Research articles for the 2019-07-20

Carrots and Sticks in Private Climate Governance
Gilligan, Jonathan M.
When public governance fails to address important environmental threats â€" such as climate change â€" private governance by firms, not-for-profits, individuals, and households can produce significant reductions in greenhouse gas emissions. Private governance can take the form of either a carrot or a stick, using incentives or punishments. Shareholder activism as a form of private governance of corporations has largely been confrontational, leading most climate-related actions to fail. This Article examines the potential for private governance to take a more collaborative approach and to frame shareholder engagement with management in terms of opportunity. It also examines private governance successes at reducing household emissions and finds that these too emphasize making it attractive and convenient for households to act.

The Euro-Area Government Spending Multiplier at the Effective Lower Bound
Amendola, Adalgiso,di Serio, Mario,Fragetta, Matteo,Melina, Giovanni
We build a factor-augmented interacted panel vector-autoregressive model of the Euro Area (EA) and estimate it with Bayesian methods to compute government spending multipliers. The multipliers are contingent on the overall monetary policy stance, captured by a shadow monetary policy rate. In the short run (one year), whether the fiscal shock occurs when the economy is at the effective lower bound (ELB) or in normal times does not seem to matter for the size of the multiplier. However, as the time horizon increases, multipliers diverge across the two regimes. In the medium run (three years), the average multiplier is about 1 in normal times and between 1.6 and 2.8 at the ELB, depending on the specification. The difference between the two multipliers is distributed largely away from zero. More generally, the multiplier is inversely correlated with the level of the shadow monetary policy rate. In addition, we verify that EA data lend support to the view that the multiplier is larger in periods of economic slack, and we show that the shadow rate and the state of the business cycle are autonomously correlated with its size. The econometric approach deals with several technical problems highlighted in the empirical macroeconomic literature, including the issues of fiscal foresight and limited information.