On the Effectiveness of Growth-Enhancing Policies in a Model of Growth Without Scale Effects

Standard R&D growth models have two disturbing properties: the presence of scale effects (i.e., the prediction that larger economies grow faster) and the implication that there is a multitude of growth-enhancing policies. Recent models of growth without scale effects, such as Segerstrom's (1998), not only remove the counterfactual scale effect, but also imply that the growth rate does not react to any kind of economic policy. They share a different disturbing property, however: economic growth depends positively on population growth, and the economy cannot grow in the absence of population growth. The present paper integrates human capital accumulation into Segerstrom's (1998) model of growth without scale effects. Consistent with many empirical studies, growth is positively related not to population growth, but to investment in human capital. And there is one way to accelerate growth: subsidizing education.     

Effort, trade, and unemployment

Abstract.  This paper incorporates equilibrium unemployment caused by efficiency wages into a monopolistic competition model of trade. Worker effort is treated as an endogenous variable that depends on the optimizing behaviour of firms and workers. Opening up trade induces firms to demand greater worker effort and to cut the size of their workforce. This counteracts the positive employment effect due to entry of firms. Circumstances are indicated in which the two effects just balance, leaving aggregate employment unchanged. Trade unambiguously increases worker effort, thereby enhancing within-firm productivity.     

Revisiting the Relevance of International Trade Theory

Probably one of the most controversial contributions to the literature of international trade theory was offered by the late social economist John Culbertson. In his view, low wage competition among corporations in a world characterized by capital mobility and massive trade deficits undermines the foundation trade theory based on David Ricardo’s celebrated notion of comparative advantage. Instead, there are several good reasons to believe that international trade with China, India, Vietnam, etc. will be governed by absolute advantage. The current essay is dedicated to the virtually ignored work of Culbertson, and it is meant as an invitation for social economists to critically evaluate the argument and in the process make an attempt to point out where it goes wrong.

Global Consistency Versus Local Responsiveness: Deutsche Telekom's Human Resource Management Strategies in Central and Eastern Europe

This article analyses the competing demands faced by Deutsche Telekom for global consistency and local responsiveness as it attempted to coordinate its human resource management strategies across its Eastern European subsidiaries. It considers the degree to which the former economic and political histories of Eastern Europe continue to influence and/or constrain multinational corporation strategies and practices in the post-2000 era. Institutional path dependency, strategic international human resource management, and international industrial relations theories are used to assist in analyzing the data. The study concludes that managerial constraints associated with the historical and economic legacies of these former socialist countries are rapidly declining, thereby allowing multinational firms to implement “Western-style” human resource management strategies. It further suggests that industrial relations institutions at the European Union level, rather than individual country level, have the greatest potential to impact on international human resource management strategies in the region. Multinational corporations should therefore engage in more-integrated strategic international human resource management and international industrial relations approaches.     

Confidence bounds for the sensitivity lack of a less specific diagnostic test, without gold standard

We consider the problem of comparing two diagnostic tests based on a sample of paired test results without true state determinations, in cases where the second test can reasonably be assumed to be at least as specific as the first. For such cases, we provide two informative confidence bounds: A lower one for the prevalence times the sensitivity gain of the second test with respect to the first, and an upper one for the sensitivity of the first test. Neither conditional independence of the two tests nor perfectness of any of them needs to be assumed. An application of the proposed confidence bounds to a sample of 256 pairs of laboratory test results for toxigenic Clostridium difficile provides evidence for a dramatic sensitivity gain through first appropriately culturing C. difficile from stool samples before applying an enzyme-immuno-assay.     

Inference on impulse response functions in structural VAR models

Skepticism toward traditional identifying assumptions based on exclusion restrictions has led to a surge in the use of structural VAR models in which structural shocks are identified by restricting the sign of the responses of selected macroeconomic aggregates to these shocks. Researchers commonly report the vector of pointwise posterior medians of the impulse responses as a measure of central tendency of the estimated response functions, along with pointwise 68% posterior error bands. It can be shown that this approach cannot be used to characterize the central tendency of the structural impulse response functions. We propose an alternative method of summarizing the evidence from sign-identified VAR models designed to enhance their practical usefulness. Our objective is to characterize the most likely admissible model(s) within the set of structural VAR models that satisfy the sign restrictions. We show how the set of most likely structural response functions can be computed from the posterior mode of the joint distribution of admissible models both in the fully identified and in the partially identified case, and we propose a highest-posterior density credible set that characterizes the joint uncertainty about this set. Our approach can also be used to resolve the long-standing problem of how to conduct joint inference on sets of structural impulse response functions in exactly identified VAR models. We illustrate the differences between our approach and the traditional approach for the analysis of the effects of monetary policy shocks and of the effects of oil demand and oil supply shocks.     

On the contribution of public procurement to entrepreneurship and small business policy

Public procurement in industrialized nations accounts for a significant share of gross domestic product; hence it is imperative for local, regional and national economic development to utilize this potential. However, previous discussions of entrepreneurship and small business policy have by and large marginalized public sector procurement. As a contribution to giving greater salience to the linkages between regional development, entrepreneurship and public procurement, this paper presents empirical results of a qualitative study into local government authorities in the United Kingdom. In particular, it draws out a range of enablers and barriers for sourcing from small- and medium-sized enterprises that were perceived by procurement managers. The focus on public sector procurement furthermore leads to a more systematic theoretical elaboration of entrepreneurship policy as being based on legal authority or the market or network effects from geographic proximity.