Can France meet the Maastricht Criteria? slower economic growth poses new challenges to economic policy makers

Conclusion With its 1996 budget the French government has all but completely abandoned its election promises. At the same time, in economic policy terms it has gained credibility amongst its partners in the EU. Following the announcement of the fiscal consolidation measures the franc initially strengthened and the central bank was able to reduce short-term interest rates slightly for the first time since July 1994. There is still a chance that France will be able to meet the criteria for joining European Economic and Monetary Union if the country proves able to counter the current trend towards a weakening of economic growth in 1996 and 1997. Although the recent wave of strikes indicates that the cutbacks have gone as far as was possible, fiscal policy is not in a position to stimulate demand if it is to avoid undermining the aim of meeting the 3% criterion at the appointed time. This makes a perceptible cut in real interest rates all the more necessary. This in turn requires a substantial stimulus by the monetary authorities, and this is only conceivable within the framework of concerted action at European level.     

How Big is the Crowding-Out Effect of User Fees in the Rural Areas of Ethiopia? Implications for Equity and Resources Mobilization

Using a nested multinomial logit model, this study investigates the demand “reduction” and “diversion” effects of user fees in rural areas of Ethiopia. The results reveal that an increase in user fees of public clinics, which are the most widely used alternative, can have a significant demand reduction effect on the poorest of the poor. This implies that despite cost recovery has been advocated as an alternative means of health care financing in most of the developing world, increasing user fees may drive the poorest segment of the population out of the health care market unless some protective measures are taken.     

Statistical Analysis of Choice Experiments and Surveys

Measures of households' past behavior, their expectations with respect to future events and contingencies, and their intentions with respect to future behavior are frequently collected using household surveys. These questions are conceptually difficult. Answering them requires elaborate cognitive and social processes, and often respondents report only their “best” guesses and/or estimates, using more or less sophisticated heuristics. A large body of literature in psychology and survey research shows that as a result, responses to such questions may be severely biased. In this paper, (1) we describe some of the problems that are typically encountered, (2) provide some empirical illustrations of these biases, and (3) develop a framework for conceptualizing survey response behavior and for integrating structural models of response behavior into the statistical analysis of the underlying economic behavior.     

AN ALTERNATIVE APPROACH TO EXPLAINING BARGAINING BEHAVIOUR IN SIMPLE SEQUENTIAL GAMES

Abstract.  For simple sequential games, the payoff structure has certain bargaining power implication. Intuitively, certain actions may have the effect of the carrot and the stick as sanctioning means. Fair outcomes can be alternatively viewed as the consequence of their presence. Experimental data on various games are used to test the hypothesis of carrot and stick behaviour. We show that our stick and carrot heuristic neatly captures puzzling phenomena in a wide class of simple sequential games. The results support the view that punishing subjects are not worse off than myopic pay-off maximizers as long as subjects are involved in a repeated strangers scheme.     

The Reform of the German Works Constitution Act: A Critical Assessment

Since 1920, the thrust of German law on workplace codetermination has changed on a number of occasions. We describe the latest swing of the legislative pendulum—favoring works council formation and competence—and evaluate the case for it. We provide new information on the extent of works councils before reviewing the evidence on their economic effects, focusing on some new results from matched-plant data. If the former evidence points to a codetermination deficit, this shortfall does not appear to have negative consequences for workplace productivity, profitability, and employment.     

Redistribution from a constitutional perspective

In its traditional form, Paretian welfare economics has little to say about policies of redistribution. I argue that by adopting a constitutional perspective, elements of a theory of redistribution can be developed without recourse to interpersonal utility comparisons. Individuals who find themselves under an imperfect veil of uncertainty at a constitutional stage face a tradeoff between the costs and benefits of redistribution. The benefits consist of a reduction in the variance of a risk-averse agent's income distribution. The costs are represented by deadweight losses caused either by bureaucracy or by disincentive effects associated with the transfer scheme. My simple formal analysis shows that individuals may, even under an imperfect veil of uncertainty, be able to agree unanimously on a certain transfer policy if their personal characteristics are not too different from each other. This paper is a modified version of a chapter from my Master's thesis, submitted at the University of Bonn in 1992. Revisions were done during a stay at DELTA/Ecole Normale Supérieure, Paris. A scholarship from the German Academic Exchange Service is gratefully acknowledged. I wish to thank Urs Schweizer, Hartmut Kliemt, Niclas Berggren, and an anonymous referee of this journal for valuable comments and suggestions, which have greatly improved the paper.     

Export Intensity and Plant Characteristics: What Can We Learn from Quantile Regression?

Using quantile regression and a rich cross section data set for German manufacturing plants this paper documents that the impact of plant characteristics on export activities varies along the conditional size distribution of the export/sales ratio. For example, firm size is statistically significant at a conventional level for the 0.25 quantile only; branch plant status matters at the upper tail of the conditional distribution of the export/sales ratio only; the craft shop dummy is only significant for the very top quantile; and patents do not matter at the very lower end of the conditional distribution of export over sales. This has implications both for understanding what makes a successful exporter, and for the design of policy measures with a focus on supporting exporters. JEL no. F10, D21, L60