Policy Trade-offs Research Articles

Jurisdiction over Transnational Quantum Networks

The international quantum communication networks develop; governance and legal jurisdiction remain unclear due to jurisdictional gaps in existing legal frameworks. Analysis of applicable accords, state practice, court judgments and domestic law related to digital infrastructure reveals minimal current governance explicitly addressing jurisdiction over global quantum systems. Results indicate specialized multilateral treaties are necessary to establish acceptable jurisdiction given quantum computing's novel abilities allowing exponentially scalable computing, cryptographically secured data transfers and precision metrology. Centralized supranational authority and distributed governance models reflect policy trade-offs for advancing global networks. Like historical technologies such as aviation and the Internet requiring years of legal development to mature, progressing quantum networks need focused creation of an internationally harmonized legal framework to balance security, sovereignty and innovation across a landscape holding tremendous transformative potential.

Reconciling Development and Decarbonization: An Examination of China's Policy Options for Curbing Emissions While Sustaining Supply Chains

China faces the challenge of balancing economic growth while meeting carbon emission reduction targets. This essay analyzes current Chinese government policies aimed at reducing emissions, including supply-side reforms, renewable energy subsidies, and awareness campaigns. It argues these policies have limitations, such as only temporary emissions reductions from supply cuts, high costs of subsidies, and lack of infrastructure to support consumer adoption of electric vehicles. To improve outcomes, the essay recommends implementing a carbon tax or cap-and-trade system, choosing the optimal policy based on demand elasticities. It also suggests subsidizing a transition from coal to electricity for heating in rural areas. In conclusion, modifying existing policies and implementing new market-based and technological solutions can help China achieve its twin goals of reducing emissions while maintaining economic growth. The essay provides a thoughtful analysis of the issues and policy trade-offs China faces in balancing environmental sustainability and development.

The il/liberal paradox: conceptualising immigration policy trade-offs across the democracy/autocracy divide

ABSTRACT This paper compares immigration reforms across democratic and autocratic states. Mobilising two large-scale datasets, it first challenges the prevailing notion that political regime types inherently dictate immigration policy outputs. The analysis shows that although immigration is central to political debates worldwide, reforms are not that frequent and, when enacted, their restrictiveness does not consistently differ by regime type. Instead, restrictions focus on border controls and openings on entry and integration policies regardless of the political regime in place. The paper then mobilises case studies from around the globe to delve into the policy dynamics underpinning immigration reforms across regimes. It shows that while all migration states grapple with the multifaceted challenges that immigration raises, autocratic politics offers a broader toolkit to resolve the trade-offs between cultural, rights-based, economic and security issues. This creates unexpected opportunities for open immigration reforms under autocratic politics, a dynamic I call the ‘illiberal paradox’ as a counterpart to the ‘liberal paradox’ observed under democratic politics. To advance theory-building across the democracy/autocracy divide, the paper concludes by arguing that the liberal and illiberal paradox concepts are not exclusive to democratic or autocratic regimes, respectively, but are valuable analytical tools to understand immigration politics across the political regime spectrum.

Losing traction? The real effects of monetary policy when interest rates are low

Based on a panel of 18 advanced countries starting in 1985, we find that monetary transmission to economic activity is substantially weaker when interest rates are low. The results hold when controlling for potential confounding non-linearities associated with debt levels and the business cycle as well as for the trend decline in equilibrium interest rates. These findings suggest that the observed flattening of the Phillips curve has gone hand in hand with a steepening of the IS curve as interest rates remained persistently low, making monetary policy trade-offs more challenging.

Minding the time gap: politicians’ perspectives on inter-temporal trade-offs in policy and politics

ABSTRACT Scholars in several fields share a desire to better understand the inter-temporal dimensions of policy-making. While several studies analysed individuals’ preferences regarding policies whose benefits unfold in the future, little is known about policy-makers’ own perceptions of inter-temporal trade-offs in politics. Using an original survey of municipal politicians in Sweden, we demonstrate that factors found important in macro-level research on future-oriented policy-making also matter for politicians’ micro-level perceptions. Politicians who perceive the policy-making process as consensus-oriented, characterised by corporatist concertation and by a low risk of policy reversal, and those who feel confident about (re-)election into government, are less likely to perceive a trade-off between policies that help them win elections and policies that benefit society in the long term, and less likely to view politics as short-term biased. Trade-off perceptions are, furthermore, related to previously overlooked variations in how politicians understand the inter-temporal profile of physical and social investment policies. Our findings have significant implications for comparative public policy research, by uncovering how politicians perceive inter-temporal trade-offs and shining new light on the micro-foundations of future-oriented policy-making.

