The knowledge production of ‘R’ and ‘D’

Many studies investigate the relationship between R&D and patents applying knowledge production functions. Using aggregated R&D may underestimate the productivity of ‘R’, as mainly ‘R’ but not ‘D’ leads to patents. Disaggregating ‘R’ and ‘D’ shows a significant premium of ‘R’ towards patenting.     

Major transitions in ‘big’ history

‘Big’ history treats events between the Big Bang and contemporary technological life on Earth as a single narrative, suggesting that cosmological, biological and social processes can be treated similarly. An obvious trend in big history is the development of increasingly complex systems. This implies that the degree to which historical systems have deviated from thermodynamic equilibrium has increased over time. Recent theory suggests that step-wise changes in the work accomplished by a system can be explained using steady-state non-equilibrium thermodynamics. This paper argues that significant macro-historical events can therefore be characterized as transitions to steady states exhibiting persistently higher levels of thermodynamic disequilibrium which result in observably novel kinds or levels of organisation. Further, non-equilibrium thermodynamics suggests that such transitions should have particular temporal structures, beginning with sustainable energy innovations which result in novelties in organisation and in control mechanisms for maintaining the new organisation against energy fluctuations. We show how events in big history which qualify as historically significant by these criteria exhibit this internal structure. Big history thus obeys law-like processes, resulting in a common pattern of major transitions between steady-state historical regimes. This common process from cosmological to contemporary times makes big history a viable and relevant field of scientific study.     

Envelope and sensitivity analysis ‘in the large’

New results on global sensitivity analysis are derived. Relying on the saddle-point characterization of the Lagrangean, simple yet powerful results are shown to hold under general conditions. A generalized envelope result is obtained. It does not require differentiability assumptions or unique solution, and it holds for discrete changes.     

A rigorous periodization of ‘big’ history

‘Big’ history is the time between the Big Bang and contemporary technological life on Earth. The stretch of big history can be considered as a series of developments in systems that manage ever-greater levels of energy flow, or thermodynamic disequilibrium. Recent theory suggests that step-wise changes in the work accomplished by a system can be explained using steady-state non-equilibrium thermodynamics. Major transitions in big history can therefore be rigorously defined as transitions between non-equilibrium thermodynamic steady-states (or NESSTs). The time between NESSTs represents a historical period, while larger categories of time can be identified by empirically discovering breaks in the rate of change in processes underlying macrohistorical trends among qualities of NESSTs. Two levels of periodization can be identified through this procedure. First, there are two major eons: cosmological and terrestrial, which exhibit qualitatively different kinds of historical scaling laws with respect to NESST duration and the gaps between NESSTs: the first eon decelerating, the second accelerating. Accelerating rates of historical change are achieved during the Terrestrial Eon by the invention of information inheritance processes. Second, eras can also be defined within Earth history by differences in the scaling of energy flow improvement per NESST. This is because each era is based on a different kind of energy source: the material era depends on nuclear fusion, the biological era on metabolism, the cultural era on tools, and the technological era on machines. Periodizing big history allows historians to uncover the mechanisms which trigger the innovations and novel organisations that spur thermodynamic transitions, as well as the mechanisms which keep historical processes under control.     

An ‘oil’igopoly theory of exploration

This paper develops a theory of ‘oil’igopoly exploration of an exhaustible resource. Strategic exploration and production are jointly derived in a three period subgame perfect equilibrium. While the ‘oil’igopoly theory of exploration shares many features with non-strategic models of exploration and production, there is one important difference. The ‘oil’igopoly theory of exploration predicts that firms who exhaust their proved reserves before they can convert their unproved reserves into proved reserves have an incentive to over-explore, relative to the Nash equilibrium level of exploration. A simple empirical prediction is that firms holding smaller proved reserves should be observed doing more exploration. This prediction is consistent with country-level production and reserve data in the post-World War II era.     

The Path to Full Employment? ‘They're Dreamin'!’

This short article critically reviews Mitchell and Watts's Buffer Stock Employer (BSE) model proposal. It concludes that the BSE scheme is unlikely to reduce the long-run unemployment rate.     

Redistribution,state trading enterprises and ‘politically optimal’ tariffs

State trading enterprises (STEs) are widely used and can be viewed as instruments of trade policy. We analyse two aspects: the first is their potential trade distorting effect; the second is how they modify the case for the ‘politically optimal’ tariff. We show that the STE can reduce the need for a tariff designed for domestic redistribution. This result introduces some ambiguity about how STEs are interpreted: from a multilateralist perspective, they should be dealt with in the same way as other non‐tariff barriers; from a nationalistic perspective, they can reduce the need for ‘politically optimal.’     

What if there are no ‘best practices’?

Developing persuasive and consistent models of educational performance has proved elusive. Existing modelling suggests no clear relationship between resources and student performance. This mirrors observed policy outcomes. A possible explanation is that the achievement process is a complicated interactive one such that simple linear additive formulations break down. This analysis presents a stylized model of achievement where unmeasured teacher quality interacts with both resources and specific educational programs. Standard econometric analyses then replicate the aggregate findings in the literature. A policy implication is that finding ‘best practices’ may fail without recognition of the fundamental interactions.     

Trade and Diversity: Is There a Case for ‘Cultural Protectionism?’

Abstract. In contrast to the predictions of standard models of international trade, globalization critics are claiming that trade destroys diversity. We demonstrate that with endogenous sunk costs, trade integration in horizontally differentiated industries can indeed lead to a fall in diversity. Consumers are faced with a tradeoff between gains in real income and a loss in diversity, so that the impact on welfare is ambiguous. However, it is possible through fiscal policies to replicate pre-trade choices and still realize gains in real income. Thus, calls for a 'cultural protectionism' are not justified.     

WHAT CAN ECONOMIC ANALYSIS CONTRIBUTE TO THE ‘SUSTAINABILITY’ DEBATE?

Economics generally, and benefit-cost analysis in particular, are not substitutes for values. They are tools of analysis that rest on assumptions about values. The primary role for economics in normative analysis is to provide information about efficiently achieving that which is valued, not to make the decision. The major economic tool for analyzing normative issues is benefit-cost analysis. This paper considers the role of benefit-cost analysis in addressing the sustainability debate. The notion of "sustain-ability" raises concerns about values held by society. The analysis here addresses several issues within the sustainability debate: concerns about intergenerational equity including the appropriate discount rate for projects with environmental consequences; implications for burdens on future generations; and the moral basis for benefit-cost analysis. The authors argue that the correct discount rate for all such projects is the social rate of time preference, and that suggestions for using lower discount rates result from attempting to prevent inequities by adjusting prices. Additionally, the authors argue that economic analysis, especially benefit-cost analysis, can play a useful role in providing information to decision makers, who ultimately will face resource allocation issues as they seek to implement policies promoting sustainability.