OPTIMAL GROWTH, GENUINE SAVINGS AND LONG-RUN DYNAMICS

Green accounting theories have shown that negative genuine savings at some point in time imply unsustainability. Consequently, recent studies advocate the use of the genuine savings measure for empirical testing: a negative index implies that sustainability be rejected. However, this criterion cannot ascertain sustainability, because positive current genuine savings do not rule out genuine dissaving in the future. This paper derives a one‐to‐one relationship between the sign of long‐run genuine savings and the limiting condition for sustained utility in the capital‐resource growth model, assuming technical progress and resource renewability. This result suggests to extend the genuine saving method to include a test of the limiting condition: if this condition is empirically rejected, positive current genuine savings are delivering a false message.     

Saving, Investment, and Capital Mobility in LDCs

The Coakley, Kulasi, and Smith current-account solvency model ( Economic Journal , 1996, pp. 620–7) is used to investigate saving and investment in LDCs. This model implies that saving and investment cointegrate with a unit coefficient irrespective of the degree of capital mobility. Panel and conventional unit-root tests indicate that LDC current accounts are stationary. The Feldstein–Horioka cross-section regression coefficient for LDCs is lower than the corresponding OECD coefficient, indicating different policy responses in these countries rather than higher capital mobility. Finally, adjustment toward solvency is slower in LDCs, reflecting their vulnerability to external shocks and the impact of financial repression.     

技术进步方式与贸易条件变化研究

在垄断竞争的差异化产品模型假设下,在成本结构中引入技术进步的两种类型即资本节约型技术进步和劳动节约型技术进步。本国劳动节约型的技术进步使得本国同类产品的产出数量增多,贸易条件下降;但资本节约型的技术进步可使本国差异化产品种类增多,贸易条件上升。通过中国工业品行业的资本劳动比和贸易条件变化的关系,初步验证了该理论模型。     

Transformation bias in the costs and benefits of housing subsidies

This note investigates the importance of testing the validity of the Hicks-neutral technical progress assumption in the context of examining the substitutability or complementarity between capital, labour and energy in the UK industrial sector, It is found that the hypothesis of neutral technical progress must be rejected in favour of the non-neutral hypothesis: with technical progress thus biased to using both capital and energy but to saving labour. In addition, it is found that all three factors are substitutable for one another when non-neutral technical progress is modelled.     

Determinants of price adjustment

This paper reports results of an empirical study investigating the adjustment speed of prices to change in costs and demand. Particular emphasis is laid on the impact of concentration on the adjustment speed. In addition, the effects of the business cycle and capital intensity are considered. It shows that concentrated industries tend to adjust prices faster, while capital intensity has a negative impact. Prices are more flexible during an upswing than in times of a recession.     

A New Technical Progress Function (1962)

Abstract. In this paper, I show that labour‐saving or capital‐saving technical progress is induced by the distribution of income between capital and labour. In the long run, technical progress is Harrod neutral. The long‐run equilibrium factor income distribution is determined by a parameter of the technical progress function.     

Aid, Economic Reform, and Public Sector Fiscal Behavior in Developing Countries

This paper looks at interactions between foreign development aid, economic reform, and public sector fiscal behavior. It proposes a model of the public sector fiscal response to aid inflows, which allows for changes in structural relationships due to an exogenously imposed program of economic reform. This model is applied to 1960–99 time series data for the Philippines, which embarked on an IMF- and World Bank-funded structural adjustment program in 1980. Estimates of structural and reduced-form equations paint a dismal picture of the effectiveness of foreign aid to, and the structural adjustment program in, the Philippines so far as fiscal impacts are concerned. Both bilateral and multilateral aid inflows, and the presence of an economic reform program, are associated with decreases in public fixed capital expenditure, decreases in taxation and other recurrent revenue, and decreases in public sector saving. Multilateral aid also appears to be highly fungible.     

Capital Stock and Economic Development in Hungary

This paper introduces a method of calculating physical capital stock figures in transition countries and derives data for Hungary. On the basis of international experience, we set investment and saving paths for future income levels. Confrontation of savings prospects of different sectors with investments needs leads to an economic policy analysis of the fiscal policy needed to catch up to 70 per cent of Austrian per capita income by 2030.     