The ECB and the inflation monsters: strategic framing and the responsibility imperative (1998–2023)

ABSTRACT The recent resurgence of inflation in Europe has led the ECB to increase interest rates and phase out asset purchase programmes designed to address the effects of the Great Financial Crisis. This article investigates how the ECB has adjusted its logic of responsibility throughout this series of crises. Using a topic model and in-depth analysis of speeches, we examine the ECB’s strategic framing of linkages related to inflation during three historical periods: the Central Bank Independence (CBI) era (1998–2011), the secular stagnation era (2011–2021), and the new inflation era (2021-). Our findings indicate that modifications made to the CBI’s linkages during the secular stagnation era shaped the ECB’s framing of the new inflation era in a novel way. However, despite acknowledging difficult policy tradeoffs, which they used to downplay in the past, ECB policymakers have continued to reframe its initial imperative of responsibility in the hope of avoiding policy discussions on regime change.

Is there an environment and economy tradeoff for the National Key Ecological Function Area policy in China?

China implemented the National Key Ecological Function Area (NKEFA) policy, the world's largest ecological compensation program, aimed to breaking the vicious cycle of poverty and environmental degradation. However, previous studies have often overlooked the poverty and environment impact of the policy and paid little attention to the distortions it may have inadvertently fostered. This study used panel data from 1749 county-level units from 2002 to 2020, supplemented with remote sensing and Geographical Information System data, to quantify ecological poverty indicators. Subsequently, a multi-period difference-in-differences model was deployed to identify the impact of the NKEFA policy on ecological poverty and rural residents' incomes in the pilot counties. Finally, the mechanisms of policy effectiveness were examined from the perspective of administrative constraints and fiscal incentives. The results show that, firstly, the NKEFA policy has exerted a substantial positive impact on both ecological poverty and rural residents' income growth. However, ecological poverty reduction displayed a rebound effect characterized by initial improvement followed by deterioration, primarily due to inadequate incentives, leading to local government distortion behavior. Meanwhile, rural residents' incomes exhibited a consistent upward trend. Secondly, the improvement of ecological poverty is premised on weakening industrial development incentives and aided by some level of ecological migration. However, this also leads to reduced fiscal revenues, increased fiscal expenditures, and expanded fiscal deficits. The significant increase in rural residents' income largely depends on the financial intervention of local governments, especially the non-agricultural income brought about by the transfer and transformation of non-agricultural labor, as well as the agricultural income brought about by the improvement of agricultural production and efficiency. Thirdly, the NKEFA policy has yielded more apparent improvements for ecologically impoverished, resource-dependent, economically strong, and industrial backbone counties. However, resource-dependent and industrial backbone counties have experienced negative income effects. These findings provide a practical Chinese-style example of global eco-poverty reduction policies in developing countries.

The political economy of electricity system resource adequacy and renewable energy integration: A comparative study of Britain, Italy and California

The need to integrate growing shares of variable renewable resources, like solar and wind, into the power system has initiated a new wave of resource adequacy policy reforms. Securing adequate resources on the system, particularly flexible and peak capacity, is indeed crucial for ensuring long-term grid reliability amid increased supply variability. While extensively explored from a techno-economic perspective, the political economy drivers and implications of these changes are frequently overlooked. Yet, power system evolution is not merely shaped by logics of techno-economic optimisation, it is also inherently political, rooted in specific liberalisation histories, political and institutional settings.This paper contributes to the literature by conducting a comparative political economy analysis of recent resource adequacy reforms in Britain, Italy, and California. It explores how differences in the technical and political economy contexts of these jurisdictions affected their strategies for securing resource adequacy capacity and investment between 2013 and 2021. Conclusions draw on the analysis of over 134 policy documents and 53 in-depth interviews with power system stakeholders.All jurisdictions introduced significant changes in resource adequacy policy, including explicit out-of-market mechanisms to remunerate resource adequacy capacity. The energy transition is thus reconfiguring state-market relations in the power sector, even in traditionally liberal countries. However, variation exists in the scope of reform, mechanism designs, policy trade-offs, and technological outcomes. This stems from context-specific political priorities, state-market relations, national and multi-level governance arrangements, market structures and stakeholder interests. This has important implications for power sector governance, as discussed in this paper.

