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Begin New Search Topic Industrial Policy Publishing Institution Board of Governors of the Federal Reserve System

21. Business Combinations Desk Book

Publication Date:
09-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Department of Defense (DoD) research, development, and acquisition policies, funding and program decisions, have a major impact on competition and industry transformation. DoD assessments of proposed business combinations (generally, domestic and foreign firm mergers, acquisitions, and joint ventures) must complement such policies and decisions to sustain credible competition in an evolving industrial environment.
Topic:
Defense Policy, Development, Industrial Policy, and Science and Technology

22. Are Depreciations as Contractionary as Devaluations? A Comparison of Selected Emerging and Industrial Economies

Author:
Steven B. Kamin, Shaghil Ahmed, Christopher J. Gust, and Jonathan Huntley
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
According to conventional models, flexible exchange rates play an equilibrating role in open economies, depreciating in response to adverse shocks, boosting net exports, and stimulating aggregate demand. However, critics argue that, at least in developing countries, devaluations are more contractionary and more inflationary than conventional theories would predict. Yet, it is not clear whether devaluations per se have led to adverse outcomes, or rather the disruptive abandonments of pegged exchange-rate regimes associated with devaluations. To explore this hypothesis, we estimate VAR models to compare the responses to devaluation of developing economies and two types of industrial economies: those that have consistently floated, and those that have sustained fixed exchange-rate regimes as well. We find that both of these types of industrial economies exhibit conventional (i.e., expansionary) responses to devaluation shocks, compared with the contractionary responses exhibited by developing countries. This finding suggests that exchange rate movements may be more destabilizing in developing countries than in industrial countries, regardless of exchange rate regime.
Topic:
Economics, Emerging Markets, Industrial Policy, and International Trade and Finance

23. Factor Endowments and Industrial Structurev

Author:
Trevor A. Reeve
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
What determines industrial structure? Do sector-specific characteristics such as unionization, regulation, and trade policy dominate production patterns? One is inclined to believe so based on countless industry-level studies and the many political battles that are continually fought over trade and industrial policy. In contrast, standard neoclassical trade theory suggests that industrial structure is primarily driven by relative factor supplies. This paper demonstrates that aggregate factor endowments explain much of the structure of production—independent of industry idiosyncrasies—and quantifies the extent to which shifts in industrial structure in a cross section of countries are driven by the broad forces of factor accumulation. This result has important implications for policy. In particular, investment in physical capital and education may have as great an impact on the pattern of production as sector-specific trade and industrial policies. Thus, general equilibrium effects should not be ignored in efforts either to understand industrial structure or to form policies that attempt to alter it. These conclusions are reached through an empirical application of the factor proportions model of production.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
United States

24. Recent U.S. Macroeconomic Stability: Good Policies, Good Practices, or Good Luck?

Author:
Beth Anne Wilson, Shaghil Ahmed, and Andrew Levin
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The volatility of U.S. real GDP growth since 1984 has been markedly lower than that over the previous quarter-century. In this paper, we utilize frequency-domain and VAR methods to distinguish among several competing explanations for this phenomenon: improvements in monetary policy, better business practices, and a fortuitous reduction in exogenous disturbances. We find that reduced innovation variances account for much of the decline in aggregate output volatility. Our results support the “good-luck” hypothesis as the leading explanation for the decline in aggregate output volatility, although “good-practices” and “good-policy” are also contributing factors. Applying the same methods to consumer price inflation, we find that the post-1984 decline in inflation volatility can be attributed largely to improvements in monetary policy.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
United States

25. Finding Numerical Results to Large Scale Economic Models Using Path-Following Algorithms: A Vintage Capital Example

Author:
Brett Berger
Publication Date:
06-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper describes the numerical optimization methods used in Berger (2001) to find the complete time paths of key economic variables in neoclassical vintage capital models. An interior and a non-interior point method are discussed. Both of the methods are part of the general class of “path-following” algorithms. These algorithms can be efficiently applied to convex programming problems; and due to the standard shape of production and utility functions, many economic problems can be written as convex programming problems. Vintage capital models add scale and complexity to standard growth models because one must now handle the dynamics of multiple capital stocks. This increase in complexity will often prevent the discovery (or existence) of closed form solutions, making numerical solutions of the type found in Berger (2001) necessary.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
United States