A comparative study of energy saving technical progress in a vintage capital model

We analyze the hypothesis about the effectiveness of energy saving technologies to reduce the trade-off between economic growth and energy preservation. In a general equilibrium vintage capital model with embodied energy saving technical progress, we show that positive growth is only possible if the growth rate of the energy saving technical progress exceeds the decreasing rate of the energy supply.     

Capital accumulation,output growth and disparities in labour productivity among Canadian regions

This paper extends the original formulation of the Verdoorn Law and derives a productivity equation in order to measure the effects of capital accumulation, scale economies, and technical progress on growth of productivity in the manufacturing sector of six Canadian regions. Productivity growth appears to be strongly influenced by growth of output but the impact of capital accumulation, although small, is not negligible. The results also indicate that there is evidence of substantial economies of scale in all regions and, contrary to common belief, that productivity growth rate adjusted for cyclical variations continued to decline during the 1980s. The fall in the output growth rate is found to be responsible for most of this decline     

Entrepreneurs' capital accumulation behavior and long-run equilibrium

The purpose of this paper is to derive some interesting results on long-run equilibrium by considering entrepreneurs' capital accumulation behavior explicitly. Our framework is a two class, two production sector model in order to analyze the dynamic stability properties in the cases of Kaldor's saving assumption and Pasinetti's saving assumption. We shall introduce a further adjustment mechanism: the speeding up (slowing down) of capital accumulation in that sector in which the rate of profit is higher (lower).     

Nontraded Goods,Capital Taxes,and Temporary Immigration in a Small Open Economy

This paper extends the standard (one-good, two-factor) model of international capital and labor mobility by incorporating a nontraded good within a small capital-exporting, labor-importing country. It examines, from this country's perspective, the effects of capital taxes and temporary immigration on the nominal wage, and on welfare, and derives the optimal policy toward capital. It demonstrates, among other things, that (i) the optimal policy toward capital may be a tax on its domestic rate of return, depending on the factor intensity of the nontraded good and on the relationship between capital and labor in production, and (ii) the distinction between temporary and permanent immigration is important in evaluating its effects on various economic variables. [F20, F22]     

Qualitatively Rational Expectations and Adjustment in the Specific-Factors Model

This paper considers adjustment in a dynamic specific-factors model with endogenous capital stocks. Investment is analyzed under the assumption that expectations are rational with respect to qualitative aspects of the adjustment process (qualitatively rational expectations, QRE). QRE leave considerable scope for systematic errors in expectations formation. Adjustment under rational expectations is similar to QRE adjustment; however, only in the former case is the speed of adjustment optimal. Overshooting of capital stocks is possible and may be optimal. Comparative-static analysis shows an asymmetry between inflows of labor and capital: only capital inflows may cause a Rybczynski effect.     

CAPITAL‐ AND LABOR‐SAVING TECHNICAL CHANGE IN AN AGING ECONOMY

Does population aging and the associated increase in the old‐age dependency ratio affect economic growth? The answer is given in a novel analytical framework that allows for population aging to affect endogenous capital‐ and labor‐saving technical change. In a steady state capital‐saving technical progress vanishes, and the economy's growth rate of per‐capita variables reflects only labor‐saving technical change. The mere possibility of capital‐saving technical change is shown to imply that the economy's steady‐state growth rate becomes independent of its age structure: Neither a higher life expectancy nor a decline in fertility affects economic growth in the long run.     

Prudence, Intertemporal Substitution, and Savings under Uncertainty

This paper derives the relations between the coefficient of absolute prudence, the equivalent precautionary premium, risk aversion to concentration, and the normality and shift of current consumption under uncertainty, without the time-separable utility assumption. Examples show that Kimball's coefficient of absolute prudence does not fully characterize precautionary saving or saving behavior under uncertainty. It is proved that, whereas a higher rate of intertemporal substitution and a larger coefficient of absolute prudence imply more savings when current consumption is normal, a larger coefficient of intertemporal substitution and a smaller coefficient of absolute prudence imply more savings when current consumption is inferior. Received July 17, 2001; revised version received November 20, 2001     

Foreign Capital, Urban Unemployment, and Economic Growth

A three-sector endogenous growth model, is used to study the effects of foreign direct investment (FDI) on the dynamics of urban unemployment, labour income, and capital income as well as national welfare in a Harris–Todaro economy. It is shown that more FDI can affect the economy's dynamics and national welfare positively or negatively. The paper derives conditions as to how the growth rate and welfare effects of FDI relate to the intersectoral mobility of capital, the destination of FDI, the elasticities of substitution, and the factor intensities of the final good production.     

