets during booms, therefore, relax market-based funding constraints during busts, which helps mitigate the severity and shorten the duration of economic meltdowns. Contractionary monetary interventions during booms also have (latent) beneficial effects during busts. Coordination between the two policy instruments improves social welfare over standard, Recurrence causes noncoordinated policy interventions, but improvement is moderate. (JEL E32, E44, E52, E61)

Mini-Grids for the Base of the Pyramid Market: A Critical Review

The lack of access to electricity of more than 1.1 billion people around the world remains a major developmental challenge and Goal 7 of the Sustainable Development Goals (SDG) as well as Sustainable Energy for All (SE4ALL) have set a target of universal electrification by 2030. Various studies have identified mini-grid-based electrification as a possible solution. There is a growing body of literature available now that has explored the feasibility, practical application and policy interventions required to support mini-grids. Through a review of available literature, this paper explores whether mini-grids can be a solution for the base of the pyramid (BoP) market and the challenges faced in deploying mini-grids in such markets. Interventions to support the mini-grid deployment are also discussed. The paper finds that the mini-grids are targeting the BoP market but the business is not attractive in profitability terms and requires financial support. Lack of regulatory clarity and non-coordinated policies affect the financial viability of projects, which requires careful support. Mini-grid electrification has hardly been embedded in rural development agenda and hence they have not contributed significantly to livelihood generation. Careful realignment of policies, regulatory frameworks and support systems can better support mini-grid deployment in developing countries.

Coordinating Monetary and Financial Regulatory Policies

I study monetary and macro-prudential policy intervention in a general equilibrium economy with recurrent boom-bust cycles. Recurrence causes forward-looking variables to also react to policy intervention during phases in which the intervention is inactive. Macro-prudential policies that contain systemic risk in financial markets during booms, therefore, relax market-based funding constraints during busts, which helps mitigate the severity and shorten the duration of economic meltdowns. Contractionary monetary interventions during booms also have (latent) beneficial effects during busts. Coordination between the two policy instruments improves social welfare over standard, non-coordinated policy interventions, but improvement is moderate.

Supply chain coordination for a deteriorating product under stock-dependent consumption rate and unreliable production process

Article history: Received 1 July 2010 Received in revised form 2 October 2010 Accepted 4 October 2010 Available online 4 October 2010 This article develops a supply chain coordination model with a single-vendor and a singlebuyer. The vendor manufactures the product in lots and delivers to the buyer in equal shipments. The vendor’s production process is not perfectly reliable. During a production run, the process may shift from an in-control state to an out-of-control state at any random time and produces some defective items. The buyer whose demand is assumed to be a linear function of the on-hand inventory performs a screening process immediately after each replenishment. Moreover, the buyer’s inventory is deteriorated at a constant rate over time. The vendor-buyer coordination policy is determined by minimizing the average cost of the supply chain. It is observed from the numerical study that channel coordination earns significant cost savings over the non-coordinated policy. © 2011 Growing Science Ltd. All rights reserved.

Cross-border coordination of prudential supervision and deposit guarantees

We study the optimal joint design of prudential supervision and deposit guarantee regulations in a multi-country, integrated banking market, where policy-makers have preferences regarding profitability and stability of the banking sector. Non-coordinated policies will tend to yield too little supervision and too much deposit insurance. The paper concludes with recommendations on policy priorities in this area.

Company Taxation and Merger Incentives in International Oligopoly: on International Policy Coordination with Strategic Trade

We analyse how national taxation of firms is likely to affect merger incentives in international markets. In particular, we ask whether non-coordinated trade policies stimulate cross-border mergers that are overall inefficient, and if this then is an argument for international coordination of such policies? We address this issue in a setting where policy makers use two-part tariffs to tax exporting firms. The analysis reveals that while non-coordinated policies may induce cross-border mergers by allowing the firms in question to play national policy makers out against each other, this can nevertheless be overall welfare enhancing compared to market outcomes under coordinated policy making.

