CO‐INTEGRATING VAR MODELS AND ECONOMIC POLICY

This paper surveys some relevant contributions to the economic literature on co‐integrating vector autoregressive (VAR) models [vector error correction mechanisms (VECMs)], emphasizing their usefulness for economic policy. It further discusses some theoretical aspects that are necessary for a complete understanding of their potential. The theoretical introduction of the co‐integrating VAR model is followed by an illustration of its applications to monetary policy, fiscal policy and exchanges rates as well as in establishing the effects of structural bilateral shocks between countries (the so‐called global VAR, or GVAR, models). Special attention is paid to the VECM capacities of being used in conjunction with dynamic stochastic general equilibrium models and of jointly specifying the short‐ and long‐run dynamics, thus representing the steady‐state of economic systems (by means of the co‐integration relations) and the short‐run dynamics around it.     

The Political Uses of Some Economic Ideas: The Trade‐Off Between Efficiency and Equality

The notion of a trade‐off between efficiency and equality is pervasive in many disciplines across the social sciences. Moreover, an imprecise notion of this well‐known dilemma is an integral part of the discourse of politicians and policy‐makers. The scientific status of the idea of a trade‐off between efficiency and equality is, however, a matter of contention. Philosophical dissections of the idea have already deflated the analytical cogency of most of its versions, while the economic literature trying to assess the empirical relation between growth and equality has shown contradicting results. This article, by focusing on the role this idea plays both in the discourse and strategy of social‐democratic parties, and in the social science explanations of their trajectories, argues that the pervasiveness of the notion of the trade‐off between efficiency and equality is best explained in terms of the political functions it can fulfill.     

DO INSTITUTIONS AFFECT CITIZENS' SELECTION INTO POLITICS?

Political economy has primarily paid attention to the principal‐agent relationship between citizens and politicians and the role of competition and institutions in disciplining political agents. However, as the electoral control of politicians and the credibility of policy commitments are limited, this perspective needs to be complemented with an economics of political selection that takes into account the heterogeneity in the quality of those elected to political office. We review the emerging literature, which investigates the institutional determinants of political selection. We discuss pay in politics, parties, their candidate selection procedures and electoral rules, institutions enhancing transparency in politics, and institutions which govern dual office holding in different branches of government. We argue that further comparative analyses are essential in order to gain an improved understanding of the impact that institutions have on political outcomes, not only via the channel of accountability, but also via the channel of selection.     

Social Ecological Economics: Understanding the Past to See the Future

The attempt to provide insight into the interactions between the economy and the environment has been an on‐going struggle for many decades. The rise of Ecological Economics can be seen as a positive step towards integrating social and natural science understanding by a movement that aims to go beyond the confines of mainstream economics towards a progressive political economy of the environment. However, this vision has not been shared by all those who have associated themselves with Ecological Economics and there has been conflict. An historical analysis is presented that shows the role of mainstream theory in delimiting the field of environmental research. The argument is put forward that rather than employing a purely mechanistic objective empirical methodology there is a need for an integrating interdisciplinarity heterodox economic approach. In order to distinguish this approach—from the more mainstream multidisciplinary linking of unreconstituted ecological and economic models—the name Social Ecological Economics is put forward as expressing the essential socio‐economic character of the needed work ahead.     

Monetary Policy Rules, Policy Preferences, and Uncertainty: Recent Empirical Evidence

We survey recent empirical evidence on monetary policy rules, and find that the emphasis in the political economy literature on institutional design (e.g. central bank independence and inflation targeting) is exaggerated. Formal institutional reform seems neither a necessary nor a sufficient condition for the observation of shifts in monetary policy rules. However, there is no doubt that in some cases (e.g. the UK following the start of inflation targeting in 1992, and Bank of England Independence in 1997), a major shift in monetary policy conduct is detectable. We also highlight the problems in explicitly testing the predictions of the political economy literature. Semi-structural modelling approaches, such as time-varying VAR models may be more useful in understanding policy rules, and the interaction between policy shifts and changes in the transmission mechanism.     

