BASKET PEGS AND EXCHANGE RATE REGIME CHANGE: AUSTRALIA AND NEW ZEALAND IN THE MID‐SEVENTIES*

The adoption of a basket peg by China in July 2005 raised interest in this form of exchange rate regime. This paper explores the emergence of the basket peg in the early 1970s, using New Zealand and Australia as case studies to examine why it was adopted, how it operated, and their policy‐makers' use of it to influence various goals. We highlight the complexity of regime choice following the collapse of Bretton Woods. For Australia and New Zealand, the basket peg was a plausible (although interim) solution when they were reluctant either to peg to a single currency or float.     

THE NATURE AND DEVELOPMENT OF THE GENERAL INSURANCE INDUSTRY IN AUSTRALIA TO 1973

The development of the insurance industry in Australia in the twentieth century was fundamentally shaped by a collusive code of conduct called the tariff. This arrangement, established to overcome problems of uncertainty, initially benefited both tariff and non-tariff firms by enhancing market stability. It also reduced competition. The collusive agreements gradually broke down, however, as new entrants and products entered the market in the 1950s. Self-regulation gradually gave way as the 'rules of the game' changed. The result was a period of instability before new competitive practices, and more direct and specific regulatory requirements emerged in the 1970s.     

VILLAGE GOVERNMENT AND RURAL DEVELOPMENT IN INDONESIA: THE NEW DEMOCRATIC FRAMEWORK

The political reforms that began in Indonesia in 1998 have created new opportunities for a revised relationship between state and community, replacing the New Order's centralistic and uniform framework with local-level institutions that are strong and responsive. This paper presents the new legal framework for the democratisation of local-level politics and village institutions. Representative councils have been elected in all Indonesian villages, and the village head is no longer the sole authority in the community. Village governments are provided with far-reaching autonomy and do not need the approval of higher authorities to take decisions and implement policies. However, decentralisation and democratisation are necessary but not sufficient preconditions for developing the countryside and alleviating poverty. An active government and civil society engagement must ensure that regulations are not distorted during implementation, and that ordinary people are included in public policy making and local governance.     

MAKING THE COLONIAL STATE: DEVELOPMENT,DEBT, AND WARFARE IN NEW ZEALAND, 1853–76

Warfare in New Zealand during the 1860s has recently been linked to the rise of the central state and growth of the national debt in that colony. This article argues that any parallel to the growth of the European fiscal‐military state is misguided. The fundamental cause of state centralisation and rising indebtedness was the same long‐run dynamic of colonial development active in all settler societies during the nineteenth century. The colonial state functioned, in part, to raise capital for development, and if necessary the colonial state would be remodelled in order to achieve this. New Zealand was no exception.     

THE NEW ZEALAND PRESS ASSOCIATION 1880–2006: THE RISE AND FALL OF A CO-OPERATIVE MODEL FOR NEWS GATHERING

The establishment of New Zealand's press agency, the New Zealand Press Association (NZPA), as a co-operative news gathering agency in 1880 has traditionally been regarded as reflecting a pioneering spirit of newspaper unity or as being largely determined by the political situation of the time. But these explanations are insufficient. Applying economic and organisational theories of co-operatives to the history of NZPA, this paper reveals it was market conditions that led to the creation of NZPA as a co-operative news gathering service. Following profound changes in those market conditions, NZPA recently abandoned this co-operative news gathering model.     

VICIOUS AND VIRTUOUS CIRCLES – THE POLITICAL ECONOMY OF UNEMPLOYMENT

We develop an empirical non-linear model of equilibrium unemployment and test its policy implications for a number of OECD countries. The model here sees the natural rate and the associated equilibrium path of unemployment as endogenous, pushed by the interaction of shocks and the institutional structure of the economy; the channel through which these two forces feed on each other is a political economy process whereby voters with "limited information" on the natural rate of unemployment react to shocks by demanding more or less social protection. The reduced form results from a dozen OECD economies give support to the model prediction of a pattern of unemployment behaviour in which unemployment moves between high and low equilibria in response to shocks and the model specification is superior in forecasting performance out of sample to alternative models of "generalised hysteresis".     

SCIENTIFIC BREAKTHROUGHS AND NETWORKS IN THE CASE OF SEMICONDUCTOR LASER TECHNOLOGY IN THE US AND JAPAN, 1960s–2000s

United States organisations took a clear lead in semiconductor laser research until the mid‐1970s. After the 1980s, many important breakthroughs were developed by Japanese organisations. Exploring the journal Applied Physics Letters, this study examines how semiconductor laser technology developed in these two countries and how this change in the country‐level industrial leadership in the scientific research occurred. Examining the relationship among industrial organisations, research networks, and scientific breakthroughs, it discusses how these coevolved and how breakthroughs were channelled in different directions. R&D targets were channelled into small markets in the US, but were concentrated into the same markets in Japan.     

THE EQUITY PREMIUM AND RISK-FREE RATE PUZZLES IN A TURBULENT ECONOMY: EVIDENCE FROM 105 YEARS OF DATA FROM SOUTH AFRICA

This paper presents a detailed empirical examination of the South African equity premium, and a quantitative theoretic exercise to test the canonical inter-temporal consumption-based asset-pricing model under power utility. Over the long run, the South African stock market produced average returns six to eight percentage points above bonds and cash, and at the 20-year horizon, an investor would not have experienced a single negative realised equity premium over the entire 105-year period we examine. Yet the maximum equity premium rationalised by the consumption-based model is 0.4%. The canonical macro-financial model closely matches the average risk-free rate, using realistic parameters for the coefficient of risk aversion and a positive rate of time preference.     

