A re-examination of Verdoorn's law and its application to the manufacturing industries of the UK,West Germany and the USA

This paper examines recent theoretical justification of Verdoorn's law and suggests a derivation of Verdoorn's law in the form P?=aQ?+b which requires only the assumption K?=γ a constant. This derivation is generalised to include the effect of the efficient use of labour on productivity change. The manufacturing industries of the United Kingdom, West Germany and the United States are analysed on the basis of the theory.     

Technology and social change: William Fielding Ogburn revisited

This paper reviews William Fielding Ogburn's work on technology and social change. An overview of his basic theory is presented, as well as later refinements found in such works as Recent Social Trends in the United States, Technological Trends and National Policy, The Social Effects of Aviation, and other books and articles. It is suggested that while Ogburn is most widely remembered for his thesis of cultural lag, some of his later work on technology and social change is actually more important and deserves reconsideration and extension. One kind of extension might follow the lines of a systems approach rather than continuing the technological primacy strategy that Ogburn is normally considered to have used. The paper also surveys Ogburn's important work in the areas of technology, planning, and social policy, including materials on technology assessment. Ogburn's nontechnocratic approach to these questions, as well as his insistence that social scientists have a great deal to offer to the formulation of technological and social policies, are some of his most important contributions. Questions of technology and social change remain important contemporary issues, yet there is a surprising paucity of social science work on these crucial topics. Further study, extension, and reformulation of Ogburn's pioneering ideas offer fruitful means of embarking on new social science analyses of technology and society.     

The Income, Savings, and Monetary Overhang of Soviet Households

The purpose of this paper is twofold. First, it reconstructs data on the income, expenditure, and savings of Soviet households during 1965–1989. Second, it estimates the magnitude of monetary overhang in the Soviet consumer market. The data reconstruction was made using unpublished archival material, i.e., Soviet family budget surveys. The magnitude of monetary overhang was estimated using the long-run solution and the VAR (vector autoregression) of the Soviet household savings function. The estimates suggest that the overhang amounted to 38% of household money balances in 1991 and that a 61% price adjustment would have been necessary to remove the monetary overhang of Soviet households at the time. J. Comp. Econom., December 1999, 27(4), pp. 644–668. University of Essex, Wivenhoe Park, Colchester CO4 3SQ, United Kingdom.     

Liberalizing U.S. Trade with the Eastern Bloc: What are the consequences?

This paper provides estimates of the trade and welfare consequences of removing the high discriminatory tariffs that the United States imposes against imports from the Soviet Union and its allies. These imports are now taxed at Smoot-Hawley rates. The estimates of the trade effects exceed those of previous studies, in part because the recent “Tokyo Round” of multilateral trade concessions has increased the tariff discrimination against the non-MFN (Most Favored Nation) suppliers. The study is the first to assess the welfare consequences of eliminating this discrimination. It is estimated that the overall annual gain to the United States would be about $1.8 billion and that the annual gain to the communist suppliers would be between $1.2 billion and $1.7 billion.     

Choosing Among Regulatory Options in the United States Telecommunications Industry

We examine the determinants of the choice between rate-of-return regulation and incentive regulation in the United States telecommunications industry. We find that a state is more likely to select incentive regulation in any year: (1) when it has employed incentive regulation in the past; (2) when the Republican party controls both the executive and the legislative branches of the state government, but the Democratic party has controlled these branches historically; and (3) as the firms earnings under rate-of-return regulation increase toward the industry average. We also find that appointed regulators are more likely than their elected counterparts to revert to rate-of-return regulation.     

Japan's technological strategy

While it is well established that borrowed technology has played an important role in Japan's economic development, the nature of this process needs further clarification. This paper deals with the catching-up hypothesis: that a technological gap between Japan and other industrial countries (primarily the United States) emerged during World War II, but has been narrowing since then. Making a distinction between absorptive and creative R and D, we show that Japan's technological strategy emphasized the former while allowing the gap in the latter to remain.     

