Showing papers in "Journal of Economic Studies in 1998"
TL;DR: In this paper, the authors explore evolutionary and competence-based theories of the firm and discuss the relevance of the competence approach to strategic management, including the important subset of "evolutionary" approaches of the Nelson Winter type.
Abstract: This essay explores evolutionary and competence‐based theories of the firm. Evolutionary theories can be regarded as a subset of a wider class of theories, variously described as “capabilities”, “resource‐based”, or “competence‐based” theories of the firm. These contrast with a different set of contractarian theories, emanating largely from the work of Coase. It is argued that the contractarian theories of the firm misleadingly assume given individuals thus neglecting processes of individual learning and transformation. Similarly underestimated is importance of technology and the persistence of variety in firm structure and performance. The genesis of the alternative, competence‐based approach is outlined, including the important subset of “evolutionary” approaches of the Nelson‐Winter type. The paper concludes with a discussion of the relevance of the competence‐based approach to strategic management.
161 citations
TL;DR: In this paper, the authors presented a model that is suitable for evaluating not only the total effects of financial intermediation on economic growth, but also the channels through which the effects are brought about.
Abstract: Presents a model that is suitable for evaluating not only the total effects of financial intermediation on economic growth, but also the channels through which the effects are brought about. These two channels are: the externality of financial on the real sector and the inter‐sectoral differential between financial and real sectors in the productivity of factors of production. Also presented is the conventional and rather ad hoc model for evaluating the effect of financial intermediation on economic growth. All the models were estimated with cross‐sectional data over the 1970s and 1980s for 90 developing countries and the main findings are that: financial intermediation exerts positive effects on economic growth in developing countries; the two postulated channels of the effects of financial intermediation are both relevant in developing countries; and financial depth, defined as the ratio of financial aggregates to GDP, promotes economic growth in only low‐income developing countries while it has no effect in high‐income ones.
116 citations
TL;DR: In the run-up to the 1992 single market deadline, there were concerns that inter-industry adjustment pressures among EU member countries would increase as discussed by the authors, which was due to a perceived reversal of the post-Second World War growth in intra industry trade (IIT).
Abstract: In the run‐up to the 1992 single‐market deadline, there were concerns that inter‐industry adjustment pressures among EU member countries would increase. Such expectations were due partly to a perceived reversal of the post‐Second World War growth in intra‐industry trade (IIT). Finds that average IIT levels continued to rise during the implementation of the single market. It is argued that the concept of marginal IIT(MIIT) is of greater relevance to adjustment than “static” IIT. Some evidence is shown to support this proposition, and a comprehensive set of intra‐EU MIIT indices is calculated for the 1980s. Since average MIIT levels in the 1988‐92 period were higher than in the early 1980s, this analysis also supports the conclusion that, on average, adjustment to the single market was no more disruptive than that experienced during earlier stages of European integration. It also appears that the forces for inter‐industry adjustment are stronger in traditional, declining industries, whereas the expansion of relatively advanced industries tends to be more evenly shared by the EU member countries.
92 citations
TL;DR: In this paper, the authors present a dynamic model of real wages in the open economy that encapsulates the well-known "competing claims model" or "incomplete competition model" of real wage determination.
Abstract: We present a dynamic model of real wages in the open economy that encapsulates the well‐known “competing claims model” or “incomplete competition model” of real wage determination. In general, the model determines the development of inflation, real wages and the real exchange rate for any given rate of unemployment. Inflation, rather than unemployment, is the “conflict solver” in the unrestricted model. However, a supply side determined equilibrium rate of unemployment is subsumed as a special case. A re‐appraisal of the empirical literature shows that there is little evidence in support of the “natural rate” restrictions.
53 citations
43 citations
TL;DR: In this article, the authors look into the question of causality between money and prices in the context of international comparison in four South-east Asian developing countries, based on an improved methodology.
