nep-mac New Economics Papers
on Macroeconomics
Issue of 2023‒07‒10
nineteen papers chosen by
Daniela Cialfi
Universita' di Teramo

  1. Inequality and the Zero Lower Bound By Jesús Fernández-Villaverde; Joël Marbet; Galo Nuño; Omar Rachedi
  2. Semi-Structural Model with Household Debt for Israel By Alex Ilek; Nimrod Cohen
  3. Monetary policy transmission in Georgia: empirical evidence By Sergo Gadelia; Tamar Mdivnishvili; Shalva Mkhatrishvili
  4. Financial shocks to banks, R&D investment, and recessions By Ryoji Ohdoi
  6. Understanding Inflation Dynamics: The Role of Government Expenditures By Chang Liu; Yinxi Xie
  7. Racial Unemployment Gaps and the Disparate Impact of the Inflation Tax By Mohammed Ait Lahcen; Garth Baughman; Hugo van Buggenum
  8. Development of Performance-Based Specifications for Asphalt Rubber Binder: Phase 2g Additional Testing of Five Plant-Sampled Binders and RHMA G Mixes By Jones, David; Rizvi, Hashim; Brotschi, Julian
  9. Perspectives in Criminology By Nelu Dorinel Popa
  10. AWS Corporate AI Use Cases By Brian Kan; Douglas Klein
  11. Criteria for Appointing an Undercover Investigator to Obtain Evidence and Information in a Criminal Case By Nadia Zlate
  12. 중국 도시의 녹색전환 정책과 시사점(Green Transition Policy and Implications of Chinese Cities) By Choi, Wonseok; Jung, Jihyun; Pak, Jinhee; Lee, Hanna; Choi, Jiwon; Kim, Joo Hye
  13. Immigrant lived experiences of racist nativism and counter-narratives under the Trump administration By Normand, Linn; Negrete, Ambar Hernandez; Torreiro-Casal, Mónica; Lopez, Enrique
  14. Comparison of policies for increasing sustainable transport mode shares in Swedish cities By Pyddoke, Roger
  15. 중국의 녹색금융 발전전략과 주요내용(China’s Green Finance Strategy:the Policy and the Market ) By Moon , Jiyoung; Lee, Hyojin
  16. Internal quality assurance in Moroccan universities: literature review and proposal of a QMS By Tayeb OUAZZANI CHAHDI; Mohamed TAHROUCH
  17. Free Movement and European Welfare States: Why Child Benefits for EU Workers Should Not Be Exportable By Martin Ruhs; Joakim Palme
  18. Large Banks and Systemic Risk: Insights from a Mean-Field Game Model By Yuanyuan Chang; Dena Firoozi; David Benatia
  19. Cotton made in Africa: A case study of sustainable production through responsible consumption By Peltzer, Roger; Brüntrup, Michael

  1. By: Jesús Fernández-Villaverde; Joël Marbet; Galo Nuño; Omar Rachedi
    Abstract: This paper studies how household inequality shapes the effects of the zero lower bound (ZLB) on nominal interest rates on aggregate dynamics. To do so, we consider a heterogeneous agent New Keynesian (HANK) model with an occasionally binding ZLB and solve for its fully non-linear stochastic equilibrium using a novel neural network algorithm. In this setting, changes in the monetary policy stance influence households' precautionary savings by altering the frequency of ZLB events. As a result, the model features monetary policy non-neutrality in the long run. The degree of long-run non-neutrality, i.e., by how much monetary policy shifts real rates in the ergodic distribution of the model, can be substantial when we combine low inflation targets and high levels of wealth inequality.
    JEL: D31 E12 E21 E31 E43 E52 E58
    Date: 2023–05
  2. By: Alex Ilek (Bank of Israel); Nimrod Cohen (Bank of Israel)
    Abstract: We propose a semi-structural DSGE model for the Israeli economy, as a small open economy, which contains a financial friction in the household sector credit market. Such a friction is reflected in a positive relationship between households’ leverage ratio and their interest rate (credit spread) on debt, as evident in the Israeli data. Our main purpose is to evaluate the implications of such a friction on the implementation of monetary policy and macroprudential policy. Our two main findings are: First, it is important that the monetary policy will react also to developments in the credit market, such as credit spread widening, to increase effectiveness in achieving its main goals of stabilizing inflation and real activity. Second, macroprudential policy may increase the sensitivity of households’ credit spread to their leverage. Thus, this policy can mitigate or even prevent over-borrowing and reduce the risk of a debt deleveraging crisis. Moreover, in a case of demand weakness and debt deleveraging, in addition to accommodative monetary policy, the macroprudential policy may contribute to stimulating demand due to a corresponding reduction in credit spread.