Optimal lot sizing for deteriorating items with triangle-shaped demand and uncertain lead time

The ordering policy for retailers and the suppliers' system are influenced by lead time and deterioration. In this study, we consider deteriorating items with triangle-shaped demand and uncertain lead time. The triangle-shaped demand has the characteristic of increasing demand during the introduction season followed by decreasing demand immediately after the peak season. An algorithm is developed to derive a replenishment policy such that the expected unit time profit is maximised. A numerical analysis of the coordinated and noncoordinated policies are also presented for comparison. [Submitted 08 January 2008; Revised 15 May 2008; Revised 21 September 2008; Accepted 29 September 2008]

Cross-Border Coordination of Prudential Supervision and Deposit Guarantees

We study the optimal joint design of prudential supervision and deposit guarantee regulations in a multi-country, integrated banking market, where policy-makers have preferences regarding profitability and stability of the banking sector. Non-coordinated policies will tend to yield too little supervision and too much deposit insurance. The paper concludes with recommendations on policy priorities in this area.

Access Regulation and Cross-Border Mergers: Is International Coordination Beneficial?

The international integration of regulated markets poses new challenges for regulatory policy. One question is the implications that the overall international regulatory regime will have for cross-border and/or domestic merger activity. In particular, do non-coordinated policies stimulate cross-border mergers that are overall inefficient, and is this then an argument for international coordination of such policies? The paper addresses this issue in a setting where firms must have access to a transportation network which is controlled by national regulators. The analysis reveals that while non-coordinated regulatory policies may induce cross-border mergers (by allowing the firms in question to play national regulators out against each other), this can nevertheless be overall welfare enhancing compared to market outcomes under coordinated regulation.

Tax Evasion, Tax Competition and the Gains From Nondiscrimination: the Case of Interest Taxation in Europe

This paper uses a game-tlieoredc approach to analyse the taxadon of interest income in Europe in the presence of tax evasion. The model allows tis to assess the success of various reform proposals. We argue tbat the tax treatment of nonresidents' interest income plays a crucial role. When decisions on discriminatio n and on withholding tax rates are made noncooperadvely, the outcome is similar to a prisoners' dilemma. All countries discriminate, but in equilihrium internationally mobile portfolio capital evades taxation successfully. In contrast, if all governments did not discriminate, tax competition leads to less tax evasion. The integration of capital markets in Europe has hrought various benefits. At the same time, however, governments struggle to contain tax evasion. International capital flight as an attempt to evade taxes is particularly relevant in the area of taxation of interest income. Banking secrecy laws in some EU countries and low tax rates in small countries like Luxembourg, which hoost its role as financial centre, have led to the effective elimination ofthe taxation of interest income for some investors. The Economist speaks, not surprisingly, about 'The Disappearing Taxpayer' (May 31, 1997). Several proposals have been made in order to overcome this situation.' The European Commission supports the introduction of a minimum tax rate and/ or the status of a community resident. Under the concept of a community resident a country's tax on interest income is independent of the residence of the investor (practically realising the source principle). By contrast, a proposal of the OECD (1977) argues in favour of a maximum withholding tax rate on interest income. None of these proposals has been unanimously accepted since gains and losses from non-coordinated policies differ greatly across member states. The main beneficiary of the present situation is Luxembourg which attracts large amounts of foreign capital, in particular from Germany. The United Kingdom opposes any coordination for political reasons and because tax coordination may also threaten London's role as the leading financial centre in Europe. In contrast, Germany sticks to its traditional bank secrecy law which enables resident investors to evade German taxation by investing abroad.

Gains from International Macroeconomic Policy Coordination Under Alternative Objective Functions

This paper investigates whether coordinated macroeconomic policy reactions to a negative productivity shock give better results than non-coordinated policies and passive adaptations to a shock. The framework used is the McKibbin-Sachs Global Model of the world economy. which incorporates rational expectations. The USA. Japan and Germany are regarded as players in a dynamic game. using money supplies and government consumption as strategic variables. The implications of different specifications of the objective functions are investigatcd. It is shown that in general. cooperative policies give results that are superior to non-cooperativc Nash equilibrium solutions. The gains from active policy-making and from cooperation depend strongly on the assumptions made about the objective functions. in particular about the weights given to different target variables.

On the Gains from International Macroeconomic Policy Coordination

We consider the question whether coordinated macroeconomic policy reactions to a negative productivity shock give better results than non-coordinated policies and passive adaptations to a shock. The framework used is the McKibbin-Sachs Global Model of the world economy, which incorporates rational expectations. The USA, Japan and Germany are regarded as players in a dynamic game, using money supplies as strategic variables. It is shown that cooperative policies give results that are slightly superior to non-cooperative Nash equilibrium solutions. On the other hand, both cooperative and non-cooperative policies give distinctly better results than policies that do not react actively upon the productivity shock.