Costs,prices and profitablity in UK manufacturing

The 1984 input–output tables make it possible to estimate directly the cost structure of any industrial sector. The results of this calculation are presented for the non-food manufacturing sector for the period 1970–87. This cost estimate is found to be part of a co-integrating set with output prices, in contrast to the specification implied by a Cobb–Douglas production function. The other elements of the equilibrium vector are an index of capacity utilization, positively related to the mark-up, and the variance of inflation (proxying inflation uncertainty), which is negatively related. Import prices have an indirect effect on the mark-up, via demand.     

Trade prices and supply in the UK economy

Current account imbalances are a major source of instability in the world monetary and trading system. Measures to correct these imbalances have largely involved adjustments to exchange rates. In the international trade literature, when the current account is in deficit, the Marshall-Lerner condition is sufficient for a successful devaluation. However, this partial equilibrium condition — apart from being based on the assumption that supply elasticities are infinite — abstracts from how the domestic economy responds to the change in relative prices. In this paper we develop a model of price and output determination in an open economy with imperpectly competitive markets, and draw a distinction between goods which are exported and those which are supplied to the domestic market. This means that we have to determine jointly both export prices and the domestic price of house sales. We show that as long as there is no money illusion in the labour market a fall in the nominal exchange rate raises domestic and export prices proportionally and leaves trade volumes unaffected. However, shifts in domestic absorption relative to overseas demand — by changing relative prices — cause shifts in the relative supply of exports and domestically sold goods and affect the trade balance. Thus fiscal and monetary measures directed towards reducing domestic absorption are more likely to be successful in correcting current account imbalances than exchange rate depreciation.     

Mapping prices into productivity in multisector growth models

Two issues related to mapping a multi-sector model into a reduced-form value-added model are often neglected: the composition of intermediate goods, and the distinction between the productivity indices for value added and for gross output. We illustrate their significance for growth accounting using the well known model of Greenwood et al. (in Am Econ Rev 87(3):342–362, 1997), who find that about 60% of economic growth can be attributed to investment-specific technical change (ISTC). We investigate the role of intermediate goods in their framework and find that, taking into account the composition of intermediates, ISTC may well account for between 93 and 96% of post-war US growth.     

Exact nonradial input, output, and productivity measurement

Summary. The use of measures originally suggested by Bennet, Bowley, and Hicks in the context of cost of living, welfare, and consumer surplus measurement to measure inputs, outputs, and productivity is examined. Suitably normalized versions of the Bennet-Bowley measures are shown to be exact and superlative measures of input, output, and productivity indicators. Received: April 2, 2001; revised version: August 8, 2001     

Bubbles in UK house prices: evidence from ESTR models

Recent movements in stock and house prices have led to an examination of the presence of bubbles. Whilst, there is extensive research on stock price data, there is relatively less for house prices. This paper uses a present‐value model for house prices to test for the presence of bubbles. The results support the presence of a non‐fundamental component within UK national and regional house prices. In particular, for the majority of series considered, evidence is presented of linear non‐stationarity within the fundamental present‐value relationship, and of non‐linear stationarity, implying the presence of a non‐fundamental, or bubble, component. Furthermore, evidence is presented that prices adjust quicker when they are below fundamental equilibrium, than when they are above fundamental equilibrium, i.e. there is downward price stickiness. These results support the hypothesis that house price dynamics can be characterised by price‐to‐price momentum. Finally, forecast evidence suggests that real prices are likely to adjust downwards and converge with fundamental value.     

Measurement of export prices and changes in product quality

In this paper, the economic theory of index numbers is applied to the construction of industry-level export price indices and export quality indices. These indices are used to make consistent comparisons of export prices and qualities at the same or different points in time. Evidence of quality change over time was found to be an important phenomenon in explaining the variation of unit value indices over time and across countries for some European Union trade flows. About half of the unit value differences among destination countries can be explained by quality differentials. The quality-corrected price indices are potentially useful in any empirical application in which accurate measures of export prices are needed.The authors wish to thank Bienvenido S. Cortés for valuable discussion at the Forty-Eighth International Atlantic Economic Conference, October 7–10, 1999, Montreal, Canada.     