Introduction: Towards a Political Understanding of New Ruins

This debate section gathers together contributions from cultural historians, political geographers, urban sociologists and architectural writers on new forms of ruination in contemporary landscapes. Their case studies span examples of ruins in China, North America, Ireland and Ukraine, as well as reviewing cultural representations of ruined, remote and peripheral spaces in England and Greece. Many wider cultural representations of ruined landscapes are primarily visual; whilst these have great value in alerting wider publics to the debris of global capitalism, neoliberalism and state‐sanctioned processes of cultural imperialism, what is needed within academic contributions to the ruinology literature is a deeper understanding and articulation of the wider contexts within which ruination occurs. Therefore, several contributions supplement visual representations of ruination with ethnographic and first‐person accounts of places on the ground, whereas other contributions offer readings of ruined landscapes that are rich in political histories and policy details. Connections are made to wider contemporary debates around ‘forensic architecture’ and critical archaeologies of the present and recent past. What connects these contributions is a commitment to situating ruins within their historical, policy and social contexts, and working through ruination to open out political readings of landscape.     

Stakeholding: Confusion or Utopia? Mapping the Conceptual Terrain

The paper has three main objectives. The first aim is to examine and clarify the burgeoning stakeholder literature that currently seeks to inform management practice, corporate governance and public policy with particular emphasis on the UK. We do this by continuing the process of clarification started by Donaldson and Preston (1995), focusing mainly on the political and practitioner literature generated within the UK. We begin this task by setting out a critique of stakeholding and develop this by using four key themes of enquiry. First, we examine stakeholding’s conceptual confusion; second, we outline and develop criticism of its underlying pluralist assumptions; third, we consider the problems of implementation; and finally, we assess some of the key arguments concerning its potential impact on business performance and competitiveness. The second aim is to develop and examine the central criticisms of stakeholding from both the neo‐liberal and Marxist/radical perspectives. By so doing we identify the key theoretical and practical issues which stakeholder proponents must address if they are to convince sceptics of the model’s validity. The third aim is to develop a conceptual framework capable of illustrating the different stakeholder perspectives and assumptions on which they are based. This consists of five continuums: the first locates authors on a left–right political continuum; the second distinguishes between those authors who use stakeholding primarily for analysis and those who use it to formulate and prescribe specific courses of action; the third differentiates between intrinsic (good in itself) and instrumental (means to an end) motives; the fourth identifies the various levels of proposed intervention; and the fifth illustrates the different degrees of enforcement advocated. We believe that this framework provides a clear illustration of our arguments and serves as a useful instrument for clarifying the stakeholder concept. In addition, it is used to position or map the work of key authors within the stakeholder debate and we believe it may provide a more coherent basis for future research and debate.     

Engineering the Financialization of Urban Entrpreneurialism: The JESSICA Urban Development Initiative in the European Union

Urban entrepreneurialism and neoliberal urban governance are assuming new forms under finance‐dominated accumulation. We examine and contribute to theorizing the mechanisms through which urban governance is financialized, taking as a case study JESSICA, one of the European Union's initiatives to implement an ‘urban sensitive’ policy for sustainable and integrated development. Like other initiatives promoting financialization, JESSICA deploys the logic of finance to select and fund urban social initiatives and development projects on the basis of their potential return on investment (ROI). Understanding this process requires placing questions of political economy—how urban governance is shaped by the broader political‐economic context—with questions of governmentality—how stakeholders are enrolled in and come to take for granted new governance initiatives. Following the multi‐scalar institutional infrastructure is crucial to understanding how this works. Taking a relational multi‐scalar approach, we trace how changes at the supranational scale filter down to shape urban policy selection and performance in Sofia, Bulgaria, where we document how ROI calculations conflict with social welfare priorities. Contrasts between the trajectory of financialization of urban governance in the European Union and the United States demonstrate how this is geographically variegated, shaped by the broader context/conjuncture within which such financialization is embedded.     

Urbanization as A Process of State Building: Local Governance Reforms in China

Existing scholarship suggests that local transformation in reform‐era China has been a process of decentralization of state power driving extractive local governments to pursue economic growth through rapacious land appropriation and producing many miserable landless villagers. This study puts forward an alternative perspective by arguing that local governance reforms in China to advance urban development should also be interpreted as a process of state building, whereby local government reshaped its governance strategy so as to mitigate potential social unrest and strengthen its political legitimacy in governing rapidly urbanizing areas. Based on intensive fieldwork in a periurban district in southern China, this research examines how the local state has heightened its control over urbanizing villages through its day‐to‐day governance practices and the pursuit of a complex policy agenda comprising social welfare provision, shareholding reforms and intervention in grassroots politics. The findings of this study shed new light on understanding local state transformation in periurban China and on explaining why the country still maintains tremendous urban growth despite incessant land disputes and numerous social tensions at different localities.     

