Discretionary Policy Research Articles

Current account dynamics: A SVAR analysis when the country‐specific shocks are correlated at leads

AbstractThe assumption of no correlation of the structural shocks as Blanchard and Quah's identification (BQ) assumes is not suitable when central banks, through discretionary policies or inflation targeting regimes, affect the output growth among other goals. In this study, we analyze the present value model of the current account (PVM) using a three‐SVAR specification and a modified BQ to identify three structural shocks: country‐specific permanent, country‐specific temporary, and global, but allowing the correlation of the domestic ones. Using Australia, Canada, Norway, and the UK, we find that those shocks are correlated and are less volatile than BQ would assume they are. The PVM predictions that hold are: (i) a positive (no) response in the current account to a country‐specific temporary (global) shock; and (ii) with the exception of Australia, there is no response in the current account to a country‐specific permanent shock. In addition, for all countries, the country‐specific temporary shock dominates current account changes but does not dominate net output growth fluctuations, which was a puzzle identified by a prior study. The role of the shock is enhanced by the modified BQ, but even with this enhancement, it still does not hold the most significant role in output variations, as indicated by PVM.

Diskresi Pemerintah Kota Surabaya Terhadap Pelaksanaan Peraturan Pemerintah Pengganti Undang-undang Nomor 2 Tahun 2022 Tentang Cipta Kerja Untuk Percepatan Perizinan Bangunan

This study aims to find out the explanation of discretionary policies related to the implementation of permits in the Surabaya City Government and to find out the legal consequences of discretionary policy strategies in accelerating the implementation of building permits in the City of Surabaya. The discretionary policy was carried out to overcome the stagnation of requirements for business/non-business licensing services and to streamline the administration of government in the City of Surabaya due to the enactment of the work copyright law which has changed building permits to building approvals. This aims to provide legal certainty for the government and also the community in the form of submitting business/non-business licensing services until the suitability of space utilization activities and building approvals can be issued. The writing method used in this research is normative legal research using case studies (case approach). The results of the analysis of this study indicate that the use of discretion by the Surabaya City Government regarding the implementation of Perppu Number 2 of 2022 concerning Job Creation to accelerate building permits or building approvals for building permits has an impact on two sides, namely the local government provides legal certainty in issuing certificates city plans and building approvals. Apart from that, it also provides legal certainty for the community in applying for business/non-business licensing services and vice versa increasing the local revenue of the City of Surabaya through building permit fees or building approvals.

Contact and control: Engagement and influence among women of color state agency heads

AbstractWhile scholarship is delving into the representation of women and people of color within the U.S. bureaucracy, less is known about these individuals' discretion within their roles. Using an intersectionality framework, this article explores the experiences of women of color in leadership roles within state government agencies, their communication with elected superiors, and perceptions of their own policy discretion and communication compared with White men and women, and men of color. Leveraging the American State Administrators Project, we find that women of color have less communication with elected officials and their staff but also perceive that they have less discretionary control over their departments. This article highlights that while women of color are increasing in leadership roles within state bureaucracies, disparities exist between women of color and their colleagues. We call attention to the disproportionate levels of oversight and discretion perceived by women of color.

Eingebaute Solidarität: „Starke Schultern“ finanzieren Entlastungen in Krisenzeiten

Abstract In times of exceptionally severe crises, it may be necessary for the state, in the spirit of solidarity, to cushion the financial burdens borne by lower-income households. To do so, it might be necessary to use discretionary policies in addition to automatic stabilizers. High inflation caused by the Russian war of aggression on Ukraine is one such crisis. Since the state has no financial resources of its own, it can only do so - apart from stretching the burden over time - through increased redistribution from upper to lower incomes. What are the effects of this additional government redistribution along the income distribution when considering not only the expenditures for the discretionary relief packages, but also the revenues used for this purpose - which can only be quantified via economic modeling?

Fiscal Decentralization in Indonesia: Does Discretionary Policy on Tax Facilities Remain Urgent?