Abstract: Attempts to look into the question of causality between money and prices in the context of international comparison in four South‐east Asian developing countries, based on an improved methodology. Thailand, Malaysia, Singapore, and the Philippines were used as case studies. Regarding the money‐price causality direction, the study based on both bivariate and multivariate tests, tends to suggest strongly that in those four countries during much of the three decades since 1960, it was money supply that was the leading variable as the monetarists maintain and not the other way around as the structuralists maintain.
43 citations
TL;DR: In this article, the effect of government size per capita on the steady state level of output and on the growth rate differs between LDC's and developed countries, and it is shown that an increase in government size will increase the steady-state levels of output if the economy is at a low steady state (underdeveloped), and will decrease the steadystate level of outputs when the economy was at a high steady state.
Abstract: The purpose of this paper is to understand how the effect of the government size per capita on the steady‐state level of output and on the growth rate differs between LDC’s and developed countries It is shown that an increase in government size will increase the steady‐state level of output if the economy is at a low steady‐state (underdeveloped), and will decrease the steady‐state level of output if the economy is at a high steady‐state (developed)
38 citations
TL;DR: In this article, the authors review the recent literature concerning the hypothesis of cross country convergence of levels and growth rates of income per capita implied by the neo-classical growth model, both in the Solow-Swan and Rampsey-Cass-Koopmans versions.
Abstract: This paper reviews one of the crucial issues in the recent growth literature concerning the hypothesis of cross country convergence of levels and growth rates of income per capita implied by the neo‐classical growth model, both in the Solow‐Swan and Rampsey‐Cass‐Koopmans versions. The alternative endogenous growth models, consistent with permanent income inequality, are considered. Convergence to a common income level versus divergence is discussed from a theoretical point of view. Then, empirical tests of the convergence property are presented. What emerges is that Barro type regressions and their findings about “conditional” convergence are questionable and cannot be used to give a definitive response on this issue.
33 citations
TL;DR: In this paper, the authors explored the determinants of intra-industry trade in Australia and found that Australian IIT has been growing as a proportion of total trade over the past 15 years and that average and relative per capita incomes, distance and trade orientation are all important factors explaining trends of IIT for Australia.
Abstract: Intra‐industry trade (IIT) is the simultaneous import and export of goods within the same industry. This paper updates previous work on Australian intra‐industry trade and explores the determinants of IIT. It is the first Australian study to pool time series and cross‐sectional data for this purpose. The empirical work also explores whether the determinants of IIT vary between different groups of trading partners; a distinction is made between Australia’s traditional trading partners and newly emerging trading partners in the Asia Pacific region. The paper finds that Australian IIT has been growing as a proportion of total trade over the past 15 years. The empirical evidence presented suggests that average and relative per capita incomes, distance and trade orientation are all important factors explaining trends of IIT for Australia.
26 citations
TL;DR: In this paper, the authors provide evidence for very little monetary policy convergence, even during the more stable 1987-92 period, and show that Germany is not the leader country in the system as it appears to accommodate shocks in other member countries.
Abstract: The paper tests for long‐run monetary policy convergence and short‐run policy interactions in seven ERM countries over the 1979‐1992 period using the approach of multivariate cointegration and Granger‐causality tests. The authors provide evidence for very little monetary policy convergence, even during the more stable 1987‐92 period. Tests for short‐run monetary policy interactions show that, in agreement with some other studies, Germany is not the leader country in the system as it appears to accommodate shocks in other member countries. The tests show also that full monetary policy convergence applied among Germany, Belgium and The Netherlands in the 1987‐92 period implies that these countries could be the first to join a European monetary union should a two‐speed approach to monetary union become a reality.
25 citations
TL;DR: In this article, an international data set on formal educational attainments is used to disaggregate total employment in order to estimate a Cobb-Douglas aggregate production function for a selection of high income OECD countries for five years in the period 1960-85.
