THE POUND AND THE PUNT REVISITED

Whereas the pound has remained outside the EMS for the last ten years, the Irish punt has been a fully participating member since the inception of the EMS in March 1979. As such the punt experienced the depreciation of the EMS bloc against the pound in 1980-1 and, largely because of this, it suffered from a higher rate of inflation in the first half of the 1980s. But against a background of greater intra-EMS stability, Irish inflation has fallen steadily. It is now closer to German inflation than at any time in the last twenty years and in the nearly three years since the last EMS realignment, has been well below inflation in the UK. At the same time output in Ireland has advanced steadily and the trade balance has moved into surplus. The Irish experience has therefore paralleled that of the EMS as a whole. After a shaky start, the EMS has proved to be a powerful force for convergence and by switching from a fixed link to the pound to one against the DM, the Irish economy is being transformed into a relatively low inflation economy. The contrast with the pound panty period is marked. It is different not to conclude that the UK' recent economic performance, particularly on inflation, would have been significantly improved if it too had chosen the route of full EMS membership.     

THE MARKET ECONOMY AND THE TEACHINGS OF THE CHRISTIAN GOSPEL

The reality of the market economy is not an economy in which Christian values are generally evident. Although there are many prominent Christian capitalist writers, the real world is a world of rather more materialistic values. It does not have to be like that. It is possible for people to take Christian values out into the world of business and prosper.     

THE ECONOMICS OF THE GREENHOUSE EFFECT

Abstract. The recognition that economic activity is contributing to climatic change, with attendant costs that may be of large magnitudes, has set in motion a substantial research effort. This paper seeks to review the contribution of economics to analysis of the greenhouse effect and to the policies and instruments suggested as means of mitgiating its damage.
A brief overview of the causes and consequences of global warming is given, and a number of energy-economy forecasting models are examined. As the costs of global warming depend upon the extent to which preventative and adaptive measures are undertaken, the techniques available to evaluate these costs are surveyed.
We examine extant targets for greenhouse gas emissions reduction, and explore the frameworks within which optimal policy targets can be designed. The paper also considers the narrower question of (minimized) abatement costs, and surveys the types of models used to estimate them.
The merits of alternative policy instruments are examined, paying particular attention to the role that risk and uncertainty, and the costs of monitoring and implementation of policy under conditions of imperfect information, may play in the choice of instruments. Problems of international co-operation in the development of abatement policy are examined, and we consider the compensations (across both nations and generations) that are likely to be necessary conditions for effective action.     

THE DEVELOPMENT OF THE RIGHT TO BUY AND THE SALE OF COUNCIL HOUSES

The history of the 'Right to Buy' local government-owned council houses is examined in this paper. It is seen that the right of councils to sell was transformed into the right of tenants to demand such sales. Peter Walker had a pivotal role in this process. Later, Michael Heseltine and Margaret Thatcher emerged as key political players. The other intellectual drivers of this reform are also discussed.     

THE EUROPEAN COURT: THE FORGOTTEN POWERHOUSE BUILDING THE EUROPEAN SUPERSTATE

Less attention is paid to the European Court of Justice than to other European Union institutions when discussing the centralising tendencies of the Union. However, the court has given an important impetus to the process of centralisation through its individual decisions and also through its tendency to give effect in its decisions to what it believes to be the'purpose'of EU treaties rather than to the text of the treaties. The proposed EU constitution will significantly widen the power of the European Court since it includes articles which are wide open to a number of different interpretations, and it will be for the court to decide how they should be interpreted.     

THE MANAGEMENT OF THE PERSONNEL FUNCTION

This article examines the way the personnel role has developed in the United Kingdom, and argues that three main models of personnel management may be discerned. The way these models have been influenced by the recession is discussed and it is suggested that the personnel function, both as a specialized activity and as one aspect of all managerial work has been forced to change, in response to the need for increased competitiveness, to structural and ideological changes, and to industrial reorganization. Looking to the future, the paper anticipates the ‘balkanization’ of the personnel function as new specialisms emerge, and as personnel activity becomes more closely associated with corporate marketing strategies.     