The Regional Governments in Indonesia provide tax facilities as regulated in each region’s Head of the Region Regulations as a form of implementing fiscal decentralization. This study examined 56 Head of the Region Regulations in Indonesia on land and building tax facilities. This legal research examined the concept of tax facilities as a reflection of fiscal decentralization. In addition, it reviewed the application of discretionary power and assessed differences in Head of the Region Regulations on regional tax facilities. The result of the research demonstrated differences in the material substances of the Head of the Region Regulations on tax facilities. Those differences reflected the discretionary power that came from the Regional Tax Law. This discretion must be maintained because Heads of the Region need flexibility in managing the potential of their regions as the embodiment of regional autonomy.
 Keywords: Discretionary Power, Fiscal Decentralization, Regional Government, Tax Facility

Tax Avoidance : Do Foreign Interests Have a Role?

FDI may have beneficial effects on economic development. On the other hand, the presence of foreign investment leads to foreign interest, which has the potential to minimize tax burden by exploiting cross-border tax policy discretion. This study examines the influence of foreign interest on the tax avoidance practices of firms in Indonesia. This is quantitative research using a sample of firms listed in the IDX80 index with a financial reporting period of 2018-2021. The results of this study indicate that foreign ownership has a positive effect on tax avoidance. Meanwhile, the number of foreign commissioners and the number of foreign directors does not affect tax avoidance. Apart from contributing to the theory, this study is also a concern for the DGT in anticipating the risk of tax avoidance by foreign capital firms. Keywords: tax avoidance, foreign ownership, foreign board of commissioner, foreign board of director

Authoritarian leaders, economic hardship, and inequality

ABSTRACT Do political leaders influence the level of economic inequality in authoritarian countries? Building on previous studies on political leaders and authoritarian regimes, we argue that economic inequality is likely to decrease during the tenure of authoritarian leaders with personal experiences of economic hardship. Since authoritarian leaders have greater policy discretion than their democratic counterparts, their policy choices are less constrained by other political actors and institutions. As their material background makes authoritarian leaders more likely to favour introducing redistributive measures, they are expected to use such strategies for political survival, leading to a decrease in economic inequality. We created and analysed a new dataset on political leaders’ socioeconomic backgrounds in authoritarian regimes and found support for our arguments. In line with recent studies on political leaders and policy outcomes, our findings suggest that leaders’ personal experiences of economic hardship greatly affect their policy choices in authoritarian countries.

Financial globalisation in ASEAN+3: Navigating the financial trilemma

AbstractThis paper offers a critical narrative of the ASEAN+3 economies' tryst with financial globalisation over the last two decades, with a specific focus on the evolution of the region's internationalisation of the financial sector. By applying the ‘Financial Trilemma’ framework, we posit how the recent emergence of foreign fintech players, digital banks, and Big Techs in finance are promoting further de facto financial integration in the region whilst also simultaneously exacerbating financial stability concerns alongside posing other non‐financial risks to market integrity, consumer privacy, and data protection. The regulation of fintechs and Big Tech in finance introduces a different type of policy trilemma for regulators across three discrete policy objectives/outcomes, viz. financial stability/market integrity; market efficiency/competition; data privacy/consumer protection. We argue that this necessitates greater regional financial cooperation by the ASEAN+3 economies which inevitably requires regional financial regulators to be prepared to forsake a degree of sovereign autonomy over respective national financial policies and to stave off systemic risks arising from the interconnected nature of transnational digital banking conglomerates.

URGENSI KEBIJAKAN DISKRESI DAN FISKAL GUNA MENYELAMATKAN APBN DALAM KONDISI PANDEMI COVID-19

Research in this journal will discuss the urgency of discretionary policies and fiscal policies made by the Government in an effort to save the state budget in the midst of the Covid-19 pandemic conditions. As we know, the consequences of the Covid-19 pandemic affected all sectors, including the country's economic sector. State expenditure increases because the health sector requires a lot of facilities, while state income decreases because many businesses or MSMEs or tourist attractions are quiet and slumped. This journal will examine how discretionary policies are made in a short and concrete time for precarious conditions, while fiscal policies are to regulate the running of the economy and state finances.