    Keywords: Monetary Policy, Household Finance, Financial Friction, Macroprudential Policy, Leaning Against the Wind (LAW)
    JEL: E44 E52 G21 G51
    Date: 2023–02
  3. By: Sergo Gadelia (Junior Researcher, Private Sector Development Research Center (PCDRC), ISET Policy Institute (ISET PI)); Tamar Mdivnishvili (Macroeconomic Research Division, National Bank of Georgia); Shalva Mkhatrishvili (Head of Macroeconomics and Statistics Department, National Bank of Georgia)
    Abstract: The strength of monetary policy transmission mechanism is what defines central banks’ ability to influence a real economy and overall prices. This is what we analyse empirically within this paper. Namely, using structural vector autoregressions and based on data since 2009 when the NBG switched to an inflation targeting regime, we estimate the strength of interest rate and exchange rate channels in Georgia. The results suggest that both are relatively strong. Namely, an increase in interest rates seems to generate all three: smaller output gap, exchange rate appreciation and, consequently, lower inflation, underlining the improved transmission mechanism since the estimates from a decade ago. The reaction of inflation to an interest rate change peaks after 4 quarters, in line with other studies as well as the NBG’s communication. Moreover, a variance decomposition analysis shows that inflation is mostly driven by supply shocks with demand shocks having only a negligible effect. In principle, this may be in line with the presumption that it is the central bank’s systematic reaction function that neutralizes the effects of demand shocks on inflation, leaving the supply side as the major driver of inflation data.
    Keywords: Monetary policy; Transmission mechanism; Structural vector autoregressions; Inflation targeting.
    JEL: C13 E43 E52 F31
    Date: 2021–11
  4. By: Ryoji Ohdoi (School of Economics, Kwansei Gakuin University)
    Abstract: In some classes of macroeconomic models with financial frictions, an adverse financial shock successfully explains a decrease in real activity but simultaneously induces a stock price boom. The latter theoretical result is not consistent with data from actual financial crises. This study aims to develop a simple theory to explain both prolonged recessions and stock price declines. I develop a simple macroeconomic model featuring a banking sector, financial frictions, and R&D-based endogenous growth to examine the impacts of an adverse financial shock to banks on firms' R&D investments and stock prices. Both the analytical and numerical investigations show that endogenous R&D investment and a shock hindering banks' financial intermediary function can be key to generating both a prolonged recession and a drop in firms' stock prices.
    Keywords: Banks; Endogenous growth, Financial frictions, Financial shocks
    JEL: E32 E44 G01 O31 O41
    Date: 2023–06
  5. By: Solikin M. Juhro (Bank Indonesia)
    Abstract: This paper elaborates the theoretical and practical perspectives of future central bank policy in emerging market economies (EMEs). With salient thoughts presented to expand broader horizons, a special overview is presented on the experiences and practices of central bank policies in EMEs. For EME central banks, complex challenges are inevitable considering the current state of economic progress, economic endowments, and institutional capacity. Several theoretical assumptions that underlie policy thinking are also substantively not the case for EMEs. These conditions, however, provide broad opportunities and space for central banks in EME countries to deliver policy innovations and breakthroughs, not only from a practical level, but also a theoretical perspective. The implementation of flexible inflation targeting framework (ITF) and the central bank policy mix, as well as the policy trilemma management of an open economy are among many examples of how central bank policy has evolved towards a more integrated framework. Eventually, to become a relevant regulator, the central bank must put extra effort into strengthening policy coordination and institutional arrangements, fostering new sources of growth to support a broader scope of welfare amelioration, while reinforcing the central bank policy mix in the new era
    Keywords: central bank policy mix, integrated policy framework, inflation targeting, central bank in emerging markets
    JEL: E02 E31 E52 E58 E61 F62 G01
    Date: 2023
  6. By: Chang Liu; Yinxi Xie
    Abstract: This paper studies the impact government expenditure has on inflation by examining an augmented Phillips curve implied from a structural New Keynesian model. Our estimation results, based on external instruments, show that the augmented Phillips curve has a flatter slope than the canonical specification and that government expenditure has a negative coefficient. Changes in government expenditure account for a substantial portion of inflation variations and provide new insights into the “missing disinflation” puzzle. We also find that inflation and inflation expectations respond negatively to fiscal spending shocks, reaffirming the supply-side channel through which inflation responds to fiscal expansions.
