AUSTRALASIAN ECONOMIC HISTORY: RESEARCH CHALLENGES AND BIG QUESTIONS

This paper reports a debate on the 'big questions' and 'research challenges' facing economic history in Australia and New Zealand. Noting the changes in research direction that occurred in the discipline over the past 50 years, and the resource challenges it currently faces, it identifies many areas of potentially fruitful research. These include the environment, market regulation and industry development, the interaction of peoples and culture, and the examination of units other than the national economy. While there is potential for exciting and diverse research, an immediate challenge is the training of the next generation of economic historians.     

PROFESSOR REEKIE AND MARKETS: HEALTH CARE AND HIGHER EDUCATION

In this intriguing book Duncan Reekie goes to the very basis of the economic order. ¹ He discusses the views of the ancient Greek and later writers, and in doing so, moves outside the confines of modern economic analysis. One is reminded of what Schumpeter once wrote: the economist pursues the study of cause and effect until he finds the causal role of a variable to be non-economic. We must then give place to other disciplines. ² Reekie's analysis reverses the order: it starts with the very general concept of the Natural Law in the works of ancient Greek and many subsequent writers, and then shows how they addressed questions that are still relevant today: questions on property and individual freedom.     

Reasonable and Risk‐Based? Replacing NFIP Generally Subsidized Rates with a Means‐Tested Subsidy

The National Flood Insurance Program was created to seek two often conflicting goals: (i) shifting risks from federal taxpayers to those who choose to live in flood plains and (ii) ensuring flood insurance is available to everyone at “reasonable” rates. Efforts to accomplish the second goal currently take the form of subsidies based on location and the date a home was constructed. The resulting revenue from subsidized insurance premiums is not sufficient to cover the true cost of flood insurance, and federal taxpayers have paid the difference: $30 billion to date. Based on a detailed survey of households in the high‐risk flood zones of New York City (NYC), we find that replacing existing premium subsidies with risk‐based prices and a subsidy for low‐income housing‐burdened households could better meet both goals by ensuring low‐income individuals have access to affordable flood insurance while still saving the federal taxpayer up to $183 million per year in NYC alone.     

Emporiophobia (Fear of Markets): Cooperation or Competition?

Widespread emporiophobia (fear of markets) has important policy implications, since it leads voters to demand anti‐market policies. There are many reasons for this anti‐market attitude; however, economists could reduce emporiophobia if we stressed cooperation rather than competition in writings and policy discussions. In a sample of introductory textbooks, competition is mentioned on average eight times as often as cooperation. The fundamental economic unit is the transaction, and transactions are cooperative. The benefit of a market economy—increased consumer surplus—comes from cooperation through transactions, not from competition. Competition in a market economy is competition for the right to cooperate. Competition is important because it guarantees that the best cooperators will win and because it establishes the efficient terms for cooperation, but cooperation is fundamental. For most people, competition has negative connotations since it focuses on losers, while cooperation implies a win–win situation. Other implications involve the morality of the market, “giving back,” and characteristics of market failures.     

AN INVESTIGATION INTO THE IMPACT OF TUTORIALS ON THE PERFORMANCE OF ECONOMICS STUDENTS

The deteriorating performance of first-year economics students has become a concern at many South African universities. Addressing the issue requires an understanding of the factors influencing students' success. Studies analysing academic performance use the education production function approach. This approach identifies inputs that are crucial to learning and to achieving certain outputs. Factors that have been investigated in other studies include the impact of lecture attendance on performance, school-leaving exam (matriculation) results, particularly performance in mathematics, and the gender and age of students.
This study adds to existing local empirical research by analysing the impact of the tutorial programme as an input. The case study investigates the tutorial programme for first-year economics students at Stellenbosch University using quantitative analysis. Results confirm what previous studies have found, namely that lecture attendance, gender, and matriculation results contribute positively to the performance of first-year economics students. The main finding of the paper is that tutorial attendance also contributes positively to academic performance.     

Is System Dynamics Modelling of Relevance to Neoclassical Economists?

System dynamics modelling is a technique that is widely used in business, environmental and ecological applications. In the field of economics, however, it is less frequently used, and those that do use it are usually not professionally trained economists. One of the reasons for this is the perceived ideological differences between system dynamics modelling and neoclassical economics. System dynamics is classified in the literature as a heterodox approach. This article utilises a reputable framework from social theory to compare system dynamics modelling and neoclassical economics on ontological and epistemological grounds. This is the first known study to find congruency between these two approaches on this basis. System dynamics modelling has the potential to increase the range of modelling tools at the disposal of neoclassical economics, so long dominated by econometric and general equilibrium modelling approaches.     

DOES ATTENDANCE AT A HISTORICALLY WHITE UNIVERSITY BENEFIT NON‐WHITE STUDENTS OF INTRODUCTORY ECONOMICS IN SOUTH AFRICA?

