Relief works,the world bank and private business:

Abstract

In an extended review of the arguments advanced by Mancur Olson concerning the economic rise and decline of nations Angus Maddison drew an interesting distinction between ultimate and proximate causality which implicitly invited consideration of both the nature of the discipline of economic history and the key causal factors influencing the rate of economic growth in both the short and long run.¹ To my knowledge nobody has taken the opportunity to build upon this distinction, although sustained analyses of deeper causality are less rare than when Maddison was writing.²     

Foreign Direct Investment and Services Trade: Evidence from Malaysia and Singapore

Abstract

Services trade is an important source of growth in Malaysia and Singapore. Both economies are export-oriented and actively court foreign direct investment (FDI) to advance their economic objectives of industrialization and economic development. This paper examines the causal linkages between inward FDI and the country's engagement in services trade in bi-variate and tri-variate VAR frameworks. The empirical findings for Singapore show evidence of bi-directional causality between inward FDI and the total trade volume in services (i.e. the absolute sum of payments and receipts) as well as between FDI and services imports (in the tri-variate specification). This may reflect her relative open foreign investment policy and free trade regime in services. For Malaysia, the evidence of causality is weaker and uni-directional, from inward FDI to services imports. These findings are consistent with the different stages of economic development and openness attained by the two sample countries, and they provide useful background for trade and foreign investment policies and development strategies.     

Camilla Josephson,Growth and Business Cycles: Swedish Manufacturing Industry 1953–2001

Abstract

Danish historians, like those of other countries, have increasingly devoted their attention in the 20th century to the study of the economic and social aspects of historical evolution, in the belief that these aspects are of fundamental importance to the understanding of political and cultural history—indeed to the deeper understanding of the whole course of history. At present, however, the only complete account of the history of economic life in Denmark is one which appeared in a German series dealing with a number of different European countries. The series included Französische Wirtschaftsgeschichte by Henri Sée, Holländische Wirtschaftsgeschichte by E. Baasch, Norwegische Wirtschaftsgeschichte by O. A. Johnsen, and Allgemeine Wirtschaitsgeschiclite by E. Kulischer.     

Monetary Policy and Risk-Based Asset Allocation

This paper focuses on the effects of the Fed’s monetary policy on stock and bond returns co-movement and their implications to risk-based asset allocation. Using a regime-switching model that controls for the economic effects of monetary policy we identify three co-movement regimes. We document that risk-based portfolio strategies poorly perform in the low correlation regime which features inflation shocks. We find outperformance evidence under the negative correlation regime with a high stock market risk and a very accommodating Fed policy. Less effectiveness is demonstrated under the positive correlation regime where bonds are regarded as risky assets and interest rate volatility is fueled by monetary policy.     

The optimal exchange rate regime for a small country

This paper examines the welfare comparisons between a freely floating, a managed floating, and a pegged exchange rate regime. We compare the expected loss under these regimes by modifying and generalizing Hamada’s (2002) model to accommodate intervention policy. We consider the de jure and de facto classifications, where the former is defined by the officially stated intentions of the monetary authorities, while the latter is based on the actually observed behavior of the nominal exchange rate. We first examine the exchange rate regimes from the central bank’s policy stance and the actual exchange rate policy. Next we assume that the regime which the private sector perceives according to an official announcement may be different from the one adopted actually by the central bank. We examine nine combinations of the de jure and de facto regimes. We interpret that, whenever they are different, there is informational friction between the central bank and the private sector. We show that the welfare level of a small country under freely floating is no less than that under other regimes, and that with some restrictive conditions, the de facto pegged or de facto managed floating is close to freely floating. This partly explains “Fear of floating” and “Fear of pegging”.     

Retirement policy: a review of the role,characteristics, and contribution of the Australian superannuation system

With a market capitalisation of over $1.84 trillion dollars and large annual flows, the Superannuation Guarantee has been regarded as the backbone of Australia's retirement policy scheme and a primary driver of economic growth. However, losses encountered in the aftermath of the global financial crisis led to a major review of superannuation, mainly in response to the lack of accountability, comparability, and transparency discovered within ‘default’ investment options. An outcome of this review was the MySuper initiative, which imposes obligations on fund providers to reconfigure their default investment strategies in accordance with new regulatory requirements. Despite these policy reforms, other challenges remain, such as gender inequality, excessive superannuation fees, low financial literacy, and lack of member participation in growing retirement savings. The paper provides a review of literature pertaining to the background, significant policy changes, and ongoing development of the Australian superannuation system. We emphasise the role of superannuation in the economy; characteristics of the industry, plans, and funds on offer; recent policy initiatives; and perceived inadequacies of the system. The paper concludes with possibilities for further empirical research.     

