Postwar slowdowns and long-run growth: a Bayesian analysis of structural break models

Using Bayesian methods, we re-examine the empirical evidence from Ben-David, Lumsdaine, and Papell (Empir Econ 28:303–319, 2003) regarding structural breaks in the long-run growth path of real output series for a number of OECD countries. Our Bayesian framework allows the number and pattern of structural changes in trend and variance to be endogenously determined. We find little evidence of postwar growth slowdowns across countries, and smaller output volatility for most of the developed countries after the end of World War II. Our empirical findings are consistent with neoclassical growth models, which predict increasing growth over the long run. The majority of the countries we analyze have grown faster in the postwar era as opposed to the period before the first break.     

Unit roots,postwar slowdowns and long-run growth: Evidence from two structural breaks

This paper provides evidence on the unit root hypothesis and long-term growth by allowing for two structural breaks. We reject the unit root hypothesis for three-quarters of the countries – approximately 50% more rejections than in models that allow for only one break. While about half of the countries exhibit slowdowns following their postwar breaks, the others have grown along paths that have become steeper over the past 120 years. The majority of the countries, including most of the slowdown countries, exhibit faster growth after their second breaks than during the decades preceding their first breaks. First version received: May 2001/Final version received: January 2002     

The simple analytics and empirics of the cyclical profit squeeze and cyclical underconsumption theories: Clearing the air

This paper examines the controversies that exist between the cyclical profit squeeze (CPS) and nutcracker theories of cyclical crisis. The simple analytics and empirics of both theories are examined. It is shown that the criticisms of the CPS advanced by Sherman (1997) are invalid, and that the two components of the nutcracker theory—a cyclical underconsumption crisis plus a non-labor cost-induced decline in profits—have little relevance for explaining postwar U.S. business cycles.     

The American system of shared powers: the President, Congress, and the NLRB

The purpose of this article is to develop and test a model ofpolitical influence on regulation that incorporates both thecompeting interests of elected officials and the relevant institutionalconstraints. To do this, we focus on one channel of politicalinfluence: the appointment of agency leaders to a multimemberregulatory board. The model has two stages: first, a bargainingstage between the president and Senate in which they choosea target policy; and second, the appointments stage in whichthey attempt to implement this target by choosing the medianboard member. The model's empirical leverage arises becauseelected officials can replace board members only when seatson the board become available through term expiration or resignation.This yields specific predictions about how and whether eachappointment will change policy. We apply the model to the NLRB.The empirical results, investigating all appointments to theNLRB from 1949 until 1988, fit our theory remarkably well.     

Coupling relationship between environment and economyof metropolis：a case study of Chongqing, China

City is a coupling system of economy, society and environment. The urban environment is a supporting systemto the sustainable development of city. Taking the urban area of Chongqing as an example, this paper establishes theindicator system for assessment of the coordination between urban environment and economy according to the resultfrom principal component analyses by software SPSS11.0. Meanwhile, the weight was assigned for each indicator basedon the load of the first proper principal components. Through computation of the coordinated development model set upaccording to the knowledge of statistics, the paper draws the conclusion that the situation of the coordination betweenenvironment and economy in Chongqing developed well from 1996 to 2004. Finally, countermeasures for the coordina-tion in the coming years are proposed.     

The ramsey model revisited: The optimality of cyclical consumption and growth

This paper reconsiders the familiar Ramsey model of optimal saving. This model is modified with two respects: direct spillovers (positive or negative) of capital on utility and penalties for changes of consumption. It will be shown that these two modifications may substantially change the stability properties of an optimal programme if capital provides utility directly (in addition to indirectly through production). More precisely, complex strategies such as (stable) limit cycles or even unstable policies may be optimal. Adjustment costs must be sufficiently high in order to obtain stable limit cycles (or even exploding spirals). This is quite surprising because large adjustment costs are expected to smooth intertemporal strategies.     

International environment conventions: The case of uniform reductions of emissions

Several serious environmental problems have a global character. International cooperation to reduce emissions for this type of problems often takes the form of an agreement among the cooperating countries to cut back emissions by a uniform percent rate compared with some base year. This type of agreements has two disadvantages. In the first place, it is well known from environmental economics that equal percentage reductions of emissions from different sources usually gives an inefficient outcome, in the sense that the same environmental goals could be achieved at lower costs through a different distribution of emission reductions. A second problem with agreements of equal percentage reductions is that not all countries will find it in their interest to participate in such agreements. In the paper, it is assumed that the set of countries which participate in an agreement is endogenously determined, with a country participating in an agreement provided that this makes the country better off than it would have been in a situation without any agreement. The agreement among the participating countries is assumed to be a uniform percentage reduction of their emissions. The countries have different opinions about what this uniform percentage should be. In the paper, it is assumed that the outcome is determined by the median country of the participating countries. The assumptions above lead to a particular equilibrium, in which some but not all countries cooperate. The equilibrium reduction of emissions for the cooperating countries is also derived. This equilibrium compared with the first best optimum within the context of simple numerical example.Presented at the conference Environmental Cooperation and Policy in the Single European Market, Venice, April 16–20, 1990. The paper is part of the research project Energy and Society at the Centre for Research in Economics and Business Administration (SNF), Oslo. I am grateful to Ignazio Musu and Henk Folmer for useful comments on an earlier version of the paper.     

