Monetary Policy and the U.S. Stock Market

What is the influence of stock market valuations on monetary policy? We use a forward‐looking Taylor rule model to examine if monetary policy since the 19 October 1987 stock market crash has been influenced by the valuation of the stock market. We estimate the model using revised and real‐time data and find no empirical evidence that the Federal Reserve policy attempted to moderate stock market valuations during the late 1990s despite the “irrational exuberance” comments by Chairman Greenspan. Actually, the empirical evidence suggests that the Fed accommodated the high valuations of the stock market during this period.     

Real Balance Effects and Monetary Policy

This article presents a dynamic stochastic new Keynesian model with real balance effects. I find a number of results that would not appear in the traditional framework. It is shown that the real balance effect makes the so-called Taylor principle not necessary for determinacy of rational expectations equilibrium and that "passive" monetary rules may be feasible. In addition, within a class of policy rules constrained to be a linear function of state variables, "active" interest rate rules are more likely to be optimal under commitment rather than under discretion. (JEL E52 , E58 )     

Production Inflexibilities and the Cost Channel of Monetary Policy

This article shows how the existence of production inflexibilities in the form of capacity utilization constraints conditions the magnitude of the response of macroeconomic variables to a money supply stimulus. Capacity is modeled under explicit microfoundations, where the existence of idiosyncratic demand uncertainty generates variable utilization rates across firms. In this context, money has real effects due to non-Fisherian effects stemming from limitations in households' access to the financial market. Firms' capacity constraints generate a convex aggregate supply curve, which is a feature of the economy that has important implications for the conduct of monetary policy.     

Are the Effects of Monetary Policy Asymmetric?

By building on the Hamilton (1989) Markov switching model, we examine questions like: Does monetary policy have the same effect in expansions and recessions? Given that the economy is currently in a recession, does a fall in interest rates increase the probability of an expansion? Does monetary policy have an incremental effect on the growth rate within a given state, or does it only affect the economy if it is sufficiently strong to induce a state change (e.g., from recession to expansion)? As suggested by models with sticky prices or finance constraints, interest rate changes have larger effects during recessions.     

Social Marketisation and Policy Influence of Third Sector Organisations: Evidence from the UK

The marketisation of social sector organisations or social marketisation emerged and spread around the world in the past three decades. In contrast with existing literature which claims that social marketisation makes social sector organisations reduce their efforts on advocacy and thus harms a civil society, this research argues that social marketisation is positively contributed to the influence of third sector organisations on government policies, and thus it strengthens civil society, rather than erodes it. Based on the National Survey of Charities and Social Enterprises in the UK, the results of regression analyses indicate clearly that, when other factors are equal, the two indicators of social marketisation, social entrepreneurship and achieving government contracts for purchasing services, are both statistically significant in estimating the level of policy influence of third sector organisations. The contribution of this research is that it finds a positive, instead of a negative, relationship between social marketisation and the perceived policy influence of third sector organisations.     

Stock Market Wealth and Consumer Spending

This article investigates the effects of stock market wealth on consumer spending. Traditional macroeconometric models estimate that a dollar's increase in stock wealth boosts consumption by three to seven cents. With the substantial 1990s rise in stock prices, the nature and magnitude of this "wealth effect" have been much debated. After describing the issues and previous research, I present new evidence from a well‐known consumer survey. The results are broadly consistent with life‐cycle saving and a modest wealth effect: most stockholders reported no appreciable effect of stock prices on their saving or spending, but many mentioned "retirement saving" in explaining their behavior.     

Labour Market and Human Capital Behaviour of Immigrant Couples: Evidence from Australia

We examine the labour market and human capital investment behaviour of immigrant couples in Australia. The family investment hypothesis (FIH) states that immigrant husbands, whom the FIH assumes to be the primary earners in the family, will invest more in their human capital than immigrant wives, whom the FIH assumes to be secondary earners. Using longitudinal data from Household, Income and Labour Dynamics in Australia (HILDA) for the period 2001 to 2014, we do not find support for the FIH. Instead, we find that foreign-born husbands and wives share similar labour market assimilation patterns with respect to hours of work and wages. Our estimates suggest that immigrant wives' labour market behaviour can be better explained by their own long-term career progression and labour market assimilation, than through supporting their husbands' labour market assimilation.     

Minimum Wages in a Segmented Labor Market: Evidence from South Africa

The segmented labor market model describes the impacts of minimum wages on covered and uncovered sectors. This paper examines the impacts of an industry-specific minimum wage in South Africa, a state characterized by high unemployment, a robust union movement, and the presence of a large informal sector. Under the industry-specific wage law, formal agricultural and household workers are covered, while workers in other sectors are not. The unique aspect of this paper lies in the ability to compare the impacts of minimum wage legislation on formal covered, informal covered, formal uncovered, and informal uncovered workers. This natural experiment allows us to test whether industry-specific minimum wage legislation leads to higher wages, whether wage increases are restricted solely to covered formal sectors or if there are spillover effects, and whether such legislation manifests in disemployment effects. We find evidence of higher wages yet disemployment among black workers in formal markets. In informal markets we find no employment effects, but higher wages in formal markets appear to have spilled over into informal markets in covered sectors.     

The Heterogeneous Effect of the Passage of the Occupational Safety and Health Act on Stock Returns

I analyze how stock prices reacted to the passage of the Occupational Safety and Health Act (OSHA) of 1970. Previous studies focus on accounting measures or actual OSHA violations, and my work complements the literature by examining how shareholders expected OSHA to affect firm profitability. Returns fell around the OSH bill’s release to the House floor and its eventual passage, and average market value dropped by $1.5 million over the 3 days surrounding House Rules Committee release. Durable manufacturing and mining industries were hardest hit in OSH passage, losing $2.6 million and $5.7 million in average market value, respectively. I also find that larger firms with poorer working conditions sustained more negative returns, and market power, not union density, explains variation in expected profitability. Furthermore, future penalties appear unrelated to shareholder expectations about compliance costs.

