Downtown parking meter demand in a border metropolitan economy

Prior research establishes that the price of parking in the city centre often impacts the decision to travel downtown and the mode of transportation utilized. Other factors that influence the decision to drive and park downtown have received less attention. This study uses time series data to analyse the demand for metered parking spaces in El Paso, Texas, USA. In addition to meter rates, the determinants of demand include personal income, gasoline prices and the price of a substitute good, parking garage spaces. Because international bridges connect downtown El Paso to neighbouring Ciudad Juárez, Chihuahua, Mexico, the impacts of trans-boundary traffic flows, bridge tolls and other cross-border economic variables are also included as potential determinants of metered parking demand. Results indicate that parking meter rates, other transportation-related costs, and economic conditions in both countries affect meter use.     

Public support for creating a market economy in Eastern Europe

Employing two large databases, we analyze the determinants of public support for the creation of a market economy in Eastern Europe. From a macroeconomic perspective inflation, unemployment, privatization, and enterprise restructuring reduce this support; alternatively, democratization, the creation of working financial markets, and foreign aid per capita increase support for the market. Across countries, higher inequality undermines market support. From a microeconomic perspective, labor market status, both the objective and the subjective economic situations of a person, political orientation, and the socio-demographic background of the respondent affect support for the market economy. For example, unemployed, relatively poor, older, female, and less-educated respondents living in rural areas are less inclined to favor the creation of a market economy. Journal of Comparative Economics 32 (4) (2004) 720–744.     

Reflections on critical realism in political economy

This paper studies critical realism in political economy. Thefocal points are two important tensions in critical realism.The first tension relates generally to the status and importanceof philosophy and the scope of critical realism. The secondtension relates specifically to critical realism in politicaleconomy. Firstly, two perspectives within critical realism inpolitical economy are separated: a Marxist current and a broadheterodox current. Secondly, these two perspectives within criticalrealism are contrasted and discussed on the basis of a criticalstance towards philosophical reductionism. Thirdly, it is arguedthat reconciliation between central aspects of the two perspectivesis both feasible and desirable, and finally, neo-Marxist politicaleconomy is pinpointed as a critical-constructive and developmentalmediation for critical realism in political economy.     

A simple aggregate demand analysis with dynamic optimization in a small open economy

We develop a very simple aggregate demand analysis of a small open economy that suffers from secular demand stagnation. It looks like the conventional Keynesian cross analysis but considers dynamically optimizing behavior of households and firms, international capital movement, and the current account adjustment. We find that parameter changes that improve the current account yield an appreciation pressure on the home currency and decrease demand for the home commodity and labor. Consequently, they worsen deflation and decrease consumption and income. This result is quite opposite to that under full employment. For example, an exogenous rise in the price of the home commodity decreases employment, consumption and income. If a country owns greater foreign assets, it suffers from less employment, consumption and income.     

Public consumption composition in a growing economy

This paper explores the role of the composition of public consumption within a three sector R&D growth model. A competitive industry supplies a homogeneous good and a monopolistic sector manufactures a composite commodity differentiated in many varieties, whose size can be increased through investment in R&D. We investigate the effects of changes in the level and in the composition of public consumption on the steady state and on the economy’s transitional dynamics. By varying the aggregate composition of demand, the government can effectively move resources away from the traditional industry to foster innovation. Welfare effects are also evaluated. We show that the composition of government consumption affects the entire time path of utility.     

Wage-setting coordination in a small open economy*

This paper studies wage-setting coordination in a two-sector, open economy dynamic stochastic general equilibrium model. Two large sectoral unions anticipate the effects of their wage demands on aggregate variables. In an open economy, there are externalities that the unions can take into account to increase aggregate welfare, but the strategic interaction between the sectoral unions tends to erode this gain. When wage coordination takes place through a wage norm set by either of the sectors, this minimizes the strategic interaction. However, wage norms create welfare losses as sector-specific wage adjustment is required to make an efficient adjustment to shocks.     

An analysis of the demand for skill in a growing economy

We construct a trade theoretic model of skill formation with skill as a produced intermediate input. Capital is required for production as well as for education which transforms unskilled labor into skilled. We use this model to reflect analytically on India's rising requirement of skilled manpower. We show that even if growth of capital and supply of skilled manpower match, relative stagnation of unskilled manufacturing sector will magnify the gap between growth in demand and supply of skill. This may happen, for example, if there is a vast pool of workforce who may not have even the basic education to qualify as “unskilled” and excessive capital flows into the skilled sector. Thus a country with lack of education at a very basic level will be forced to import skilled manpower from the rest of the world.     

