NIESR Discussion Paper

Did Central Banks Cause The Last Financial Crisis? Will They Cause The Next?

Recent history suggests that raising interest rates higher than warranted by macroeconomic prospects would not be the right policy for financial stability. The significant tightening of monetary policies in the advanced economies from mid-2004 to mid-2006 failed to stop increased risk-taking in the financial system. The pre-GFC policy failure was not lax monetary policy but the failure of regulators to address (and markets to sanction) new risks created by innovation in international banks.

Peer Effects and Social Influence in Post-16 Educational Choice

This paper investigates whether the educational choices that young people make after the completion of their GCSEs (at age 16) are influenced by their peers. More specifically, it takes advantage of the variation in peer groups that arises when students move from primary to secondary school in order to isolate the impact of secondary school peers on the choice of educational trajectory. These trajectories are broadly classified as academic, vocational, a combination of the two, or no education at all.

Central bank swap lines and CIP deviations

We study the use of US dollar central bank swap lines as a tool for addressing dislocations in the foreign currency swap market against the USD since the global financial crisis. We find that the use of the Federal Reserve’s USD central bank swap lines was mainly related to tensions in US money markets during times of financial crisis, and less to tensions which were confined to foreign exchange swap markets.

Union Density, Productivity, and Wages

We exploit tax-induced exogenous variance in the price of union membership to identify the effects of changes in firm union density on firm productivity and wages in the population of Norwegian firms over the period 2001 to 2012. Increases in union density lead to substantial increases in firm productivity and wages having accounted for the potential endogeneity of unionization. The wage effect is larger in more productive firms, consistent with rent-sharing models.

The power of self-interest: Effects of subsidies for adult education and training

Education and training among the working-age population has become an increasingly important policy issue as working lives have lengthened and the pace of technological change has quickened.  This paper describes the effects of a reform that broadened access to public subsidies for adult Vocational Education and Training.  Difference-in-differences analysis reveals that the large-scale reform, which was introduced in the Australian state of Victoria from 2009, increased participation in VET among the population aged 25-54, and corresponded with an improved match between subsidised VET cours

Exploring the importance of behavioural endogeneity for policy projections

Behavioural endogeneity is appealing functionality for any analytical tool designed to explore the implications of public policy alternatives. This study improves the evidence base for choosing between alternative approaches for projecting decision making by exploring two key research questions: (i) how important are the impact effects of policy change, relative to associated incentive effects; and (ii) to what extent can the over-all infuence of behavioural responses to policy change be approximated by labour supply responses alone?

The macroeconomic effects of banking crises: evidence from the United Kingdom, 1750-1938

This paper investigates the macroeconomic effects of UK banking crises over the period 1750 to 1938. We construct a new annual banking crisis series using bank failure rate data, which suggests that the incidence of banking crises was every 30 or so years. Using our new series and a narrative approach to identify exogenous banking crises, we find that industrial production contracts by 8.2 per cent in the year following a crisis.

Mutual gains? Is there a role for employee engagement in the modern workplace?

I examine the history of employee engagement and how it has been characterised by thinkers in sociology, psychology, management and economics.  I suggest that, while employers may choose to invest in employee engagement, there are alternative management strategies that may be profit-maximising.

The interest rate effects of government debt maturity

Using an empirical model, this paper finds that shortening the average maturity of US Treasury debt held outside the Federal Reserve by one year reduces the five-year forward 10-year yield by between 130 and 150 basis points. Based on a pre-crisis period, these estimates suggest that portfolio balance effects are unlikely to reflect only post-crisis market conditions.

Foreign Investment and Shared Sovereignty

This study investigates how the legal provisions contained in Bilateral Investment Treaties (BITs) affect foreign direct investment inflows in OECD countries. This stands in contrast to the existing literature on two counts: first, we examine separate investor protection provisions contained in BITs; and second we cover OECD economies only. We also take account of the existence of investment clauses in Preferential Trade Agreements. Additional attention is paid to the role of trade in the gravity model, estimated using a Poisson Pseudo Maximum Likelihood estimator.

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