The economic effects of health care systems on national economies: an input-output analysis of Slovenia

This paper estimates the size of the economic impact generated by the Slovenian health care sector on the national economy in the 2009–2014 period. The study separately calculates output, income, employment, value-added and import multipliers for the Slovenian health care sector based on input-output analysis covering 49 sectors. Initially, values of simple output multipliers for all years are estimated. When the re-circulation of final demand through households is added to the direct and indirect economic effects, the values of total output multipliers considerably exceeds 2. The results suggest that an additional million EUR of final demand in the health care sector will, based on different scenarios, increase the total employment by 20 to 30 units. Moreover, the type II employment multipliers imply that under the best-case scenario one employee in the health care sector creates an additional 0.7 unit of employment in remaining structures of the observed economy. Stability evaluation of the derived multipliers suggests that the domestic health care sector may reduce volatilities in production, income and employment and consequently act as an important shock absorber in the economy.     

Making economic sense of brain models: a survey and interpretation of the literature

Neuroeconomics draws attention to motive forces that are ignored in the standard framework of economic theory. The present paper develops a conceptual approach that, similar to Pennings et al. (Journal of Bioeconomics 7: 113–127, 2005), tackles the issues at the systemic level by analyzing and modeling the brain processes that decide on behavior. It takes as the basic unit of analysis potential stimulus-response actions which—when selected—become actual behavior. The objective of these potential stimulus-response actions is to increase utility. At any moment of time, several of these potential actions compete with each other for the privilege of becoming actual behavior. This competition can be modeled on the basis of economic principles. The behavior that materializes may cover the range from the rational to the foolish, depending on which of the potential responses gathers the greatest emotional strength. The emotional strength of a potential response, in turn, is determined by the individual’s past experience and her capacity for rational action. Given that the objective is always to increase utility, it can normally be expected that the more or less rational dominates the foolish, but this need not always be the case. Which potential actions become behavior in a concrete instance is decided by a mechanism implemented by the basal ganglia, a structure in the brain serving as the action selection mechanism. The insights provided by this approach afford coherent explanations of behaviors that are not readily explicable by the standard approach of economic theory.      

Graphical causal models and VARs: an empirical assessment of the real business cycles hypothesis

This paper assesses the empirical plausibility of the real business cycle view that shocks to real variables are the dominant sources of economic fluctuations and that monetary policy shocks play an insignificant role in determining the behavior of real variables. I reconsider the vector autoregressive model of King et al. (Am Econ Rev 81:819–840, 1991), but propose an alternative identification method, based on graphical causal models. This method selects the contemporaneous causal structure using the information incorporated in the partial correlations among the residuals. The residuals orthogonalization which follows and the study of the impulse response functions confirm the results of King et al. (Am Econ Rev 81:819–840, 1991): permanent productivity shocks are not the dominant sources of aggregate fluctuations in US economy. I would like to thank Peter Spirtes, Marco Lippi, and Clark Glymour for helpful comments on early versions of the paper. I am also grateful to Valentina Corradi for providing me with an updated version of the King et al. (1991) data set. The usual disclaimer applies.     

Mapping prices into productivity in multisector growth models

Two issues related to mapping a multi-sector model into a reduced-form value-added model are often neglected: the composition of intermediate goods, and the distinction between the productivity indices for value added and for gross output. We illustrate their significance for growth accounting using the well known model of Greenwood et al. (in Am Econ Rev 87(3):342–362, 1997), who find that about 60% of economic growth can be attributed to investment-specific technical change (ISTC). We investigate the role of intermediate goods in their framework and find that, taking into account the composition of intermediates, ISTC may well account for between 93 and 96% of post-war US growth.     

Potential output growth in several industrialised countries a comparison

In this paper, we present international comparisons of potential output growth among several economies—Canada, the euro area, France, Germany, Italy, Japan, the Netherlands, the United Kingdom, and the United States—for the period 1991–2004, for which we construct consistent and homogenous capital stock series. The main estimates rely on a structural approach where output of the whole economy is described by a Cobb–Douglas function and Total Factor Productivity (TFP) is estimated allowing for possible breaks in the deterministic trend. The results confirm that over the considered period the potential gross domestic product growth has been faster in the United States than in other studied countries, reflecting a combination of higher labour contribution and faster TFP growth. Overall, this paper might help to shed some light on cross-country differences in economic performance over the recent period.     