Industrial organization in a restructuring socialist economy: Evidence from Bulgaria

Using new data for all state and cooperatively-owned Bulgarian establishments and enterprises in 1988 and 1989 we portray key aspects of Bulgarian industrial organization. During 1988–89: state ownership became less dominant; there was an abrupt reversal in the twenty year trend towards bigger economic units; more than half of the largest firms were concentrated in certain sectors, notably engineering and construction; using official prices, only about 10% of enterprises made losses. These data and other new data for manufacturing products enable calculation of diverse measures of market structure as this may evolve under the policies introduced in 1991. Indices of market concentration typically show substantial concentration; usually about 50% of manufacturing output was produced in potentially competitive environments. While estimates of minimum efficient scale imply that MES does not constitute a significant barrier to entry for new competitors, the underdeveloped nature of the Bulgarian capital market probably greatly restricted entry.     

Effective demand and the terms of trade in a dual economy: a Kaldorian perspective

Along the line suggested by Nicholas Kaldor, the paper incorporatesinto the analysis of a dual economy effective demand as a problemof generation of agricultural surplus and its realisation intopurchasing power for industrial goods. Through this approach,it is shown how one obtains empirical predictions about unevensectoral growth rates, as well as an effect of the movementin the terms of trade on long-term industrial growth which iscontrary to that suggested by Lewis. The paper also specifiesthe process of dynamic adjustment of industrial growth in aself-reinforcing circular flow under conditions of sufficientlyhigh agricultural growth, extending the effective demand argumentin a dual economy.     

Indeterminacy in a small open economy with endogenous labor supply

Summary. We establish conditions under which indeterminacy can occur in a small open economy business cycle model with endogenous labor supply. Indeterminacy requires small externalities in technologies with social constant returns to scale, independently of the intertemporal elasticities in both consumption and labor. Received: December 12, 2001; revised version: May 17, 2002 RID="*" ID="*"The paper has benefited from discussions with Jess Benhabib and Mark Weder, as well as from the comments of an anonymous referee. Correspondence to: Q. Meng     

Entry and fiscal policy effectiveness in a small open economy within a Monetary Union

In this article I develop an imperfectly competitive dynamic general equilibrium model for a small open economy integrated in a monetary union. Here, the type of entry in the non-traded goods’ sector affects fiscal policy effectiveness. Fiscal policy effectiveness is enlarged when aggregate demand stimuli increase intra-industrial competition (case I). This is due to the counter-cyclical mark-up mechanism generated by entry. Such a mechanism is absent in the usual monopolistic competition where entry only has a sharing effect (case II).

The political economy of participation in IMF programs: a disaggregated empirical analysis

What factors determine whether or not countries have programs with the International Monetary Fund (IMF)? The existing literature suggests that a number of economic and political variables are important, but there is disagreement about their relative significance. Moreover, the fit of general participation models is not particularly good. An increasingly popular view in the recent literature is that the pattern of IMF lending is politically driven and that it reflects the interests of the Fund’s leading shareholders; the US is seen as exerting a powerful influence. Using both quantitative and qualitative techniques, and based on an informal analytical framework, we examine in detail the factors that may be at work. We cover the period from 1984 to 2008. We discover considerable variation across the nature of programs (concessional and non-concessional), income levels, geographic regions, and time periods. The degree of observed variation means that it is unsafe to use one general participation model as the basis for evaluating the effects of IMF programs. It also means that the design of policy needs to reflect the nuances that the data reveal.     

Real wage rigidities and optimal monetary policy in a small open economy

The main objective of the study is to provide a theoretical analysis of optimal monetary policy in a small open economy where households set real wage in a staggered fashion. The introduction of real wage rigidities plays a important role to resolve main shortcomings of the standard new Keynesian small open economy model. The main findings regarding the issue of monetary policy design can be summarized as three fold. First, the optimal policy is to seek to minimize variance of domestic price inflation, real wage inflation, and the output gap if both domestic price and real wage are sticky. Second, controlling CPI inflation directly or indirectly induces relatively large volatility in output gap and other inflations. Therefore, both CPI inflation-based Taylor rule and nominal wage-inflation based Taylor rule are suboptimal. Last, a policy that responds to a real wage inflation is most desirable.     

GDP nowcasting: application and constraints in a small open developing economy

Despite data limitations, an attempt is made to find out if a GDP nowcasting model can provide reliable forecasts for a small open economy. Two competing Bayesian vector autoregressive models are tested rigorously to obtain the optimal model by minimizing in-sample forecasting errors. The main finding of this study is that GDP nowcasting can produce reliable results for a small open economy despite the unavailability of sufficient data sets and the lack of high frequency indicators.     

