Thomas Hodgskin,Rational Optimist

Long considered a ‘Ricardian socialist’, Thomas Hodgskin is rarely read as the perceptive observer of the Industrial Revolution that he was. His most famous pamphlet, Labour Defended Against the Claims of Capital, has been interpreted as anticipating some central tenets of Marxism. If we abandon this well‐established interpretation, however, we can better appreciate Hodgskin's acute reading of the process of industrialisation unfolding before his eyes. Unlike most socialists, Hodgskin had no sympathy for machine breakers and actually understood the importance of the entrepreneurial function. Moreover, he thought mechanisation and improvement in the tools available for workers would not dispossess them but, on the contrary, would raise their living standards. Hodgskin's ‘optimism’ shows that in the 1820s someone who was deeply concerned with the future of the working classes could nonetheless develop a reasoned sympathy for industrialisation — rather than merely oppose technological innovation and long for a mythical past.     

Financial development and economic growth: long‐run equilibrium and transitional dynamics

We analyze the impact of financial development on economic growth. Differently from previous studies that focus mainly on balanced growth path outcomes, we also analyze the transitional dynamics of our model economy by using a finance‐extended Uzawa–Lucas framework where financial intermediation affects both human and physical capital accumulation. We show that, under certain rather general conditions, economic growth may turn out to be non‐monotonically related to financial development (as suggested by the most recent empirical evidence) and that too much finance may be detrimental to growth. We also show that the degree of financial development may affect the speed of convergence, which suggests that finance may play a crucial role in determining the length of the recovery process associated with exogenous shocks. Moreover, in a special case of the model, we observe that, under a realistic set of parameters, social welfare decreases with financial development, meaning that even when finance positively affects economic growth the short‐term costs associated with financial activities more than compensate their long‐run benefits.     

Hispanic Ethnicity,English‐Skill Investments,and Earnings

Analyzing synthetic cohorts in the 1980 and 1990 Public Use Microdata Samples, we find that Mexican‐Americans and other Hispanics acquired English fluency at a faster pace than Puerto Ricans and Cuban‐Americans during the 1980s. Additional results indicate that English‐skill investments differently influenced the earnings distributions of these ethnic groups.     

Output-inflation tradeoffs in 34 countries

This article examines the responsiveness of real output to the variability of inflation and aggregate demand. In the manner of Lucas (1973), estimates of the output-inflation tradeoff are computed for a large sample of countries. This measure is then correlated with the variances of the inflation rate and the growth rate in nominal income. Because differences in inflation variance (and hence the tradeoff) are viewed as the outcomes of differences in demand variance, correlations between these two variables are also reported. Cross-time and cross-country results provide a good measure of support for Lucas and the notion that attempts to exploit the tradeoff weaken it.     

Money, endogenous fertility and economic growth

This paper analyzes the issue of money superneutrality through an intertemporal optimizing model of capital accumulation with endogenous fertility, i.e. endogenous population growth. Two elements of this setup invalidate money superneutrality: (i) a demand for fertility that depends on real money balances, and (ii) an inverse relation between capital–labor ratio and population growth. Higher monetary growth increases fertility, since it reduces its opportunity cost, and hence diminishes capital intensity, and per capita output. This reverse Tobin effect is matched by an increase in aggregate capital and output growth rates. In this framework, the optimal monetary growth rule is a “distorted Friedman rule”.     

Stochastic Models of Implied Volatility Surfaces

We propose a market–based approach to the modelling of implied volatility, in which the implied volatility surface is directly used as the state variable to describe the joint evolution of market prices of options and their underlying asset. We model the evolution of an implied volatility surface by representing it as a randomly fluctuating surface driven by a finite number of orthogonal random factors. Our approach is based on a Karhunen–Loeve decomposition of the daily variations of implied volatilities obtained from market data on SP500 and DAX options.
We illustrate how this approach extends and improves the accuracy of the well–known 'sticky moneyness' rule used by option traders for updating implied volatilities. Our approach gives a justification for the use of 'Vegas' for measuring volatility risk and provides a decomposition of volatility risk as a sum of independent contributions from empirically identifiable factors.
(J.E.L.: G130, C14, C31).     

The Role of Expectations in Explaining the Cross-Section of Stock Returns

We find highly significant results when the cross-section of market-adjusted stock returns is regressed against changes in analyst expectations this year about: (1) this year's earnings, (2) next year's earnings, (3) long-term earnings growth, and (4) noise (measured as the standard deviation of analyst forecasts). Surprisingly, changes in expectations about this year's earnings are not significant in a multiple regression with the other independent variables. Changes in expectations about next year's earnings are highly significant but with an impact that is much smaller than that of changes in expectations about the long-term growth in earnings. Changes in noise are also statistically significant and are negatively related to market-adjusted returns, an indication that the signal to noise ratio, rather than merely the signal, is what drives price adjustments to new information.     

Remote control and maintenance outsourcing networks and its applications in supply chain management

The paper analyzes the impact of e-business technologies on maintenance management and supply chain operations. The aim of this work is to investigate the network organization level of supply chains in case of remote maintenance application and to understand how maintenance policies are coupled with information technology (IT) solutions. To this purpose two literature reviews are presented: firstly, on the supply chain and network integration, and then on the evolution of maintenance using information technology. Following this, the paper present four specific industrial case-studies of eMRO network organisation. They have been chosen as reference models from a set of practical applications and pilot tests performed by the authors in different production sectors in the last 5 years. Technology complexity environments, maintenance outsourcing level, and supply chain integration context are discussed for each case-studies with particular regards to the profitable forms of collaboration provided by the introduction of IT and the Web. This analysis work toward the development of a framework useful to: (1) classify different e-maintenance systems and understand the relationships between the different members of the network, and (2) identify the variables which can influence the introduction and development of the systems.     

Economic Growth and Transboundary Pollution in Europe: An Empirical Analysis

The existing empirical evidence suggests that environmental Kuznets curvesonly exist for pollutants with semi-local and medium term impacts.Ansuategi and Perrings (2000) have considered the behavioral basis for thecorrelation observed between different spatial incidence of environmentaldegradation and the relation between economic growth and environmentalquality. They show that self-interested planners following a Nash-typestrategy tend to address environmental effects sequentially: addressingthose with the most immediate costs first, and those whose costs aredisplaced in space later. This paper tests such behavioral basis in thecontext of sulphur dioxide emissions in Europe.