NEW ESTIMATES OF AUSTRALIAN PUBLIC BORROWING AND CAPITAL RAISED IN LONDON, 1849–1914

Current statistics of Australian public borrowing to 1914 suffer from several limits. On the basis of a comprehensive revision, an upward bias is shown in all the alternative time series of London borrowing, while statistics of local bond issues are derived for the first time. The new time series show the importance of the initial borrowing cycle during the 1850s and 1860s; the scale of debt repatriation from the mid-1890s; the interaction between domestic and overseas borrowing before the 1880s; and the potential significance of remittance as an 'invisible stabiliser' of the exchanges and alternative indirect source of capital imports.     

PHYSICAL STATURE IN NINETEENTH‐CENTURY NEW ZEALAND: A PRELIMINARY INTERPRETATION

During the late nineteenth century, the physical stature of New Zealand‐born men stagnated, despite an apparently beneficial public health environment and growth in per‐capita incomes. We examine trends and differentials in male stature through World War I enlistment and casualty records. Stature varied by social class, with professionals and men in rural occupations substantially taller than their peers. There is not enough evidence to show that the indigenous Maori population differed in height from men of European descent. Stagnation in stature in late nineteenth‐century New Zealand is consistent with patterns observed in Australia, North America, and Western Europe.     

HECKSHER-OHLIN IN CANADA: NEW ESTIMATES OF REGIONAL WAGES AND LAND PRICES

Many immigrant-receiving and land-abundant countries experienced a diminishing ratio of wages to land prices during the globalisation era from 1870 to 1910. Factor price evidence suggests that Canada does not fit the pattern. We present the first Canadian estimates of region-specific wages and land prices that span the period from 1871 to 1925. Our evidence indicates that while Canada as a nation looks like an anomaly in the era of convergence, this is largely an artefact of aggregating the experience of the labour-abundant eastern provinces with the late-settling and land-abundant western provinces.     

‘LONG SLOW BOOM’?: MANUFACTURING IN NEW ZEALAND, 1945–70

Many studies of post-war New Zealand economy are highly critical both of economic policy and of the business sector, emphasising protection, complacency and sclerosis. This article argues that such accounts are excessively simplistic and, by analysing the structure and performance of New Zealand manufacturing during 1945–70, suggests that there was considerable innovation in both technological and organisational spheres. The result was that, to a greater extent than current accounts allow, New Zealand manufacturing pursued efficiency and international competitiveness.     

FURTHER DOWN MEMORY LANE: A NOTE REFLECTING ON THE MISSING FOUR

A review article by Botha included short biographies of past presidents of The Economic Society of South Africa from its inception in 1925-1963. The review article discussed 17 of the 21 presidents serving between 1925 and 1963. This note supplements the earlier article by providing some information on the four presidents not covered in the earlier article.     

HIGH AND VOLATILE TREASURY YIELDS IN TANZANIA: THE ROLE OF STRATEGIC BIDDING AND AUCTION MICROSTRUCTURE

The observed increase in the level and volatility of Tanzania's Treasury yields in recent years against an otherwise benign macroeconomic backdrop presented a puzzle for policymakers, while raising concerns about the fiscal burden of rising debt interest payments and diversion of bank credit away from the private sector. Using evidence from bid-level data, and supported by a simple theorising of bidder incentives under unorthodox issuance practices, this paper traces the recent volatility in yields to the emergence of a sharp segmentation of the T-bill market between sophisticated financial market players (foreign-controlled banks) and a less-experienced group of investors (domestic pension funds and small banks). An important policy recommendation that emerges is that public debt managers should avoid micro-managing Treasury bill auctions by issuing amounts in excess of those offered or by dipping into oversubscribed segments of the yield curve, as such practices seriously disadvantage the less-sophisticated (but more competitive) investors vis-à-vis the more sophisticated players.     

FIRM AND GOVERNMENT AS ACTORS IN PENROSE'S PROCESS THEORY OF INTERNATIONAL GROWTH: IMPLICATIONS FOR THE RESOURCE-BASED VIEW AND OWNERSHIP–LOCATION– INTERNATIONALISATION PARADIGM

Edith Penrose's The Theory of the Growth of the Firm proposed a process theory of growth based on the pursuit of knowledge by the firm and unconstrained by government. In her subsequent studies of foreign direct investment by large firms in developing countries, Penrose considers the firm and government as actors in the same growth process. This paper explores the development of Penrose's expanded process theory of growth from 1955 to 1973 in which she assumes that neither dual actors nor foreign expansion requires a new or special theory. This finding has implications for the resource-based view and the eclectic ownership–location–internationalisation paradigm interpretations of international business.     

THE ECONOMICS AND ORGANISATION OF CHINESE MINING IN COLONIAL AUSTRALIA

This article describes Chinese mining in colonial Australia using the examples of gold mining in southern New South Wales (NSW) and the Northern Territory as well as tin mining in northern NSW. Chinese miners were often more successful than their European counterparts. One reason for this success was the effective use that the Chinese made of large cooperative groups, a particularly efficient way to work a mining claim. Earlier studies of Chinese mining in Australia chiefly chronicled the racism and violence experienced by the Chinese and underestimated their significant economic contribution. Reasserting their economic importance challenges an exclusive focus on race.