Stabilization policy and indeterminacy in a small open economy

This paper studies the (de)stabilizing effects of income tax rules in a two-sector small open economy with production externalities. The paper shows that in the model with positive sector-specific externalities in the investment sector and negative sector-specific externalities in the consumption sector (or positive aggregate investment externalities), a regressive income tax rule can stabilize such an economy against indeterminacy, whereas a progressive income tax rule can increase the tendency for indeterminacy to occur. This paper also studies two variants that consider an imperfect world bond market and an endogenous labor supply, respectively, and shows that the qualitative results stated above remain valid. Moreover, increasing the level of sector-specific investment externalities can decrease (increase) the minimal level of tax progressivity required for indeterminacy if the investment externalities are below (above) a certain critical value and if the negative externalities in the consumption sector are taken as given.     

Exchange rate changes and endogenous terms of trade effects in a small open economy

This paper shows that the small-country assumption of dependent-economy models is unlikely to hold for many of the cases in which this class of models is used, for example, in the analysis of a terms of trade shock in the “commodity currency” models. When a shock affects most or all of the small countries exporting a commodity, the combined exchange rate effects will result in endogenous terms of trade changes even for those countries too small to individually affect world markets. The paper also explores the possible implications of these secondary terms of trade changes for the dependent-economy models.     

Foreign exchange reserves and import demand in a developing economy: the case of Pakistan

Conventional specifications of import demand in LDCs have commonly been plagued by implausible and unstable parameter estimates. This paper shows the importance of imposing long‐run income homogeneity and of including foreign exchange reserves when estimating import demand function for an LDC. Using several cointegration techniques, it is shown that there is one linear relationship among real imports, real income, relative import prices and real foreign exchange reserves. In addition, by employing stability tests for cointegrated systems by Hansen (1992a), the paper shows that only when foreign exchange reserves and long‐run unit‐income homogeneity are accounted for does a constant parameter, long‐run equilibrium relation emerge for Pakistan. Also, the ensuing short‐run dynamic model is constant and data‐coherent. Finally, the study provides information on the speed of adjustment to equilibrium and the median and mean time lags of adjustments of real imports to changes in their determinants. The results indicate a quick response of real imports to changes in their determinants.     

Uhljeb – a post-socialist homo croaticus: a personification of the economy of favours in Croatia?

Party patronage combined with a collectivist culture appears to present a very resistant socialist legacy in Croatia. In-group favouritism and an overly bureaucratised system provide a fertile soil for uhljebs. An uhljeb is a public sector employee whose main ‘competence’ is membership of a political party or a nepotistic relationship. They now already count in the thousands, and often contribute to the further multiplication of uhljebs, and to an increase in clientelist arrangements. The practice of employing uhljebs both undermines and underpins the existing system. That ambivalence is one of the characteristics of the Russian sistema, and that is one of the important links to compare blat users and uhljebs, in addition to the practice of ‘pulling strings’. As key protagonists, uhljebs and blat users illustrate their own and society’s modus operandi: an intense ‘economy of favours’. Recent studies increasingly show that cultural variables influence economic outcomes and this article presents an extension of the ‘economy of favours’ into Croatia’s paradigm. Based on primary sources and international benchmarks, it provides a comparison of the cultural contexts of Eastern and Western European countries, and portrays a rising informal practice that, despite its omnipresence, has been under-researched in the academic literature.     

Impact of economic uncertainty in a small open economy: the case of Chile

We construct the first news-based economic uncertainty index for Chile, which allowed us to rebuild 23 years of the history of economic uncertainty in the country and quantify its impact on the economy. We find that an increase in economic uncertainty conveys a fall in GDP, investment, and employment, even after accounting for the small open economy nature of Chile. In contrast to previous studies for big and developed economies, we do not find evidence of an overshooting effect when uncertainty dissipates; therefore, increases in economic uncertainty have negative effects on the economy, even in the long-run. Our estimates suggest that these impacts range from 10% to 20% for aggregate investment, 2.5% to 5% for GDP, and 1.3% to 4.2% for employment. Extensions suggest that economic uncertainty affects both mining and non-mining investment, with the former showing a more pronounced decline. We also find that the bulk of effect of economic uncertainty on aggregate investment is via private investment, with some short-run impacts on public investment. Moreover, compared to the GDP response, aggregate consumption responds in almost the same way to an economic uncertainty shock.     

The policy (in)effectiveness of government spending in a dependent economy

This paper analyses the policy effectiveness of government spending in a two-sector open economy whose output and expenditure is comprised of tradables and non-tradables. This framework reveals that government spending on either tradables or, more normally, on non-tradables widens the external deficit, yet how the real exchange rate behaves depends, in the first instance, on in which sector the public spending occurs. It also shows that, irrespective of where government spending falls, there appears to be no significant short run boost to overall output and hence employment a priori, although empirically actual impact would depend on the elasticities of tradable and non-tradable output with respect to the real exchange rate. Furthermore, fiscal stimulus is shown to be unambiguously ineffective if deemed unsustainable by foreign lenders, or implemented under a fixed exchange rate regime with limited capital mobility.