Policy Rules Research Articles

Speech Act Analysis on Statements Delivered by The Minister of Foreign Affairs of The Republic of Indonesia

This research investigates a speech act and felicity condition from the minister of foreign affairs of the Republic of Indonesia. In this research, the researcher analyzed speech act categories and felicity conditions in a statement. This research used descriptive qualitative research to analyze. The instrument of this research was the researcher himself. Transcripts and note-taking were also used to collect the data. The researcher analyzed three parts: the list and collection of all the statements, categories, types of speech acts, and felicity conditions. Lastly, conducted all types of speech acts and felicity condition types were found in the statement. As a result, the researcher found 70 assertive, 44 directive, 47 commissive, 12 expressive, and five declarative for illocutionary acts. Then, perlocutionary acts are 86 persuading, 80 convincing, and 12 scaring. And for the felicity condition shows 41 propositional content conditions, 61 preparatory conditions, 47 sincerity conditions, and 29 essential conditions. In conclusion, the minister's statement contains assertive and persuasive speech acts, so the condition of felicity is a condition of preparation. In addition, ministerial statements have followed the rules of Indonesia's free and active foreign policy.

Re-Examining the South African Reserve Bank’s Policy Reaction Function Using the NARDL Model

The 3–6 percent inflation target is a policy rule used by the South African Reserve Bank (SARB) to fulfil its statutory obligation of ensuring a low and stable inflation environment and its policy reaction function assesses how the Reserve Bank responds to deviations of inflation from its target. We rely on nonlinear autoregressive distributive lag (NARDL) models to estimate the asymmetric preferences which the Reserve Bank has to inflation deviations during rising and falling episodes of inflation. Using quarterly data spanning from 2002:q1 to 2021:q4, we estimate the policy reaction functions using 7 disaggregated measures of inflation to capture the heterogeneity in the formation of price expectations. We further segregate our data into two sub-periods, corresponding to the pre-crisis and post-crisis era, as a robustness exercise. Overall, our findings indicate that in the post-crisis era the SARB (i) has become more responsive to inflation, output fluctuations and exchange rates and (ii) has responded more aggressively to rising inflation than falling inflation.

Establishing Regional Regulations for the Protection of Local Wisdom

Local governments structure legislation into a policy rule regarding the protection of local wisdom that must be carried out due to globalization. Globalization is something that cannot be avoided. Its influence can become a problem or negatively impact fading cultural identity if the community wrongly addresses it. This is different if the community and local government can respond positively to globalization because this can increase the community's cultural identity. This paper focuses on the study of how local government policies maintain cultural traditions as a pearl of local wisdom? and what is the paradigm of the local government in establishing regional regulations regarding the protection of local wisdom. The approach method utilized is a socio-legal or socio-juridical approach. This research was carried out in the city of Pariaman, West Sumatra. The research data, both primary and secondary data, were analyzed qualitatively. Based on the research result, the concrete paradigm of the Regional Government in protecting the values of local wisdom is a regional legislation on safeguarding indigenous culture as a Pariaman community's local wisdom. It can be interpreted that the Regional Regulation is a concrete agreement towards the ideal concept of protecting local wisdom in the Pariaman community. The ideal concept seen from the substantive values of protecting Local wisdom's worth in the Pariaman community must be founded on sociological, philosophical, and legal considerations. These three factors prioritize or rank the values within this local wisdom.

Has the Fed Responded to House and Stock Prices? A Time-Varying Analysis

Abstract We investigate whether the Federal Reserve has responded systematically to house and stock prices and whether this response has changed over time using a Bayesian structural VAR model with time-varying parameters and stochastic volatility. To recover the systematic component of monetary policy, we interpret the interest rate equation in the VAR as an extended monetary policy rule responding to inflation, the output gap, house prices, and stock prices. Our results indicate that the systematic component of monetary policy in the United States responded to real stock price growth significantly but episodically, mainly around recessions and periods of financial instability, and took real house price growth into account only in the years preceding the Great Recession. Around half of the estimated response captures the predictor role of asset prices for future inflation and real economic activity, while the remaining component reflects a direct response to stock prices and house prices.

