Transaction‐Cost Economics: Past,Present, and Future?

Oliver Williamson is the founder and chief developer of transaction‐cost economics (TCE). In this brief essay, on the occasion of his Nobel Memorial Prize, I offer a partial discussion of Williamson's contributions by first summarizing some of the accomplishments of TCE‐past and then sketching some of the opportunities for TCE‐future. Most of the topics in both sections (TCE‐past and TCE‐future) start with a quotation from Williamson's early work that I think still speaks volumes today. That is, while fellow travelers and successors have acted on one set of Williamson's insights, helping to produce the accomplishments of TCE‐past, another collection of Williamson's insights has gone relatively unremarked, creating some of the opportunities for TCE‐future.     

China’s Reform: History,Logic and Future

This paper is a brief introduction of the core content and basic concepts of the book China’s Reform: History, Logic and Future, and gives answers to questions such as why China’s reform and opening-up policy has achieved great success, why the catch-up mode, extensive and extractive development mode China adopted in the past three decades are no longer sustainable and what China’s market-oriented reforms should aim to achieve in the next stage so that readers can have a profound understanding of China’s reform. Planning ahead, from the perspective of sustainable economic development, China badly needs to transform from factor-driven growth to efficiency-driven and innovation-driven growth, the key to which is to further encourage the liberalization of thought, promote reform and opening-up, unswervingly follow the path of economic liberalization, marketization and privatization, to establish an inclusive modern market system, to allow the market to play a decisive role in resource allocation and the private economy to play a dominant role in the national economy. The market-oriented reform is a complicated project and China is faced with at least three different aspects of reform in some key areas—the main body of private economy, the liberalization of financial market and the marketization of land. Meanwhile, China needs to efficiently balance three elements of good governance, that is, the rule of law, execution and democratic supervision, so as to facilitate the modernization of state governance system and governance capability.     

Can the Phillips Curve Explain Inflation over the Past Half-Century?

International Advances in Economic Research - Standard Phillips curve models of price inflation suggest that the United States should have experienced an episode of deflation during the Great...     

Simulation Analysis of Public Debt and Fiscal Deficit in Austria – Optimal Economic Policies for the Past and the Future

The macroeconometric simulation model AMOD1 and the optimization algorithm OPTCON are used to evaluate fiscal policies for Austria since the late seventies. In particular, the question of optimal (debt stabilizing) fiscal policies for the past and for the future is analyzed within the framework of a medium-scaled simulation model. The first set of optimization experiments aims to assess optimal fiscal policies for debt stabilization for the historical period 1978–2000 while trying to maintain reasonable growth rates of approximately 2 percent of real GDP. Optimal values of the instruments and the targets are compared to empirical data for Austria. A second set of simulations calculates optimal paths for the fiscal instruments for the period 2001-2010, particularly with respect to the criteria of the Stability and Growth Pact, which is mandatory for member states of the Euro zone.     

Does Analyst Optimism About Future Earnings Distort Stock Prices?

Monthly returns to firms with optimistic expectations are 1.5% lower versus firms with pessimistic expectations, while annual buy-and-hold returns to firms with optimistic expectations are 20% lower. The optimistic component of stock prices lingers months after the optimism is revealed to the market. It also exists separately from the component related to analyst forecast dispersion. The possibility that forecast dispersion is related to transitory versus permanent earnings is proposed.     

官与商:离不开,靠不住?

官府与企业之间究竟是怎样一种关系?先秦以降,迄今为止,只有清末民初的一名实业家曾以六字箴言一语道破此中奥秘,那就是:离不开,靠不住。     

High-tech, high-touch recruitment: an oxymoron?

A combination of factors has diluted the recruitment experience and created a confluence of elements similar to a perfect storm. Recruitment has morphed from a high-touch experience to a high-tech process. Though we can't go back to those halcyon pre-Internet days, we do need to find a better approach than our current technology-based, fragmented recruitment process. The ideal recruitment scenario would be a marriage of high tech and high touch. We must drive the technology, not let the technology dictate our process.     

Leaders, self-confidence, and hubris: what's the difference?

Success can easily breed hubris. As leaders become more confident, their success can limit their learning because they develop repetitive patterns of filtering information based on past successes and discount information that does not agree with their patterns of success. It is important for leaders to stay grounded in reality and effective as their success grows. Humility, gratitude, and appreciation will avoid the overconfidence that leads to hubris. Building confidence in others is the mark of a great leader. Hubris is not.     

The Future Be Damned: Economists’ Optimism and Nuclear Proliferation

Lower income households make much heavier use of costly financial services, such as payday loans, check cashing services, auto title loans, and many more. These services are crafted for, targeted to, and distributed through outlets in lower income neighborhoods. In other words, there are extensive provisioning systems designed specifically to deliver such products and services to these households. Such marketing aimed at lower income groups reduces both their wealth and welfare relative to upper and upper middle groups.     

Location,location, location: currency effects and return predictability?

Most international financial market studies that compare across countries utilize the US dollar as the common numeraire. We explore the little studied question of the appropriate choice for the base currency and ask if currency choice can affect the final conclusion of whether predictability exists. We provide empirical results for stock return predictability that demonstrate the importance of the numeraire. For example, the existence (absence) of predictability for a US investor does not necessarily imply the existence (absence) of predictability for other foreign investors.     

Euro,crisis and unemployment: Youth patterns,youth policies?

This paper examines the occurrence of structural breaks in European unemployment associated with major institutional events. We uncover different responses of adult and youth unemployment rates. While adult unemployment is more prone to experience structural breaks, youth unemployment is more sensitive to business cycle oscillations, especially in the recent crisis. This calls for fine tuning policy measures specifically targeted to youth unemployed in bad times. One important implication of our findings is that generic labour market reforms are not effective enough to solve the youth unemployment problem. Educational policies raising average qualifications and helping school-to-work transitions are suitable complementary cures.     

China's Growth Slowdown: Labor Supply,Productivity, or What?

There has been much discussion of the sources of China’s growth slowdown but little formal econometric analysis of this question. Chen and Groenewold (2019) show that the slowdown was primarily supply-driven, but they stopped short of identifying specific supply variables. This paper extends their analysis and distinguishes several potential supply components: labor supply, productivity, and capital accumulation. Our results confirm their main conclusion that supply dominates the explanation of the slowdown. A model with two supply factors (labor supply and productivity) reveals that both components contribute to the slowdown, although productivity makes the greater contribution. However, when capital stock is added to the model, the decline in the capital accumulation rate becomes an important factor in the growth slowdown, to some extent replacing the effects of both labor supply and productivity.     

AID,POLICIES, AND GROWTH: WHY SO MUCH CONFUSION?

We revisit the highly debated aid‐policy‐growth association. Our results overturn Burnside and Dollar's original findings by simply using new data over the same countries and years. Marginal effects from the extended sample (1962–2013) provide weak evidence that aid can promote growth in the presence of good policies. Post‐Cold War (1990–2013) analysis, however, reveals that aid can decrease growth at any level of policy. The overwhelming majority of the results suggest aid conditional on policy is ineffective. This debate continues because the results are highly sensitive to country‐year selection, choice of methodology, measurement of institutional quality, and growth rate measurement. (JEL F35, O23, O40)