THE GOVERNANCE OF FINANCIAL SUPERVISION: RECENT DEVELOPMENTS

This paper examines the evolution of financial supervision as a policy tool over the last three decades, with a focus on the issues raised by the Global Crisis. It considers a sample of advanced and emerging economies to discuss the four main questions debated in the literature, and addressed in the economic policy arena: the architecture of supervision, the role of the central bank as supervisor, the governance of supervision, and financial supervision vs. the internationalization of finance. Our survey finds that, on each of these issues, theory and practice do not offer clear‐cut answers and unambiguous optimal solutions. At the same time, the most promising approach is to tackle financial supervision as a principal‐agent problem, where economics and political economy approaches must be used in combination to improve both positive and normative analyses of supervisory governance.     

Global Urban Policymaking in Africa: A View from Angola Through the Redevelopment of the Bay of Luanda

A burgeoning literature looks into the processes and actors involved in the adoption and emulation of best practices and models of urban policy and development across the globe, often with the aim of attracting investment and making cities more competitive. With its focus on leisure, tourism and global capital, the redevelopment of the Bay of Luanda, in the capital of Angola, echoes the rhetoric, policies and projects underpinning such practices. Yet, a deeper interrogation reveals that the redevelopment forms part of a predominantly inward‐looking project driven by the highest echelons of the national government and its ruling party. While these actors mimic and appropriate the language and tools of entrepreneurial cities, their aim is not necessarily to make the city more internationally competitive but to achieve domestic political legitimacy and stability. The argument presented in this article builds on McCann's ( 2013 ) call for scholars to also consider the ‘introspective’ politics of urban policy boosterism from the perspective of a context in which power is highly centralized. The article thus contributes to a growing literature that advances more adequate and provincialized theorizations of urban policy and city governance in the global South, with a particular focus on the African context.     

Political Tie Heterogeneity and the Impact of Adverse Shocks on Firm Value

Past research has recognized the contingent value of corporate political ties but largely neglects their heterogeneity. Drawing on the political embeddedness perspective and literature on emerging economy political institutions, we develop hypotheses regarding how political networks comprising managerial and government ownership ties may have different valuation effects in the face of adverse political shocks. Examining stock market responses to an unanticipated, high‐profile political event in China, we find a negative valuation effect of managerial ties to municipal government, but an insignificant effect of government ownership ties. Further, companies combining managerial and ownership ties experienced less post‐shock reduction in market value than those holding only managerial political ties. These findings shed light on the values of different configurations of corporate political ties and inform firms of potential ways to manage ubiquitous political hazards in emerging economies.     

Becoming a Slum: From Municipal Colony to Illegal Settlement in Liberalization‐Era Mumbai

This article argues that the transformation of a Mumbai neighborhood from municipal housing colony into illegal slum has been facilitated by the politically mediated deterioration and criminalization of its water infrastructure in the context of liberalization‐era policy shifts. These policy shifts hinge upon a conceptual binary that posits the unplanned, illegal and informal ‘slum’ as the self‐evident conceptual counterpoint to a planned, formal, ‘world‐class’ city. The story of Shivajinagar‐Bainganwadi problematizes this assumption by evidencing the deeply political and highly unstable nature of this binary — and thus insists upon an account of the shifting political and economic stakes imbued in these categories. The case of Shivajinagar‐Bainganwadi reveals that the neighborhood's emergence as an illegal slum has been mediated by the liberalization‐era politics that have come to infuse the neighborhood's water pipes — dynamics that have produced the illegality/informality of the neighborhood as a discursive effect.     

Urban Policy Mobilities Research: Introduction to a Debate

An increasing number of scholars are focusing attention on the circulation of urban policies and the concept of ‘policy mobilities’. This collection of short commentaries identifies emerging areas of interest and contention for urban policy mobilities researchers. Exploring issues from conceptual dualisms and topological thinking to interdisciplinarity and slow methodologies, the commentaries offer refinements and suggest new pathways for urban policy mobilities research in the future.     

Hard and Soft Densification Policies in the Paris City‐Region

This essay is concerned with the planning and densification of suburbs, which present a huge challenge insofar as they form a large area of urbanized land that remains underexploited due to low residential density. Drawing on current research in the Paris city‐region, the essay focuses specifically on the difficulty in implementing densification policies in low‐rise suburban areas. It examines the varying degrees of densification fostered by these policies, and builds upon recent urban studies literature on suburban change to trace how suburban areas are being transformed through regulations, instruments and market dynamics associated with densification processes. What kinds of densification policy are being implemented and what are the socio‐economic, political and cultural determinants of each type of regulatory approach? This essay will attempt to answer this question via an analysis of the densification policies being put in place in the municipalities of the Paris city‐region. It will offer in turn a typology of these different policies. It shows that densification is an instrument that can be used to address local political concerns which vary greatly depending on the economic, social and geographical position of municipalities within larger urban areas.     