    Keywords: Central bank research; Fiscal policy; Inflation and prices
    JEL: E3 E63
    Date: 2023–06
  7. By: Mohammed Ait Lahcen; Garth Baughman; Hugo van Buggenum
    Abstract: We study the nonlinearities present in a standard monetary labor search model modified to have two groups of workers facing exogenous differences in the job finding and separation rates. We use our setting to study the racial unemployment gap between Black and white workers in the United States. A calibrated version of the model is able to replicate the difference between the two groups both in the level and volatility of unemployment. We show that the racial unemployment gap rises during downturns, and that its reaction to shocks is state-dependent. In particular, following a negative productivity shock, when aggregate unemployment is above average the gap increases by 0.6pp more than when aggregate unemployment is below average. In terms of policy, we study the implications of different inflation regimes on the racial unemployment gap. Higher trend inflation increases both the level of the racial unemployment gap and the magnitude of its response to shocks.
    Keywords: Racial inequality; Monetary policy; Unemployment; Inflation; Discrimination
    JEL: E32 E52 J64 E31
    Date: 2023–05–25
  8. By: Jones, David; Rizvi, Hashim; Brotschi, Julian
    Abstract: The work discussed in this interim report is part of a larger study, funded by the California Department of Transportation, with the objective of developing and recommending testing procedures and criteria for performance-based specifications of asphalt rubber binders used in gap-graded and open-graded mixes using current Superpave performance grade (PG) equipment. Work covered the testing of five plant-produced binders, the base binders used to produce them, and the gap-graded rubberized hot mix asphalt mixes produced with them. The following important observations from the binder rheology tests were made: Although the low-temperature performance grades appeared to be reasonable, the high-temperature grades appeared to be unrealistically high, while the intermediate-temperature grades appeared to be potentially lower than anticipated when compared to the base binders. A comparison of the concentric cylinder and parallel plate (3 mm gap) geometries indicated that the results between the two geometries are different and are likely to be higher than the precision and bias of the individual procedures. Precision and bias statements for these procedures had not been developed at the time of preparing this report. Consistent trends in results were observed between high-temperature PG/true grade, Delta TC, and non-recoverable creep compliance at 3.2 kPa. Observations from previous testing and during this phase of the study indicated that incompletely digested rubber particles—which have different sensitivities to temperature, aging, and applied stress and strain than the base asphalt binder—appeared to have a dominant influence on results and caused variability between results, regardless of the testing geometry used. Considering these incompletely digested particles as part of a homogenous binder may therefore not be appropriate when determining performance grades. Work is continuing in Phase 3 of this study to adjust testing procedures to account for the influence that these incompletely digested particles have on results. The proposed modifications to short- and long-term aging procedures (i.e., rolling thin film oven and pressure aging vessel) and to the bending beam rheometerspecimen preparation procedures developed in Phase 2 are considered to be more aligned with the original intent of the tests and will likely reduce the variability between replicate specimens during testing. Preliminary test results indicate that Fourier transformed infrared spectroscopy is a potentially valid method for quantifying rubber content in rubber-modified binders.
    Keywords: Engineering, asphalt rubber binder, AR binder, performance grade
    Date: 2023–01–01
  9. By: Nelu Dorinel Popa (Dimitrie Cantemir Christian University of Bucharest, Romania)
    Abstract: In order to further prove its relevance and impact on other fields, criminology needs to follow some trends and, at the same time, create chapters that respond to the needs of society. In other words, the science of criminology has an interdisciplinary and dynamic character, developing with society. However, there is currently no consensus on its future. Instead, discussions are taking place about the direction it may take, whether it is about how the subject should be taught in universities or which areas of criminology should gain importance in the coming years. This article will therefore provide a brief analysis of the future of criminology, seen through the prism of possible scenarios and future areas within criminology.