Projecting spatial interactions between global population and land use changes in the 21st century

Previous research on global urban land expansion has primarily focused on accommodating the growing population without adequately considering the trade-offs between urban land and ecological services. Consequently, it is important to investigate the effect of this expansion on the ecological service system, while also examining the potential trade-offs between population growth and available urban land. Here, we quantify how different global land expansion options contribute to reconciling global population changes and to compliance with the UN Sustainable Development Goal 11 on sustainable cities and human settlements. Using an integrated framework for projecting global land consumption with the trade-off strategy between global land expansion and population under shared socioeconomic pathways (SSPs), we aim to bridge the knowledge gap in this area. The results of our study suggest that implementing a trade-off strategy between global land expansion and population growth can successfully reduce the levels of global land consumption in the future. Under the SSP1 scenario, for instance, our findings indicate that implementing trade-off policies can significantly reduce land consumption while increasing carbon sinks and protecting the global ecological service system. Specifically, converting land to forest or grassland can help decrease land consumption by 8.07% by the end of the 21st century. These insights can be valuable in designing land use policies that incorporate data-based solutions and address the challenges of sustainable urban development while also accommodating population growth.

The estimated annual financial impact of gene therapy in the United States

Gene therapy is a new class of medical treatment that alters part of a patient’s genome through the replacement, deletion, or insertion of genetic material. While still in its infancy, gene therapy has demonstrated immense potential to treat and even cure previously intractable diseases. Nevertheless, existing gene therapy prices are high, raising concerns about its affordability for U.S. payers and its availability to patients. We assess the potential financial impact of novel gene therapies by developing and implementing an original simulation model which entails the following steps: identifying the 109 late-stage gene therapy clinical trials underway before January 2020, estimating the prevalence and incidence of their corresponding diseases, applying a model of the increase in quality-adjusted life years for each therapy, and simulating the launch prices and expected spending of all available gene therapies annually. The results of our simulation suggest that annual spending on gene therapies will be approximately $20.4 billion, under conservative assumptions. We decompose the estimated spending by treated age group as a proxy for insurance type, finding that approximately one-half of annual spending will on the use of gene therapies to treat non-Medicare-insured adults and children. We conduct multiple sensitivity analyses regarding our assumptions and model parameters. We conclude by considering the tradeoffs of different payment methods and policies that intend to ensure patient access to the expected benefits of gene therapy.

Book review: all through the town: the school bus as educational technology

Book review: all through the town: the school bus as educational technology

Temporary foreign work permits: Honing the tools to defeat human smuggling

We study how temporary visa schemes can be designed to drive smugglers out of business while meeting labor market needs in host countries. After discussing their compatibility with a large range of policy objectives, we show how combining internal and external controls with a regulated market for temporary visas alleviates the policy trade-off between migration control and ending human smuggling. We use information on irregular migration from Senegal to Spain and the Democratic Republic of Congo to South Africa to calibrate the “eviction” prices of visas for these two routes, which are set to throttle smuggling activities. Our results highlight important constraints for governments seeking to prevent temporary workers from overstaying, especially on south–north routes such as Senegal to Spain. They suggest combining a regulated market for visas with tighter sanctions against employers of undocumented workers as a way forward.

Intrinsic Information Preferences and Skewness

We examine whether people have an intrinsic preference for negatively skewed or positively skewed information structures and how these preferences relate to intrinsic preferences for informativeness. The results from lab experiments show a strong intrinsic preference for positively skewed information and suggest that providing such information can improve information uptake. Evidence from field studies in decision- and ego-relevant contexts replicates these findings. We discuss our findings through the lens of existing theories and the potential trade-offs in information provision policies. (JEL C91, C93, D12, D82, D83)

Disentangling COVID-19, Economic Mobility, and Containment Policy Shocks

We study the dynamic interaction between COVID-19, economic mobility, and containment policy. We use Bayesian panel structural vector autoregressions with daily data for 44 countries, identified through traditional and narrative sign restrictions. We find that incidence shocks and containment shocks have large and persistent effects on mobility, morbidity, and mortality that last for one to two months. These shocks are the main drivers of the pandemic, explaining between 20 and 60 percent of the average and historical variability in mobility, cases, and deaths worldwide. The policy trade-off associated to nonpharmaceutical interventions is 1 pp less economic mobility per day for 8 percent fewer deaths after 3 months. (JEL C43, H51, I12, I18, O15)

Choosing Or Losing In Behavioral Health: A Study Of Patients' Experiences Selecting Telehealth Versus In-Person Care.