THE STATE GIVETH AND THE STATE TAKETH AWAY: SUPPORTING THE RESEARCH-BASED PHARMACEUTICAL INDUSTRY IN EUROPE AND THE UK

The European research-based pharmaceutical industry has been declining relative to its US counterpart for more than a decade. It remains a substantial and successful industry, and the UK continues to be a particular success story, but many challenges lie ahead in an increasingly competitive global environment. Recent attempts to reinvigorate and support pharmaceutical and biotech research and development have been numerous, and in the UK now include the R&D tax credit. But it is the operating environment and the structure of the market for pharmaceuticals that represent the biggest challenges for the industry and policy-makers.     

THE ECONIMY AFTER THE NOVEMBER MEASURES

The policy measures of November 24 were announced against a background of deepening recession. The purpose of this Forecast Release is to analyse the causes of the worsening economic outlook and the reasons for the policy adjustments announced last month. In the light of this analysis we assess the effect of the policy adjustments on the economic prospects for 1981 and beyond.     

THE ECONOMY AFTER THE ELECTION

With the election out of the way and signs of recovery tentatively in place, the Government is likely to take steps to bring the economic and political cycles back into kilter so that it does not have to fight the next election under the handicap of recession. This suggests that its first priority will be to consolidate the progress on inflation with a tight fiscal and monetary stance, deferring until 1993-4 any significant relaxation of policy. Holding the exchange rate close to its present parity will therefore take priority over interest rate cuts which may have to wait on a lead from the Bundesbank. On fiscal policy the aim will be to reduce the budget deficit, which suggests a tough approach to public expenditure in this year's spending round.     

THE 364 ECONOMISTS AND THE 1981 BUDGET: AN EXAMINATION OF THE EMPIRICAL EVIDENCE

Earlier this year we passed the 25th anniversary of the letter to The Times from 364 economists protesting about government economic policy in general and the 1981 Budget in particular. In a recent publication, Stephen Nickell, then a member of the Monetary Policy Committee of the Bank of England, defended the letter. This article contends that Nickell's argument was wrong. This is not merely a matter of historical interest, it is important that the issues are understood if mistakes are not to be made in economic policy in the future.     

POPULATION AND THE ECONOMY DURING THE DEMOGRAPHIC TRANSITION

The changes in population structure currently taking place in both developed and less‐developed nations are part of a very long‐term trend of demographic change that has yet to run its full course. The starting point of this trend is the complete rearrangement of demographic regimes characterised by significant declines in mortality coupled with widespread fertility control. This process started in a small group of European and non‐European societies during the nineteenth century and by the second half of the twentieth century had spread to much of the world. It has brought with it significant economic and social implications for societies affected which have differed by the timing of the transition but not in their basic thrust. Eventually the demographic transition promises to bring with it very rapid and widespread ageing and, within a few decades, world population decline. Some of the long‐term economic implications of this entire process are discussed in this article.     

THE APPLICABILITY OF THE TRADITIONAL THEORY OF ECONOMIC POLICY

Abstract. The traditional theory of economic policy requires targets, instruments, an empirical economic model, and a social welfare or criterion function to be specified in order to derive the optimal economic policy. Empirical studies of reaction functions suggest that economic policy is carried out in some systematic manner, subject to interference from political factors. This survey addresses the problems of specifying, estimating and applying an economic model when economic policy is following a path specified by a reaction function. Attention is paid to rational expectations, the Lucas'critique, and the policy neutrality proposition. Lack of knowledge of the policy maker's objective function poses the most serious difficulty when applying the theory of economic policy. Various methods of determining this function are reviewed, and the possibility that policy makers might be satisficing is discussed. The role played by political factors is considered in the light of the public choice literature.     