Soft budget constraints, bank capital, and the monetary transmission mechanism

This paper investigates the effect of monetary policy in a situation where soft budget constraint problems prevail in the economy and the bank faces a capital requirement. Under these circumstances, an expansionary monetary policy may increase quantity of bank lending without improving the quality and thus may not stimulate economic activity. On the other hand, in order to solve the problem of soft budget constraint problems and to improve the quality of bank lending, the quantity of bank lending should be decreased. Central authorities need to keep this tradeoff in mind when exercising monetary policy and injecting public funds.     

Neutrality and free trade: Sweden and trade liberalisation, 1948–1958

Abstract

This article discusses the Swedish attitude to European economic cooperation, an attitude that has been described as reluctant. The traditional explanation for this has been Sweden's neutrality. This explanation has been challenged by researchers, who have claimed that a nationally self-sufficient social democracy was responsible for the reluctance towards Europe. In this article, neutrality is still seen as the main explanatory factor. Swedish strategies for dealing with European integration linked the concepts of neutrality and global free trade. Nordic cooperation was also seen as a strategy to meet demands for European integration. Swedish activities within the European organisations were limited by neutrality concerns. Within these limits Sweden worked for economic policy solutions, which might be called social democratic.     

Low Inflation,Pass-through,and a Discrete Inflation-targeting Framework for Monetary Policy in China

The performance of inflation in China over the past few decades has been remarkable. This paper characterizes the statistical nature of the inflation series in China over the past quarter of a century and presents an interesting scenario of large decline in inflation pass-through accompanied with low inflation since the end of the 1990s. How should monetary policy in China be conducted under these new economic conditions? We propose a discrete inflation-targeting framework for monetary policy,which is likely to be suitable for the regime of low inflation and inflation pass-through. The advantages and caveats of adopting such a framework are also discussed.     

The Rise and Decline of Mancur Olson's View of The Rise and Decline of Nations

The evolution of Mancur Olson's views regarding The Rise and Decline of Nations, the second of his three main books, is examined. It expands and extends to history and to the world the arguments presented in his earlier work, The Logic of Collective Action. Although Olson never abandons the idea that the accumulation of interest groups in a democratic society can lead to its economic stagnation, how this comes about and can be overcome changes somewhat by the time of his final book, Power and Prosperity, which focuses on the problems of transition economies and proper political governance. A sign of the greater complexity of his later views emerges in his analysis of the U.S. South, presented in his 1983 presidential address to the Southern Economic Association.     

The French commitment to European monetary integration: A review of the two EMS crises (1981–83, 1992–93)

This paper focuses on the process of exchange rate management during the two European Monetary System(EMS) crises, in 1981–83 and 1992–93, and examines the factors which led the French governments to adhere to the EMS. France's strong franc (franc fort) policy is a useful test case for maintaining national commitment to European monetary integration. The origin of the franc fort policy can be traced back to the exchange rate crisis of 1981–83. By actively supporting European institutions and emphasizing the emergence of a strong and united European common currency, France discovered the way to bolster confidence in her economic policy. Beyond this focal point, political justification and economic rationality became mutually reinforcing, configuring French national preference in European monetary integration. The response of the French government to the EMS crisis of 1992–93 was more consistent compared to the response to the 1981–83 crisis, and reflected the accumulation of loyalty to European monetary integration. This loyalty, however, was made neither from purely economic calculation nor out of normative commitment French European monetary policy reflected the interaction between domestic politics and European monetary integration. The French commitment to the franc fort also was based on domestic political bases such as the existence of a core policy group, a centralized policy‐making structure, and an issue linkage between the franc fort and European integration.     

The finances and financial administration of Sweden during the late sixteenth century

Abstract

The late lfith century is still one of the least known periods in Swedish economic history. This is especially true of the governmental financial conditions which were to give rise to the policy of expansion. In this connection the figures contained in the so-called “state ledgers” of 1573 and 1582 have often been quoted; and these two financial statements, the only ones from the 16th century, have usually been regarded as balance sheets of the whole income and expenditure of the state during the years in question. By reason of the method of accounting employed, however, it has not been possible to determine with certainty what they really include and on what basis the data were assembled.     

