Policy coordination in East Asia and across the Pacific

In this paper, we construct a macro-econometric model that describes the economic activity in the Asia-Pacific area and provide quantitative insights into the recent policy debates on monetary and currency coordination among the East Asian economies. The model includes a wide variety of monetary and currency policy rules that the East Asian economies adopt and allows for one country's policymaking to have substantial effects on foreign countries. We apply the model to three current policy issues: (1) the desirability of currency basket pegs in East Asia, (2) the anticipated effects of China's currency policy reform, and (3) the non-negativity constraint on Japanese nominal interest rates. The simulation analyses show the external economy effects of policy rules quantitatively and suggest the difficulty of monetary and currency policy coordination among the East Asian economies.

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On Indexed Bonds and Aggregate Demand Elasticity

Bonds indexed to the price level or inflation have become popular and more common in the industrialized world. This paper examines the impact of indexed bonds on the price level elasticity of aggregate demand. With a model of aggregate demand based on the standard IS-LM framework and expanded to differentiate between bonds which are indexed to the price level and bonds which are not so indexed, we find that the existence of indexed bonds decreases the elasticity of aggregate demand with respect to the general price level.

Monetary Policy in Austria–Hungary, 1876–1913: An Econometric Analysis of the Determinants of the Central Bank’s Discount Rate and the Liquidity Ratio

This paper presents a model to explain the official discount rate of the Central Bank of Austria–Hungary from 1876 to 1913. The discount rate is assumed to depend on the liquidity ratio of the Bank, defined as the ratio of its stock of metals to banknotes issued, and on changes in foreign discount rates. The paper also presents an equation explaining the liquidity ratio. We use “not equally spaced chronologically ordered data” referring to the 50 discount rate changes enacted. The regressions confirm that the liquidity ratio was the main determinant of the discount rate and that Germany (and not Great Britain) played a significant role in determining the Austro–Hungarian discount rate and the liquidity ratios, supporting the view that the classical gold standard was a decentralized multipolar system rather than a system fully dominated by London as suggested by Keynes. The regressions also suggest that, although Austria–Hungary had an inconvertible paper currency (1879–1892) and fluctuating exchange rates (1876–1895) and formally joined the gold standard only in 1902, it “shadowed” the behaviour of gold standard Central Banks with such consistency that the stability of the estimated regressions was relatively unaffected by the frequent institutional changes.

Book reviews

Great Britain And Ireland S. H. Rigby, A medieval mercantile community: the Grocers’ Company and the politics and trade of London, 1000-1485 Peter Clark, The history of an English borough: Stratford-upon-Avon, 1196-1996 Donald Woodward, The new draperies in the Low Countries and England, 1300-1800 J. R. Wordie, Alternative agriculture: a history from the Black Death to the present day Robert Tittler, English counties and public building, 1650-1830 Michael Turner, Parliamentary enclosure in England: an introduction to its causes, incidence and impact, 1750-1850 Jeremy Gregory, Aspects of the Georgian church: visitation studies of the diocese of York, 1761-1776 Richard Whatmore, Progress, poverty and population: re-reading Condorcet, Godwin and Malthus R. G. Wilson, The diary of Robert Sharp of South Cave: life in a Yorkshire village, 1812-1837 Peter Cain, Free trade and Liberal England, 1846-1946 John Sheail, A history of water in modern England and Wales Kenneth D. Brown, Religion, business and wealth in modern Britain Penny Starns, Labour, social policy and the welfare state John F. Wilson, Finance in the age of the corporate economy Peter Howlett, Governance, industry and labour markets in Britain and France: the modernising state in the mid-twentieth century General Sitta Von Reden, Warriors into traders: the power of the market in early Greece Christopher Dyer, The growth of the medieval city: from late antiquity to the early fourteenth century; idem, The later medieval city, 1300-1500 Colin Heywood, Burgundy to Champagne: the wine trade in early modern France Hugh Clout, The brandy trade under the ancien regime: regional specialisation in the Charente David Ormrod, The first modern economy: success, failure, and perseverance of the Dutch economy, 1500-1815 Ted Wilson, Merchants, bankers, middlemen: the Amsterdam money market during the first half of the 19th century Michael Wintle, The economic history of the Netherlands, 1914-1995: a small open economy in the ‘long’ twentieth century Henry Roseveare, From the North Sea to the Baltic: essays in commercial, monetary and agrarian history, 1500-1800 J. K. J. Thomson, State corporatism and proto-industry: the Württemberg Black Forest, 1580-1797 Alan Dyer, Urban decline in early modern Germany: Schwäbisch Hall and its region, 1650-1750 Michael Palairet, Rebuilding the financial system in central and eastern Europe, 1918-1994 Catherine R. Schenk, Monetary standards and exchange rates A. Slaven , European enterprise: strategies of adaptation and renewal in the twentieth century John J. Mccusker, Tobacco in the Atlantic trade: the Chesapeake, London and Glasgow, 1675-1775 John Killick, Trading beyond the mountains: the British fur trade on the Pacific, 1793-1843 Timothy J. Lockley, From Calabar to Carter’s Grove: the history of a Virginia slave community S. J. Kleinberg, Civic wars: democracy and public life in the American city during the nineteenth century Arni Sverrisson, Endless novelty: specialty production and American industrialization, 1865-1925 Gary Herrigel, Steel phoenix: the fall and rise of the US steel industry Peter Coates, Wetlands of the American Midwest: a historical geography of changing attitudes Robert G. Greenhill, Studies in the history of Latin American economic thought Christopher J. Napier, The development of accounting in an inter-national context: a festschrift in honour of R. H. Parker     