Urban Political Ecology Beyond Methodological Cityism

The concept of planetary urbanization has emerged in recent years amongst neo‐Lefebvrian urban scholars who see urbanization as a process taking place at all spatial scales. This article analyses recent critiques of the urban political ecology (UPE) literature which argue that much of the work in the field has been guilty of focusing exclusively on the traditional bounded city unit rather than urbanization as a process. In response, the article reviews various strands of the UPE literature which have (always) moved beyond ‘the city’ to consider the various metabolisms and circulations of humans and non‐humans connecting cities with places outside of their borders at a variety of scales. Furthermore, it suggests how these approaches can productively work with the insights of the planetary urbanization literature, in considering both the changing nature of urbanization and also the socio‐ecological and political implications of these changes. Finally, the article suggests how the methodological approach of the ‘site multiple’ and its focus on everyday practices and lived experiences can be useful for researching diverse urban phenomena and their more‐than‐urban connections.     

LONG DARK SHADOWS OR INNOVATIVE SPIRITS? THE EFFECTS OF (SMOOTHING) BUSINESS CYCLES ON ECONOMIC GROWTH: A SURVEY OF THE LITERATURE

Abstract It is argued that fiscal policy can play a part in preventing a possible downward spiral or be instrumental in achieving a higher long‐term path of growth. Never before has this argument been advanced as frequently as in the current economic crisis. However, the economic literature – an overview of which is given here – does not provide an unambiguous answer, either theoretically or empirically, to the question of the relationship between (the smoothing of) cyclical fluctuations and long‐term growth. In this context, two main contrasting explanatory paradigms can be identified: Schumpeter’s concept of creative destruction and the learning by doing hypothesis. Even if it were possible to identify the relationship more clearly on this basis, it is important not to lose sight of the problems associated with the real‐time assessment of the current economic situation, time lags and political economic incentives even in difficult times.     

Development by Decree: The Limits of ‘Authoritarian Modernization’ in the Russian Federation

The apparent success of state‐managed market economies has challenged the conventional wisdom that liberal democracy is the norm around which all capitalist countries tend to converge. If the link between democracy and development is more tenuous than we often think, the authoritarian variety of capitalism is not without its own problems, especially with respect to political legitimacy, innovation and regional development. This article explores these issues through the prism of ‘authoritarian modernization’ in Russia. We argue that this strategy is unlikely to succeed, even in its own terms, because (1) the political system fails to create favourable institutional conditions for modernization; (2) the economic system is beset by deeply embedded structural problems; and (3) the regional policy apparatus is torn between the goals of spatial equalization and spatial agglomeration. The article focuses on the Skolkovo Innovation Centre, the main symbol of Russian modernization, to demonstrate the territorial repertoire of the mega‐project, a state‐sponsored development strategy to create innovation clusters from above because they cannot emerge from below.     

Entrepreneurship education: the role of local business

Entrepreneurship education is high on political agendas for its contributions to cultural change and economic growth. Scholars have suggested that the local context may influence the results of entrepreneurship education, and have recommended that educators strengthen their relationships with local businesses and help students learn from actual business settings. By combining policy analysis with empirical data, the present qualitative study explores two issues. First, we look at how the role of local business is expressed in entrepreneurship education policy documents. Second, we explore how local entrepreneurial activity and culture may influence how policies are understood and translated into practice at the local level. The findings indicate that collaboration between schools and business life may strengthen, rather than change, existing local development paths. The present paper contributes to the literature and understanding of the interplay between entrepreneurship education policy and the local context and proposes several policy recommendations emerging from the empirical study.     

Merchants of doubt: Corporate political action when NGO credibility is uncertain

The literature on special interest groups emphasizes two main influence channels: campaign contributions and informational lobbying. We introduce a third channel: providing information about the credibility of political rivals. In particular, nongovernmental organizations (NGOs) often aim to communicate scientific knowledge to policymakers, but industry‐backed groups often attempt to undermine their credibility. We extend a standard signaling model of interest‐group lobbying to include fixed costs of policymaker action and show that these costs make possible two mechanisms for creating doubt about the value of policy action. The first uses Bayesian persuasion to suggest the NGO may be a noncredible radical. The second involves creating an opposition think tank (TT) that acts as a possible radical, not a credible moderate. We show that the TT cannot always implement the Bayesian persuasion benchmark, and we characterize how optimal TT design varies with exogenous parameters.