The Rockefeller Foundation and the League of Nations: Public Health in Europe (1920-1945)

The Rockefeller Foundation (RF) and the League of Nations (LON) played a fundamental role in stabilization policies during the interwar period. Public health became essential in this context due to the immediate consequences of the war, the post-war economic crisis and the Great Depression. RF and LON became the cornerstone of international action in several fields: epidemics, famine, malnutrition, infectious diseases, infant mortality, drug abuse, biological and dietary standard-setting, epidemiological records, public health policies and professionalization. In the shaping international health expertise, LON and RF collaboration was extremely important, in terms of determining goals and programmes, and in terms of financial support. This article analyses the areas and the extent of their collaboration in Europe.

Tight Money-Tight Credit: Coordination Failure in the Conduct of Monetary and Financial Policies

Violations of Tinbergen’s rule and strategic interaction undermine stabilization policies in a New Keynesian model with the Bernanke-Gertler accelerator. Welfare costs of risk shocks are large because of efficiency losses and income effects of costly monitoring, but they are much larger under a simple Taylor rule (STR) or a Taylor rule augmented with credit spreads (ATR) than with a Taylor rule and a separate financial rule targeting spreads. ATR and STR are tight money-tight credit regimes responding too much (little) to inflation (spreads). The Nash equilibrium of monetary and financial policies is also tight money-tight credit but it dominates ATR and STR. (JEL E12, E31, E44, E43, E52, E63)

"Perspectives Fiscal Policy as a Stabilization Tool: Discretionary and Non Discretionary Policies"

Global financial crisis of 2008 and the Covid 19 led slowdown have brought Keynesian fiscal stabilization policies back to the forefront of all academic debates. But what the world is experiencing should be treated as an exceptional situation that should not be used to advance the case to fine-tune the economy every time using discretionary fiscal measures. The pre-crisis broad macroeconomic consensus still holds, and stabilization should first be left to monetary policy. On the fiscal front government should rely more on rule-based inbuilt stabilizers for short-term management of cyclical fluctuations in case of demand shocks and long-run fiscal policy should focus more on growth and developing enabling factors to attract more investment. Fiscal stabilizers on the expenditure side should be strengthened to provide an adequate safety net to economically vulnerable sections of the society.

Stabilisation policies in Ukraine in the time of the COVID-19 pandemic

This paper aims at both theoretical and empirical assessment of stabilization policies in Ukraine in the wake of a contractionary macroeconomic shock of the COVID-19 pandemic. Various aspects of fiscal and monetary policies are analyzed within the theoretical framework of a dynamic AD–AS model with a focus on the exchange rate effects. It is demonstrated that output effects of fiscal and monetary policies depend on inflationary inertia measured as the correlation between present and lagged inflation. Depreciation of the exchange rate is inflationary and can be contractionary under both low and high inflationary inertia. For Ukraine, it is found that the supply-side recovery is of priority, in contrast to the majority of industrial countries where insufficient demand is the biggest problem. Using the 2SLS estimator, it is obtained that a non-inflationary increase in the GDP growth rate is expected under a decrease in the excessive money supply combined with the exchange rate appreciation. As the exchange rate is still undervalued due to effects of the large devaluation of 2014–2015, a combination of conservative monetary policy and moderate exchange rate appreciation should not raise any concerns. Our results reject frequent speculations that a local appreciation of the hryvna has been responsible for the GDP slowdown since the middle of 2019. Fiscal policy seems to be neutral in respect to both inflation and GDP. Among other results, it is found that an increase of the Euro area output by 1% contributes to the GDP growth rate in Ukraine by 0,6-0,7 percentage points. As suggested by a dummy variable, a deep economic slump of 2014-2015 was not caused by structural shifts in the Ukraine’s economy, with a large depreciation of the hryvna and excessive money supply being the most relevant explanatory factors.

Complexity in Stabilization Policies

This chapter briefly revisits the book’s discussions of Keynes, the Great Depresssion, and Stabilization policies. It considers the importance of fiscal policy and the importance of simplicity in its use and the trust in its impact, especially in the 1960s. The chapter then looks at stagflation and growing doubts in the 1970s and the growing importance of rational expectations and of the Ricardian Equivalence Hypothesis and their impact on stabilization policy. Monetary policy also took on increasing importance in light of the growing complexity of the structure of the economy and the consequent growth of many new occupations. Finally, the impact of these changes and of growing globalization on the design of stabilization policies is discussed alongside a possible reduction in the effectiveness of fiscal policy.

Nonlinear asset-price dynamics and stabilization policies

We first present a brief review of nonlinear asset-pricing models and contributions in which such models have been used as benchmarks to evaluate the effectiveness of a number of regulatory policy measures. We then illustrate the functioning of one particular asset-pricing model—the seminal framework by Brock and Hommes (J Econ Dyn Control 22:1235–1274, 1998)—and its possible stabilization via a central authority that seeks to counter the destabilizing trading behavior of speculators. Our paper underlines that tools from the field of nonlinear dynamical systems may foster our understanding of the functioning of asset markets, thereby enabling policymakers to design better trading environments in the future.