Long-run results indicate that for price and wage inflation there is little disincentive for discretionary policy when monetary policy is at or near the zero-lower bound. Optimal commitment and discretionary policy are examined in a popular DSGE framework. The monetary authority targets a convex combination of price and wage inflationary gaps around time-varying inflation targets. A joint hypothesis test is derived to determine if the central bank faces an inflationary disincentive for activist policy. Considering price and wage inflation separately, there are significant short-run disincentives to discretionary policy. Discretion and commitment policies are not different for price and wage inflation when nominal interest rates are persistently low.

There are a limited number of aggregate service diffusion models that have been analytically analyzed and empirically estimated for subscription-based services. Aggregate diffusion models of this sort are instrumental for decision-making and forecasting the number of subscribers over time. In this article, an aggregate diffusion model of subscription services for a monopoly is developed, incorporating a customer acquisition process, a customer attrition process, and marketing-mix variables. On the empirical side, using Canadian cable TV diffusion data related to several provinces, the inclusion of marketing-mix variables into the aggregate diffusion model for subscription services that incorporate customers' defection is found to improve its performance. An extended Kalman filter estimator shows that advertising affects the coefficient of innovation, whereas price affects the coefficient of imitation. On the theoretical side, the sensitivity of marketing-mix decisions to a change in customers' defection at the steady state is operationalized for a long planning horizon together with fixed marketing-mix decisions over time. Upon meeting certain realistic conditions, it is shown for the first time that customers' defection could enhance a firm's profitability. Managerial implications of the study, together with directions for future research, are discussed.

Poverty alleviation remains one of the most pressing problems, and China has made considerable advancements toward poverty alleviation in recent years. Considering village as a random effect, this paper proposes a linear quantile mixed model to analyze the effects of household type, village type, and their interactions on household income, suggesting a test of who benefits more or less from anti-poverty policies. Results indicate that there has been a somewhat unbalanced development between poverty-stricken households who are scheduled to be out of poverty earlier and poverty-stricken households who are scheduled to be out of poverty later. The imbalance is slightly different across village types. Results also show that anti-poverty policies have been equally implemented among village types, but there is some unbalanced development of poverty-stricken and non-poverty-stricken households at lower income distribution quantiles depending on village type. Previously unidentified, marginally non-poor households are found to benefit disproportionately less from policy measures irrespective of village type.

Poverty alleviation remains one of the most pressing problems, and China has made considerable advancements toward poverty alleviation in recent years. Considering village as a random effect, this paper proposes a linear quantile mixed model to analyze the effects of household type and village type to test whether local governments equitably implement poverty alleviation measures among poverty and non-poverty-stricken villages. Results indicate that anti-poverty policies have been equally implemented among village-types on average, but there is unbalanced development of poor and non-poor households depending on village-type. Previously unidentified, marginally non-poor households are found to benefit disproportionately less from these policies.

Abstract Much has been written on how an active central bank produces inflation outcomes above and beyond what commitment policy would produce. This paper contributes to this body of literature by simulating from the state estimates of both commitment and discretionary policy equilibria in a familiar dynamic New–Keynesian framework. Optimal interest rate and inflation rate policies are derived under the two regimes for six developed economies. The model is estimated using Bayesian methods employing a random-walk Metropolis–Hastings algorithm. Optimal inflation and interest rate policies for each of the economies are simulated. Results suggest that the simulated inflation induced by discretionary policy is not significantly different from commitment policy after 2000 for five of the six countries (including the U.S). Simulated commitment interest rate policy is on average 1.9% higher at the center of the distribution, suggesting that discretionary interest rate policy is on average more often loose compared to commitment interest rate policy. Simulations of the average inflation deviation and welfare loss of discretion policy indicate are greatest when the central bank exhibits low preference for inflation targeting and high preference for output stability.

Between 2004 and 2009 it is estimated that over 30 billion songs were downloaded illegally on different peer-to-peer sharing networks according to the Recording Industry Association of America (RIAA). In an attempt to stop this during the late 1990’s and early 2000s the RIAA and other music labels engaged in a very public and vigorous campaign of prosecution of firms, such as Napster and Limewire, for copyright violations in order to reduce piracy. Due to the public backlash, in late 2008 the RIAA announced that they would begin to stop litigation on a grand scale. This paper examines the impact that this model of piracy prosecution had on music sales. We find evidence that the RIAA’s model of litigation actually backfired and led to decreased legitimate album sales. Additionally, we find that variation in per capita seasonally adjusted album sales cannot be explained by the existence of both Limewire and Napster file sharing services.