It is not known how the growth of telehealth has affected patients' choice of visit modalities (telehealth versus in person). In 2023 we conducted a mixed-methods study that paired a nationally representative survey of 2,071 adults (including 571 who used behavioral health services) and semistructured interviews with twenty-six people with depression or bipolar disorder. We explored patients' experiences with visit modality selection and their agency in the decision. Approximately one-third of patients receiving therapy or medication visits reported that their clinicians did not offer both modalities. Thirty-two percent reported that they did not typically receive their preferred modality, and 45percent did not believe that their clinician considered their modality preferences. Qualitative findings revealed that some clinicians did not elicit patients' modality preferences. Perceived lack of choice affected satisfaction and rapport with clinicians and encouraged some people to seek care elsewhere. These findings highlight trade-offs in policies to preserve patient choice and approaches that clinicians can take to identify and accommodate patients' preferences.

Economic Development Strategies: Taxes, Incentives, and Public Expenditures

Economic development strategies may include tax, incentive, and public expenditure policies. Budget-constrained state and local governments must make tradeoffs when determining the final mix of economic development and other public policies each year. In this paper, I first provide descriptive evidence on economic development policy tradeoffs. I then classify economic development strategies and relate them to real GDP per capita growth.

Structural Reforms to Accelerate Growth, Ease Policy Trade-offs, and Support the Green Transition in Emerging Market and Developing Economies

Structural Reforms to Accelerate Growth, Ease Policy Trade-offs, and Support the Green Transition in Emerging Market and Developing Economies

Cost-benefit analysis of ballast water treatment for three major port clusters in China: evaluation of different scenario strategies

IntroductionThe expansion of maritime trade has led to the introduction of invasive species into aquatic ecosystems through ballast water discharge. China, being a major player in global trade and manufacturing, has experienced negative impacts on its coastal ecosystems and marine biodiversity.MethodsThis study examines the cost‒benefit trade-offs of ballast water management policies for major port clusters in China and other global ports. This paper evaluates compliance costs for individual vessels and fleets under different policy scenarios and ballast water treatment system (BWTS) installation strategies.ResultsThe onboard BWTS installation strategy appears to be more cost-effective under the existing International Maritime Organization (IMO) policy. However, with stricter global discharge requirements or a substantial increase in BWTS capital and operating costs, strategies based on port location could prove more beneficial due to potential economies of scale. Notably, ships with high ballast water discharge volumes, like bulk carriers, are potentially better equipped to cope with future policy shifts. In the face of stricter regulations in China, projected annual compliance cost increases range from $456 million (cost data based on China) to $1.205 billion (cost data based on US).DiscussionPolicymakers are advised to adopt a comprehensive view of ballast water management policies, taking into account the trade-offs between compliance costs and environmental risks. Other essential factors, such as advancements in BWTS technology, fuel consumption, emissions, and maintenance costs, also demand careful consideration in policy development.

Education and Voter Response to Principled Trade-Offs in Muslim Democracies

We contribute to the policy trade-offs literature by focusing on a principled trade-off that juxtaposes a widely desired objective with a moral belief and by examining how education conditions voters’ responses to this trade-off. Through survey experiments in Indonesia and Tunisia, we examine how voters respond to a liberal initiative to relax alcohol restrictions to raise revenue for social security and a conservative initiative to tighten alcohol restrictions even if it decreases social security revenue. We find that voters opposed the liberal initiative and that more educated voters supported the conservative initiative more than their less educated counterparts. These findings highlight the powerful constraints of moral beliefs even in the context of a trade-off with a common good and support the socialization perspective of education that portrays education as an institution that socializes individuals in the society’s dominant values—whether liberal or conservative—as opposed to simply a force for liberalization.

A horse race of alternative monetary policy regimes under bounded rationality

We introduce bounded rationality, along the lines of Gabaix (2020), in a canonical New Keynesian model calibrated to match Canadian macroeconomic data. We use the model to provide a quantitative assessment of the macroeconomic impacts of alternative monetary policy regimes—flexible inflation targeting (FIT), average-inflation targeting (AIT) and price-level targeting (PLT)—with an effective lower bound (ELB) constraint. First, our results suggest that the benefits of adopting history-dependent monetary policy regimes rely on two important assumptions: rational expectations and the central bank’s emphasis in stabilizing real variables such as the output gap. The macro-stabilization advantage of PLT disappears even for small deviations from rational expectations, and it is especially undermined when the central bank assigns a high weight on output volatility. Second, the presence of cost-push shocks, such as the ones global economies have experienced since the recovery from the pandemic, introduces important policy trade-offs that poses practical challenges which are best tackled using an AIT regime. Third, in choosing the optimal window width under the AIT regime, a central bank that assigns some emphasis on real sector stability needs to be mindful of expectation formation. If economic agents are sufficiently far from being rational, our simulations indicate that the optimal window is between 1 and 2.5 years.