Lexicographic expected utility with a subjective state space

This paper provides a model that allows for a criterion of admissibility based on a subjective state space. For this purpose, we build a non-Archimedean model of preference with subjective states, generalizing Blume et al. (Econometrica 59:61–79, 1991), who present a non-Archimedean model with exogenous states; and Dekel et al. (Econometrica 69:891–934, 2001), who present an Archimedean model with an endogenous state space. We interpret the representation as modeling an agent who has several “hypotheses” about her state space, and who views some as “infinitely less relevant” than others.     

Fiscal Multiplier in Microstates: Evidence from the Caribbean

The global financial crisis and the attendant Great Recession of 2007–2009 have spawned a full-scale re-examination on the effectiveness of fiscal policy throughout the world. While this has led to a plethora of analyses in developed countries, the same abundance of the work has not been evident for developing counties. This paper uses time-series analysis to examine the multiplier impact of fiscal policy on growth and other macroeconomic variables in the case of four Caribbean states. Although these countries have similar degrees of openness, they differ in debt burdens and economic structures, thus providing a natural laboratory for this investigation. We concluded that fiscal multipliers among the sample countries are quite low and that the contemporaneous fiscal stance appears to be pro-cyclical.     

The Income–Temperature Relationship in a Cross-Section of Countries and its Implications for Predicting the Effects of Global Warming

Hotter countries are poorer on average. This paper attempts to separate the historical and contemporaneous components of this income–temperature relationship. Following ideas by Acemoglu et al. (Am Econ Rev 91(5):1369–1401, 2001), we use colonial mortality data to account for the historical role of temperature since colonial mortality was highly correlated with countries’ average temperatures. The remaining income–temperature gradient, after colonial mortality is accounted for, is most likely contemporaneous. This contemporaneous effect can be used to estimate the consequences of global warming. We predict that a 1°C temperature increase across all countries will cause a decrease of 3.8% in world GDP. This prediction is robust across functional forms and an alternative method for separating historical effects.     

Estimating the impacts of eliminating fisheries subsidies on the small island economy of the Azores

A major problem affecting world fisheries today is overcapacity of which overfishing is both a cause and a consequence. There is a general consensus that fisheries subsidies cause great harm to the resource by exacerbating the problems resulting from the common resource issues of fisheries leading to overexploitation of the resource through a new set of perverse incentives. Many now advocate that subsidies should gradually be terminated, and that capacity enhancing and fuel subsidies should be terminated immediately. On account of the global fisheries crises, highly subsidised fisheries and the anticipated reforms of the European Union's Common Fisheries Policy this study aimed to estimate the impact of eliminating fisheries subsidies on various macro and micro economic variables pertaining to the regional economy of the Azores using a dynamic computable general equilibrium model based on a social accounting matrix. The simulation results suggest that reduction, and in particular, elimination of fisheries subsidies would have a substantial effect on the region, however, the negative social and economic effects would be largely confined to the fishing sector. Conversely, the augmentation of fishery subsidies would benefit the fishing sector with an overall adverse effect on the rest of the economy.     

A bottom-up re-estimation of global fisheries subsidies

Using a recently developed database of fisheries subsidies for 148 maritime countries spanning 1989 to the present, total fisheries subsidies for the year 2003 is computed. A key feature of our estimation approach is that it explicitly deals with missing data from official sources, and includes estimates of subsidies to developing country fisheries. Our analysis suggests that global fisheries subsidies for 2003 are between US25 and 29 billion, which is higher than an earlier World Bank estimate of between US 25 and 29 billion, which is higher than an earlier World Bank estimate of between US 14–20 billion. This new estimate is lower than our 2000 global subsidies estimate of US$ 30–34 billion. We find that fuel subsidies compose about 15–30% of total global fishing subsidies, and that capacity enhancing subsidies sum to US$ 30–34 billion. We find that fuel subsidies compose about 15–30% of total global fishing subsidies, and that capacity enhancing subsidies sum to US 16 billion or about 60% of the total. These results imply that the global community is paying the fishing industry billions each year to continue fishing even when it would not be profitable otherwise—effectively funding the over-exploitation of marine resources.     