The primary goal of this article is to investigate whether properly modelling real-time data and optimal real-time decision-making of a monetary planner provides new insights into monetary policy behaviour and outcomes. This article extends a variant of the asymmetric preference model suggested by Ruge-Murcia to investigate the use of real-time data available to policymakers when making their decisions and revised data which more accurately measure economic performance, but is only available much later. In our extended model, the central banker targets a weighted average of revised and real-time inflation together with a weighted average of revised and real-time output. Moreover, we allow for an asymmetric central bank response to real-time data depending on whether the unemployment rate is high or low. Our model identifies several new potential sources of inflation bias due to data revisions. Our empirical results suggest that the Federal Reserve Bank focuses on targeting revised inflation during low unemployment periods, but it weighs heavily real-time inflation during high unemployment periods. The inflation bias due to data revisions is comparable in magnitude to the bias from asymmetric central banker preferences with the bias being somewhat larger during high unemployment.

This paper examines the linkages between monetary policy equilibria and asymmetric preferences. Much has been written on the relationship between discretionary monetary policy and policy under commitment from a timeless perspective. Additionally, there is a relatively robust literature that suggests monetary policy in the U.S. responds asymmetrically to fluctuations in the output gap. Here, asymmetric optimal policy is analyzed under both commitment and discretion in a simple dynamic New-Keynesian model. The timeless perspective equilibrium leads to a policy rule with inertia (consistent with the literature), but in this case implies asymmetry over time. This result is not found under discretion. Both model variants and those imposing linearity are estimated for five developed economies. Policy deviations are simulated for the linear and nonlinear rules. Results imply that the asymmetric commitment policy produces the lowest average deviations from observed policy, and also the policy deviations with the smallest variance, for all five countries. A linear Taylor rule produces statistically larger average deviations than both asymmetric commitment and asymmetric discretionary policy. (C) 2016 Elsevier Inc. All rights reserved.

The following paper contributes to a growing body of literature examining the degree to which monetary policy deviates from a systematic rule. We extend an error correction model of the Fed's reaction function by Judd and Rudebusch (1998) by endogenizing the unobserved inflation target in a model that nests the constant target model as a special case. The model is iteratively updated using a Kalman filter and estimated using Bayesian methods. The draws from the posterior distribution are used to estimate a distribution of Taylor rules with which to compare observed policy and more appropriately estimate deviations. This approach more accurately represents the parameter space given our data. Estimates imply a significant deviation in Fed policy over the years preceding the housing market decline. Restricted model variations imply no evidence of strict inflation targeting, but strict output gap targeting behavior cannot be ruled out over the Burns and Volcker tenure. (C) 2016 Board of Trustees of the University of Illinois. Published by Elsevier Inc. All rights reserved.

The purpose of this paper is to analyze the effect of time varying monetary policy targets on the asymmetric preferences hypothesis for US monetary policy. Recent literature suggests that monetary policy responds asymmetrically to fluctuations in either an output gap or unemployment gap. Most of these studies impose the assumption of constant inflation and interest rate targets. This paper models both of these target rates as time varying parameters using a nested specification to test for constancy in the target rates. Additionally, the paper examines the estimation strategy needed to estimate all of the policy maker's structural or deep parameters for the asymmetric preferences model. The model is estimated via maximum likelihood using an iterative Kalman filter. Results show that asymmetric policy response over the output gap disappears for all sample periods when the joint underlying dynamics of inflation and interest rate data are accounted for. Additionally, the results indicate that policy target rates are not well represented by constants for all sample periods examined. As a whole, the empirical exercise suggests that conclusions about monetary policy behavior might be sensitive to modeling assumptions about target policy rates.

We extend Ruge-Murcia (2003, 2004) to weigh inflation and output and show that empirical evidence supports an asymmetric preference hypothesis for output. We also find evidence that the monetary authority targets potential output in parallel to Barro and Gordon (1983). (C) 2012 Elsevier B.V. All rights reserved.