Relative consumption and majority voting: supplementing Oates’ “Decentralization Theorem”

This paper reconsiders the question of whether centralized or decentralized provision of local public goods is preferable, taking into account two new elements: the appearance of relative consumption effects and the possibility of an inefficient election outcome due to a right-skewed income distribution. Surprisingly, our results indicate that (1) decentralization may lead to a strictly higher welfare level than centralization, even if regions are homogeneous, and (2) under certain circumstances centralization may be welfare superior, even though traditional public good spillovers are not considered in our framework. Whether centralization or decentralization is preferable crucially depends on the extent to which social interaction takes place between regions.     

Openness in the Canadian economy: 1870–1988

The causal relation between openness and GDP and between exports and imports are examined. Causality test carried out in growth rates showed that over the period 1870–1988 openness, both narrowly and broadly defined, Granger-causes GDP growth; tests for the inverse causality produced mixed results, validating causality from GDP growth to export plus import growth, but rejecting causlaity from GDP growth to export growth; it was also found that export growth causes import growth, but not the opposite. Causality tests over four subperiods indicated the importance of openness for only the earliest phase of Canadian economic development. While the absence of causality in the later subperiods is largely compatible with the experience of the industrial countries, no meaningful comparison can be made between the experience of Canada and that of developing countries owing to causality variations of openness and to large differences in resource endowments.     

Is the shadow economy a bane or boon for economic growth?

This paper uses the theoretical framework developed by Feder (1983) and Ram (1986) to examine interactions (i.e. externalities and intersectoral factor productivity differentials) between the official and unofficial sectors of the economy. Results from the empirical analysis, using data on over 100 countries from 1970 to 2008, suggest that the marginal externality effect of growth in the unofficial sector on the official sector is positive. Further, input productivities are higher in the unofficial sector relative to the official sector. These results are robust using alternate measures of the (unobserved) unofficial economy and across level of development.     

The not so dark side of trust: Does trust increase the size of the shadow economy?

This paper reports a negative relationship between the size of the shadow economy and generalized trust, in a sample of countries, both developed and developing. That relationship is robust to controlling for a large set of economic, policy, and institutional variables, to changing the estimate of the shadow economy and the estimation period, and to controlling for endogeneity. It is independent from trust in institutions and from income inequality, and is mainly present in the sample of developing countries. Those findings suggest that the tax compliance effect of trust dominates its role as a substitute for the formal legal system.     

Professors Malthus and Jones: Political economy at the East India College 1806–1858

Abstract

T. R. Malthus was the first Professor of Political Economy in Britain, being appointed in 1805 to the new East India College, whose purpose was to provide an education fitted to the training of East India Company recruits prior to their departure for India. Malthus was succeeded on his death in 1834 by Richard Jones, whose own period at the College ended just before the College closed in 1858, consequent upon the conversion of the Company into the Indian Civil Service and the introduction of entry by competitive open examinations. This paper considers the function and nature of the teaching of political economy within the College, and emphasizes the manner in which institutional imperatives constrained the development of political economy as an administrative pedagogy.     

Do fiscal decentralization and income inequality affect the size of the shadow economy? A panel data analysis for OECD countries

In this article, we study fiscal decentralization and inequality as driving forces of the shadow economy in advanced economies. Our empirical analysis suggests that a reduction in income inequality will contain the shadow economy, whereas expenditure and tax decentralization do not significantly impact it. As decentralization is generally believed to increase government efficiency, this result is indicative of already highly efficient public administrations. Our results further indicate that redistributive policies positively affect the size of the shadow economy, whereas the tax burden does not have any discernible effect on the shadow economy in our sample.     

Productivity and long-term growth potential in the UK economy 1924–1968

This paper examines the long-term structural determinants of labour productivity for the UK economy using a panel data set from 1924 to 1968. Trade union, product market competition and human capital explanations are embedded within the model and compared. Labour quality, or human capital, is found to be the most important of the explanations considered.     

Innovation spending and productivity growth in the German economy 1980–1986

A newly developed technique involving vertically integrated input-output sectors is used to examine the relationship between labour productivity and innovation expenditures in the German economy during the period 1980 to 1986. The productivity measures used, dubbed Harrod-Robinson-Read (HRR), take into account the direct and indirect labour used in each consumption goods sector. Included in these measures is the labour content of new capital investment.

The HRR measures show higher rates of productivity growth in most sectors, compared to the simple direct labour requirements measures. This is due to the fact that the HRR measures take into account the increased efficiency with which new capital is produced. The second part of the study examines the relationship between labour productivity and innovation expenditures as measured by the IFO (Institute for Economic Research – Munich) innovation survey. Using cross section data for 58 German industries, a strong correlation was found between direct labour productivity growth and direct innovation expenditure.