A DEMATEL-ISM Integrated Modeling Approach of Influencing Factors Shaping Destination Image in the Tourism Industry

Tourism is an upcoming industry with a high potential for future growth. Many factors influencing destination image (DI) are affecting tourism development. Therefore, studying factors influencing DI is essential. This research study aims to model the factors influencing DI in the tourism industry. A total of 15 factors were the focus of the study. Data on the factors were collected from 10 tourism industry experts. An integrated modeling approach was adopted using the Decision-Making Trial and Evaluation Laboratory (DEMATEL) and Interpretive Structural Modelling (ISM). Interrelationships between the factors, causal effects, relative importance weights, ranks, and driving and dependence powers were analyzed to develop causal and interpretive structures. The developed model revealed that political stability is foundational to other aspects of DI. Then, factors related to safety and security, policy rules and regulations, tourism infrastructure, information and communication technologies, environment, economic development and affluence, fairs, exhibits, and festivals in a destination should be considered. These affect others related to health and hygiene, transport infrastructure, natural and cultural resources, human resources, quality of services, prices, hospitality, friendliness, and receptiveness aspects in a destination. The developed model provides a valuable framework for decision-makers in the tourism industry to enhance and shape the DI.

EU OPEN STRATEGIC AUTONOMY POLICY AS A TRIGGER OF INDUSTRIAL DEVELOPMENT AND A CHALLENGE FOR REGULATORY COOPERATION

The purpose of the article is to study the instruments of the policy of strategic autonomy of the European Union with an emphasis on projects of common European interest, and to assess its impact on the development of the industrial potential of member countries in the context of intensified economic competition in the international arena, accompanied by the erosion of regulatory cooperation. EU strategic autonomy aims to reduce the productivity gap between the EU and the US in all sectors of the economy. Strategic autonomy, among other things, is aimed at updating the EU’s comprehensive industrial strategy, which will help counteract trends of deindustrialization, expand access to venture capital, and accelerate the formation of a truly single capacious market of EU member states. Strategic autonomy will affect the prospects for building a sustainable, climate-neutral and cost-effective system that contributes to the growth of citizens’ well-being. It has been established that the new approach to industrial policy is closely related to the policy of strategic autonomy of the EU; a whole range of measures is aimed at increasing the effectiveness of industrial policy: the adoption of an Action Plan for the proper implementation and compliance with the rules of the single market; review of EU competition rules; development of an Action Plan for the protection of intellectual property, which involves ensuring the technological sovereignty of the EU; combating the theft of intellectual property, improving legislation in the field of public procurement, taking into account environmental requirements. The New Industrial Policy identifies the key factors in the EU’s industrial transformation and aims to achieve a threefold objective: maintaining global industrial competitiveness and a level playing field both in the domestic market and at the global level; turning Europe into a climate-neutral part of the world by 2050; achieving digital leadership in the world. In essence, we are talking about a new quality of economic growth, a new environmental model. The strategy is aimed at increasing the strategic autonomy of the EU in a period of increasing global competition and provides for reducing dependence on external supplies of critical raw materials, developing key technologies strategically important for the industrial future of Europe. The EU’s strategic autonomy policy restricts trade and competition in several ways: through the implementation of quantitative restrictions (quotas; import bans; bans on foreign investment); through price controls, subsidies and standards that apply equally to domestic and foreign suppliers; by establishing new digital policy rules (new restrictions on data regulation; data exchange obligations; taxes on digital services; regulation of digital services markets). Choosing unbalanced policy priorities can lead to reduced investment efficiency, slower competition, slower innovation, and worsening productivity and technology gaps between the EU and the US. The regulatory potential of strategic autonomy to promote market distortions is usually justified by the benefits of safety for society, ethical and environmental considerations, welfare effects for consumers and increased competitiveness of producers, however, it is predicted that it will inevitably produce losses that will be incurred by economic entities. manufacturing practices, review of value chains and supply chains, and due to legal uncertainty associated with how regulation is developed and applied. This inevitably indicates the risks of increased regulatory competition on an international scale.

Asymmetries in multi-target monetary policy rule and the role of uncertainty: Evidence from China

Have monetary policies asymmetrically responded to targets besides output and inflation? Multiple targets have been found to exist for monetary authority, and uncertainty is having a growing impact on monetary policy in China. Using the nonlinear autoregressive distribution lag (NARDL) model and data from China from 2001Q1–2022Q3, we build a multi-target monetary policy rule with uncertainty and verify the monetary authority’s asymmetric reactions to the exchange rate, housing price, and uncertainty. Specifically, the Monetary authority of China responds more to a decline than increase in the output gap, and responds more to an increase than decrease in the inflation gap, exchange rate gap, housing price gap, and uncertainty. This practice supports the view of expanding the targets of the Taylor rule, while also providing innovative ideas for asymmetric monetary policy responses for countries with an economic structure or population density comparable to China.

