Poverty and the shadow economy: The role of governmental institutions

This paper examines the impact of poverty on the size of the shadow economy using cross-country panel data for over 100 countries for the period 1991–2015. The results show that poverty has a positive and significant effect on the size of the shadow economy. Furthermore, we argue that the quality and size of governmental institutions matter in moderating the impact of poverty on the shadow economy. Considering the interactions between poverty and government quality and size, we find that poverty has the largest effect on the size of the shadow economy when government quality is the lowest and the size of the government is the largest. These results withstand a battery of robustness checks.     

Radicalness of blockchain: an assessment based on its impact on the payments industry

Blockchain is receiving considerable attention among practitioners and academics. However, a detailed analysis investigating how the impact of blockchain is going to unfold is still missing. Our article sets out to assess the radicalness of blockchain at an early stage of its development and substantiates the analysis with evidence from the payments industry. We start by distilling five key aspects of radical innovation from extant literature. Our analysis of blockchain then focuses on the payments industry, which represents a major business field of banking and the cradle of this technology. The results of a Delphi study provide 17 statements about the current development of blockchain. The statements deliver insights into the impact of blockchain on the payments industry and reveal the radicalness of the technology. Based on these insights, we investigate how blockchain affects the five key aspects of radical innovation and develop contributions from an innovation management’s perspective.     

Measuring the size of the shadow economy in 30 provinces of China over 1995–2016: The MIMIC approach

Applying the multiple indicators and multiple causes (MIMIC) approach, the present paper measured the size of the shadow economies in China's provinces over 1995–2016. The results show that the average size of the shadow economy in 30 provinces of China increased from 13.55% in 1995 to 14.39% in 2009, and then decreased to 12.30% in 2016. There are obvious variations in the size of the shadow economies in different districts of China. The average size of the shadow economy is lowest in provinces in the eastern district and highest in the western district. In addition, the causes and consequences of the shadow economies in China's provinces have also been analysed using the MIMIC approach, and the results show that tax burden, complexity of the tax system, intensity of regulation, unemployment, employment in the agricultural sector and economic openness have significant positive effects on China's shadow economy, while the ratio of direct taxes to indirect taxes, fiscal autonomy and income levels have significant negative effects on China's shadow economy. Using the growth rate of energy consumption as the benchmark indicator, the MIMIC analysis shows that the shadow economy has significant positive effects on the development of the official economy and income inequality while having a significant negative effect on the labour participation rate.     

The advantages of a small European Monetary Union

The question whether European Monetary Union should include all the EC countries from the start or should initially be limited to a few core countries is again being discussed more intensely. What advantages would a small EMU have from an economic point of view? Which countries should be its founder members?     

Origins of reform resistance and the Southern European regime

With a particular interest for Southern Europe, this contribution develops a classification of obstacles to economic policy reforms. This classification covers approaches ranging from classical economics and political-economic explanations to more innovative explanations linked to behavioral economics. The subsequent part analyzes qualitatively and quantitatively to which extent the “Southern European regime” may imply a particular relevance of some of the potential reform obstacles classified before. We derive “reform ability profiles” which quantify several of the reform obstacles (or reform drivers) to compare EU countries in their likely reform predisposition. These profiles confirm particular Southern European weaknesses which tend to reduce the political-economic feasibility of long-term reforms: a low effectiveness in poverty protection, high intertemporal discounting and uncertainty avoidance, a poor information level of the population and deeply shattered trust in national institutions. In a microeconometric analysis based on Eurobarometer survey data, the analysis leaves the highly aggregated level and looks into the individual heterogeneity in reform acceptance. It is shown that several of the reform obstacles identified in theory are also empirically correlated with the individual inclination to accept reforms.     

Verantwortlich Organisieren

Gute Organisation als Wert — Der barmherzige Samariter aus der Bibel leistet nicht nur die Erstversorgung eines überfallenen, sondern ist auch Organisator: Er sorgt für Pflege und gibt Geld dafür. Beides zusammen kann heute kein Einzelner mehr leisten. Viele Professionelle arbeiten im Behandlungsprozess zusammen, was gute Organisation erfordert.     

Monopsony in the Labor Market,Minimum Wages and the Time Horizon: Some Unresolved Issues

This article discusses development of optimal solutions for monopsony in the labour market for the long run (when labour and capital are both flexible). It is shown that binding minimum wages up to a certain degree pushes the monopsonists to choose a high capital intensity of production, just as high as or even higher than that chosen when there is no regulation for minimum wages. Thereby, we demonstrate the existence of re-switching effects in the tradition of Piero Sraffa. The second part of the paper recalculates and analyzes earlier results by making use of the rather general constant elasticity of substitution production function. Based on a numerical solution for optimal monopsony under different regimes (no minimum wage, minimum wages of different values, etc.), we formulate a two-period game between the government and the monopsonistic firm (‘minimum wage game’). Finally, we analyze the relationship between the elasticity of substitution on the one hand and likely levels of employment on the other hand, after introduction of minimum wages.     

Possible External Shocks to Asia in 2001: How Vulnerable Are the Regional Economies?

In 2001, threats of a U.S. economic slowdown, a moderation of economic growth in the EU, sharp deceleration of the global electronics cycle, and high oil prices could be some of the potential external shocks clouding Asia's economic outlook. This article analyzes these external shocks and assesses which Asian economies are most (or least) vulnerable to these exogenous shocks. © 2001 John Wiley & Sons, Inc.