Outsourcing, productivity, and input composition at the plant level

Abstract .  We evaluate the productivity and input composition effects of outsourcing (or subcontracting) for Turkish textile and apparel manufacturing plants. We analyze differences in performance indicators for plants that subcontract inputs or outputs, and find that plants that outsource internationally perform better than those that outsource domestically. We evaluate labour productivity gaps and find that more productive plants both initiate outsourcing and subsequently increase their productivity. We then estimate a flexible production function, controlling for simultaneity and selection bias, and find that higher productivity from input subcontracting involves greater skilled labour intensity but the reverse is true for output subcontracting.     

Nonexclusionary input prices under quantity competition: vertical integration,foreclosure and sabotage

A vertically integrated provider is a monopoly supplier of an input essential for its rival to produce downstream output. Market exclusion in the form of inefficient foreclosure or sabotage can arise when input prices are, respectively, ‘too high’ or ‘too low’ relative to the downstream price. The range of nonexclusionary input prices within which neither form of market exclusion arises is determined by displacement ratios. The safe harbour range of downstream-to-upstream ‘price-cost’ margin ratios is decreasing in the degree of product homogeneity and approaches a single ratio in the limit as the products become perfectly homogeneous. The bounds of nonexclusionary input prices are markedly wider under Bertrand–Nash competition than they are under Stackelberg competition.     

Taxation and the asymmetric adjustment of selected retail energy prices in the UK

This paper investigates the adjustment of the prices of four key petroleum products in the UK following changes in the price of crude oil. We find significant evidence that the pre-tax prices of diesel, kerosene, and gas oil adjust more rapidly in an upward than a downward direction, but that the pre-tax price of unleaded petrol adjusts symmetrically. However, these patterns are obscured at the pump once one accounts for fuel duty and value-added tax, raising the possibility that firms can use the tax system to conceal rent-seeking behaviour.     

Detecting long‐run relationships in regional house prices in the UK

Recent developments in the analysis of cointegration in the presence of asymmetric adjustment are extended and applied to data on regional house prices in the UK. This extension is found to have a dramatic impact upon the results derived. In contrast to recent studies employing standard methods, allowance for the possibility of asymmetric behaviour results in the detection of a large number of long‐run relationships between house prices in different regions. A consistent pattern of asymmetric adjustment is observed, with reversion to equilibrium occurring more rapidly (slowly) when house prices in the South of England decrease (increase) relative to other regions. While the results derived support the existence of a ripple effect underlying the observed movements in regional house prices, the extent of cointegration uncovered casts doubt upon the recently proposed notion of weak segmentation in the UK housing market.     

Redesigning hospitals around patients and technology

Hospitals must drastically redesign themselves and revise their operations to be successful. Four major redesign initiatives will enable the traditional hospital to provide effective patient care while attaining its own profitability goals.     

Inflation uncertainty, growth uncertainty, oil prices, and output growth in the UK

This study examines the transmission and response of inflation uncertainty and output uncertainty on inflation and output growth in the UK using a bi-variate EGARCH model. Results suggest that inflation uncertainty has positive and significant effects on inflation before the inflation-targeting period, but that the effect is significantly negative after the inflation-targeting period. On the other hand, output uncertainty has a negative and significant effect on inflation and a positive effect on growth, while oil price rises significantly increase inflation for the UK. Results also indicate that inflation uncertainty significantly reduces output growth before and after the inflation-targeting period. These findings are robust and the Generalized impulse response functions corroborate the conclusions. These results have important implications for an inflation-targeting monetary policy, and for stabilization policy in general.     

Unions,wages and productivity: some evidence from UK engineering firms

Estimates of union wage and productivity effects are derived using primary micro-level panel data for a sample of firms in the UK engineering industry. Union wage differentials of the order of 10% are suggested from the results, whereas union productivity impacts appear to be non-linear with respect to union density.     