Interregional Trade Linkages and the Commercial Role: The Spanish Case

The development of a national or regional economy depends on its own actions as much as on those of its commercial partners. Trade transmits economic events from one economy to another. The type and the degree of interdependence between territories—regions or countries—determines the consequences of external actions in a region. Multipliers translate the effects of a change in one variable on the others. Using an input–output scheme to express interregional commercial flows, some coefficients are developed to classify and identify the role that each region plays in interregional trade. An empirical application of the methodology on Spanish Comunidades Autonomas is presented. A preliminary version of this paper was presented at the Fifty-Eight International Atlantic Economic Conference, Chicago, October 7–10, 2004. The authors greatly appreciate the comments and suggestions from the participants at the meeting. The authors also wish to thank an anonymous referee and editor for their constructive suggestions and comments. This research was partially supported by the DGI project SEJ2004-07924/ECON.     

The dynamics of crop sectors in regional development: The case of tobacco

The importance of specific crop sectors can be better cast in a broader framework to account for intersectoral effects. Input-output analysis can provide this framework to assess the importance of the controversial crop, tobacco. In this respect, employment, income, and output multipliers were estimated to demonstrate the dynamics of the sector at the regional and national levels. Furthermore, the impact of totally eliminating tobacco cultivation was computed. Results clearly demonstrate the significance of the tobacco sector and its interrelation with the rest of the economic sectors.This study was partially financed by the Portuguese Association of Tobacco Producers.     

A flexible time-varying specification of the technical inefficiency effects model

The temporal pattern of technical efficiency in the technical inefficiency effects model, as modeled by Battese and Coelli (Empir Econ 20:325–332, 1995), is rather restrictive. Specifically, it a priori imposes a common pattern upon all firms in the sample, which in addition is monotonic over time. Obviously this is an undesirable implication of the model especially when there is evidence of strong firm heterogeneity and/or a long time span. To overcome this shortcoming, the present paper incorporates the Cornwell et al. (J Econom 46:185–200, 1990) flexible specification of the temporal pattern of technical efficiency into technical inefficiency effects model. The proposed formulation is then applied to the agricultural sector of the EU and US, during the period 1973–1993. The empirical result support the proposed formulation as quite different temporal patterns of technical efficiency have been found for the ten countries included in the analysis. We would like to thank an anonymous referee and an associate editor for valuable suggestions in an earlier version of the paper.     

Homogeneous middleman groups as superorganisms,endogamous ethnic groups,and trust networks: Reply to comments on Janet Landa’s target article, ‘The bioeconomics of homogeneous middleman groups as adaptive units’

This article responds to some of the very valuable comments on my target article (Landa, J Bioeconomics 10(3):259–278, 2008) on homogeneous middleman groups (HMGs) as adaptive units. In addition to viewing HMGs as adaptive units, I discuss the idea of viewing HMGs as superorganisms and as endogamous ethnic groups, as well as re-emphasizing the importance of HMGs as trust networks. My theory of HMGs as adaptive units shares some similarities with biologists’ ‘biological market theory’ of mutualistic interactions between species.      

FDI, domestic capital and economic growth: Evidence from panel data at China’s provincial level

Based on panel data at the provincial level in China, this paper found that direct effects foreign direct investment (FDI) had on economic growth were of insignificance. However, through improving technical efficiency and “crowding” in domestic investment, FDI produced positive effects on China’s economy. The state sector still played a major part in the total fixed investment, therefore, direct effects on growth were significant. Although private sector was increasingly important for the whole economy, it had no direct influences on economic growth. Meanwhile, neither the state sector nor private sector made contribution to the improvement on technical efficiency. __________ Translated from Shijie Jingji Wenhui 世界经济文汇 (World Economic Papers), 2006, (4): 27–43     

Optimal balanced growth in a general multi-sector endogenous growth model with constant returns