Market Access and Manufacturing Wages: Evidence for the Enlarged EU

This paper shows that the establishment of market access to the new EU member countries can favour manufacturing wages in larger EU members, but not in smaller ones, although within the latter some sectors may have gains. Hence the impact of market access is country and sector-specific. The variation in country size, as measured by GDP, is highly correlated with the variation in the impact of market access to the new EU member countries on manufacturing wages.     

Return Migration in Africa and the Relationship between Educational Attainment and Labor Market Success: Evidence from Uganda

The return migration of skilled professionals has been suggested as a policy instrument suitable for reversing the large‐scale emigration of skilled professionals from African countries. However, there are no empirical studies showing how migrant professionals from Africa are reintegrated into the labor market after they return. This study examines the relationship between educational attainment and the likelihood of employment among native‐born African migrants returning home from abroad. The study focuses on the evidence from Uganda since this country has one of the longest histories of skilled migration in Africa. The results show that returning migrants with university degrees and vocational credentials are more likely to be employed than their nonmigrant and immigrant counterparts. However, this employment advantage was not observed among returning migrants with secondary schooling or below. Furthermore, the results show that returning migrants are generally more likely to be employed as district employment rates increase.     

The One-Child Policy and Gender Equality in Education in China: Evidence from Household Data

This paper uses individual-level data from the China Health and Nutrition Survey and examines the impact of the one-child policy on gender equality in education in China. The results showed children in one-child households enjoyed significantly improved opportunities for education compared to children inside multiple-child households. The improvement for girls was larger than that of boys. In addition, we found no difference in years of schooling between only-child boys and only-child girls, whereas the gap between boys and girls inside multiple-child households remained significant. In particular, years of schooling for girls having male sibling(s) were 0.62 years lower than that of girls having female sibling(s). These findings suggest the one-child policy inadvertently contributed to greater educational gender equality in China.     

Stock Market and Aggregate Investment Behavior in Malaysia: An Empirical Analysis

The present paper analyzes the role of stock market, more specifically real stock prices and stock market uncertainty/volatility, on aggregate investment behavior for an emerging market, Malaysia. Employing the autoregressive distributed lags approach to cointegration test, the paper establishes a long run equilibrium that ties the aggregate investment to its determinants—real income, real stock prices, real lending rate and stock market volatility. In the long run, we document a positive relation between aggregate investment and real stock prices and a negative relation between aggregate investment and stock market volatility. These results are further supported by our analyses of their dynamic interactions based on Granger causality and impulse-response functions. Based on the results, the real stock market prices, which has yet reached the level recorded prior to the crisis, may have explained the low investment in Malaysia after the Asian crisis. Moreover, the stock market volatility can also post a threat to the investment performance.     

Institutional Constraints,Market Competition,and Revenue Strategies: Evidence from Canadian Social Enterprises

VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations - This study examines the impact of external environment on social enterprises’ revenues strategies. Using a national...     

Social Class,Economic Inequality,and the Convergence of Policy Preferences: Evidence from 24 Modern Democracies

Using data from the World Values Survey and national‐level indicators for 24 modern democracies, we assess the influence of social class and economic inequality on preferences for government responsibility. We improve on previous research by using multilevel models that account for differences in attitudes both within (i.e., over time) and across countries. Our findings are consistent with the economic self‐interest hypothesis. Specifically, working class individuals, who tend to gain the most from government intervention because of their low and often more precarious economic position, are more likely than others to support government intervention. We also find a positive relationship between national‐level income inequality and support for government intervention. As income inequality rises, its social ills tend to be more pervasive, resulting in public opinion becoming more supportive of governments taking responsibility for their citizens. We further demonstrate that inequality moderates the relationship between social class and attitudes. Although the effect of income inequality is positive for all social classes, attitudes across social classes become more similar as inequality rises. Utilisant les données de World Values Survey et indicateurs de niveau national, nous évaluons l'influence de la classe sociale et l'inégalité économique sur les préférences en matière de responsabilité du gouvernement dans 24 démocraties modernes. Notre analyse se améliore sur la recherche précédente en utilisant des modèles à plusieurs niveaux qui tiennent compte des différences dans les attitudes au sein (ce est à dire, au fil du temps) et entre les pays. Nos résultats sont cohérents avec l'hypothèse d'auto‐ intérêt économique. Par exemple, les travailleurs ‐ qui ont tendance à bénéficier plus quand le gouvernement intervient dans l’économie en raison de leurs faibles revenus et souvent position plus précaire ‐ sont plus susceptibles que d'autres à un soutien responsabilité du gouvernement. Nous constatons également une relation positive entre l'inégalité des revenus au niveau national et le soutien à l'intervention du gouvernement. Comme l'inégalité des revenus se élève—et ses maux sociaux ont tendance à être plus répandue—l'opinion publique devient plus favorable des gouvernements assument la responsabilité de citoyens. Tout aussi important, cependant, nous démontrons également que la relation entre la social classe et les préférences pour la responsabilisation du gouvernement diffèrent par la quantité de l'inégalité des revenus dans un pays. Bien que l'effet de l'inégalité des revenus est positif pour toutes les classes sociales, les différences dans les attitudes de la classes sociale convergent que l'inégalité augmente.