Housing Boom‐Bust Cycles and Asymmetric Macroprudential Policy

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

The Association of Supplemental Nutrition Assistance Program Participation and Food Insufficiency among Households with Children in the United States during COVID-19

BackgroundAs the expansion of Supplemental Nutrition Assistance Program (SNAP) benefits and pandemic emergency assistance programs ended in late 2021, little is known about subsequent trends in food insufficiency (FI) among households with children. ObjectivesThis research examined the association between SNAP participation and FI among households with children in the United States, particularly non-Hispanic Black (Black) and Hispanic households. MethodsThis cross-sectional analysis used Household Pulse Survey data collected from December 2021 to May 2022. Spatial analysis was conducted to visualize FI and SNAP participation rates across 50 states. With state SNAP policy rules as exogenous instruments and sociodemographic factors as control variables, 2-stage probit models were utilized to assess the SNAP and FI association among all (n = 135,074), Black (n = 13,940), and Hispanic households with children (n = 17,869). ResultsApproximately 13.9% [95% confidence interval (CI): 13.85%, 13.99%] of households experienced FI, and 20.4% (CI: 20.35%, 20.51%) received SNAP benefits. Among Black and Hispanic households, higher rates were observed, with 23.3% (CI: 23.12%, 23.4%) and 20.8% (CI: 20.61%, 20.95%) experiencing FI and 36.3% (CI: 36.1%, 36.5%) and 26.9% (CI: 26.61%, 27.13%) receiving SNAP benefits. These rates varied across states, ranging from 8% (Utah) to 21.1% (Mississippi) for FI and from 8.8% (Utah) to 32.7% (New Mexico) for SNAP participation. SNAP participants demonstrated a 12% lower likelihood of FI than nonparticipants (CI: –0.18, –0.05, P < 0.001). Among Black households, SNAP participants had a 29% lower likelihood of FI than nonparticipants (CI: –0.54, –0.03, P < 0.001). However, SNAP participation was not significant among Hispanic households (P = 0.99), nor did it narrow the FI gap between Hispanic and non-Hispanic households (P = 0.22). ConclusionsSNAP participation was associated with lower levels of FI among households with children, particularly for Black households. However, there was no significant association between SNAP participation and FI among Hispanic households with children.

Multisectoral actions in primary health care: A realist synthesis of scoping review.

Multisectoral actions (MSAs) on health are key to implementation of primary health care (PHC) and achieving the targets of the Sustainable Development Goal 3. However, there is limited understanding and interpretation of how MSAs on health articulate and mediate health outcomes. This realist review explored how MSAs influence on implementing PHC towards universal health coverage (UHC) in the context of multilevel health systems. We reviewed published evidence that reported the MSAs, PHC and UHC. The keywords used in the search strategy were built on these three key concepts. We employed Pawson and Tilley's realist review approach to synthesize data following Realist and Meta-narrative Evidence Syntheses: Evolving Standards publication standards for realist synthesis. We explained findings using a multilevel lens: MSAs at the strategic level (macro-level), coordination and partnerships at the operational level (meso-level) and MSAs employing to modify behaviours and provide services at the local level (micro-level). A total of 40 studies were included in the final review. The analysis identified six themes of MSAs contributing to the implementation of PHC towards UHC. At the macro-level, themes included influence on the policy rules and regulations for governance, and health in all policies for collaborative decision makings. The meso-level themes were spillover effects of the non-health sector, and the role of community health organizations on health. Finally, the micro-level themes were community engagement for health services/activities of health promotion and addressing individuals' social determinants of health. Multisectoral actions enable policy and actions of other sectors in health involving multiple stakeholders and processes. Multisectoral actions at the macro-level provide strategic policy directions; and operationalise non-health sector policies to mitigate their spillover effects on health at the meso-level. At micro-level, MSAs support service provision and utilisation, and lifestyle and behaviour modification of people leading to equity and universality of health outcomes. Proper functional institutional mechanisms are warranted at all levels of health systems to implement MSAs on health.