The Equality of Educational Opportunity survey (aka the Coleman Report), published in 1966 in the USA, is arguably the fountainhead of the debate promulgated within the economics of education and allied disciplines concerning the efficacy of schooling. The debate was largely due to the primary conclusion of the Coleman Report that school inputs (other than student demographics) explain little, if any, of the variance in student performance, with the implication that more money was not the solution to educational problems. While the methodology and the conclusions of the Coleman Report have been criticised in the 40 years since its publication, the fundamental question of the magnitude and extent of the consequences of educational inequalities has relevance to the South African situation. Utilising a cross‐sectional data set drawn from three universities, and the theoretical framework of an education production function, this paper addresses the issue of whether, over a decade after the first democratic elections in South Africa, black, Indian and coloured students studying Introductory Microeconomics, have benefited academically from attending historically advantaged (i.e. white) universities (HAU) relative to their counterparts who are attending historically disadvantaged universities (HDU).     

Inward investment, industry concentration and the speed of adjustment

Inward Investment, Industry Concentration and the Speed of Adjustment. — The paper develops a model of concentration, based on the standard literature of concentration determination, which is then estimated using a frontier approach within a panel framework. Such a model provides an estimate of the lower bound of concentration in the industry, based on observed industry level characteristics. The paper then develops a model of concentration change, which shows that foreign penetration acts to reduce concentration levels, and also acts to increase the rate at which the industry moves towards this equilibrium. Finally, the importance of this deviation, in terms of explaining foreign penetration is explored.     

Investment and institutional uncertainty: A comparative study of different uncertainty measures

Investment and Institutional Uncertainty: A Comparative Study of Different Uncertainty Measures. — There is ample empirical evidence of a negative relationship between aspects of institutional uncertainty and investment. Most studies, however, do not allow a comparison between different dimensions of such uncertainty because they focus on specific indicators, particular regions or different periods. The paper concludes with an evaluation of the quantitative effects of the significant uncertainty indicators on investment finding that a lack of rule of law, high corruption, and volatility in real exchange rate distortions are the most detrimental for investment.     

Higher Wages,Less Gym Time? The Effects of Minimum Wages on Time Use

This study examines the effects of minimum wages on time use. Analyzing data from the American Time Use Survey from 2003 to 2017, I investigate the role of time allocated toward exercise and other health‐enhancing activities as a potential mechanism underlying the link between minimum wages and health. The study finds that a $1 increase in minimum wages is associated with reductions in exercising and total personal health time by 13 and 20 minutes during the week, respectively. This decline in health time is fully reallocated toward additional leisure time. The results are largely driven by males and employed individuals.     

Export variety and export performance: Empirical evidence for the OECD countries

Export Variety and Export Performance: Empirical Evidence for the OECD Countries. — Does product variety matter for export performance? This has been suggested by the new trade theory. In the present paper, we investigate empirically whether increasing export variety has contributed to the export growth of the OECD countries. We calculate direct measures of export variety and estimate pooled export demand equations for 15 OECD countries. The econometric results suggest that producing highly differentiated export goods gives a competitive advantage which allows to sell more products.     

Discrete plant-location decisions in an applied general-equilibrium model of trade liberalization

Discrete Plant-Location Decisions in an Applied General-Equilibrium Model of Trade Liberalization. - This paper makes a first step toward a more realistic approach to increasing-returns trade models in which firms face discrete choices about the numbers and locations of their plants. The model is applied to the North American auto industry in the NAFTA context. Results include: (1) production appears to be excessively geographically diversified initially; (2) autos are produced in fewer locations as trade barriers are lowered; (3) a “non-monotonicity“ case is produced in which a plant is first closed and then reopened as trade barriers are progressively lowered; (4) an example of the misleading nature of marginalist analysis is presented in which plants in Canada and Mexico increase production when locations are fixed but close down when locations are endogenous and optimized.     

HEALTH CARE PROVIDER CHOICE

In order to achieve an ‘optimal health system’, health policies should not only be focused on the supply of health care, but also take cognisance of the demand for health care. Studies of health care demand in South Africa are scarce due to considerable data limitations. This analysis attempts to fill this gap by combining two data sets (specifically, the GHS 2004 and IES/LFS 2000) in order to be able to utilize the wealth of information regarding health care utilization in the General Household Survey. The aim is to inform and encourage debate on how to incorporate demand side considerations in order to arrive at improved public health care in South Africa.     

Is the uncertainty-investment link non-linear? Empirical evidence for developed economies

Is the Uncertainty-Investment Link Non-linear? Empirical Evidence for Developed Economies. — This paper examines whether the impact of uncertainty on aggregate investment differs for low and high values of uncertainty. I present two types of estimates on the impact of uncertainty, measured by the volatility of stock market returns, for a group of developed economies. First, I estimate investment models in which I include a linear and a quadratic term for uncertainty. Second, I estimate investment models in which uncertainty is a threshold variable. Both types of estimates provide evidence on the empirical relevance of a non-linear effect of uncertainty on investment.     

Bimetallism: The “rules of the game”

Based on historical evidence found in Juglar and Bonnet that over the Bimetallic period French and British central banks did co-operate when using their discount rates as policy instruments for currency stabilization, we test whether Bimetallism was a regulated system or not. Our revised story of Bimetallism contrasts the existing literature which identifies this regime as a self-equilibrating system, constrained by specie points.