Endogenous currency formation in an online environment: The case of Diablo II

This paper presents a case study of the emergence of currency from a barter economy in an online game community. We use this case study to attempt to shed light on the relative importance of various types of frictions that lead to the emergence of money in search-theoretic models of currency formation. In particular, our study highlights the importance of exchange frictions relative to epistemic frictions. Using the records of an online message board dedicated to facilitating trades within the game, we document the emergence of currency and its stability over time.     

Agricultural non-wage production and health status: A case study in a tropical environment

To date, it has rarely been possible to assess the effect of health status on the productivity of agricultural workers, particularly among non-wage-earning peasants. In this paper, the author uses observations gathered in the course of four successive inquiries among rice-growers working on one of the major programmes of agricultural development undertaken in the Cameroons. Two groups of rice-growers were identified and studied separately. The estimation of a production function on pooled cross-section and time-series observations makes it possible to measure the influence of health status on paddy output: a 10 percent reduction in the incidence of urinary bilharziasis could result in a 4 percent increase in production.     

The relative efficiency of public and private firms in a regulated environment: The case of U.S. electric utilities

The relative efficiency of privately-owned and publicly-owned electric utilities is investigated using theoretical and econometric models that allow for the effects of both ownership type and regulation. The estimation results indicate that the two types of firms are equally cost inefficient in the United States. The average effect of inefficiency is to increase the cost of production by 2.4 percent. Holding output constant, inefficiency increases the average quantities demanded of capital and labor and decreases the average quantity demanded of fuel.     

Professional versus consumer interests in regulation: the case of the US child care industry

Professional licensure benefits producers by creating entry barriers into the profession, but consumers might also gain if licensure induces producers to supply high levels of quality. Whether consumers or producers gain most form licensure can be determined by examining the effect of licensure requirements on aggregate consumption. This paper uses a cross-sectional model to estimate the relationship between variations in state licensure rules and consumption of child care services. The results suggest that professional interests, and not those of consumers, are dominant in the setting of regulatory standards for the US child care industry.     

The cyclical behavior of job creation and job destruction: A sectoral model

Summary Three key features of the employment process in the U.S. economy are that job creation is procyclical, job destruction is countercyclical, and job creation is less volatile than job destruction. These features are also found at the sectoral (goods and services) level. The paper develops, calibrates and simulates a two-sector general equilibrium model that includes both aggregate and sectoral shocks. The behavior of the model economy mimics the job creation and destruction facts. A non-negligible amount of unemployment arises due to the presence of aggregate and sectoral shocks.We thank Jeffrey Campbell, Richard Rogerson and two referees for helpful comments. We are grateful to M.J.D. Powell for providing us with his GETMIN FORTRAN subroutine.     

The cyclical behaviour of fiscal policy: evidence from the OECD

This paper addresses the topic of cyclicality in fiscal policy. In particular, we show that the level of cyclicality varies across spending categories and across OECD countries. In line with leading theories of fiscal cyclicality, we show that countries with volatile output and dispersed political power are the most likely to run procyclical fiscal policies. Wage government consumption is highlighted as the most important channel by which these variables affect fiscal cyclicality.     

The self and its interests in classical political economy

Because economic affairs involve individual action, they must be understood on the basis of a theory which is both subjective, depending on a conception of individual decision-making and especially private interest, and objective, demonstrating how the objective forces of a system of interaction including a system of production and reproduction shape outcomes of individual action. Economic theory, then, requires a conception of the individual agent or subject of economic activity. In this essay, I explore this conception as it develops in the classical theory exemplified by the work of Adam Smith and Karl Marx.     

The cyclical response of employment to output changes: United States manufacturing industries, 1948 to 1983

This paper provides new evidence on the income elasticity of health care by combining stationarity and cointegration tests of health care expenditure and incomes with estimates of the cointegrating relationship between them. A recently updated dataset of health care expenditures and disposable personal income for the US states for the years 1966–1998 is used. The principal findings are that health care expenditures and incomes at the state level are non-stationary and cointegrated. Dynamic OLS cointegrating regressions of the pooled state time series estimate the income elasticity of health care at 0.817 to 0.844, well below unity, confirming that health care expenditure, even at the aggregate level, is a necessity good.     

The powers that are: central bank independence in the Greenspan era

This paper investigates political pressure from incumbent Presidents and Congress on US monetary policy during the period that Greenspan was the chairman of the Federal Reserve. We propose an expectations-augmented Taylor rule in which we replace realized values with expectations, and use the unemployment gap instead of the output gap. We apply a state-space framework that allows the use of mixed frequency data. Our findings suggest that the Federal Reserve under Greenspan did not create election driven cycles, but also did not strictly follow the Taylor rule. The deviations from the Taylor rule are not driven by partisan politics, but are rooted in the expected economic conditions.