Exchange rate and inflation under weak monetary policy: Turkey verifies theory

SUMMARY For the academic audience, this paper presents the outcome of a well-identified, large change in the monetary policy rule from the lens of a standard New Keynesian model and asks whether the model properly captures the effects. For policymakers, it presents a cautionary tale of the dismal effects of ignoring basic macroeconomics. In doing so, it also clarifies how neo-Fisherian disinflation may work or fail, in theory and in practice. The Turkish monetary policy experiment of the past decade, stemming from a belief of the government that higher interest rates cause higher inflation, provides an unfortunately clean exogenous variance in the policy rule. The mandate to keep rates low, and the frequent policymaker turnover orchestrated by the government to enforce this, led to the Taylor principle not being satisfied and eventually a negative coefficient on inflation in the policy rule. In such an environment, was the exchange rate still a random walk? Was inflation anchored? Does the “standard model” suffice to explain the broad contours of macroeconomic outcomes in an emerging economy with large identifying variance in the policy rule? There are no surprises for students of open-economy macroeconomics; the answers are no, no and yes.

Comparative analyses of fiscal sustainability of the budgetary policy rules

AbstractWe construct a continuous‐time overlapping generations model with an endogenous growth structure and consider fiscal sustainability under two fiscal rules: (i) the government fixes the budget deficit‐to‐GDP ratio and (ii) the government fixes the primary balance‐to‐GDP ratio. Under the constant budget deficit‐to‐GDP rule, fiscal sustainability is ensured when the initial public debt‐to‐GDP and budget deficit‐to‐GDP ratios are sufficiently small. Under the constant primary balance‐to‐GDP rule, it is difficult to ensure fiscal sustainability when the primary balance is in deficit or zero. However, fiscal sustainability is ensured when the primary balance is in surplus and the initial government debt‐to‐GDP ratio is sufficiently small.

Evaluating Fiscal Policy Under Cyclical Balance in Developed Countries

Abstract This study investigates the cyclical patterns of fiscal policy rules using various policy variables that respond to the macroeconomic performance of developed countries over the past few decades. The study reveals that regardless of whether the economy is in a recession or a boom, fiscal policy basically displays counter-cyclical behavior. However, the degree of cyclicality varies depending on the output gap measurements chosen and the countries analyzed. Additionally, the estimates using various fiscal policy indicators demonstrate a strong time variation in fiscal cyclical behavior, resulting in a significant increase in the counter-cyclicality of the fiscal balance. The article also applies the time-varying coefficients vector autoregression model to assess the effects of fiscal policy on output and finds that a boost in the cyclically adjusted primary balance positively impacts production in the short run.

Minimum multipliers for fishery offsets in marine habitats vary depending on the no net loss goal

Offsetting impacts on fishery resources under losses of marine habitats due to development is important to help safeguard seafood security. However, the gains that marine habitat restoration can create for fishery resources remain largely unquantified. It is unknown what area of fish habitats must be restored to fully offset a hectare of development impacts. Here, we quantify minimum offset areas required to achieve different indicators of no net loss (NNL) goals: economic value, catch of each species, and catch of most-caught species. Simulations are conducted by using a case study of mangrove habitat offsets in Australia to infer the minimum restoration area needed to fully offset fishery losses caused by 84 development projects. We establish two offset policy rules: offsetting closest to the impact site, and offsetting to maximise benefit regardless of location. Achieving NNL for all fishery species requires a substantially larger offset multiplier than achieving NNL for most-caught species, or for economic benefits. For all NNL objectives, choosing optimal offset sites can minimise the area needed for restoration, but required multipliers still always >1. The amount of offset area required to achieve NNL goals for fisheries per unit area lost for each development project increases as development projects accumulated, since the suitable sites for offsetting become scarcer. These results reveal the large and increasing costs of fully offsetting marine impacts and the increasing risks, especially where suitable offset sites are likely to be scarce.

The Four-Equation New Keynesian Model

Abstract This paper develops a New Keynesian model featuring financial intermediation, short- and long-term bonds, credit shocks, and scope for unconventional monetary policy. The log-linearized model reduces to four equations: Phillips and IS curves, as well as policy rules for the short-term interest rate and the central bank's long-bond portfolio (QE). Credit shocks and QE appear in both the IS and Phillips curves. In equilibrium, optimal monetary policy entails adjusting the short-term interest rate to offset natural rate shocks but using QE to offset credit market disruptions. Use of QE significantly mitigates the costs of a binding zero lower bound.