Discretion as a Government Policy Innovation in Indonesia

The research aims to find out how discretion is implemented as a form of government policy innovation in Indonesia. The importance of discretion for local governments to provide innovative policies for ideal government services. This study uses normative legal research methods with statutory approaches, conceptual approaches, case approaches, and comparative approaches. The analytical method used is descriptive and prescriptive methods. The results of the discussion show that discretionary arrangements that are implemented as a form of government policy innovation are steps that must be taken in supporting innovative officials as an effort to find common ground between innovation and law, not to be passive in realizing innovation. Discretionary criteria as government policy innovations in their implementation are assessed based on four aspects: authority, limits, testing, and judicial control. The ideal discretionary model in making innovation policies to realize bureaucratic reform must be based on the main values of the welfare state. In addition, discretionary policies must follow Pancasila values, as well as collaboration between authorities. Discretionary policies must follow the general principles of good governance (AUPB). Thus, it is necessary to have additional principles as a basis for implementing discretionary innovation policies in realizing bureaucratic reform, namely the principle of motivation, the principle of fair play, the principle of prohibition of detournement de pouvoir, the principle of justice, the principle of freedom, the principle of integrity, the principle of real goals, the principle of effectiveness and the principle of participation.

News and narratives: A cointegration analysis of Russian economic policy uncertainty

Russia has become more integrated and dependent on global developments over the last decades, despite being ruled by an increasingly autocratic regime. We perform a cointegration analysis on a monthly dataset spanning from 2001 to 2021, with a limited set of variables reflecting both domestic and international developments. Results point to significant interactions between these two dimensions, mostly over the short-term. Kremlin may employ media control as a discretionary policy instrument to influence popular support for the incumbent, but this works slowly and is hardly sustainable in the long-term.

Trade Globalization and Inequality: Evidence Across Economies

In recent years, trade globalization has experienced rapid growth, however, within many countries, income gap is also widening. Whether there exists causality needs further investigation. This work uses the panel of 166 countries during 1970-2018 and employs the exogeneous variation of trade globalization in the last period to explore its effect on income inequality. The paper finds trade globalization has a significantly positive effect on income inequality and it is robust when constructing instrument variables, considering long term effects or using changes in the regression. However, the effect varies in economies with different income and development levels, and technology, education, governance, policy and other factors may have important roles. Now, trade globalization is still a promising opportunity for all countries and each should develop discretionary policy to make the most of it.

Arrangements for the Termination of Investigations in the Prosecution of Criminal Cases of Domestic Violence According to Law Number 8 of 1981 Concerning the Criminal Procedure Law (Case Study of the East Dumai Police)

Law No. 23 of 2004 concerning Domestic Violence in article 1 paragraph 1 states that the integrity and harmony of a happy, safe, peaceful and peaceful household is the dream of everyone in the household. This study aims to find out and analyze the arrangements for stopping investigations in the prosecution of criminal cases. As well as knowing and analyzing about knowing the process of stopping investigations in domestic violence criminal cases. This research belongs to the normative type of research. So it can be known that investigators as members of the Police, in principle, have discretionary authority. Termination of investigation is a discretionary policy of law enforcement with the requirement that if the perpetrator reneges on the peace agreement by repeating the violent crime, it will be directly processed formally (court). Based on the explanation above, it can be concluded that investigators as members of the Police, in principle, have discretionary authority.

Innovation Funding and the Valley of Death

Innovation is a public good. As with other public goods, it is expected to be underproduced if only private incentives are present. Therefore, the law strives to encourage innovation via an array of stimulus mechanisms. The law offers three main mechanisms: intellectual property (IP), cash transfers—mainly prizes and grants—and tax incentives. Vast literature analyzes and compares these innovation stimuli in search of the optimal mix to boost innovation. Yet a key problem is largely overlooked: together, the existing stimuli do not cover the lion’s share of the innovation lifecycle. At the beginning of the innovation process, companies can win grants or prizes to cover research & development (R&D) expenses. When the company is already selling, it can enjoy IP payoffs and tax credits. In between, no targeted stimuli exist. This is an incongruity because most innovative endeavors struggle neither in the R&D phase nor at the sales stage. In particular, for startups in the high-tech sector, it is precisely the phases between R&D and sales that prove fatal. This phenomenon is so well-known that the market has created a nickname for it: “the valley of death.” The gap in funding yields high costs. First, underfunding yields an exorbitant startup failure rate, which represents innovation loss and harms the incentive to engage in innovation. Second, the dearth of funding produces inferior innovation and imposes competitive harm against well-funded incumbents. Third, distributive concerns arise because the current regime disproportionately affects entrepreneurs with less access to capital on the free market. This Article considers three main ways to alleviate these concerns. The first way is to “stretch” the existing stimuli to cover the post-R&D-pre-market stage of companies. The second possibility is to improve the private market for startup funding. Finally, a third solution consists of discrete policies to address the costs that the stimulus gap imposes without directly addressing this gap. For example, it is possible to conceive of ways to tackle distributive concerns of startup funding. This Article makes at least three novel contributions to the literature: first, it analyzes the gap in inducement tools in the innovation lifecycle, which is largely overlooked. Second, it explores the inefficiencies of stimuli shortages in terms of innovation policy. Finally, this Article takes the first step in exploring potential solutions.