Abstract: Models of endogenous economic growth typically assume that aggregate production is characterised by increasing returns to scale, often as a result of the accumulation of physical and human capital. In this paper, an international data‐set on formal educational attainments is used to disaggregate total employment in order to estimate a Cobb‐Douglas aggregate production function. The function is estimated, using a pooled cross‐section time‐series model, for a selection of high income OECD countries for five years in the period 1960‐85. The estimation results suggest that increasing returns to scale prevailed.
TL;DR: This paper examined the relationship between budget (or public) deficits and exchange rates in eight OECD countries, namely Germany, the UK, Switzerland, Belgium, Netherlands, Italy, France, and Canada over the period 1980−1995 by using quarterly data and the methodologies of cointegration, long-run causality and Granger (or short-run) causality tests.
Abstract: Attempts to examine the relationship between budget (or public) deficits and exchange rates in eight OECD countries, namely Germany, the UK, Switzerland, Belgium, the Netherlands, Italy, France, and Canada over the period 1980‐1995 by using quarterly data and the methodologies of cointegration, long‐run causality and Granger (or short‐run) causality tests. The empirical findings provide evidence in favour of the association between exchange rates and budget deficits with the impact of these deficits on the exchange rate, however, not being uniform. In certain cases budget deficits seem to have led to a currency depreciation, while in others to a currency appreciation.
TL;DR: In this paper, a cointegration and error-correction model was used to investigate the relationship between relative price elasticities and the degree of openness of the Cameroon economy.
Abstract: The hypotheses that an increase in relative price elasticities is not associated with increased import substitution and that an increase in income and foreign exchange elasticities is not associated with a greater degree of “openness” of the Cameroon economy are investigated using cointegration and error‐correction modelling. Disaggregation of total imports into raw materials, consumer, intermediate and capital goods shows that long‐run relative price elasticities of import demand are greater than short‐run values, being above unity for raw materials and consumer goods; thus leading to rejection of the first hypothesis for these categories of imports. Imports are income‐elastic for capital and intermediate goods and foreign exchange inelastic for all categories of import, implying that the Cameroon economy has been less open to trade in general. Some policy implications of the results are provided.
TL;DR: In this article, UK regional data on GDP and the GDP deflator are analysed to extract information on underlying demand and supply shocks as well as aggregate demand and output shocks, and the main results are that the supply shocks are almost completely symmetric across UK regions and there is no evidence of these shocks being propagated slowly across the regions.
Abstract: UK regional data on GDP and the GDP deflator are analysed to extract information on underlying demand and supply shocks as well as aggregate demand and supply shocks. Identification is achieved using long run restrictions, based on a theoretical model. The main results are that the supply shocks are almost completely symmetric across UK regions and that there is no evidence of these shocks being propagated slowly across the regions.
TL;DR: In this paper, the authors test the extended tax-smoothing model for a sample of 32 developing countries and find that the testable implications employed relax the assumption of constant money velocity.
Abstract: This paper tests the extended tax‐smoothing model for a sample of 32 developing countries. Importantly, the testable implications employed relax the assumption of constant money velocity. Although seigniorage is an important source of revenue in developing countries, all the evidence indicates that the principles of optimal taxation have not been used when developing countries raise revenue from inflation.
TL;DR: In this article, the authors studied the components of the forward discount dynamics in Germany from 1972 to 1996 and found that an ARCH structure fits the monthly data well, while an EGARCH structure gives a better description of daily forward discount volatility.
Abstract: This paper studies the components of the forward discount dynamics in Germany from 1972 to 1996. By using two different frequencies in the analysis, we find that an ARCH structure fits the monthly data well, while an EGARCH structure gives a better description of daily forward discount volatility. Results also suggest that foreign central bank reserves and portfolio investment are significant in the determination of the forward discount trend over the whole period. The causality, however, varies over time. Sign size, and persistence effects on the volatility of the forward discount are all significant, and thus, provide important information to both policy makers and operators in the market. There is also evidence that the volatility of the forward discount dropped after the Plaza Accord.