Can the HOSS framework help shed light on the simultaneous growth of inequality and informalization in developing countries?

Using simple, modified versions of the factor proportions framework, and focusing on structural features within developing economies, this paper attempts to reconcile puzzling developments observed in many post-reform, post-liberalization countries whereby increasing income inequality has emerged side-by-side with informalization of the economy. Measures undertaken to enhance public sector efficiency and attract investment in an import-intensive export sector may increase rental–wage and skilled–unskilled wage gaps, contra the predictions of the simple Heckscher–Ohlin–Stolper–Samuelson (HOSS) framework regarding skill- and capital-scarce countries. The common thread generating our interesting results is the presence of sectors that are even more labor-intensive than those producing traded goods.

Running the Numbers on Lotteries and the Poor: An Empirical Analysis of Transfer Payment Distribution and Subsequent Lottery Sales

State lottery revenues are shown to increase during the week transfer payments are distributed. The timing of the increase in lottery purchases suggests a portion of the transfer payments is used to purchase lottery tickets. In addition to providing information on the timing of lottery purchases, this study finds sales of Pick 3 and Pick 4 tickets increase during the period, while sales of Pick 5 and Pick 6 games do not, suggesting a general preference for the relatively higher probability, smaller jackpot games for the group.

Book Reviews

Books reviewed in this article: Phillipp R. Schofield, Peasant and Community in Medieval England Ian Kershaw & David M. Smith (eds.), The Bolton Priory Compotus Michael Jones (ed.), Revolution and Consumption in Late Medieval England Peter Northeast (ed.), Wills of the Archdeaconry of Sudbury Pamela Sharpe, Population and Society in an East Devon Parish Donald Winch & Patrick K. O'Brien (eds.), The Political Economy of British Historical Experience S.D. Smith, ‘An Exact and Industrious Tradesman’ Nicola Verdon, Rural Women Workers in Nineteenth-Century England J.R. Wordie (ed.), Agriculture and Politics in England Lewis Johnman & Hugh Murphy, British Shipbuilding and the State Jairus Banaji, Agrarian Change in Late Antiquity Angeliki E. Laiou, The Economic History of Byzantium Adriaan Verhulst, The Carolingian Economy Adam Steinhouse, Workers' Participation in Post-Liberation France Patrick Major & Jonathan Osmond (eds.), The Workers' and Peasants' State Rainer Karlsch & Raymond Stokes, The Chemistry must be Right Monica Chojnacka, Working Women of Early Modern Venice Harold James & Jacob Tanner (eds.), Enterprise in the Period of Fascism in Europe Wendy Z. Goldman, Women at the Gates David Armitage & Michael J. Braddick (eds.), The British Atlantic world Steven W. Usselman, Regulating Railroad Innovation Nikki Mandell, The Corporation as Family Bruce L. Gardner, American Agriculture in the Twentieth Century Stefano Battilossi & Youssef Cassis (eds.), European Banks and the American Challenge Geoffrey Jones & Lina Galvez-Munoz (eds.), Foreign Multinationals in the United States Mauro F. Guillén, The Limits of Convergence Dennis O. Flynn, Arturo Giráldez & James Sobredo (eds.), Studies in Pacific History Nick Tiratsoo, Junichi Hasegawa, Tony Mason & Takao Matsumara, Urban Reconstruction in Britain and Japan David Zweig, Internationalizing China Charles H. Feinstein & Mark Thomas, Making History Count Phillip Mirowski, Machine Dreams     