When is government debt accumulation optimal in a liquidity trap?

When the government issues long-term bonds, the optimal time-consistent fiscal and monetary policy is to consolidate debt in a liquidity trap by increasing labor taxes aggressively. This prescription is at odds with large debt-financed fiscal expansions undertaken in the US during previous liquidity trap episodes. In this article, I show that accumulating debt turns optimal in a medium-scale model with sticky wages and limited asset market participation. In my model, the net disposable income of Rule-of-Thumb households is sensitive to tax variations and constitutes an additional constraint to fiscal policy. For plausible calibration, the discretionary policy maker chooses to curtail its tax increase and to beef up its spending stimulus. In long simulations, the volatility of taxes falls below the one of government spending, in line with empirical evidence. The debt increase in the liquidity trap is also consistent across maturities, both under discretion and commitment.

Combining rules and discretion in economic development policy: Evidence on the impacts of the California Competes Tax Credit

We evaluate the effects of one of a new generation of economic development programs, the California Competes Tax Credit (CCTC), on local job creation. Incorporating perceived best practices from previous initiatives, the CCTC combines explicit eligibility thresholds with some discretion on the part of program officials to select tax credit recipients. The structure and implementation of the program facilitates rigorous evaluation. We exploit detailed data on accepted and rejected applicants to the CCTC, including information on the scoring of applicants with regard to program goals as well as on funding decisions, together with restricted-access American Community Survey (ACS) data on local economic conditions. Using a difference-in-differences approach, we find that each CCTC-incentivized job in a census tract increases the number of individuals working in that tract by close to 3 – a significant local multiplier. Local multipliers are larger for non-manufacturing awards than for manufacturing awards. CCTC awards increase employment among workers across socioeconomic groups and in more- as well as less-advantaged neighborhoods, but have limited impact on residents of affected communities. We validate our empirical strategy and confirm our core results using an alternative dataset and recently developed difference-in-differences methods that correct for potential biases generated by variation in treatment timing and treatment effect heterogeneity.

How does delegation structure shape agent discretion in EU foreign policy? Evidence from the Normandy Format and the Contact Group on Libya

ABSTRACT Informal groupings have proliferated in EU foreign policy over the past decade, despite the enhanced role of the High Representative tasked with ensuring the coherence of this policy domain under the Lisbon Treaty. This article analyzes how the decision of select EU member states to act on certain policy issues through informal groupings, bypassing the EU framework, affects the High Representative’s room for maneuver. Drawing on the principal-agent model, the emergence of informal groupings is conceptualized as a manifestation of pathological delegation, which undermines High Representative’s role. The findings reveal two factors that may nevertheless increase the agent’s discretion in cases of delegation anomalies: the low heterogeneity of member state preferences toward the informal grouping and the interaction between agents in the same domain, facilitating agent’s performance. By examining agent's discretion when delegation anomalies arise, the article may be useful for scholars investigating delegation and agency in international organizations.

Liquidity-constrained consumers and optimal monetary policy in a currency union

This paper examines optimal monetary policy in a currency union model with liquidity-constrained (LC) consumers. The result demonstrates that given LC consumers in the home country, the response of macroeconomic variables to a foreign structural shock is generally dampened as a share of foreign LC consumers increases. This paper finds that the costs of discretionary policy are generally not greater in a currency union in which LC consumers exist in both countries. We address that the presence of nominal wage rigidity significantly lowers welfare losses in our model.

Between Innovation and Precedent the Treaty of Waitangi exception clause in Aotearoa New Zealand’s free trade agreements

New Zealand includes a Treaty of Waitangi exception clause in all its free trade agreements. The clause aims to protect Māori interests arising from the government’s Treaty of Waitangi obligations. But despite changes to New Zealand’s trade agreements, an evolving relationship between the New Zealand government and Māori, and debate over the adequacy of the clause, the exception clause has remained unchanged for 20 years. We suggest that the reproduction the same text helps New Zealand negotiators to credibly argue that inclusion of the clause is required for domestic political reasons. Yet this textual stability also hinders innovation. At the international level, FTA partners might balk at any widening of policy discretion afforded by a revised clause. At the domestic level, revising the clause would require difficult debate over the extent of appropriate protections for Māori in New Zealand’s trade agreements. As calls to change the exception clause grow, New Zealand trade policymakers will need to carefully balance innovation and precedent.