Velocity variance comparisons under alternative policy regimes

Conclusion This paper has shown that it is dangerous to make recommendations, concerning which money supply to control, based on a comparison of velocity variances which occurred during one historical policy regime. The policy recommendation could be sensitive to what the historical policy regime was, and in a wide variety of circumstances the policy recommendation could be wrong.An additional point should be made. Since interest rates were excluded from the model, it has not been analyzed for whether mistaken policy advice could be drawn from a velocity variance comparison on data observed during a regime of targeting short-term interest rates rather thanM1 orM2 (such as the pre-1970 period). Cagan [1982], Fellner [1982], and Kopcke [1983], for instance, make such comparisons. Given the results of this paper, however, it seems very likely that such an analysis would reinforce the strong cautionary point of this paper. Furthermore, if the historical regime did not involve an exclusive focus on one tool, but rather was a hybrid regime involving an ill-defined mixture of concern withM1,M2, and a short-term interest rate, then the cautionary point is further reinforced.Given the essentially negative result of this paper, that one cannot make a regime choice based on a simple velocity variance comparison, how can one choose the appropriate money supply to control? It would seem that there is no substitute for the use of a complete structural empirical model.     

Peter Sandberg,Kartellen som sprängdes. Svensk bryggeriindustri under institutionell och strukturell omvandling 1945–1975

Abstract

Research into local history seldom has the same appeal as the investigation of biographical material, where personal circumstances and influence, especially those of an individualist, arouse immediate interest. There has, nevertheless, been no lack of research into local history, but the creation of a meaningful link with the history of a province or of an entire country is not always easy, with the result that specialist historians have been reluctant to accept the challenges of the subject. Although in Denmark and Sweden there are a number of good monographs on the historical development of individual towns, there is elsewhere in Scandinavia nothing resembling the studies of social and economic conditions in country districts which have been produced in Finland and Norway. Norway's prominent position in this respect is strikingly illustrated by this book. Hans Try has examined the internal development of the parish of Segne during the nineteenth century, particularly during the 1860s when in nearly all aspects of its history there was a clear break with the past. Segne, a coastal district of Vest Agder in south-west Norway (including, incidentally, a farm named Try and the 6 km long Trysfjord), had a population in 1865 of 2461. Three-quarters of these, the author estimates, were engaged in fanning, 371 being principals and 1475 family members, servants, etc. Try puts the number of family holdings (bruk) at 444, ranging from ancestral farms (71 of which could be described as matrikkelgardar, freehold farms with their own numbers in the land register) to borderline cases of a house with a garden plot. At the 1860 land registration there were no less than 130 cases where the proper classification for taxation purposes was difficult to determine, a tax (skyld) of 1 ort (c. a sixpence) being the lowest assessment for a bruk.     

International Monetary and Financial Arrangements: Present and Future

The paper deals with a broad range of topics under the rubric of the international monetary system: exchange rate agreements, International Monetary Fund structure, history and functioning of the European Monetary Union, monetary and fiscal policies adopted in recent years by different countries, with a special emphasis on central bank independence and inflation control, capital flows and cross-border assets growth and their influence on financial stability, and policy proposals to enhance financial stability. With more than four-fifths of world trade conducted under managed or full flexibility the present system can be regarded more as a flexible than a fixed exchange rate regime. EMU is a major institutional innovation; while its economic benefits have been amply discussed and perhaps exaggerated, the economic costs seem to have been underestimated. Financial liberalization has resulted in huge benefits to savers and borrowers as capital has tended to flow to its most productive uses around the world, but it has also led to fears that this has sharply reduced the effectiveness of monetary policy. This liberalization imposes a constraint on monetary policy in the sense that it forces a much higher degree of economic convergence than was true before.     

(In)equality and the South African Constitution

ABSTRACT

Does the South African Constitution constrain or empower government, courts and citizens in addressing systemic social and economic inequalities? This article argues that the Constitution is explicitly ‘transformative’, but is an enabling document, providing ‘scaffolding’ for political and legal activities. It is government, strong institutions and civil society that are ultimately responsible for securing its equality aspirations. Here the Constitution admits of different understandings of equality and different economic and social policy choices. This article identifies these contested meanings of equality and suggests that a liberal egalitarian/social democratic version is dominant in policy choices and the jurisprudence of the Constitutional Court. It illustrates this with reference to the Court’s jurisprudence on equality, and suggests that more radical and transformative interpretations remain possible. However, it concludes that we cannot escape politics, the need for good policy choices and effective implementation and enforcement.     

The entelechies of mercantilism

Daniel Waldenström's debate article in this issue of the SEHR raises several interesting questions for discussion. I will not comment on his criticisms of Swedish economic historians' publishing practice and their international participation; I will state only that I think economic and business historians in the Nordic countries should increase their international activities and their publications in international journals. In my opinion this concerns particularly scholars in my own country, Norway. Waldenström makes, however, several normative assertions about economic history that concern the discipline as a whole, including the guiding principles of the editorial policy of the SEHR. His normative claims about content and the methodological foundations of economic history deserve an answer.     

