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Article
Publication date: 13 November 2017

Stephan Fahr and John Fell

The global financial crisis demonstrated that monetary policy alone cannot ensure both price and financial stability. According to the Tinbergen (1952) rule, there was a…

Abstract

Purpose

The global financial crisis demonstrated that monetary policy alone cannot ensure both price and financial stability. According to the Tinbergen (1952) rule, there was a gap in the policymakers’ toolkit for safeguarding financial stability, as the number of available policy instruments was insufficient relative to the number of policy objectives. That gap is now being closed through the creation of new macroprudential policy instruments. Both monetary policy and macroprudential policy have the capacity to influence both price and financial stability objectives. This paper develops a framework for determining how best to assign instruments to objectives.

Design/methodology/approach

Using a simplified New-Keynesian model, the authors examine two sets of policy trade-offs, the first concerning the relative effectiveness of monetary and macroprudential policy instruments in achieving price and financial stability objectives and the second concerning trade-offs between macroprudential policy instruments themselves.

Findings

This model shows that regardless of whether the objective is to enhance financial system resilience or to moderate the financial cycle, macroprudential policies are more effective than monetary policy. Likewise, monetary policy is more effective than macroprudential policy in achieving price stability. According to the Mundell (1962) principle of effective market classification, this implies that macroprudential policy instruments should be paired with financial stability objectives, and monetary policy instruments should be paired with the price stability objective. The authors also find a trade-off between the two sets of macroprudential policy instruments, which indicates that failure to moderate the financial cycle would require greater financial system resilience.

Originality/value

The main contribution of the paper is to establish – with the help of a model framework – the relative effectiveness of monetary and macroprudential policies in achieving price and financial stability objectives. By so doing, it provides a rationale for macroprudential policy and it shows how macroprudential policy can unburden monetary policy in leaning against the wind of financial imbalances.

Details

Journal of Financial Regulation and Compliance, vol. 25 no. 4
Type: Research Article
ISSN: 1358-1988

Keywords

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Article
Publication date: 12 February 2018

Abstract

Details

Journal of Financial Regulation and Compliance, vol. 26 no. 1
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 5 November 2018

Moritz Zoellner, Michael Fritsch and Michael Wyrwich

The purpose of this paper is to review the results of studies that investigate the most important active labour market policy (ALMP) measures in Germany. A focus is also…

Abstract

Purpose

The purpose of this paper is to review the results of studies that investigate the most important active labour market policy (ALMP) measures in Germany. A focus is also on programmes devoted to foster entrepreneurship which can make important contributions to a country’s growth and social welfare.

Design/methodology/approach

The study relies on quantitative and qualitative assessments and a comparison of results of previous studies on ALMPs.

Findings

The available evidence suggests that most ALMP measures increase labour market prospects of the participants. In particular, evaluations of the entrepreneurship promotion activities show high success rates as well as high cost efficiency. The bulk share of participants of entrepreneurship measures is still self-employed after several years and nearly one-third of these businesses had at least one employee. The authors mention problems regarding the evaluation of previous programmes and highlight future challenges of German ALMP.

Originality/value

This is the first study on ALMP that has an extensive and explicit focus on entrepreneurship-promoting programs.

Details

Journal of Entrepreneurship and Public Policy, vol. 7 no. 4
Type: Research Article
ISSN: 2045-2101

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Article
Publication date: 13 November 2009

Reinhard Hujer, Paulo J.M. Rodrigues and Katja Wolf

The paper aims to present an analysis of the indirect and direct effects of active labour market policy measures at the regional level for Western Germany.

Abstract

Purpose

The paper aims to present an analysis of the indirect and direct effects of active labour market policy measures at the regional level for Western Germany.

Design/methodology/approach

Most evaluation studies of active labour market policy focus on the microeconometric treatment effect using individual data and do not account for possible indirect effects like deadweight and substitution effects. The present study uses a dynamic specification of the augmented matching function at the regional level. A dynamic panel data model is estimated using monthly and regional variation of different labour market programmes as explanatory variables. Furthermore, spatial interactions are taken into account by adding a spatially correlated error term.

Findings

Almost no significant negative effects are found of the stock of participants in programmes of labour market policy on the number of outflows from unemployment into regular jobs. Thus, contrary to findings at the individual level, no lock‐in effect is found. The number of programme participants does not reduce the number of outflows from unemployment. On the other hand when looking not at the stocks but on the outflows from programmes, no positive effects on outflows from unemployment at the regional level are found.

Research limitations/implications

Because of data limitations only a period up to six months after completing a programme is used.

Originality/value

The authors distinguish between the effects of the stock of programme participants and of the outflows from programmes. Furthermore, the authors account for spatially correlated error terms by using a GM estimator proposed by Mutl in 2006.

Details

International Journal of Manpower, vol. 30 no. 7
Type: Research Article
ISSN: 0143-7720

Keywords

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