ECONOMIC PROSPECTS AND POLICY

Patrick Foley agrees with Tim Congdon on the unimportance of the current account and with Patrick Minford on the economy's medium-term growth prospects.     

POLITICAL PROCESS AND THE FORMATION OF ECONOMIC POLICY

Institutional economics has some useful things to say about government policy-forming processes. It focuses attention on the structural components of government institutions which shape the direction of policy formation and its delivery. In this article, the author discusses how institutional models of government decision-making may be adapted to parliamentary systems of government. This approach has some merit because it rescues analysis of government processes from models based on the US constitutional system.     

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 MAKING OF ECONOMIC POLICY

Books reviewed in this article:
Rosalind Levacic (1987) Economic Policy-Making: Its Theory and Practice.
Paul Whiteley (1986) Political Control of the Macro-Economy.
Douglas A. Hibbs Jr. (1987) The Political Economy of Industrial Democracies.
Wyn Grant with Jane Sargent (1987) Business and Politics in Britain.
Michael Moran (1986) The Politics of Banking     

THE ECONOMETRIC ANALYSIS OF ECONOMIC POLICY

The application of econometric analysis to the process of economic policy formulation is considered. A framework is provided by the theory of reduction, specifically reductions where key information losses would invalidate policy. Consequently, model evaluation; the role of econometric models; forecasting; exogeneity; causality; constancy and invariance; unobservables; seasonality; and data integrability are considered, together with specific policy issues where econometrics can clarify the problems.     

LABORATORY EXPERIMENTS FOR ECONOMIC POLICY MAKING

Abstract In this paper, we assess the scope and the specific contribution of laboratory experiments for economic policy making. We review experiments which have addressed a specific problem, institution, mechanism design or tool relevant in economic policy. We have two research questions. What type of policy questions can be addressed in the laboratory? And what is the specific value added of economic experiments for policy making. The survey contains experiments on competition policy, auctions, regulated markets, and emission permits.     

EMPLOYMENT OF OLDER WORKERS IN POLAND: ISSUES AND POLICY IMPLICATIONS1

The aim of this paper is to discuss barriers to the employment of older workers in Poland, where, due to various structural weaknesses and institutional arrangements, this problem has taken on a particularly acute seriousness. After analysing the causes of inactivity amongst older workers, the paper concludes by making policy recommendations.     

MONETARY POLICY AND ECONOMIC IMBALANCES: AN ETHNOGRAPHIC EXAMINATION OF CENTRAL BANK RITUALS

We apply the ethnographic tools of economic anthropology to analyse a particular ritual performed by the high priest of the Arbee sub‐tribe in the South Pacific island group of Aotearoa. (In other island groups, this high priest is sometimes known as the Governor of the Reserve Bank of New Zealand.) The ritual is considered by many within Aotearoa to be the cause of The Imbalance in The Economy. We analyse this claim and show that it has similarities (and equal validity) to claims of other cargo cults within the South‐West Pacific region.     

ECONOMIC SANCTIONS: FAILED FOREIGN POLICY TOOL AND A COST TO AMERICAN BUSINESS

In recent years the US government has increased its use of economic sanctions in order to punish countries, organisations and individuals. This form of foreign policy has become an increasing burden on US business and adversely affects US competitiveness and perceived reliability in the global marketplace. In addition, economic sanctions are generally ineffective in producing the desired changes and often harm the people they were intended to help. This paper argues that economic sanctions are an increasing menace to US business, represent an ineffective tool of foreign policy, and do not meet generally accepted ethical standards.     

STOCK‐FLOW INTERACTIONS,DISEQUILIBRIUM MACROECONOMICS AND THE ROLE OF ECONOMIC POLICY

This paper presents the ‘KMGT’ (Keynes–Metzler–Goodwin–Tobin) portfolio model and studies its stability properties. The approach to macrodynamic modelling taken here extends the KMG model of Chiarella and Flaschel (2000) , focusing in particular on the incorporation of financial markets and policy issues. The original KMG model considered three asset markets (equities, bonds and money) but depicted them in a rudimentary way so that they had little influence on the real side of the model. The only financial market influencing the real side of the economy was the money market (via an LM curve theory of interest). Here Tobin's portfolio choice theory models the demand for each asset in such a way that the total amount of assets that households want to hold equals their net wealth, which is a stock constraint attached to portfolio choice. There is also a flow constraint, that the net amount of assets accumulated (liabilities issued) by one sector must equal its net savings (expenditures). The Tobinian macroeconomic portfolio approach characterizes the potential for financial market instability, focusing on the interconnectedness of all three markets. The paper goes on to study the potential for labour market and fiscal policies to stabilize unstable macroeconomies.     

