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"DEVALUATION"
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The Distributional Consequences of Large Devaluations
We study the impact of large exchange rate devaluations on the cost of living at different points on the income distribution. Poor households spend relatively more on tradeable product categories and consume lower-priced varieties within categories. Changes in the relative price of tradeables and of lower-priced varieties affect the cost of living of low-income relative to high-income households. We quantify these effects following the 1994 Mexican devaluation and show that they can have large distributional consequences. Two years post-devaluation, the cost of living for the bottom income decile rose 1.48 to 1.62 times more than for the top income decile.
Journal Article
Sign Tracking, but Not Goal Tracking, is Resistant to Outcome Devaluation
During Pavlovian conditioning, a conditioned stimulus (CS) may act as a predictor of a reward to be delivered in another location. Individuals vary widely in their propensity to engage with the CS (sign tracking) or with the site of eventual reward (goal tracking). It is often assumed that sign tracking involves the association of the CS with the motivational value of the reward, resulting in the CS acquiring incentive value independent of the outcome. However, experimental evidence for this assumption is lacking. In order to test the hypothesis that sign tracking behavior does not rely on a neural representation of the outcome, we employed a reward devaluation procedure. We trained rats on a classic Pavlovian paradigm in which a lever CS was paired with a sucrose reward, then devalued the reward by pairing sucrose with illness in the absence of the CS. We found that sign tracking behavior was enhanced, rather than diminished, following reward devaluation; thus, sign tracking is clearly independent of a representation of the outcome. In contrast, goal tracking behavior was decreased by reward devaluation. Furthermore, when we divided rats into those with high propensity to engage with the lever (sign trackers) and low propensity to engage with the lever (goal trackers), we found that nearly all of the effects of devaluation could be attributed to the goal trackers. These results show that sign tracking and goal tracking behavior may be the output of different associative structures in the brain, providing insight into the mechanisms by which reward-associated stimuli-such as drug cues-come to exert control over behavior in some individuals.
Journal Article
Trade and Exchange Rate Competition in East Asia
Exchange rate manipulation—the active devaluation of a currency through intervention in the foreign exchange market—is a frequent trigger of international disputes. Yet it is not an obvious policy choice: as a blunt tool to boost export competitiveness, it is disliked by citizens and importers because of the loss of purchasing power it entails, and because it benefits those with investment abroad at the expense of those with savings at home. It is thus notable that a group of East Asian countries, from Japan and Korea to Thailand, undertake frequent and often large interventions to devalue their currencies. What explains their policy choice? We provide evidence that exchange rate depreciations are undertaken at the behest of export industries. Because lobbying activities in East Asian countries are not directly observable, we focus on Japan and Korea and construct a proxy measure of lobbying by exporters, drawing on news reports. We use machine learning to scale daily reports of industry demands in the two leading financial newspapers, the Japanese Nihon Keizai Shimbun and, in a robustness check, the Korean Hankyung, over twenty-five years. We find evidence that mounting public pressure by organized economic interest groups precedes intervention and induces currency depreciation.
Journal Article
Fiscal Devaluations
We show that even when the exchange rate cannot be devalued, a small set of conventional fiscal instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a dynamic New Keynesian open economy environment. We perform the analysis under alternative pricing assumptions—producer or local currency pricing, along with nominal wage stickiness; under arbitrary degrees of asset market completeness and for general stochastic sequences of devaluations. There are two types of fiscal policies equivalent to an exchange rate devaluation—one, a uniform increase in import tariff and export subsidy, and two, a value-added tax increase and a uniform payroll tax reduction. When the devaluations are anticipated, these policies need to be supplemented with a consumption tax reduction and an income tax increase. These policies are revenue neutral. In certain cases equivalence requires, in addition, a partial default on foreign bond holders. We discuss the issues of implementation of these policies, in particular, under the circumstances of a currency union.
Journal Article
Investigating habits in humans with a symmetrical outcome-revaluation task
The translation of the outcome-devaluation paradigm to study habit in humans has yielded interesting insights but proven to be challenging. We present a novel, outcome-revaluation task with a symmetrical design, in the sense that half of the available outcomes are always valuable and the other half not-valuable. In the present studies, during the instrumental learning phase, participants learned to respond (Go) to certain stimuli to collect valuable outcomes (and points) while refraining to respond (NoGo) to stimuli signaling not-valuable outcomes. Half of the stimuli were short-trained, while the other half were long-trained. Subsequently, in the test phase, the signaled outcomes were either value-congruent with training (still-valuable and still-not-valuable), or value-incongruent (devalued and upvalued). The change in outcome value on value-incongruent trials meant that participants had to flexibly adjust their behavior. At the end of the training phase, participants completed the self-report behavioral automaticity index – providing an automaticity score for each stimulus-response association. We conducted two experiments using this task, that both provided evidence for stimulus-driven habits as reflected in poorer performance on devalued and upvalued trials relative to still-not-valuable trials and still-valuable trials, respectively. While self-reported automaticity increased with longer training, behavioral flexibility was not affected. After extended training (Experiment 2), higher levels of self-reported automaticity when responding to stimuli signaling valuable outcomes were related to more ‘slips of action’ when the associated outcome was subsequently devalued. We conclude that the symmetrical outcome-revaluation task provides a promising paradigm for the experimental investigation of habits in humans.
Journal Article
Discursive representation of masculinity and femininity in Tinder and Grindr: Hegemonic masculinity, feminine devaluation and femmephobia
By analysing 200 Tinder profiles of Spanish heterosexual men and 200 Grindr profiles of Spanish queer men, this article examines these men’s online gendered and sexualised self-representation strategies. More specifically, the study develops a discourse and feminist analysis of post-feminist media cultures which contrasts these men’s discursive representations. In so doing, the article attempts to cast light on the (d-)evaluating discursive strategies these Spanish heterosexual and queer men deploy when creating their profiles. Importantly, the analysis gives evidence of how occupying the masculine or the feminine position goes hand in hand with the devaluation and policing of femininity. Furthermore, the analysis calls attention to the contradictory gender ideas present in their personal profiles and this, in turn, sheds further light on the ways they construct multiple masculine identities to negotiate their sexual gendered identities.
Journal Article