Disaggregate Real Exchange Rate Behaviour

In this paper, we re-examine the “PPP Puzzle” using sectoral disaggregated data. Specifically, we first analyse the mean reversion speeds of real exchange rates for a number of different sectors in 11 industrial economies and then focus on relating these rates to variables identified in the literature as key determinants of CPI-based real exchange rates, namely: the trade balance, productivity and the mark up. In particular, we seek to understand to what extent the relationships existing at the aggregate level are borne out at the disaggregate level. We believe that this analysis can help shed light on the PPP puzzle.

Productivity,subsistence, and by-employment in the mid-nineteenth century Choshu

Thanks to the ample information contained in the $\text{B}\text{o}$ch$\text{o}$ F$\text{u}$do Ch$\text{u}\text{shin-an}$ (census-like survey of the Ch$\text{o}$sh$\text{u}$, now called Yamaguchi Prefecture, at about 1840s), marginal productivity in agriculture can be successfully estimated. (1) It is higher than or at the very least equal to the subsistence level at the time, and (2) it is almost identical with the wages of employment in salt manufacturing and of other by-employment in the area. These findings, though limited with respect to the period and region under consideration, cast some doubts about the plausibility of the Lewis' model and similar theories of dualistic development, as applied to the modern development of Japanese economy. A useful step, suggested by this study, for finding a more reasonable explanation, would be to incorporate an appropriate analysis of by-employment into the model.     

Exchange Rate Economics

The paper summarizes the current theory of how a floating exchange rate is determined, dividing the subject into what determines the steady state and what determines the transition to steady state. The inadequacies of this model are examined, and an alternative “behavioral” model, which recognizes that the foreign exchange market is populated by both fundamentalists and chartists is presented. It is argued that the main importance of understanding the foreign exchange market for development strategy is to permit a correct appraisal of the dangers of Dutch disease. Empirically it seems that from the standpoint of promoting development it is preferable to have a mildly undervalued rate. The paper concludes by examining implications for exchange rate regimes.

Reviews

M. W. Barley . Houses and history. Frank T. Melton . Sir Robert Clayton and the origins of English deposit banking, 1658-1685. John Rule . The labouring classes in early industrial England, 1750-1850. Clive Trebilcock . Phoenix Assurance and the development of British assurance, Vol. I, 1782-1870. J. A. Cantrell . James Nasmyth and the Bridgewater Foundry: a study of entrepreneurship in the early engineering industry Andrew Porter . Victorian shipping and imperial policy: Donald Currie, the Castle Line and South Africa. Roger J. P. Kain . An atlas and index of the tithe files of mid-nineteenth-century England and Wales. Anne Digby . Madness, morality and medicine: a study of the York Retreat, 1796-1914. Dudley Baines . Migration in a mature economy: emigration and internal migration in England and Wales, 1861-1901. Mark Blaug . Economic history and the history of economics. Leslie Hannah . Inventing retirement: the development of occupational pensions in Britain. Peter Mathias and Stuart Bruchey (Eds.). British economic history. An eighteen-volume series of theses. Alfred W. Crosby . Ecological imperialism: the biological expansion of Europe, 900-1900. Barbara A. Hanawalt (Ed.). Women and work in preindustrial Europe. A. J. Coale and S. C. Watkins (Eds.). The decline of fertility in Europe. Anne Lombard -Jourdan . Aux origines de Paris: la genèse de la rive droite jusqu'en 1223. Catharina Lis . Social change and the labouring poor: Antwerp, 1770-1860. Gérard Delille . Famille et propriété dans la Royaume de Naples, XV^e-XIX^c Siècle. Carl G. Gustavson . The small giant: Sweden enters the industrial era. Karl -Gustav Hildebrand . Expansion, crisis, reconstruction: the Swedish Match Company, 1917-1939 Silvana Malle . The economic organization of war communism, 1918-21. Arcadius Kahan . The plow, the hammer and the knout: an economic history of eighteenth-century Russia. David W. Galenson . Traders, planters and slaves, market behaviour in early English America. Oliver A. Rink . Holland on the Hudson: an economic and social history of Dutch New York. Charles Bergquist . Labor in Latin America: comparative essays on Chile, Argentina, Venezuela, and Colombia. Yen -P'ing Hao . The commercial revolution in nineteenth-century China: the rise of Sino-western mercantile capitalism. Kesaji Kobayashi and Hidemasa Morikawa (Eds.). Development of managerial enterprise. David Coleman and Roger Schofield (Eds.). The state of population theory: forward from Malthus. R. I. Rotberg and T. K. Rabb (Eds.). Population and economy: population and history from the traditional to the modern world. Herman Van Der Wee . Prosperity and upheaval: the world economy, 1945-1980.     

