A note on the evolution of inequality in Poland, 1992-99

Analyses of household budget surveys, national accounts dataon functional income distribution, and data on the dispersionof wages, indicate that income inequality in Poland, after fallingover the 1993–96 period, rose significantly from 1997onwards. Farmers and the unemployed were the main losers. Theoverall position of wage-earners improved, although wage inequalityincreased sharply in the second half of the 1990s. Employersand the self-employed fared quite well. This coincided withfiscal policy changes which substantially slowed down progressionin income taxes. Over the 1993–96 period growth was highand balanced. Subsequently, growth slowed down, giving riseto serious fiscal and external deficits.     

“Thirlwall’s Law” reconsidered

Thirlwall’s Law is found to be the necessary but not sufficient condition for balanced long-run growth. A simple equation is considered whose empirical analysis could confirm—or reject—the validity of the Law. The analysis, conducted by means of econometric co-integration using the Dynamic Ordinary Least Squares method applied to data for 59 countries covering the years 1960–2012, suggests that Thirlwall’s Law may not hold for the decisive majority of countries.     

WHY ARE GOODS CHEAPER IN RICH EUROPEAN COUNTRIES? BEYOND THE BALASSA–SAMUELSON EFFECT

In wealthy European countries consumer goods tend to be cheaper than consumer services. Usually explained in terms of cost developments and/or foreign‐trade considerations, this trend could also be a reflection of demand‐side regularities. Estimation of a cross‐country demand system indicates that goods are ‘necessities’ whereas services are ‘luxuries’. The relative price of goods responds negatively to the rising supply of goods and positively to the rising supply of services, with the former response being much stronger. If the supplies of both items were to rise at the same speed, the relative price of goods would have to fall.     

A note on the statistical verification of Marx: comment on Cockshott and Cottrell

This Note questions the statistical validity of the analysesof the relationship between the rate of profit and the organiccomposition across industries.     

REAL CONVERGENCE AND PRICE LEVELS: LONG‐TERM TENDENCIES VERSUS SHORT‐TERM PERFORMANCE IN THE ENLARGED EUROPEAN UNION

A cross‐country regression relating the relative price level to the relative GDP level is statistically significant and stable over time. Price and GDP levels for EU member countries tend to gravitate to that line. The conclusion that there is a shorter‐term trade‐off between fast real convergence and low inflation is unwarranted. Higher inflation is not a necessary companion of fast convergence. Giving up national currency, or pegging it to the euro, may prevent real convergence or precipitate divergence. A weak initial price level may be insufficient. While retaining national currency is not risk‐free, it allows a corrective devaluation.     

Towards a theory for a practical optimisation model for a farm

Abstract

Total factor productivity in communal agriculture in Zimbabwe grew at 1.73% per annum from 1975 to 1990. Growth was negative before independence in 1980 and then reached over 8% a year, but turned negative again after 1985. The success following independence can be explained by the widespread adoption of modern technology, especially in maize production. Adoption was driven by the reorientation of government policy towards the communal sector, which led to improved price incentives and public provision of essential infrastructure investments, such as marketing depots and farm credit facilities. However, the high costs of support proved to be unsustainable and productivity declined from 1985.     

‘Old’ Europe’s wage dynamics and trade imbalances: Is there a link?

No evidence is found that gains in relative labour productivity have had a positive effect on the trade balance/GDP ratio for the ‘old’ EU members (excluding Germany) from 1961 to 2014. Rising relative wage rate is shown to have had strong—and negative—effects on the trade balance/GDP ratio for the EU-14, at least in the longer run. It follows that external rebalancing may be achieved through a sufficiently strong fall in the relative wage rates, without productivity changes having a role to play. This is not to claim that the EU-14 (and its members suffering trade deficits in particular) ought to attempt the devastating policy of ‘internal devaluation’. A constructive alternative would be to achieve the fall in the relative wage rates through faster growth of German nominal wage rates. Whether that alternative is practicable is another matter. But it can be argued that without that alternative being followed the European Union will remain a stagnant area plagued by recurrent crises caused by imbalanced trade among its Member States.