Globalization and the ‘confidence game’

We show that governments in developing countries have an incentive to play the “confidence game” — wherein the need to win the confidence of the international capital market ‘can actually prevent a country from following otherwise sensible policies and force it to follow policies that it would normally consider perverse’. This incentive arises because of a combination of a ‘conformity bias’ and ‘good news bias’ in governmental decision making in an open economy, which results in inefficient outcomes which increases rather than decreases the threat of devaluation. While institutions that encourage greater transparency and the public revelation of information, may often mitigate this inefficiency, on some occasions increased transparency may even exacerbate the inefficiency.     

ON PASLNETTI'S ‘G’ MATRIX

Pasinetti's vertically integrated H matrix has been much used in economic theory but his other vertically integrated matrix, G — which is of a quite different nature — has been little noticed. This paper considers the nature of the G matrix, its relationship to H, and varous issues — concerning consumption and growth, value added, sales revenue and differential growth or profit rates — for the analysis of which G is a very useful analytical tool.     

Consumer attitudes to ‘Healthy’ restaurants

This paper describes the results of a qualitative research study that sought the views of consumers about using restaurants as a setting for health promotion and, specifically, for providing low-fat healthy food choices. As health promotion has evolved from a major focus on individual change toward a greater focus on the environments in which people live, work and recreate, restaurants in Australia are now being targeted as appropriate organizations for change. Consumers in this study expressed cautious interest in the idea. However, it was clear that their prime motivation for choosing a restaurant and a restaurant meal did not lie with healthy food considerations. Instead, issues such as cost, personal preference and hygiene appeared to be more important.     

Joint Production with ‘Restricted Free Disposal’

A single production system with constant returns can produce any level and composition of demand by appropriate intensities of the cost‐minimizing processes. Hence, in the long run, products can never be in excess supply and there exists a system of prices of production which is semipositive and independent of demand. These (and other) properties do not, in general, carry over to joint production systems where one or several processes produce two or more different products. The proportions in which products emerge will generally be different from those in which they are required for use. The usual approach to that problem is to apply the rule of ‘free goods’. This assumption may be applied to goods which, if they are left where they are and as they are, cause neither costs nor benefits. But it cannot be applied to outworn machines, scrap, wastes or pollutants and is therefore not generally applicable. The present paper aims at finding conditions for the existence of cost‐minimizing systems for cases where this crucial assumption either is completely absent or is substituted by the assumption of ‘restricted free disposal’, i.e. by the assumption that excess production is permitted up to a certain tolerated limit. It will be proved that the conditions for the existence of cost‐minimizing systems with free disposal carry over to systems with restricted free disposal.     

The ‘New’ Theory of Optimum Currency Areas

Highbrow opinion is like a hunted hare; if you stand long enough it will come back to the place it started from. Dennis Robertson     

Repeated games and the ‘reciprocal dumping’ model of trade

A repeated game version of the basic Brander and Krugman (1983) model is analyzed. In the Brander-Krugman model, rivalry among oligopolistic firms gives rise to international trade. It is now shown that no trade, which is welfare-reducing when transportation costs are negligible, is a strong Nash equilibrium of the supergame. The threat strategies that support ‘no trade’, the discount rate, and the crucial role of transportation costs are discussed, extending the BranderKrugman analysis in a natural way.     

Current Account ‘Core–Periphery Dualism’ in the EMU

Current account (CA) dispersion within European Union (EU) Member States has been increasing progressively since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process able to stimulate a log run rebalancing as neoclassical theory predicts. To shed light on the issue, this paper investigates the determinants of Eurozone CA imbalances, focusing on the role played by financial integration. The analysis considers two samples of 22 OECD and 15 EU countries, three time horizons corresponding to various steps in European integration, different control variables and several panel econometric methods. The results suggest that within the EU group of countries financial integration contributed to explain the CA deterioration in the peripheral countries especially in the post‐EMU period creating an asymmetric behaviour within the EMU. From a financial stability perspective, this ‘divergence’ could hinder the effectiveness of monetary policy. By reducing the apparent benefits of participating in the monetary union, it also raises the risk of a break‐up.     

A laingian view of the ‘advantage’ of advertisers over consumers

This paper discusses the advantage advertisers may enjoy over consumers in terms of R.D. Laing's Interpersonal Perception Method (Laing, Phillipson & Lee, 1966). It is suggested that the advertiser (A) has an advantage over the consumer (C) to the extent that (1) A operates more efficiently at higher order levels of perspective than does C; (2) A understands C, whereas C misunderstands A; (3) A causes C to feel understood by A; and (4) A realizes that he understands C, whereas C fails to realize that she misunderstands A. The differential orientations and skills of A and C would appear to support these conditions with some frequency.     

Determinants of retail patronage. A ‘natural’ experiment

A large number of studies has analyzed possible determinants of retail patronage using comprehensive models and cross-section data. This research is typically based upon the assumption that shopping is undertaken by single-purpose trips, and hence that the location of a store relative to other service outlets is unimportant. The importance of the opening hours of stores is also usually neglected. This paper reports the results of a ‘natural’ experiment, showing that proximity to a liquor store and extension of opening hours were significant determinants of sales and number of customers in food retailing in Norway.