Inflation Targeting As a Tool for Maintaining Price Stability of The National Bank of Ukraine

Introduction. Inflation targeting is a tool for ensuring price stability in the economy and therefore requires harmonious coordination and communication among government institutions. At the same time, the central bank must adhere to a certain policy instrument, the established legal rules, which are fixed in its mandate, or act at its discretion. Nowadays, the most common rule of monetary policy is inflation targeting.&#x0D; Aim and tasks. The purpose of the article is to explain the expediency of using the inflation targeting regime to keep inflation at a certain target level, which is determined by the central bank taking into account the current state of the economy.&#x0D; Results. The theoretical model of Taylor is considered, which is based on inflation assessment in the form of a simple interest rate rule based on monetary policy instruments that ensure convergence of the inflation forecast to the target value in the medium term. The obtained results reflect the volatility of the indicators of the objective function in the data range of 2015 Q3–2021 Q2 and confirm the weight of the gap of variable values that are estimated to be insignificant (95%). Using the GMM method, the relationship between the indicators of the objective function and their impact on the inflation rate through the use of the inflation targeting regime was verified. In particular, the volatility of variables such as the inflation gap, short-term interest rate, output gap, and exchange rate gap and their impact on the target inflation rate was revealed on the time horizon of monetary policy. Smoothing out gaps in variables is one of the goals of the central bank's reaction function under the inflation targeting regime. The use of the GMM method confirms the validity of the application of Taylor's rule regarding the feasibility of choosing an objective function with predetermined variable parameters at different sampling intervals.&#x0D; Conclusions. The increase in the volatility of variable parameters in the objective function of central banks under the inflation targeting regime is explained by global crises and the sensitivity of macroeconomic indicators to fluctuations in the economic situation. This is the main reason why central banks strictly follow the rules of monetary policy, which allow the timely smoothing of exogenous shocks in the economy.

Inspecting Monetary Policy Rules in a Small Open Economy with Financial Frictions

Inspecting Monetary Policy Rules in a Small Open Economy with Financial Frictions

Macroeconomic stabilisation properties of a euro area unemployment insurance scheme

In this paper we use a medium-scale DSGE model to quantitatively assess the macroeconomic stabilisation properties of a supranational unemployment insurance scheme. The model is calibrated to the euro area’s core and periphery and features a rich fiscal sector, sovereign risk premia and labour market frictions. Adopting both simple policy rules and optimal policies for the centralised insurance scheme, our simulations point to enhanced business cycle synchronisation and inter-regional consumption smoothing. The results suggest a sizeable reduction in the volatility of macroeconomic aggregates at the region-level, while the cross-regional correlation of unemployment and inflation increases significantly, compared to the decentralised setting. The higher degree of inter-regional risk-sharing comes at the cost of sizable fiscal transfers. Limiting such transfers via claw-back mechanisms reduces the degree of stabilisation across countries.

What to target? Insights from a lab experiment

This paper compares alternative monetary policy regimes within a controlled lab environment, where groups of participants are tasked with repeatedly forecasting inflation in a simple macroeconomic model featuring only the dynamics of interest rates, inflation and inflation expectations. Average-inflation targeting can replicate the price path observed under price-level targeting in the presence of disinflationary shocks and enable subjects to coordinate on simple heuristics that reflect the concern of the central bank for past inflation gaps. However, this depends on the exact specification of the policy rule. In particular, if the central bank considers more than two lags, subjects fail to form expectations that are consistent with the monetary policy rule, which results in greater inflation volatility. Reinforcing communication around the target helps somewhat anchor long-run inflation expectations.

Controlling GDP and Debt with a Post-Keynesian model

Our aim in this paper is to design a set of fiscal policy rules using a linear, discrete macroeconomic Post-Keynesian model with delays. We develop algebraic methods with appropriate symbolic algorithms that produce a solution, which allows us to find a path for the desired GDP and debt targets to be met.&#x0D; &#x0D; Keywords: Fiscal policy, Symbolic algorithmic methods, GDP, Debt, Algorithmic control&#x0D; JEL Classification: E00, E62, E12