    Keywords: criminology, interdisciplinary science, green criminology, cyber criminology, feminist criminology, mobility criminology
    Date: 2022–08
  10. By: Brian Kan (Crean Lutheran High School, Irvine, United States); Douglas Klein (New Jersey City University, United States)
    Abstract: Amazon, with $469 Billion in sales in 2021, has established itself as a world-class user of AI, utilizing Machine Learning in its search engine to deliver desired results quickly - so millions of shoppers find the products they want to buy. Amazon’s affiliate, Amazon Web Services, had annual sales of $62 Billion in 2021, making it the 53rd largest company on the Fortune 500 as measured by revenues. AWS provides enterprises with a fully managed AI service with tools needed to execute every step of the ML development lifecycle in one integrated environment. By 2021, more than one hundred thousand companies utilized AWS Machine Learning - more than any other cloud platform. Outside of the traditional search engine applications what are some compelling and important business use cases where ML and AI have the greatest impact? Some use cases in this paper: AWS AI and Machine Learning are used by commercial landlords and industrial real estate owners to save energy and reduce carbon emissions. The World Wildlife Federation uses AWS AI tools in Indonesia to better understand the size and health of orangutan populations in their native habitat. And The Walt Disney Company uses ML and AI to organize metadata into one archival system, storing information about the stories, scenes, and characters in every second of Disney’s huge catalog of shows and movies.
    Keywords: AWS, Amazon Web Services AI, AWS Machine Learning, AWS Business Use Cases
    Date: 2022–06
  11. By: Nadia Zlate (National Anticorruption Directorate, Romania)
    Abstract: In this article we aimed to expose the traits and qualities that an undercover investigator should have in order to be able to carry out his mission in good conditions, without the risk of uncovering the occult operation and without endangering his own life or physical or mental integrity. The use of undercover investigators may involve interactions with different individuals over a shorter or longer period of time, which may be a single contact or multiple meetings in which a connection is established between the person being investigated and the undercover investigator. They must show special social skills, namely to be able to adapt their behavior depending on the situation in which they are in order to give credibility to the character they portray, but also to relate to the people targeted by the operation in such a way that it can obtain evidence and information relevant to the criminal case in which it is used. Due to the importance of the activity carried out by undercover investigators, the risk to life and physical and mental integrity to which they may be subjected, it is imperative that their election within the framework of undercover operations be carried out with maximum skill and responsibility by persons qualified in this sense.
    Keywords: undercover investigators, undercover investigator qualities, the role of the undercover investigator, special investigative means
    Date: 2022–10
    Abstract: 본 보고서는 중국 도시의 녹색전환 정책을 에너지, 공업, 교통 분야의 정책으로 분류하고 각 분야의 정책 추진체계와 특징 등을 파악하였다. 또한 각 분야의 주요 정책 특징과 추진사례 등을 통해 한국이 향후 녹색전환을 추진하는 데 필요한 정책적 시사점과 한·중 협력방안 그리고 관련 리스크 등을 제시하였다. As a strategy to promote green transition, Chinese cities are increasing their proportion of renewable energy consumption by diversifying and scaling small solar power, wind power, biomass, and geothermal power, and striving to supply eco-friendly energy by activating green electricity transactions between regions. In addition, policies to reduce pollution and carbon emissions andestablish a green manufacturing system are being promoted with a focus on cities where industrial complexes are situated. The green transition in China’s transportation sector also takes on the character of an industrial policy that utilizes urban green transition to foster industries, such as fostering the new energy automobile industry centering on large cities where automobiles and publictransportation are concentrated. In this respect, this study classified the green conversion policy of Chinese cities into policies in the energy, industry, and transportation sectors, and identified the policy implementation system and characteristics of each field. In addition, based on the characteristics of major policies and implementation cases in each field, policy implications and cooperation measures necessary for Korea to pursue a green transition in the future were identified, as well as matters to keep in mind. Chapter 2 of this report deals with the background and strategies for promoting green transformation in Chinese cities. Since the1980s, after the reform and opening up, China’s urbanization has progressed rapidly, with coastal cities being the center of industrialization, and these cities serving as hubs for international trade. However, the indiscriminate expansion of Chinese cities is evaluated as an unsustainable model, and the Chinese governmentis pursuing a green conversion policy of cities to reduce environmental pollution and to grow the economy centered on high value-added manufacturing and services. The green transition promotion strategy of Chinese cities aims to set low-carbon transition targets for each city and build an eco-friendly energy system. At the same time, it promotes green conversion of industrial complexes located in cities, and promotes investmentand consumption in the private sector through policies that lead the supply of new energy vehicles in public institutions and public transportation.(the rest omitted)
