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Both raw intuition and past experience suggest that the success of an employment guarantee scheme (EGS) in safeguarding the welfare of the poor depends both on the wage it promises, and the ease with which any worker can gain acce...
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Both raw intuition and past experience suggest that the success of an employment guarantee scheme (EGS) in safeguarding the welfare of the poor depends both on the wage it promises, and the ease with which any worker can gain access. An EGS is thus at once a wage guarantee and a rationing device. We chart the positive and normative limits of such an EGS as an efficiency improving and poverty alleviating policy reform in a canonical labor market setting. At its core, an EGS provides an aggregate, not just EGS, employment target. Given the target, the EGS wage and access can be fine-tuned to deliver outcomes ranging from a contestable labor market to a simple universal unemployment benefit. The credibility of any such target, however, is shown to be triggered endogenously by a host of factors: the distributional concerns of the planner, private sector productivity, the prevalence of market power and the need for public works. Paradoxically, the outcome with a planner who cares only about efficiency can be less efficient than the outcome with a planner whose social welfare function also gives weight to poverty!
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This paper elaborates a simple model of growth with a Taylor-like monetary policy rule that includes inflation-targeting as a special case. When the inflation process originates in the product market, inflation-targeting locks in ...
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This paper elaborates a simple model of growth with a Taylor-like monetary policy rule that includes inflation-targeting as a special case. When the inflation process originates in the product market, inflation-targeting locks in the unemployment rate prevailing at the time the policy matures. Although there is an apparent NAIRU and Phillips curve, this long-run position depends on initial conditions; in the presence of stochastic shocks, it would be path dependent. Even with an employment target in the Taylor Rule, the monetary authority will generally achieve a steady state that misses both its targets since there are multiple equilibria. With only one policy instrument, Tinbergen's Rule dictates that policy can only achieve one goal, which can take the form of a linear combination of the two targets.
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Following a lengthy review, the FOMC recently revised its long-run monetary policy strategy statement, largely in recognition of the persistent threat the effective lower bound (ELB) on policy rates poses to its dual mandate goals...
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Following a lengthy review, the FOMC recently revised its long-run monetary policy strategy statement, largely in recognition of the persistent threat the effective lower bound (ELB) on policy rates poses to its dual mandate goals. Under traditional monetary policy strategies, the ELB imparts a persistent downward bias to inflation and inflation expectations; to offset this, new strategies are needed which will at times deliver inflation above 2%. The new framework addresses this issue and seeks to achieve inflation that averages 2% over time. It also emphasizes that maximum employment is a broad-based and inclusive goal, and that the FOMC should seek to eliminate shortfalls—rather than symmetric deviations—from maximum employment. The FOMC’s September policy statement provided forward guidance that is fully consistent with the new strategy. Historical retrospection of the 2015–2018 liftoff period suggests that, if it were in place over that time, the new framework and forward guidance likely would have forestalled rate increases and potentially delivered better macroeconomic outcomes. More, generally, to reduce employment shortfalls and average 2% inflation over time, the FOMC needs to have an “in it to win it” attitude toward our inflation objective. The September FOMC statement’s forward guidance that inflation should be at 2% and confidently on track for overshooting before we liftoff from the ELB is an important step in that direction.
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This paper analyses the effects of two alternative monetary strategies (exchange rate targeting and inflation targeting) on economic growth and employment. On the panel of 18 countries for the period from 1996 to 2013, I tested th...
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This paper analyses the effects of two alternative monetary strategies (exchange rate targeting and inflation targeting) on economic growth and employment. On the panel of 18 countries for the period from 1996 to 2013, I tested the hypothesis that countries in exchange rate targeting have a higher rate of GDP growth and lower inflation rate. In order to test the impact of exchange rate policy on economic growth and prices, I applied dynamic panel two stepwise method of least squares (2SLS method) and they were evaluated by two independent regression equation. In order to allow the comparison of results related to exchange rate targeting, the effects of the introduction of inflation targeting in the unemployment rate were also estimated using the panel method two stepwise least squares (2SLS method). Results of empirical studies show that countries with inflation targeting have a lower rate of economic growth and higher unemployment.
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This paper supplements the studies of Mansoorian and Mohsin (2004, 2006) on the macro effects of a temporary policy of inflation targeting by shedding light on two neglected scenarios. These scenarios are not only empirically plau...
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This paper supplements the studies of Mansoorian and Mohsin (2004, 2006) on the macro effects of a temporary policy of inflation targeting by shedding light on two neglected scenarios. These scenarios are not only empirically plausible, but also give rise to rather different policy implications. First, we show that if consumption and leisure are substitutes and their substitutability is relatively large, a temporary rise in inflation can raise, rather than lower, the shadow value of assets. This effect stemming from the rise in the shadow price of assets plays a crucial, but opposite, role vis-a-vis the direct effect of inflation. The induced effect of the shadow price is long-lasting persistence and has a permanent consequence, even though the policy is temporary. As a result, in the steady state, employment, capital, and output increase, rather than decrease, in response to a temporary increase in inflation. Second, if consumption and leisure are complements, we find that in response to a temporary decrease in inflation, employment, capital and output suffer short-run costs in the transition, but reap long-run benefits in-the steady state. This transitional result is in accordance with the Canadian responses. (C) 2015 Elsevier Inc. All rights reserved.