TRADE POLICY AND CITY PRIMACY IN DEVELOPING COUNTRIES

This paper examines the relationship between trade policy and city primacy in developing countries. A general equilibrium model was constructed and center‐periphery relations are analyzed, accounting for tensions between agglomerative and distributive forces. By applying the theoretical model through numerical simulations, we analyzed how trade policy affects the interactions between these forces. We distinguished between import tariffs and export trade barriers. The results suggested that trade liberalization can reduce the dominance of mega‐cities in developing countries, but only when improvements are made to internal and external factors inhibiting their export trade. These include improving domestic transport infrastructure and reducing barriers to exports from developing countries by developed nations.     

ECONOMIC SYSTEM CONVERSION AND MIGRATION TRANSITION IN RUSSIA

This paper examines migration changes in Russia due to the transition of the economic system. As expected, great changes in migration patterns occurred in Russia. The correlation coefficients between federal investment and interregional migration are positive and large during the Soviet period, indicating that political incentives played a major role in migration patterns in the USSR. However, the regional development policy implemented in the Soviet era may not have been socially efficient in causing migration inflows and excess labor supply in the Far North regions. In addition, it can be said that the government could not control population flows perfectly even in the planned economy.     

GREENHOUSE GAS EMISSIONS AND ECONOMIC STRUCTURE IN URUGUAY

Using input–output analysis, we identify the key sectors in greenhouse gas (GHG) emissions of the Uruguayan economy. The responsibilities of each sector in terms of its emissions are decomposed into an own component, generated during the activities of the sector, and an indirect component, generated by the induced activities in other sectors. This has important implications for the design of mitigation polices, as the appropriate policy measures are contingent on the nature of the pollution. Technical improvements and best practices are effective only when applied to directly polluting sectors, while demand policies may be more appropriate for indirectly polluting sectors. In addition, we analyze pollution generated during the production of exports. The results show that demand policies are going to be effective in the Building, the Hotel and restaurants, and the Wholesale and retail trade; and repair of motor vehicles and motorcycles sectors. These policies complement GHG emissions’ mitigation policies in directly polluting sectors (mainly the Cattle farming and the transport-related sectors). Finally, methane and nitrous oxide emissions are mainly the consequence of production for exports, while carbon dioxide emissions are mainly driven by production for domestic consumption.     

公共政策支持与深圳中小企业发展

中小企业众多且发展迅猛是深圳经济的重要特征,中小企业的迅速成长及其重要贡献已成为支撑深圳市国民经济和社会发展的基本力量。2000年以来,深圳中小企业工作成效显著,基本形成公共政策框架支持下的发展局面。一、中小企业发展基本情况(一)中小企业发展迅猛,地位重要,作用显著。建立特区以来,尤其是20世纪90年代以后,深圳市中小企业数量迅速增长,质量不断提高,贡献越来越大。仅2002年,全市就新增中小企业约1.8万家,到2002年底,注册企业约12.1万家,99.4%是中小企业,其中各类非公有制企业占80%左右。2002统计年度与2000年相比,限额以上中小工…     

THE APPLICABILITY OF THE TRADITIONAL THEORY OF ECONOMIC POLICY

Abstract. The traditional theory of economic policy requires targets, instruments, an empirical economic model, and a social welfare or criterion function to be specified in order to derive the optimal economic policy. Empirical studies of reaction functions suggest that economic policy is carried out in some systematic manner, subject to interference from political factors. This survey addresses the problems of specifying, estimating and applying an economic model when economic policy is following a path specified by a reaction function. Attention is paid to rational expectations, the Lucas'critique, and the policy neutrality proposition. Lack of knowledge of the policy maker's objective function poses the most serious difficulty when applying the theory of economic policy. Various methods of determining this function are reviewed, and the possibility that policy makers might be satisficing is discussed. The role played by political factors is considered in the light of the public choice literature.     

SOCIAL CHANGE AND ECONOMIC LIFE IN BRITAIN IN THE 1980s

Books reviewed in this article:
Duncan Gallie, Catherine Marsh, and Carolyn Vogler (eds.) (1994) Social Change and the Experience of Unemployment.
Jill Rubery and Frank Wilkinson (eds.) (1994) Employer Strategy and the Labour Market.
Alison McEwan Scott (ed.) (1994) Gender Segregation and Social Change: Men and Women in Changing Labour Markets.
Roger Penn, Michael Rose, and Jill Rubery (eds.) (1994) Skill and Occupational Change.
Michael Anderson, Frank Bechhofer, and Jonathan Gershuny (eds.) (1994) The Social and Political Economy of the Household.
Duncan Gallie, Roger Penn, and Michael Rose (eds.) (1996) Trade Unionism in Recession.