THE EVOLUTION OF THE TERM 'WASHINGTON CONSENSUS'

Abstract.  The term 'Washington Consensus', as Williamson conceived it, was the lowest common denominator of the reforms that he judged 'Washington' could agree were required in Latin America. The term has evolved to denote a different set of policies from those initially conceived. This paper investigates the different versions and interpretations of this controversial term and assesses whether the term itself is suitable and viable or slowly becoming irrelevant and obsolete. Most importantly, the evolution of the term mirrors the evolution of economic thought on economic development for nearly the last two decades.     

THE LIMITS OF REGULATORY REFORM IN THE EU

The regulatory impact assessment (RIA) may seem like a good mechanism for holding EU regulators to account as it requires them to compute costs and benefits of regulations before implementing them. However, it is too easy to use the RIAs to justify preconceived opinions. To achieve deregulation in the EU it is necessary to have a commitment to liberal markets and the concept of regulatory competition.     

THE PORTUGUESE MALAISE: STRUCTURAL CAUSES OF THE CRISIS AND LESSONS FOR THE EUROZONE

The analysis of the structural causes of the Portuguese crisis points to a mix of internal and external factors that reinforced each other. Among the external factors were the perverse incentives posed by the current institutional setting in the EU and the single currency. These have wider implications for the eurozone in that the long‐term sustainability of the eurozone will require more effective operation of internal adjustment mechanisms. Additionally, the implementation of monetary competition in the eurozone is suggested as an alternative to the current path towards greater centralisation.     

THE ECONOMICS OF COMMUTING AND THE URBAN LABOUR MARKET

ABSTRACT. The spatial distribution of households and firms, or urban spatial structure, is a core element of the study of urban economics and the crucial determinant of commuting patterns. This paper examines developments in the analysis of urban spatial structure and commuting are related to the urban labour market—that is the analysis of labour supply and labour demand in a spatial context. These developments have been overlooked in the traditional approach to urban structure and commuting where most attention has been devoted to the markets for land and housing rather than the market for labour. Yet a little reflection suggests that the labour market might have a great deal to do with the location decisions of households and firms, and hence with commuting patterns. We argue that much criticism of the economic analysis of urban structure and commuting can be addressed by explicit incorporation of the labour market into the conventional model of urban location. This criticism includes findings that the theory cannot explain the tendency for richer households to live farther from the central business district and commute farther to work (Wheaton, 1977) and findings of substantial unexplained or 'wasteful' commuting according to conventional theory (Hamilton, 1982). The paper begins by outlining the basic model of residential location and commuting (Section 2). We then consider extensions that involve the introduction of labour supply decisions and which determine the value of commuting time (Section 3). More recent extensions involve the introduction of decentralized workplaces (Section 4) and, logically, the issues of job search and migration (Section 5). We conclude with a summary of the progress in incorporating labour market behaviour into the analysis of urban structure and commuting and our suggestions for further research in this area.     

THE ESSENCE OF THE AUSTRIAN SCHOOL

In a lecture in November 2008, Professor Huerta de Soto set out the key contributions of the Austrian School to economic thought.     

ON THE SECOND STAGE OF THE CAMBRIDGE CAPITAL CONTROVERSY

The second stage of the Cambridge capital controversy concerns the neo‐Walrasian theory of value and distribution. Since production is not understood in this theory as employing factors of production but rather commodities, that is goods and services with date and place of delivery, some scholars maintained that it is not affected by the problems that emerged, during the first stage of the controversy, as regards the conception of capital as a factor of production and the rate of interest as the price for its use. The reply of the ‘neo‐Ricardians’ was based on two arguments. The first regarded the relevance of the new notions of equilibrium adopted in the neo‐Walrasian approach, with particular reference to temporary and Arrow–Debreu equilibria, and the second the possibility that the phenomena of re‐switching and reverse capital deepening, by affecting the working of the saving‐investment market, could cause equilibrium multiplicity and instability also in a neo‐Walrasian framework.