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A number of academic studies find that either price-level targeting or temporary above-average inflation are nearly optimal policies to address a liquidity trap crisis. Still, central bankers and the public generally question whet...
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A number of academic studies find that either price-level targeting or temporary above-average inflation are nearly optimal policies to address a liquidity trap crisis. Still, central bankers and the public generally question whether even a temporarily higher inflation rate could be beneficial in addressing a liquidity trap or could be consistent with price stability over the longer term. At the same time, however, the Federal Reserve's projections for high unemployment and low inflation do not seem to be consistent with the best monetary policies to address the Fed's dual mandate responsibilities. Accordingly, it is useful to seriously discuss these potentially beneficial alternative policies.
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I evaluate the welfare performance of a target for the level of nominal GDP in a New Keynesian model with unemployment, accounting for a zero lower bound (ZLB) constraint on the nominal interest rate. Nominal GDP targeting is comp...
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I evaluate the welfare performance of a target for the level of nominal GDP in a New Keynesian model with unemployment, accounting for a zero lower bound (ZLB) constraint on the nominal interest rate. Nominal GDP targeting is compared to employment targeting, a conventional Taylor rule, and the optimal monetary policy with commitment. I find that employment targeting is optimal when supply shocks are the source of fluctuations; however, facing demand shocks and the ZLB constraint, nominal GDP targeting can outperform substantially employment targeting. (C) 2020 Elsevier B.V. All rights reserved.
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This paper looks at the locations and occupations of jobs taken by residents of socially deprived areas in Belfast using travel-to-work data from the 1991 Census of Population. It also examines the locations and occupations of job...
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This paper looks at the locations and occupations of jobs taken by residents of socially deprived areas in Belfast using travel-to-work data from the 1991 Census of Population. It also examines the locations and occupations of jobs taken by residents of other parts of Belfast and Northern Ireland as part of the wider context. These data are used as a background for the discussion of the spatial targeting of jobs to areas of social deprivation and high unemployment. Although policies of this kind are increasingly important in Northern Ireland and in other parts of the UK, the analysis highlights two important problems. First, the well-known problem of 'spatial leakage' means that not all jobs located in deprived areas, particularly those in professional occupations, go to local residents. Secondly, residents of socially deprived areas have a greater representation in non-professional occupations in comparison with those who live in non-deprived locations. The implications of these findings are twofold. First, spatial units for labour market interventions might be more appropriately delimited to take account of observed travel-to-work flows. Secondly, to maximize job uptake by local residents of deprived areas, the jobs located there might be 'appropriate' in terms of existing occupational structures of the residents. However, this second recommendation might reinforce existing spatial and occupational divisions in the labour market since socially deprived areas could become, in a worst-case scenario, 'sinks' for low-grade employment. Because of this potential danger, supply-side education and training measures are also appropriate. as a supplement to job location policies, to enable residents of deprived locales to compete for a wider range ofjobs wherever they are located. ~C 2000 Elsevier Science Ltd. All rights reserved.
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In this paper, autologistic models are used to examine the impact of certain factors on the likelihood of European regions' ability to meet the employment target for both men and women for the year 2017 in 270 EU regions at NUTS 2...
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In this paper, autologistic models are used to examine the impact of certain factors on the likelihood of European regions' ability to meet the employment target for both men and women for the year 2017 in 270 EU regions at NUTS 2 level. The results show the role of both regional and gender differences in forming spatial clusters, as well as the presence of spatial interaction in achievement of the target. Moreover, meeting the European strategy's education target and increasing a region's GDP levels also have a positive impact on achieving the targets. These findings may be of interest for the implementation of socio-economic policies at a regional level, aimed at raising the employment rate for men and women in European regions.
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This paper argues for a fundamental reorientation of fiscal policy from the current aggregate demand management model to a model that explicitly and directly targets the unemployed. Some advantages notwithstanding, aggregate deman...
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This paper argues for a fundamental reorientation of fiscal policy from the current aggregate demand management model to a model that explicitly and directly targets the unemployed. Some advantages notwithstanding, aggregate demand management has a number of serious drawbacks that merit its reconsideration. This paper identifies these shortcomings and builds the case for a targeted demand management approach that can deliver economic stabilization through full employment and better income distribution. This approach is consistent with the original Keynesian policy recommendations and offers a reinterpretation of Keynes's proposal for the modern context with the help of the work of Hyman Minsky.
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