Economic Liberalization and Conditional Volatility of Exchange Rate in Sub‐Saharan Africa: Asymmetric GARCH Analysis

Abstract: For small open economies, an understanding of movements in the exchange rate is imperative in analyzing trade and capital flows. In addition, reliable forecasting of exchange rate volatility is important in risk‐taking assessment and investment decision‐making, both of which are critical to long‐term growth. Using an asymmetric GARCH‐type approach, this paper examines the implications of economic liberalization on the stochastic behavior of the exchange rate series in a sample of sub‐Sahara African (SSA) countries over the 1970–2004 period. The results indicate that exchange rate volatility is variable, and is less volatile under fixed exchange rate regime (pre‐economic liberalization) and higher under flexible regime (post‐economic liberalization), that is, it is asymmetric. For most of the countries, the EGARCH and TGARCH models are robust to parameter stability and gives better forecasting performance compared to the standard GARCH model.     

Book reviews

Books reviewed: John Hatcher and Mark Bailey, Modelling the middle ages: the history and theory of England’s economic development Christine M. Newman, Late medieval Northallerton: a small market town and its hinterland, c. 1470–1540 Adam Fox, Oral and literate culture in England, 1500–1700 Frederick Valletta, Witchcraft, magic and superstition in England, 1640–70 David W. Howell, The rural poor in eighteenth‐century Wales Peter Borsay, The image of Georgian Bath, 1700–2000 Torsten Berg and Peter Berg, eds., R. R. Angerstein’s illustrated travel diary, 1753–1755: industry in England and Wales from a Swedish perspective Anne Orde, Religion, business and society in north‐east England: the Pease family of Darlington in the nineteenth century Arthur J. McIvor, A history of work in Britain, 1880–1950 Roger Davidson, Dangerous liaisons: a social history of venereal disease in twentieth‐century Scotland Neil Forbes, Doing business with the Nazis: Britain’s economic and financial relations with Germany, 1931–1939 Ronald Hyam and Wm. Roger Louis, (eds.), The Conservative government and the end of empire, 1957–1964, 2 parts. Part I: High policy, political and constitutional change. Part II: Economics, international relations, and the Commonwealth C. Edmund Clingan, Finance from Kaiser to Führer: budget politics in Germany, 1912–1934 Girolamo Imbruglia, (ed.), Naples in the eighteenth century: the birth and death of a nation state Alice Teichova, Herbert Matis, and Jaroslav Pátek, (eds.), Economic change and the national question in twentieth‐century Europe Ton Notermans, Money, markets, and the state: social democratic economic policies since 1918 David Abulafia, (ed.), The new Cambridge medieval history, V: c. 1198‐c. 1300 Elise S. Brezis and Peter Temin, (eds.), Elites, minorities and economic growth Kenneth Morgan, Slavery and servitude in North America, 1607–1800 Kenneth Morgan, Slavery, Atlantic trade and the British economy, 1660–1800 John J. McCusker and Kenneth Morgan, The early modern Atlantic economy Allan Kulikoff, From British peasants to colonial American farmers David Blanke, Sowing the American dream: how consumer culture took root in the rural Midwest Bruce Curtis, The politics of population: state formation, statistics and the census of Canada, 1840–1875 Jeremy Baskes, Indians, merchants, and markets: a reinterpretation of the repartimiento and Spanish‐Indian economic relations in colonial Oaxaca, 1750–1821 Birgit Sonesson, Puerto Rico’s commerce, 1765–1865: from regional to worldwide market relations Claude Marcovits, The global world of Indian merchants, 1750–1947: traders of Sind from Bukhara to Panama Nasir Tyabji, Industrialisation and innovation: the Indian experience Tirthankar Roy, The economic history of India, 1857–1947 Simon Ville, The rural entrepreneurs: a history of the stock and station agent industry in Australia and New Zealand David B. Abernethy, The dynamics of global dominance: European overseas empire, 1415–1980 Neil De Marchi and Craufurd D. W. Goodwin, (eds.), Economic engagements with art, annual supplement to vol. 31, History of Political Economy Pat Hudson, History by numbers: an introduction to quantitative approaches     

International trade and economic growth: evidence from a panel ARDL-PMG approach

The purpose of this work is to study the impact of trade openness on the economic growth of the countries bordering the Mediterranean using a panel of eight countries from 1975 to 2016. We apply ARDL panel which is a technique recently developed. We study the effects of openness to international trade on economic growth while incorporating economic policy variables. The results show that the variables of commercial and financial openness favor economic growth. The free trade agreements that the European Union has signed with certain countries in the Mediterranean basin are designed above all to encourage greater regional economic integration and an increase in their potential growth. Therefore, our findings show that the financial sector is slow to affect economic growth in these countries. This study reveals that human capital and the investment rate support the economic growth of our sample. In addition, we conclude that a process of economic convergence has begun in these countries. A causal analysis was carried out we found an unidirectional causality ranging from economic growth to trade openness.