26. Preventing Deflation: Lessons From Japan's Experience in the 1990s

Author:
Jane Haltmaier, Alan J. Ahearne, Joseph Gagnon, and Steve Kamin
Publication Date:
06-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper examines Japan's experience in the first half of the 1990s to shed some light on several issues that arise as inflation declines toward zero. Is it possible to recognize when an economy is moving into a phase of sustained deflation? How quickly should monetary policy respond to sharp declines in inflation? Are there factors that inhibit the monetary transmission mechanism as interest rates approach zero? What is the role for fiscal policy in warding off a deflationary episode? We conclude that Japan's sustained deflationary slump was very much unanticipated by Japanese policymakers and observers alike, and that this was a key factor in the authorities' failure to provide sufficient stimulus to maintain growth and positive inflation. Once inflation turned negative and short-term interest rates approached the zero-lower-bound, it became much more difficult for monetary policy to reactivate the economy. We found little compelling evidence that in the lead up to deflation in the first half of the 1990s, the ability of either monetary or fiscal policy to help support the economy fell off significantly. Based on all these considerations, we draw the general lesson from Japan's experience that when inflation and interest rates have fallen close to zero, and the risk of deflation is high, stimulus–both monetary and fiscal–should go beyond the levels conventionally implied by baseline forecasts of future inflation and economic activity.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
Israel

27. The Defense Science Board Summer Study on Defense Science and Technology

Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Technology has been and must continue to be a key enabler of military advantage, both in conflict and in situations where conflict is close at hand. Over the years, the Department of Defense (DoD) science and technology progrme has discovered, invented, harnessed, and demonstrated such enabling technologies. As industry becomes more global, as scientific endeavors in other countries become more competitive, and as affordable technology increasingly issues from commercial sources, the DoD science and technology program needs to continue to meet challenges and exploit opportunities that arise. The Defense Science Board 2001 Summer Study task force has asked to examine three aspects of the DoD science and technology program: How the Department's S investment should be spend. The level of investment in science and technology. How the military can realize the most value from this investment.
Topic:
Defense Policy, Industrial Policy, and Science and Technology
Political Geography:
United States

28. Annual Industrial Capabilities Report to Congress, MAR 2002

Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Section 2504 of title 10, United States Code, requires that the Secretary of Defense submit an annual report to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives, by March 1st of each year. The report is to include:”(1) A description of the departmental guidance prepared pursuant to section 2506 of this title.(2) A description of the methods and analyses being undertaken by the Department of Defense alone or in cooperation with other Federal agencies, to identify and address concerns regarding technological and industrial capabilities of the national technology and industrial base.(3) A description of the assessments prepared pursuant to section 2505 of this title and other analyses used in developing the budget submission of the Department of Defense for the next fiscal year.(4) Identification of each program designed to sustain specific essential technological and industrial capabilities and processes of the national technology and industrial base.” This report contains the required information.
Topic:
Defense Policy, Economics, Industrial Policy, and Science and Technology
Political Geography:
United States

29. Report of the Defense Science Board Task Force on Tactical Battlefield Communications

Publication Date:
12-1999
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
At the outset of this study, the Task Force observed that there was no such thing as “just” tactical communications. Rather, it saw requirements for conducting military operations in two major theaters of war as well as for conducting a wide variety of other missions. It also saw emerging requirements for a telecommunication infrastructure to support rapid force projection, early entry, reachback/split-base, and high mobility operations. Furthermore, Joint Vision 2010 (JV2010) assumed information superiority to be necessary for dominant maneuver, precision engagement, full dimensional protection and focused logistics. All these factors have led our Military Services to express a need for a fully integrated, strategic/tactical, voice/data/information telecommunications infrastructure rather than merely “tactical” communications. This infrastructure must bring post-camp-station information services to deployed forces and, conversely, bring information from our deployed forces to the continental United States (CONUS) or to other locations geographically distant from areas of operations.
Topic:
Defense Policy, Industrial Policy, and Science and Technology
Political Geography:
United States