Unwrapping some euro area growth puzzles: Factor substitution, productivity and unemployment

In this paper, we estimate a long run supply-side system incorporating a CES production function with time-varying factor-augmenting technical progress for the euro area over the period 1970–2005. We find that the elasticity of substitution lies below unity at 0.7, that labor-augmenting technical progress is dominant in the long run while capital-augmenting technical progress plays an important role in the interim period. Importantly, we also find evidence of a structural break in the pattern of biased technical progress towards the end of the 1990s. Our results help to solve two puzzles in Europe’s recent growth experience which differ markedly from the US experience. The first is related to the effects of the IT boom in the 1990s on productivity growth in Europe. The second puzzle concerns the changes in the “Okun’s law” relationship, linking growth to the reduction of unemployment, which are observable in Europe since the late 1990s.     

Beyond Agency and Structure: Triple-Loop Learning

With the demise of Andersen, LLP and new legislation that puts an end to self-governance in public accounting, the effectiveness of current models of accounting ethics have been seriously called into question. We argue that the profession suffers from fundamental limitations in its ethical framework that makes it impossible to effectively address ongoing ethical problems. The dominant representation of professional behavior is an agency model of ethics, in which the ultimate responsibility for identifying and dealing with ethical dilemmas resides with the individual. We argue that structural forces such as control over resources, meaning systems, and community norms and values also have a strong influence on the actions of accountants and that these must also be considered. The recent legitimation crisis has forced the accounting profession and its constituencies to begin to recognize and address the structural aspects of ethics as they enable and constrain action. We propose a framework based on structuration theory and learning theory that allows for systematic, multi-level investigation of the structural forces that cause ethical dilemmas to arise and to be recognized and that influence the manner in which they are analyzed and resolved. This framework should be capable of continual critique and reconfiguration as environmental conditions change.     

Which bank is the “central” bank?

Liquidity flows through a financial network cannot be accurately described using external processing constraints alone. Behavioral aspects of participants also matter. A method similar to Google's PageRank procedure is used to produce a ranking of participants in the Canadian Large Value Transfer System in terms of their daily liquidity holdings. Accounting for differences in banks’ processing speeds is essential for explaining why observed distributions of liquidity differ from the initial distributions, which are determined by the credit limits selected by banks. Delay tendencies of banks are unobservable in the data and are estimated using a Markov model.     

An exploratory study of Principal Investigator roles in UK university Proof‐of‐Concept processes: an Absorptive Capacity perspective

The increasing emphasis on academic entrepreneurship, technology transfer and research commercialisation within UK universities is predicated on basic research being developed by academics into commercial entities such as university spin‐off companies or licensing arrangements. However, this process is fraught with challenges and risks, given the degree of uncertainty regarding future returns. In an attempt to minimise such risks, the Proof‐of‐Concept (PoC) process has been developed within University Science Park Incubators (USIs) to test the technological, business and market potential of embryonic technology. The key or the pivotal stakeholder within the PoC is the Principal Investigator (PI), who is usually the lead academic responsible for the embryonic technology. Within the current literature, there appears to be a lack of research pertaining to the role of the PI in the PoC process. Moreover, Absorptive Capacity (ACAP) has emerged within the literature as a theoretical framework or lens for exploring the development and application of new knowledge and technology, where the USI is the organisation considered in the current study. Therefore, the aim of this paper is to explore the role and influence of the PI in the PoC process within a USI setting using an ACAP perspective. The research involved a multiple case analysis of PoC applications within a UK university USI. The results demonstrate the role of the PI in developing practices and routines within the PoC process. These practices and processes were initially tacit and informal in nature but became more explicit and formal over time so that knowledge was retained within the USI after the PIs had completed the PoC process.     

BAYESIAN STATE SPACE MODELS IN MACROECONOMETRICS

State space models play an important role in macroeconometric analysis and the Bayesian approach has been shown to have many advantages. This paper outlines recent developments in state space modelling applied to macroeconomics using Bayesian methods. We outline the directions of recent research, specifically the problems being addressed and the solutions proposed. After presenting a general form for the linear Gaussian model, we discuss the interpretations and virtues of alternative estimation routines and their outputs. This discussion includes the Kalman filter and smoother, and precision-based algorithms. As the advantages of using large models have become better understood, a focus has developed on dimension reduction and computational advances to cope with high-dimensional parameter spaces. We give an overview of a number of recent advances in these directions. Many models suggested by economic theory are either non-linear or non-Gaussian, or both. We discuss work on the particle filtering approach to such models as well as other techniques that use various approximations – to either the time state and measurement equations or to the full posterior for the states – to obtain draws.