TL;DR: The similarities among the writings of Ralph Hawtrey, Lauchlin Currie and Milton Friedman are re-affirmed, as is the influence of the former on what Friedman has called "the Chicago tradition" of the 1930s as mentioned in this paper.
Abstract: The similarities among the writings of Ralph Hawtrey, Lauchlin Currie and Milton Friedman are re‐affirmed, as is the influence of the former on what Friedman has called “the Chicago tradition” of the 1930s. The underconsumptionist analysis of Paul Douglas is not integral to that tradition.
TL;DR: In this article, a simple alternative measure for the arc elasticity of demand was proposed, which comes naturally and possesses some attractive properties in particular it equals the point demand elasticity at some point inside the interval, thus leading to the exact estimations of demand elasticities when this is constant and yields narrower values that Dalton's, Lerner's, and Allen's widely used measures.
Abstract: This paper presents a simple alternative measure for the arc elasticity of demand that comes naturally and possesses some attractive properties In particular, it equals the point demand elasticity at some point inside the interval, thus leading to the exact estimations of demand elasticity when this is constant It also yields narrower values that Dalton’s, Lerner’s and Allen’s widely used measures, and its relationships with the arc revenue elasticities keep exact analogy with those established for the point elasticity case
TL;DR: This article argued that the unique Chicagoan quantity-theory of the early 1930s embodied a policy framework which left it immune from the Keynesian revolution and contained important linkages with Friedman's views in its business cycle analysis and policy positions.
Abstract: Offers a response to David Laidler’s article “More on Hawtrey, Harvard and Chicago”, in this issue. Asserts that the unique Chicagoan quantity‐theory of the early 1930s embodied a policy framework which left it immune from the Keynesian revolution and contained important linkages with Friedman’s views in its business‐cycle analysis and policy positions. Claims that this tradition explains why Chicago (and not Harvard) originated the monetarist counter‐revolution.
TL;DR: In this article, the authors examined and analyzed the TFPG performance of individual service industries in Singapore and found that the role of government could constitute an important factor in the estimation of TFPGs.
Abstract: This paper examines and analyses the TFPG performance of individual service industries in Singapore. TFPG of services were highly cyclical, indicating the overwhelming vagaries of external demand in this small and open economy. Although the TFPG of most services were dismal during 1976‐93, the rates were higher for the post‐1985 recession period, compared with those in the pre‐1985 recession years. This trend reflects the Government’s concerted efforts to upgrade the workforce and promote higher technology services. Besides, the service industries which did not conform to this trend had in common massive infrastructural investments which were primarily undertaken by government‐linked enterprises with a longer‐term interest of the economy at large. Thus it seems that the paternal role of government has a vital influence on Singapore’s TFPG performance. The study implies that the role of government could constitute an important factor in the estimation of TFPG, and in comparing TFPG among economies where government roles differ significantly.
TL;DR: In this article, the authors studied the behavior of employment and real wages in Greek manufacturing and found that adjustment costs in firms' decision making, due to institutional and technological constraints, are the main reason for the slow response of (un)employment to changes in the economic environment.
Abstract: This paper studies the behaviour of employment and real wages in Greek manufacturing 1954‐1993. Since employment dynamics are driven by trade union membership, wage aspirations and adjustment costs, the paper tries to identify the relative importance of these propagation mechanisms for the stylized fact of full (un)employment persistence. The empirical results suggest that adjustment costs in firms’ decision making, due to institutional and technological constraints, are the main reason for the slow response of (un)employment to changes in the economic environment.
TL;DR: In this article, four indexes are employed to measure trends in asset concentration of large business in the United States between 1967 and 1992 using the Fortune 500 data and whether the merger wave of the 1980s was statistically significant.