The Contribution of Sectoral Productivity Differentials to Inflation in Greece

This paper estimates the magnitude of the Balassa-Samuelson effect for Greece. We calculate the effect directly, using sectoral national accounts data, which permits estimation of total factor productivity (TFP) growth in the tradeables and nontradeables sectors. Our results suggest that it is difficult to produce one estimate of the BS effect. Any particular estimate is contingent on the definition of the tradeables sector and the assumptions made about labour shares. Moreover, there is also evidence that the effect has been declining through time as Greek standards of living have caught up on those in the rest of the world and as the non-tradeables sector within Greece catches up with the tradeables.

Book Reviews

Great Britain and Ireland T. C. Smout, ed., Scotland since prehistory: natural change and human impact N. M. Herbert, ed., A history of the county of Gloucester, V: the Forest of Dean Colin Platt, King Death: the Black Death and its aftermath in late medieval England Del Sweeney, ed., Agriculture in the middle ages: technology, practice, and representation Mark Overton, Agricultural revolution in England: the transformation of the agrarian economy, 1500-1850 Roy Porter and Marie Mulvey Roberts, eds., Pleasure in the eighteenth century Adrian Randall and Andrew Charlesworth, eds., Markets, market culture and popular protest in eighteenth-century Britain and Ireland Barry Reay, Microhistories: demography, society and culture in rural England, 1800-1930 Edgar Jones, True and fair: a history of Price Waterhouse Michael Turner, After the Famine: Irish agriculture, 1850-1914 Roger Middleton, Government versus the market: the growth of the public sector, economic management and British economic performance, c. 1890-1979 Andrew Marrison, British business and protection, 1903-1932 James Foreman-Peck, Sue Bowden, and Alan McKinlay, The British motor industry Peter Scott, The property masters: a history of the British commercial property sector General Gary Herrigel, Industrial constructions: the sources of German industrial power Volker R. Berghahn, ed., Quest for economic empire: European strategies of German big business in the twentieth century Paul Bairoch and Martin Körner, eds., La Suisse dans l'économie mondiale/Die Schweiz in der Weltwirtschaft Ivan T. Berend, Central and eastern Europe, 1944-1993: detour from the periphery to the periphery Wendy Davies and Paul Fouracre, eds., Property and power in the early middle ages Jonathan Dewald, The European nobility, 1400-1800: new approaches to European history Ann Goldgar, Impolite learning: conduct and community in the republic of letters, 1680-1750 Iain R. Smith, The origins of the South African war, 1899-1902 Augustus J. Veenendaal, Slow train to paradise: how Dutch investors helped build American railroads Elmus Wicker, The banking panics of the great depression Deborah Oxley, Convict maids: the forced migration of women to Australia Stanley Lebergott, Consumer expenditures: new measures and old motives Jack Goody, The East in the West G. D. Snooks, The dynamic society: exploring the sources of global change Elliott A. Krause, The death of the guilds: professions, states, and the advance of capitalism, 1930 to the present Maxine Berg, A woman in history: Eileen Power, 1889-1940     