Labor productivity growth: disentangling technology and capital accumulation

How much of the convergence in labor productivity that we observe in manufacturing is due to convergence in technology versus convergence in capital-labor ratios? To shed light on this question, we introduce a nonparametric counterfactual decomposition of labor productivity growth into growth of the capital-labor ratio (K/L), technological productivity (TEP) and total factor productivity (TFP). Our nonparametric specification enables us to model technology allowing for heterogeneity across all relevant dimensions (i.e. countries, sectors and time). Using data spanning from the 1960s to the 2000s, covering 42 OECD and non OECD countries across 11 manufacturing sectors, we find TEP and TFP to account for roughly 46 and ?6% of labor productivity growth respectively, on average. While technological growth at the world level is driven primarily by the US and a handful of other OECD countries, we find strong evidence of convergence in both technology and capital-labor ratios. Interestingly, very few of the usual growth determinants are found to enhance the process of technological catching-up.     

政府投入与我国医院效率的变化

本文使用数据包络分析(DEA)的方法,通过回顾性的研究考察医疗体制改革以来我国整个医院行业微观效率分数的改变,以及不同性质医院效率值与政府投入减少的相关性.本文研究发现:医疗体制改革以来我国各类性质的医院效率都有下降的趋势.其中县及县以上医院与农村乡镇卫生院的医院效率值的下降与政府投入的减少均有一定的相关性.     

Assessing the losses in euro area potential productivity due to the financial crisis

In this article, we show that the recent financial crisis has significantly affected the potential total factor productivity (TFP) of the four largest euro area economies, as well as that of the rest of the euro area. We used a reduced-form equation of TFP, based on an approach recently developed by Cahn and Saint-Guilhem (2010). Our empirical findings show that the permanent impact on potential TFP varies across countries from –3.9 points to –1.3 points in Q2 2012. When these losses are incorporated, TFP gaps develop closely in line with capacity utilization rates (CUR). Moreover, in the case of France, including CUR in our TFP model improves the quasi-real-time reliability of TFP gap estimates.     

R&;D and productivity: using UK firm-level data to inform policy

The UK’s business R&D (BERD) to GDP ratio is low compared to other leading economies, and the ratio has declined over the 1990s. This paper uses data on 719 large UK firms to analyse the link between R&D and productivity during 1989–2000. The results indicate that UK returns to R&D are similar to returns in other leading economies and have been relatively stable over the 1990s. The analysis suggests that the low BERD to GDP ratio in the UK is unlikely to be due to direct financial or human capital constraints (as these imply finding relatively high rates of return).     

Reference technology sets,Free Disposal Hulls and productivity decompositions

Diewert and Fox (2013) proposed decompositions of a Malmquist-type productivity index into explanatory factors, with a focus on extracting technical progress, technical efficiency change and returns to scale components. A major problem with their decompositions is that it may be difficult to determine the appropriate reference technologies. Using relatively unrestrictive regularity conditions, the paper develops a data envelopment type approach for decomposing productivity growth for a panel of production units into explanatory factors based on the Free Disposal Hull methods pioneered by Tulkens and his co-authors.     

Organisational change and the productivity effects of green technology adoption

This study investigates induced productivity effects of firms introducing new environmental technologies. The literature on within-firm organisational change and productivity suggests that firms can achieve higher productivity gains from adopting new technologies if they adapt their organisational structures. Such complementarity effects may be of particular importance for the adoption of greenhouse gas (GHG) abatement technologies. The adoption of these technologies is often induced by public authorities to limit the social costs of climate change, whereas the private returns are much less obvious. This study finds empirical support for complementarity between green technology adoption (either CO₂-reducing or resources and energy efficiency-enhancing technologies) and organisational change. While the sole adoption of green technologies is associated with lower productivity, the simultaneous implementation of green technologies and organisational innovations is not.