Understanding Sexual and Gender Minority Privacy

This panel presentation is a summary update of the recent research from the 2021 ALISE Research Grant Competition Award: Educating for Equity?: Sexual and Gender Minority Privacy in Library and Information Studies Education. This session aligns with the conference theme, “Go back and Get It: From One Narrative to Many” by illustrating the ways in which “privacy” is a polysemous concept, and information professionals grappling with privacy from a policy perspective must be prepared for its multi-faceted nature and the distinct privacy needs of different communities. 
 New library and information professionals are expected to uphold a number of ethical principles, often in contexts of incredible complexity, wherein principles may well be in conflict with one another. One of the major tools by which organizations may navigate such conflicts is policy. Indeed, “[f]or current and future information professionals to be truly prepared for the far-reaching impacts of policy on their careers and their institutions, LIS educators need to make a commitment to teaching information policy” (Jaeger et al., 2015, p. 175). That education should approach information policy in a holistic manner, as “an interrelated set of issues that comprise a larger entity” (Jaeger et al., 2015, p. 175), rather than a discrete set of issues such as privacy and intellectual freedom. Educating students in information policy becomes even more urgent when one considers how much of the ecosystem in which users participate through libraries and other information institutions is outside of the direct control of the institution itself, mediated by contracts and policies. 
 In order to explore this larger question of information policy education for LIS students, this project proposed to examine a specific case: library policy addressing the privacy of sexual and gender minority (SGM) people (also often referred to by some variation of LGBTQI2SA+ people). This case sits at the confluence of several areas of discrete policy concern within LIS, including diversity, equity, and inclusion, equal access to information, privacy, and intellectual freedom. Therefore, this project provides a good opportunity to explore if and how LIS students are being equipped to deal with policy questions as “an interrelated set of issues.” This is also a case of incredible urgency, as COVID-19 has deepened existing inequities facing sexual and gender minority people in the United States. 
 This project examined whether students are equipped to handle complex questions of information policy by examining the urgent information problem facing libraries: the privacy of SGM individuals in the face of COVID-19 surveillance. Sexual and gender minorities face significant information risks that differ from those of cis-gender, heterosexual people; improper information disclosure can lead to the loss of employment, housing, access to health care, and social support for SGM due to outing. Because of the risks of outing and discrimination, privacy concerns are of special concern to LGBTQ+ people in the face of pandemic surveillance, particularly digital surveillance. While privacy rights have been a point of controversy and uncertainty for all in the face of digital surveillance and the exigencies of the pandemic, sexual and gender minorities may well struggle to assert even those rights to which they are unquestionably entitled. However, even those who choose to advocate for their communities and assert their rights often do not realize that libraries are a potential place of risk. This study asked, “Are LIS programs preparing their students to meet the needs of LGBTQ+ patrons and stakeholders from a policy perspective in the workplace?” We have answered that question through a mixed-methods study, including a survey of LIS faculty, a content analysis of ALA-approved masters programs’ learning outcomes and syllabi, a document analysis of the privacy policies of a purposive sample of libraries, and interviews with library employers. The panel will share the insights gained from this study in order to expand the understanding of the privacy of marginalized groups within libraries, and provide direction for future research into information policy education within LIS. 
 The panel will also discuss how this research has led to collaborations with other colleagues which focuses on human-centered digital privacy solutions for digital and social media. The burgeoning growth of artificial intelligence (AI) and machine learning (ML) solutions, the ubiquity of social media and digital repositories, and cross-platform data usage have raised the stakes of addressing digital privacy. The enormity of data presents an uphill task to identify and mitigate private information on digital and social media platforms. Lastly, through engagement with participants, probing questions will be asked of the audience to brainstorm and collect ideas. Panel attendees will be active participants, working with the panelists in breakout groups, considering how find privacy solutions that are responsive to the legal and regulatory, social, cultural, and technical dimensions that we encounter within LIS education and beyond.