Volume 15, Number 2, 2023

EN:

The Ramsey (1928) equation decomposes the real discount rate into the pure rate of time preference plus a term that accounts for the changing marginal utility of consumption. Discussions about the appropriate discount rate to apply in Cost Benefit Analysis sometimes refer to variations induced by alternative values of the pure rate of time preference as if the two vary on a one-to-one basis. But the optimal consumption path, which determines the marginal product of capital and hence the discount rate, depends on the rate of time preference. Hence the discount rate depends on time preference through the marginal utility term. We derive an analytical expression of this relationship and show that the derivative of the discount rate with respect to time preference only equals unity in the steady state and converges from below. We estimate the derivative using US data from 1930 to 2015. Based on a semi-parametric regression model with time-varying coefficients we find it is about 0.9, but we cannot rule out 1.0 being included in the 95% confidence interval. The implied pure rate of time preference after 1980 is about 1.6 percent.

EN:

In this study, we aim to explore and compare the frequency of attendance and the reasons for non-attendance to cultural activities between natives and first-generation immigrants in thirteen European countries. The empirical analysis relies on data from the special module on cultural participation in the European Union-Income and Living Conditions Survey (EU-SILC) in 2015. We apply the Probit and multinomial Probit models. This study contributes to the literature by exploring the determinants of cultural participation and comparing the frequency of participation in cultural activities between natives and first-generation immigrants. Furthermore, the study explores the reasons for non-participation in cultural activities, highlighting potential differences between countries and between the European Union (EU) and non-EU migrants. The results highlight that social interactions depend on several factors related mainly to the country of destination and employment opportunities and individual factors related to the migrant, including demographic and economic characteristics and the length of residence in the host country. The findings show that the length of residence of immigrants in the host countries is positively correlated with a higher frequency of attendance, indicating that cultural participation can be, by its nature, a long-term process or “experienced” activity. The findings also show that in most cases, migrants do not attend the cultural activities we explore because of financial constraints and not due to lack of interest. Thus, this highlights that the economic integration of migrants could be the primary driver of cultural participation and integration.

EN:

We explore the links between credit expansion, inflation, and inflation expectations, and show that active public debt management can trigger a non-interest rate channel of credit expansion. This creates incentives for the government to use debt management for promoting non-debt management goals, thus, choosing debt maturity structure that differs from its optimal. Through a theoretical monetary policy game, we show that it is welfare improving to delegate public debt management to an independent office separate from the fiscal authority.

EN:

We contribute to the literature on the international propagation of uncertainty shocks with a Global Vector Autoregressive (GVAR) model that quantifies the spillover effects of uncertainty shocks in the US on to real equity prices of 32 advanced and emerging countries (besides the US). In this regard, we also account for the role of global financial market conditions in the propagation of these shocks, using high and low values of the Global Financial Cycle (GFCy) index. Using quarterly data over 1980:1 to 2019:2, our findings reveal greater response of advanced markets than emerging counterparts to an US uncertainty shock. Further, we show consistent higher negative responses during weak financial conditions than otherwise, confirming the intervening role of the GFCy index. Our results have important implications for investors and policymakers.