I will study a multi-sector endogenous growth model with general constant returns to scale technologies and demonstrate the existence, uniqueness and the saddle-path stability of the balanced growth equilibrium. I will first demonstrate the existence of a balanced growth equilibrium, by showing that the balanced growth rate associated with the balanced growth equilibrium is solely determined by solving a Frobenius root problem of the price equations derived from the Euler equations and the property of the nonsubstitution theorem. Then I will show the saddle-path stability of the balanced growth equilibrium without any capital intensity conditions, which is a generalized property proved in the two-sector endogenous growth models by de Guevara et al. (J Econ Dyn Control 21, 115–143, 1997), Bond et al. (J Econ Theory 68, 149–173 1996) and Mino (Int Eco Rev 37, 227–251 1996). The theorem clearly implies that the balanced growth equilibrium has a transition path in the neighborhood of the balanced growth equilibrium. The paper was presented at the conferences “Irregular Growth: Beyond Balanced Growth” held on June 19–21, 2003 in Paris and “Economic Growth and Distribution: On the Nature and Causes of the Wealth of Nations” held on June 16–18, 2004 in Lucca, Italy. From the discussion with Alain Venditti at CNRS-GREQAM, Gerhard Sorger at University of Vienna and the conference participants, I have been benefited much by writing this paper. Especially Alain Venditte had given me a chance to take a look at his unpublished paper titled ” Indeterminacy and the Role of Factor Substitutability” jointly written with Kazuo Nishimura at Kyoto University and published in Macroeconomic Dynamics, Vol. 8. The author also would like to thank an anonymous referee for useful suggestions.     

Is there a Laffer curve between aggregate output and public sector employment?

This paper develops a model of the relationship between public sector employment, total output and aggregate real demand in market prices, where public employment has a positive productivity effect on private output. Public employment crowds out private employment and output because its increase induces higher wages and taxes. The valuation of government output is also taken into account. While public employment affects total output and aggregate real demand in an a priori ambiguous way, numerical simulations suggest that the relationship may be nonlinear; positive, when public sector is “small” and negative, when it is “large”. Using the annual data from 22 OECD countries over the period 1960–1996 and estimating and testing for threshold models and more commonly used specifications with multiplicative interaction terms give support to this nonlinearity hypothesis between public employment and private sector output. First version received: October 1996/Final version received: April 2000     

The influence of facility characteristics and permit conditions on the effectiveness of environmental regulatory deterrence

This paper analyzes the influence of facility characteristics and permit conditions on the effectiveness of regulatory pressure—stemming from inspections and sanctions—at inducing better environmental performance from individual polluting facilities. The study considers the influence of various facility characteristics, especially those relating to size and operation (e.g., capacity utilization), and permit conditions that vary across facilities (e.g., effluent limit level). To capture this influence, the paper analyzes the interactions between regulatory pressure and facility characteristics/permit conditions when estimating the level of environmental performance. The empirical analysis examines wastewater discharges by U.S. chemical manufacturing facilities for the years 1995–2001.     

Regulation and shadow economy: empirical evidence for 25 OECD-countries

New empirical findings for the impact of regulations on economic activities in the shadow economy are presented here. A comprehensive regulation index covering major fields (e.g. labour and product market regulation and the quality of institutions) has been used to analyze the relationship between the density of regulations and the size of shadow economies. The empirical results from 25 OECD countries for the time period 1995–2005 show that—apart from tax burden and tax moral—main causes for the development of the size of shadow economies are labour and product market regulations, overall regulations and poor quality of official public institutions and administration. These findings can provide additional information on policy measures to tackle the problem of growing shadow economies.     

Agreeing on generalised Darwinism: a response to Pavel Pelikan

Pelikan (J Evol Econ 21:341–366, 2011) develops an interesting conceptual framework that adds to prior work on generalised Darwinism. Despite claims to the contrary we show that it is similar to the approach developed by Hodgson and Knudsen (J Evol Econ 16(4):343–366, 2006a, J Econ Behav Organ 75(1):12–24, 2010a, b), Aldrich et al. (J Evol Econ 18(5):577–596, 2008) and others. Pelikan also mischaracterises the Hodgson–Knudsen position over Lamarckism. We show why the term is misleading (rather than strictly wrong) when applied to social evolution.