These results suggest that with more detailed capital expenditure data it should be possible to describe more precisely the relationships between innovation activity, spending on new capital, and productivity changes. The key to examining these relationships in more detail is the growing wealth of information contained in recent innovation surveys such as those done by the IFO.     

Economic class and the distribution of income: a time-series analysis of the UK economy, 1955–2010

This paper contributes to our understanding of the determinants and dynamics of surplus-value using quarterly UK data, 1955–2010, and the Johansen (1988 Johansen, S. 1988. Statistical analysis of cointegrated vectors. Journal of Economic Dynamic and Control, 12: 231–54. [Crossref], [Web of Science ®] , [Google Scholar], 1991 Johansen, S. 1991. Estimation and hypothesis of cointegration vectors in Gaussian vector autoregressive models. Econometrica, 59: 1551–80. [Crossref], [Web of Science ®] , [Google Scholar]) cointegration and vector error correction model (VECM). A model is introduced to define this Marxian concept, before we explain distribution, paying attention to three forces that are traditionally seen as drivers of power in this struggle: (i) working class militancy; (ii) the size of the ‘reserve army’ of the unemployed; and (iii) political party. Our results demonstrate the ongoing relevance of Marxian economics in providing an alternative, robust and significant explanation of distribution in the post-war UK economy.     

Assessing structural changes in the Malaysian economy: I–O approach

This study attempts to re-investigate the production structure change for the Malaysian economy through changes in the A and (I − A)^− 1 matrices over the period 1980–2005, when the planners formulated and implemented nine plans so far. Five input–output tables were published by the Department of Statistics in Malaysia for the period under study. A structural change method was carried out to analyze and assess the changes in economic efficiency. This comparative study focuses on changes in the economic structure with different levels of development over time (1980–2005). The change in the economic structure is decomposed into two initial components (technology and total output). In accordance with the results, there appear to be similarities over time in the national structure of production patterns of intermediate use of commodities. Also, the results clearly indicate a rather remarkable degree of commonality in the patterns of growth processes, with more significant differences among sectors than between tables. However, the changes within sectors, and the Malaysian table as a whole, seem to result from changes in the level of the efficiency. Technical relationship seems to have remained relatively unchanged. It is clear that the economy has not moved fast enough forward, and does not seem to be geared by, the type of exports that may sustain a dynamic industrial development, based on external markets. New evidence is revealed in this study: the efficiency degree between demand and supply side for the Malaysian economy still remain weak and changeable over the period of study.     

Uncertainty and the United States’ election effect on the economy: some thoughts and empirical illustrations

This study discusses the general impact of Donald Trump’s election on the US and European economies as well as the effect of this political news on financial markets. To this end, we discuss different hypotheses from a theoretical view and empirically illustrate these thoughts when possible. Our analysis suggests that while the expected Trump measures might boost the US economy in the short term, these actions would have negative long-term consequences in the United States. Further, this new US policy will affect European economies and destabilize financial markets while increasing uncertainty, which could constrain growth and increase the downside risk.     

Decentralization and growth: what if the cross-jurisdiction approach had met a dead end?

The relationship between decentralization and economic growth is generally studied from a perspective stressing universal or quasi-universal regularities across jurisdictions. That approach has generated many insights but seems to reach its limits. The paper explains why it allows contrasting positions with regard to the benefits of decentralization even among proponents of free and competitive markets. And it seems from the empirical literature that no robust and economically significant cross-jurisdiction relation between decentralization and economic performance or growth, except perhaps their independence, has been found. The absence of a relation valid across jurisdictions, however, does not entail the absence of relations specific to each. When jurisdiction specificity is very strong, it is normally difficult to say if there is a relation between observable decentralization arrangements in a jurisdiction and its observable economic performance. However, this may be different under particular circumstances reflecting disequilibrium. Episodes of growth acceleration, when they follow persistent underperformance and include changes in decentralization arrangements, may provide some empirical support to the claim that the relation exists.     

Macro-econometric modelling for the Nigerian economy: A growth–poverty gap analysis

This study develops comprehensive full-sector macro-econometric models for the Nigerian economy with the aim of explaining and providing a long-term solution for the persistent growth–poverty divergence experienced by the country. The models are applied to test the hypothesis of existing structural supply-side constraints versus demand-side constraints impeding the economic growth and development of the country. A review of the historical performance of the Nigerian economy reveals significant socio–economic constraints as the predominant impediments to high and sticky levels of poverty in the economy. Thus, a model which is suitable for policy analyses of the Nigerian economy needs to capture the long-run supply-side characteristics of the economy. A price block is incorporated to specify the price adjustment between the production or supply-side sector and real aggregate demand sector. The institutional characteristics with associated policy behaviour are incorporated through a public and monetary sector, whereas the interaction with the rest of the world is represented by a foreign sector, with specific attention being given to the oil sector. The models are estimated with time-series data from 1970 to 2006 using the Engle–Granger two-step co-integration technique, capturing both the long-run and short-run dynamic properties of the economy. The full-sector models are subjected to a series of policy scenarios to evaluate various options for government to improve the productive capacity of the economy, thereby achieving sustained accelerated growth and a reduction in poverty in the Nigerian economy.     