Natural resources,technological progress,and economic modernization

The present inquiry focuses on the modernization perspectives of the commodity‐exporting countries through the lens of development economics. To this end, the study adopts the Kaldorian framework to address the modernization effects, epitomized in the absorption of surplus labor. To trace the process of economic modernization, the study augments Lewis’s dualistic economy model by the extractive sector. Three different scenarios for the management of resource revenues are scrutinized. An altruistic mode, which implies a pure redistribution of the revenues among the poor swaths of the population, protracts the process of economic modernization, requires a greater amount of capital stock, and harbors a greater risk of a poverty trap. This effect is less pronounced if the modern sector is more capital‐intensive. A productive mode, which elicits full reinvestment of the commodity revenues, in contrast, accelerates the pace of economic modernization. Further, predicated on the scrutiny of a more realistic scenario, a bargaining mode, the study derives the condition for a net positive (or negative) modernization effect. The study identifies technical progress alongside capital accumulation as a further important source of economic modernization.     

股票财富、信号传递与中国城镇居民消费

本文尝试在消费者最优选择模型基础上,通过引入居民的借贷约束和预防性储蓄,推导出能够检验股市的财富效应、信号传递效应和不对称效应的实证分析框架,并利用中国的季度数据考察中国股市变动对居民消费的影响。与国内相关文献所得结论不同,本文的研究表明:如果不仅考虑股票价格变动的财富效应,而且考虑其信号传递效应,那么中国股票市场对城镇居民消费存在着较为明显的影响。分析也表明,如果用工资而不是人均可支配收入度量人力资本回报,中国股票市场同样存在正的财富效应,且这种财富效应具有明显的不对称性,反映经济基本面变化的股价变动对中国居民消费具有长期影响,投机因素引起的股价变动对中国居民消费的影响甚微。     

The theorem of proportionality in contemporary capital theory: An assessment of its conceptual foundations

It is ascertained that the theorem of proportionality, which maintains that replacement investment is a constant proportion of the outstanding capital stock, has several fundamental shortcomings. It derives from a model founded on assumptions that are highly restrictive and unlikely to hold in reality. It is alien to the thinking of researchers in industrial organization and other neighboring fields to economics that treat the durability of capital goods as a choice variable. It ignores several thorny conceptual and methodological issues, and, perhaps most important, it may have restrained seriously the progress towards developing models based on more realistic approaches of production. However, despite its shortcomings, the theorem continues to dominate the contemporary theory of capital, most probably because of (a) its simplicity and (b) the lack of a model that might yield a better theorem in terms of standard criteria, like explanatory and predictive power, fruitfulness, etc. For this reason, attention is drawn to recent research which shows that a model centered on the heterogeneous structure of capital and the useful lives of its components is both feasible and exceedingly rich in theoretical and empirical implications.     

Has the Feldstein-Horioka puzzle waned? Evidence from time series and dynamic panel data analysis

This objective of this paper is to examine the Feldstein-Harioka puzzle by using both time series analysis that accommodates structural breaks, and dynamic panel error-correction method. Our sample consists of 118 countries over the period 1981–2013. Results from ARDL model suggest that long-run capital is highly mobile in high-income countries (HIC), moderately mobile for both middle- and low-income countries. Our finding of the low long-run saving coefficient for HICs shows that failure to account for a structural break may overstate the long-run saving coefficient. Findings from the pooled mean group estimators suggest that capital is moderately mobile in the middle-income countries, and highly immobile in the high- and low-income countries in the long run. Our findings highlight that ignoring structural break, the type of data (time series/panel), and econometric method used can affect the conclusion about capital mobility. The adjustment coefficient in the time series analysis is comparatively higher than the panel data analysis. We also test whether country size and openness affect the saving–investment correlation. While the effect of country size on the saving coefficient is mixed, the saving estimate is found to be a function of the degree of openness. We also discuss policy implications of our findings on the current account sustainability.