New technologies and productivity growth in the euro area

This paper provides an overview of the available evidence on the importance of information and communication technologies (ICT) for developments in average labour productivity (ALP) growth in the euro area. The contribution of ICT to ALP growth is found to have increased both in terms of production and investment over the 1990s (up to 2001). However, there is no evidence of significant positive spillover effects from the use of ICT on ALP growth. This implies that there is no reason to believe that potential output growth in the euro area has increased significantly in recent years on account of new technologies. Comparing developments in the euro area and the United States, it appears, however, that ICT capital cannot account for much of the difference in ALP developments over the 1990s. This suggests that cyclical developments and, in particular, the structure of the economy are more important for explaining the difference in performance.First version received: March 2002/Final version received: May 2003We thank Bart van Ark, Neale Kennedy, Gerard Korteweg, Ad van Riet, Marcel Timmer, two anonymous referees and participants at the 17th Congress of the European Economic Association, Venice August 2002 for their comments. All errors and omissions remain ours, of course. We thank Erikos Velissaratos for his help in acquiring data on investment in ICT and Colin Webb for providing us with the OECD STAN database. This paper represents the views of the authors and does not necessarily reflect the views of the European Central Bank, the European Commission or their staff.     

Consumer-driven health care: the future is now

Given that managed care seems to have run its course, employers are forced to deal with escalating health care costs by reducing benefits and lowering pay--or are they? Why not bring the power of the responsible, informed consumer to health care? Consumer-driven health care offers a new, economically rational direction that can simultaneously address the needs of both employers and employees. This article reviews the factors leading to the need for consumer-driven health care and describes the characteristics and benefits of its current and next generations of development.     

Gross margin sales compensation plans

The notion that gross margin commission plans lead to optimum wages for salespeople and maximum profits for the firm was tested using data from 108 medical supply wholesalers. Results suggest that although gross margin plans may increase wages, they do not improve the contribution profits of the firm.     

The norman conquest of $4.86 and the asset approach to the exchange rate

In this paper the asset approach to the exchange rate is tested for the pound–dollar exchange rate, using quarterly data, over the period 1921 to 1925. The out-of-sample forecasting performance of the asset approach is compared to a purchasing power parity model and random walk representation of the exchange rate. The results are shown to be broadly supportive of similar tests conducted for the 1970s experience with floating exchange rates.     

Interest rate interactions in the classical gold standard, 1880-1914: was there any monetary independence?

This paper examines an hypothesis of Svensson (1994) (Journal of Monetary Economics 33, 157-199) that a credible target zone can confer on a country a degree of independence in the operation of its monetary policy, even when exchange rates are fixed. We test this hypothesis for the Classical gold standard using a newly created monthly data base for the period 1880-1913. Building on the recently noted finding that the Classical gold standard represented a credible, well-behaved, target zone system we propose a number of ways of testing the Svensson’ model. Our main finding is that the Classical gold standard did indeed confer some independence in the operation of monetary policy for participating countries. This would seem to have an important bearing on the kind of institutional framework required for a modern day target zone to function effectively and, in particular, to weather speculative attacks.