    Keywords: 경제개혁; 산업정책; economic reform; industrial policy
    Date: 2022–12–30
  13. By: Normand, Linn; Negrete, Ambar Hernandez; Torreiro-Casal, Mónica; Lopez, Enrique
    Abstract: This article places immigrant lived experiences at the center of its analysis and highlights the counter-narratives of minority immigrant communities in America under the Trump administration. While scholarship exists on analyzing the rise of hate-narratives during the Trump administration, less scholarly attention has been paid to how immigrants experience and respond to this anti-immigrant climate. The narratives were collected in an anonymous survey from more than three-hundred immigrants, predominantly immigrants of color. Drawing on the conceptual framework of racist nativism, the study contextualizes these experiences in light of the Trump administration’s anti-immigrant rhetoric and policies. It examines not just the lived experiences of increasingly explicit anti-immigration rhetoric and behaviors, but also the counter-narratives of how immigrant communities understand and navigate these. Its novelty lies in voicing the strength, resistance and resilience among immigrants despite their dehumanizing circumstances. The paper thereby contributes by drawing on the voices and stories from the immigrants themselves to provide a deeper and more nuanced understanding of their lived experiences under the Trump administration.
    Date: 2023–05–13
  14. By: Pyddoke, Roger (Swedish National Road & Transport Research Institute (VTI))
    Abstract: The EU is currently promoting sustainable mobility in its cities. This promotion can take the form of subsidies for cycling and public-transport infrastructure. This paper compares existing Swedish policy instruments for promoting more sustainable transport: government subsidies to infrastructure for sustainable modes in the form of city environmental agreements (CEAs), congestion and parking charges and a hypothetical incentive to reduce the mode share of cars. Analyses of the CEAs indicate that they do not reliably affect mode choice. The results for congestion and parking charges, on the contrary, indicate that these have a substantial potential to shift mode choices and improve welfare by pricing external costs. The outcomes of the hypothetical incentive based on achieved effects will depend on the extent to which cities are willing to use externality pricing and to which citizens are willing to change modes. The management and evaluation of this hypothetical incentive poses considerable requirements on data and estimations of a counter factual outcomes without incentives, and its necessary costs. Provided these requirements can be met, the incentive model appears to be a possible instrument for stimulating cities to move faster towards sustainable transport.
    Keywords: Sustainable transport; Cities; Mode shares; Policy
    JEL: H23 H54 H71 R48 R49 R51
    Date: 2023–06–15
    Abstract: 중국은 탄소중립을 실현하기 위한 녹색산업 발전에 녹색금융의 활용이 반드시 동반되어야 한다는 사실을 인지하고 있다. 2016년 이후, 세계에서 가장 빠르고 적극적으로 녹색금융 시장 형성을 추진하고 있는 중국은 현재 최대 녹색대출 시장을 보유하고 있으며, 미국 다음으로 큰 녹색채권 시장을 보유하고 있다. 중국은 녹색금융을 자국의 탄소중립 목표 달성을 위한 중요한 전략적 정책도구로 활용하고 있으며, 정부 주도하에 자국 녹색산업 발전 지원, 외자유치, 대외협력 확대 등 다양한 측면에서 녹색금융을 활용하고 있다. 이에 본 연구에서는 중국의 녹색금융 발전전략을 분석하고 한중 간 녹색금융 협력방안을 제시하였다. China is a leading nation in the area of green finance, deeply recognizing that carbon neutrality should be accompanied with green finance to boost development of the green industry and actively working to develop green financial markets. In 2016, China published the “Guidelines for Establishing the Green Financial System, ” which provides core guidelines for establishing the domestic green financial market. These guidelines define the concept of green finance in China, namely as providing financial service to support projects such as for environmental protection, renewable energy development, and green infrastructure construction for response to climate change and efficient use of resources in economic activities. Viewing green finance as an important strategic policy tool for China to achieve its carbon neutrality goal, this research explores China‘s green finance strategy in terms of policy establishment and market formation, the tools for supporting domestic green industry development, and global cooperation, while also aiming to provide suggestions for Korea-China cooperation in the green finance field. Chapter 2 studies China’s policy establishment and market status in terms of green loan and bond markets, which are the main components of China’s green finance market. China’s green loan market is largely operated by state-owned banks and some large commercial banks as major players. These provide loans for domestic green projects to boost China’s green economy development. The support provided by these banks has increased the size of China’s green loan market to over 15.9 trillion RMB, making it the largest market in the world in 2021. China’s green bond market, as well, is one of the largest in the world. Its size recorded 1.56 trillion RMB in 2021, and according to the Climate Bond Initiative it is the second largest green bond market in the world after the United States. In China’s green bond market, local governments and corporations act as major suppliers of green bonds. According to the issuance type and purpose of use, China’s green bonds can be classified into various categories including finance bonds, intermediate bills, commercial bills, corporate bonds, and enterprise bonds. (the rest omitted)