Abstract: Four indexes are employed to measure trends in asset concentration of large business in the United States between 1967 and 1992 using the Fortune 500 data. The paper also investigates whether the merger wave of the 1980s was statistically significant. For all the 500 and the top 100 firms, each of the indexes confirmed that concentration trends were on the increase for the whole period and that the increase in the level of concentration due to the mergers of the 1980s was statistically significant. However, on both counts, not all indexes were in agreement for the bottom 300 firms when examined by subsets of 100 firms.
TL;DR: The authors assesses the contribution of individuals to the Chicago tradition of the 1930s, and once again assesses individuals' contributions to the tradition of Chicago in the early 20th century.
Abstract: Responds to George Tavlas’ comments in “More on the Chicago tradition”, in this issue, and once again assesses the contribution of individuals to “the Chicago tradition” of the 1930s.
TL;DR: This article investigated the relationship between tenure and earnings using two different approaches utilizing a matched employer-employee sample and found that the tenure status is a significant determinant of earnings, and that the effect of tenure on earnings was estimated by a system of simultaneous equations using three stage least squares.
Abstract: This paper investigates the relationship between tenure and earnings using two different approaches utilising a matched employer‐employee sample. In the first approach a two step procedure is adopted where the tenure status is modelled as endogenous and subject to choice decision. In the second approach the effect of tenure on earnings is estimated by a system of simultaneous equations using three stage least squares. The results suggest the tenure is a significant determinant of earnings.
TL;DR: In this article, the likely effects of a wage subsidy in a model of LDC which systematically incorporates an Informal sector were analyzed. And the effects of the wage subsidy on the ranking policies to improve welfare was shown to be considerably different in this model compared to this in the Harris-Todaro-type models.
Abstract: This note sketches out the likely effects of a wage subsidy in a model of LDC which systematically incorporates an Informal sector. It is seen that the effects of a wage subsidy in this model differ considerably from those derived in the Harris‐Todaro‐type frameworks. Also, the ranking policies to improve welfare is likely to be considerably different in this model compared to this in the Harris‐Todaro‐type models.
TL;DR: In this article, the authors used the vector autoregressive approach to test the effect on exchange rates of fiscal variables for seven countries (Australia, Canada, Britain, France, Germany, Italy and the USA).
Abstract: One of the perceived benefits of a flexible exchange rate system is the insulation of the domestic economy from foreign shocks, and the potential for independent policy actions. In view of the considerable uncertainty, which pervades appropriate specification of the relevant theoretical models, the empirical analysis of this paper adopts the vector autoregressive approach. Using quarterly data over the period 1975(2)‐1995(2), models are estimated which test the effect on exchange rates of fiscal variables for seven countries (Australia, Canada, Britain, France, Germany, Italy and the USA). In testing the exchange rate response to a bond financed fiscal expansion, a tax financed fiscal expansion and to a swap of taxes for debt with no change in the level of government expenditure, the results for the seven countries over the recent float are mixed because the impulse response functions to the shocks do not have the same pattern in every country.
TL;DR: This article reviewed two new environmental and resource economics textbooks, a book on ecological economics and one on the subject of environmental policy in developing economies, to familiarize the reader with the emerging subject of ecological economics.
Abstract: Familiarizes the reader with the emerging subject of ecological economics and provides an overview of how ecological economics differs from environmental and resource economics. Proceeds to then review two new environmental and resource economics textbooks, a book on ecological economics and one on the subject of environmental policy in developing economies.
TL;DR: In this paper, the authors argue that the weaknesses of the Friedman Rule from the application of the welfare theorems of general equilibrium theory to a monetary economy and show how, the consistency of the criticism notwithstanding, the optimal solution can still be implemented.
Abstract: The optimum quantity of money proposition, whose validity is agreed on, is actually open to criticism. The present paper argues that the weaknesses of the Friedman Rule from the application of the welfare theorems of general equilibrium theory to a monetary economy and shows how, the consistency of the criticism notwithstanding, the optimal solution can still be implemented.