Book reviews

Books Reviewed in this article: Great Britain And Ireland A. Curry and E. Matthew, eds., Concepts and patterns of service in the later middle ages, I: the fifteenth century Peter Clark and Raymond Gillespie, eds., Two capitals: London and Dublin, 1500–1840 David Hickman, ed., Lincoln wills, 1532–1534 Jill Barlow, ed., A calendar of the registers of apprentices of the city of Gloucester, 1595–1700 Todd M. Endelman, The Jews of Britain, 1656 to 2000 Madge Dresser, Slavery obscured: the social history of the slave trade in an English provincial port Thomas Sokoll, ed., Essex pauper letters, 1731–1837 Richard Rodger, The transformation of Edinburgh: land, property and trust in the nineteenth century Bernard Cronin, Technology, industrial conflict and the development of technical education in nineteenth–century England Glyn Jones, The millers: a story of technological endeavour and industrial success, 1870–2001 Jeffrey Hill, Sport. leisure and culture in twentieth–century Britain Thomas Gibson, Road haulage by motor in Britain: the first forty years Alan F. Wilt, Food for war: agriculture and rearmament in Britain before the Second World War A. Hinds, Britain's sterling colonial policy and decolonization, 1939–1958 George Symeonidis, The effects of competition: cartel policy and the evolution of British industrial policy General Paul Cartledge, Edward E. Cohen, and Lin Foxhall, eds., Money, labour and land: approaches to the economies of ancient Greece Thomas J. Sargent and François R. Velde, The big problem of small change Patrick O’Brien, Marjolein ’t Hart, Derek Keene, and Hermann Van der Wee, eds., Urban achievement in early modern Europe: golden ages in Antwerp, Amsterdam and London Stephen L. Harp, Marketing Michelin: advertising and cultural identity in twentieth–century France Tom Scott, Society and economy in Germany, 1300–1600 Jon Cohen and Giovanni Federico, The growth of the Italian economy, 1820–1960 Ken Albala, Eating right in the Renaissance Patrick Griffin, The people with no name: Ireland's Ulster Scots, America's Scots Irish, and the creation of a British Atlantic world, 1689–1764 Laura Rigal, The American manufactory: art, labor, and the world of things in the early republic Joshua L. Rosenbloom, Looking for work, searching for workers: American labor markets during industrialization Wyatt Wells, Antitrust and the formation of the postwar world Charles Levenstein and Gregory F. DeLaurier, with Mary Lee Dunn, The cotton dust papers: science, politics, and power in the ‘discovery’ of byssinosis in the US Timothy Curtis Jacobson and George David Smith, Cotton's renaissance: a study in market innovation Gerardo della Paolera and Alan M. Taylor, Straining at the anchor: the Argentine Currency Board and the search for macroeconomic stability, 1880–1935 Iain McCalman, Alexander Cook, and Andrew Reeves, eds., Gold: forgotten histories and lost objects of Australia Lou Taylor, The study of dress history Luis Suarez–Villa, Invention and the rise of technocapitalism Gordon Boyce, Co–operative structures in global business: communicating, transferring knowledge and learning across the corporate frontier     

Fear of Floating and Pegging: A Simultaneous Choice Model of De Jure and De Facto Exchange Rate Regimes in Developing Countries

We present an analysis of the determinants of de jure and de facto exchange rate regimes based on a panel probit model with simultaneous equations. The model is estimated using simulation-based maximum likelihood methods. The empirical results suggest a triangular structure of the model such that the choice of de facto regimes depends on the choice of de jure regimes but not vice versa. This gives rise to a novel interpretation of regime discrepancies.

International R&D Rivalry with Spillovers and Tariff Policies

This paper investigates the effects of R&D spillovers on the R&D choices of foreign exporters when the importing country adopts either uniform or discriminatory alternative tariff regimes. We show that the importing country should optimally choose a uniform tariff regime. A uniform tariff regime is also advantageous for foreign exporters if the R&D spillovers are sufficiently large. A comparison of free trade with the two tariff regimes reveals that there are some situations in which both the importing country and foreign exporters are better off under free trade, which supports trade liberalization.