    Keywords: 금융정책; 자본시장; 중국의 녹색금융 발전전략; Financial policy; capital market; Chinas green finance development strategy
    Date: 2022–12–30
  16. By: Tayeb OUAZZANI CHAHDI (ENCGT - Ecole Nationale de Commerce et de Gestion de Tanger - UAE - Université Abdelmalek Essaâdi, UEMF - Université Euro Méditerranéenne de Fès); Mohamed TAHROUCH (ENCGT - Ecole Nationale de Commerce et de Gestion de Tanger - UAE - Université Abdelmalek Essaâdi)
    Abstract: This article sheds light on the development of the culture of Quality Assurance (QA) in the Moroccan higher education system and its implementation by universities. It first highlights the multifaceted definition of quality assurance and describes its recent development in the American, Canadian, and European higher education systems. It concludes that the criteria defining the concept of QA were established by the North for the North and forced the South to align with them to maintain their cooperative relationships. The article then discusses the Moroccan legal framework established for the higher education system and the significant role reserved for its regular evaluation. It highlights the 4 levels of evaluation of the performance of this system and concludes that its feasibility necessarily involves universities deploying their own Quality Management System (QMS) and standardizing their academic practices by establishing their quality standards, with permanent and reproducible procedures. Drawing on relevant literature on the subject and using a descriptive and comparative approach, we propose a QMS model that, in our view, would best suit the case of Moroccan universities, with the ambition of being able to apply it to a concrete case and make it a future publication.
    Abstract: Cet article jette la lumière sur le développement de la culture de l'assurance qualité (AQ) dans le système d'enseignement supérieur marocain et de sa mise en oeuvre par l'université. Il souligne d'abord la multiformité de la définition de l'assurance qualité et décrit son développement récent dans les système d'enseignement supérieur américain, canadien et européen et conclue par le fait que les critères qui définissent le concept d'AQ furent établis par le nord pour le nord et ont forcé le sud à s'y aligner pour conserver leurs relations de coopération. L'article aborde ensuite l'arsenal juridique marocain instauré pour le système d'enseignement supérieur et la place importante réservée à son évaluation régulière. Il met en évidence les 4 niveaux d'évaluation de la performance de ce système et en déduit que sa faisabilité implique forcément pour les universités de déployer en leur sein leur propre système de management de la qualité (SMQ) et de normaliser leur pratique académique en instaurant leurs standards de qualité, avec des procédures permanentes et reproductibles. Nous appuyant sur la bibliographie pertinente consacrée à ce sujet et procédant d'une approche descriptive et comparative, nous proposons un modèle de SMQ qui, de notre point de vue, s'adapterait le mieux au cas des universités marocaines, avec l'ambition de pouvoir l'appliquer sur un cas concret et en faire une prochaine publication.
    Keywords: Assurance qualité, enseignement supérieur, système de management de la qualité (SMQ), Maroc
    Date: 2023–05–12
  17. By: Martin Ruhs; Joakim Palme
    Abstract: The regulation of the free movement of workers in the European Union (EU), and specifically EU (migrant) workers’ access to welfare benefits in the host country, has generated considerable political conflicts within and across EU Member States in recent years. These conflicts have the potential to threaten the future political sustainability of unrestricted intra-EU labour mobility and broader processes of European integration. In this paper, we provide an institutional analysis of one specific issue that has been at the heart of these debates: the exportability of child benefits. Under the current EU rules, ‘EU workers’ (i.e. mobile EU citizens who live and work in a Member State where they do not hold national citizenship) can “export” family benefits to their children and other family members resident in the home country. A number of EU countries have demanded a change to these rules. We argue that the political conflicts about exporting child benefits are, at least in part, due to a fundamental tension between the ‘employment-based’ institutional logic that regulates EU workers’ access to child and family benefits and the ‘residence-based’ institutional logic that underpins family policy in all Member States. To reduce this tension, we make the case for changing the principles for coordinating EU workers’ access to welfare benefits, which would mean, as a consequence, that the exportability of child benefits would no longer apply. It is the country where the child lives, rather than the country where the working parent/spouse (‘breadwinner’) is employed that should bear the responsibility for providing child benefits.