External sustainability in Spanish economy: Bubbles and crises, 1970–2020

We address the issue of the sustainability Spain's external debt, using data for the period 1970–2020. To detect episodes of potentially explosive behavior of the Spanish net foreign assets over GDP ratio and the current account balance over GDP ratio, as well as episodes of external adjustments over this long period, we employ a recursive unit root test approach. Our empirical analysis leads us to conclude that there is some evidence of bubbles in the ratio between Spanish net foreign assets and the GDP. In contrast, the evidence that the ratio between the Spanish current account balance and the GDP had explosive subperiods is very weak. The episode of explosive behavior identified in the position of net foreign assets during the period 2002–2015 was the result of the country's economic expansion 1995–2007. The results also show an external adjustment during the period 2008–2019 after the start of a cyclical economic recession.     

Capital flows in a transitional economy and the sterilization dilemma: The hungarian experience, 1992–97

This paper evaluates Hungary's dilemma with sterilization in the context of the record of countries elsewhere that have experienced similar capital inflow episodes, e.g., Latin America and Asia. The study focuses on the short-run impact of sterilization on monetary policy. The empirical results indicate that sterilized interventions by the National Bank of Hungary (NBH) did not neutralize capital inflows until possibly the middle of 1995, following a change in government and, more significantly, a change in exchange rate regimes. Indeed, it appears that monetary policy was overly restrictive and that, for a time, the NBH overcompensated for the inflows of capital.     

Knowledge sourcing and firm performance in an industrializing economy: the case of Taiwan (1992–2003)

We examine the impact of R&D and technology imports on firm performance in Taiwan??s manufacturing industry in a policy context of industrial upgrading. To do so, we estimate a Translog production function on two panels (covering 1992?C1995 and 1997?C2003), using stochastic frontier models. We find that the effects of both knowledge inputs become significant in a larger number of industries in the second panel. These results suggest that the policies encouraging innovation implemented from 1991 onwards paid off in the second half of the 1990s, with innovation driving firm sales. In traditional industries, the effect of innovation can be interpreted as an effort to catch up with the global technology frontier. In the electronics and high-technology industries, it rather testifies of the emergence of a new domain of specialization for Taiwan??which was largely enabled by the aforementioned innovation policies.     

Macroeconomic stability,structural reforms,and sluggish growth: The Mexican economy since 2008–2009 and the lessons of 2015

This paper examines the evolution of the Mexican economy since the crisis of 2008–2009. It focuses on the main economic indicators of the period and then turns to the changes in economic policy adopted by Peña Nieto’s government since late 2012 and the scope and shortcomings so far of these reforms. It then looks in detail at what happened in 2015, a year characterized by a deterioration of the external environment and by a number of puzzles. Finally, it addresses the short and medium term prospects of the economy under the present set of economic policies and the changes required to put the economy on a higher growth path.     

Wage bargaining and induced technical change in a linear economy: Model and application to the US (1963–2003)

In a simple one-sector, two-class, fixed-proportions economy operating at full capacity, wages are set through generalized axiomatic bargaining à la Nash (1950). As for choice of technology, firms choose the direction of factor-augmenting innovations to maximize the rate of unit cost reduction (Kennedy, 1964, Funk, 2002). The aggregate environment resulting by self-interested decisions made by economic agents is described by a two-dimensional dynamical system in the employment rate and output/capital ratio. The economy converges cyclically to a long-run equilibrium involving a Harrod-neutral profile of technical change, a constant rate of employment of labor, and constant input shares. The type of oscillations predicted by the model matches qualitatively the available data on the United States (1963–2003). Institutional change, as captured by variations in workers’ bargaining power, has a positive effect on the rate of output growth but a negative effect on employment.     

Research on the development and countermeasures for circular economy

Ecological economics and sustainable development economics are the basic theories to research on circulareconomy. Through the systemically research on the relationship of the three above, this paper thinks that the reuse andrecycle of circular economy is a way that the stall is mended after a sheep is lost. Although the reduction technicallycontrols the production process, it cannot solve the waste caused by blind production and excess competition. We haveexperienced variety obstacles when implementing the circular economy, whose main reason is the conflict between theindividual ration and the social ration. Therefore, only when the individual ration and social ration incline to conformity,the cooperating Nash equilibrium will be appeared. In order to realize the harmony of ecology, economy and society, wehave to explore effective evaluation theory. This paper cites the ＂five flows of wealth operation theory＂ from professorMa Chuandong to search operation mechanism of circular economy, makes clear the developing thoughts of circulareconomy based on the realities, and brings forward some countermeasures to develop circular economy based on theabove theoretical analysis.