    Date: 2023–11
  18. By: Yuanyuan Chang; Dena Firoozi; David Benatia
    Abstract: This paper aims to investigate the impact of large banks on the financial system stability. To achieve this, we employ a linear-quadratic-Gaussian (LQG) mean-field game (MFG) model of an interbank market, which involves one large bank and multiple small banks. Our approach involves utilizing the MFG methodology to derive the optimal trading strategies for each bank, resulting in an equilibrium for the market. Subsequently, we conduct Monte Carlo simulations to explore the role played by the large bank in systemic risk under various scenarios. Our findings indicate that while the major bank, if its size is not too large, can contribute positively to stability, it also has the potential to generate negative spillover effects in the event of default, leading to increased systemic risk. We also discover that as banks become more reliant on the interbank market, the overall system becomes more stable but the probability of a rare systemic failure increases. This risk is further amplified by the presence of a large bank, its size, and the speed of interbank trading. Overall, the results of this study provide important insights into the management of systemic risk.
    Date: 2023–05
  19. By: Peltzer, Roger; Brüntrup, Michael
    Abstract: Responsible consumption and production are key to sustainable development, and are therefore a Sustainable Development Goal (SDG 12) in their own right. Consumption and production patterns also need to be socially responsible and economically viable. Private-sector requirements and state supply chain regulations, which have become more widespread in recent years, are designed to ensure that products consumed in high-income countries but manufactured (at least partially) in low-income countries are produced in line with certain social and environmental standards. Although progress has been made, many questions remain, particularly regarding whether the local social and economic impacts are sufficient. Cotton made in Africa (CmiA) is a certification initiative within the textile industry. Established 18 years ago as part of one of the largest public-private partnerships of German Development Cooperation with private foundations and private companies around an agriculture-based supply chain, CmiA - like its sister scheme the Better Cotton Initiative (BCI) - seeks to ensure compliance with specific environmental and social conditions in the cotton production process. Wherever it is implemented and monitored, the CmiA-standard provides retailers and consumers with the assurance that the cotton in the textiles and garments in question has been produced in line with CmiA-requirements. Up to now, about one million smallholder households with six to seven million family members in Africa produce under the label. This Policy Brief reflects on the impact that the introduction of CmiA has had on certified farmers, as well as on the challenges facing this standard following its successful market launch, and draws broader lessons learned for sustainability standards. The key findings are as follows: CmiA shows that sustainability standards do not only work for high-priced niche markets but can also be implemented in the mass market. While cotton is a non-food cash crop, the revenues it generates can boost food security among smallholders via the income channel and can also promote local food production through a number of other impact channels. Standard-setting must be accompanied by support for farmers so that they are able to comply and activate impact channels. It remains a huge challenge not only to guarantee social and ecological standards but also to achieve a 'living income' for smallholder farmers. For all the benefits of publicly funding the start-up phase of implementing sustainability standards, it must be ensured that these standards are subsequently financed from the value chain itself. Textile retailers and consumers ultimately have to pay for the goods they consume and which have been manufactured under sustainable conditions. As the mass-market implementation of sustainability standards takes time and patience, we cannot expect to see dramatic improvements in the local living conditions and incomes of the farmers in the short to medium term. Instead, this will require continuous investment in smallholder production and in the local environments over many years. Transitioning from pesticide-intensive production to a system that does not use such products without major productivity losses is challenging but seems feasible. In order to determine whether, and to what extent, the wellbeing of smallholder farmers is increased by complying with sustainability standards, good and continuous impact assessment is needed and this must be adapted to the especially complex conditions of African smallholder agriculture.
    Keywords: Sustainable development goals, Sub-Saharan Africa, cotton, agriculture, sustainability standard, consumption, natural resources, environment, smallholders, poverty
    Date: 2023

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