IS-LM stability and economic policy effectiveness: Further observations

Professor Wang (1980) has usefully extended my original model by introducing an explicit government budget constraint. However, the form of that budget constraint is very restrictive and limited. In this note, an alternative budget constraint to Wang's is developed. This permits the model and policy analysis to be significantly extended and generalized.     

Are Soviet industrial-production statistics significantly distorted by hidden inflation?

In recent years speculation has increased regarding the existence and magnitude of hidden inflation in the Soviet economy. This speculation has unintentionally, but necessarily, called into question a great deal of econometric research predicated on the assumption that Soviet statistics are workably reliable. This paper attempts to evaluate these issues by examining the CIA's unofficial estimates of hidden inflation in the industrial sector calculated by James Steiner. A careful reconstruction of Steiner's arithmetic procedures reveals that the high levels of hidden inflation he estimates are invalid.     

The impact of the Soviet trade shock on central and East European economies

The paper examines the significance of what is called the Soviet trade shock on central and East European economies. The analysis involves two steps: first, the terms-of-trade effect of replacing the CMEA trading rules by market rules is estimated, and second, the impact of the loss of export markets in the former Soviet Union is assessed. The results of estimating the terms-of-trade effect for Hungary and Poland show that the income losses in 1990–1991 have not been as substantial as commonly believed (3.5 percent of GDP and 1.0 percent of GDP, respectively). The decomposition of the fall of total Soviet imports in 1991 into three categories, reflecting the impact of domestic recession, reduction of trade with ex-CMEA, and diversion of imports from ex-CMEA to western countries allowed us to estimate the CMEA-induced part of the trade collapse at 36 to 49 percent of the total fall of exports to the Soviet Union by the CEECs (except Romania), with the impact of domestic recession being in all cases stronger than the CMEA dissolution effect. An attempt has also been made to estimate the impact of the Soviet trade shock on GDP levels in CEECs. The results obtained indicate that the collapse of exports to the Soviet Union in 1991 may have been responsible for about one third of the officially reported GDP fall in Czechoslovakia and Poland, and for more than half of the GDP fall in Bulgaria and Hungary, but the impact of the CMEA-induced export fall was much smaller. The impact of the Soviet trade shock on Romania was negligible. The results obtained suggest a smaller impact of the Soviet trade shock on Hungary and Poland, as compared with some other studies. The conclusions should, however, be treated with caution, because of many untested assumptions underlying the analysis.I would like to acknowledge helpful comments received on earlier drafts of the paper by Daniel Gross, Dieter Hesse, Gabor Oblath, and Mica Panic. The views expressed in the paper are, however, my own responsibility.     

The Asian Infrastructure Investment Bank: Multilateralism on the Silk Road

Initial English-language media coverage of the Asian Infrastructure Investment Bank (AIIB) was framed in terms of strategic rivalry between China and the United States and China’s frustration with slow reform to existing multilateral development banks (MDBs). But the United States, not China, turned the AIIB into a battle for global influence, which the United States lost when key allies joined the bank.

China had a positive agenda for establishing the AIIB, particularly as part of its flagship ‘one belt, one road’ regional initiative. By establishing a multilateral lender for Asian infrastructure, China can de-politicize what can be fraught bilateral financing deals as well as boost its image in the region. This requires the AIIB being a truly multilateral institution.

The AIIB will have to meet the standards of other MDBs, particularly for safeguards, procurement and transparency. The bank will be under international scrutiny and AIIB shareholders should build the bank cautiously, initially focusing on co-financing with other MDBs. The AIIB need not mirror existing lenders, but can learn from their experience and improve on their efficiency. The AIIB will be a learning experience for China and could boost its credentials for future multilateral leadership.     

A revisit on the tax burden distribution and GDP growth: fresh evidence using a consistent nonparametric test for causality for the USA

We revisited the evidence of Karagianni et al. (Int Rev Econ Fin 21:186–194, 2012) and Tiwari (Econ Bull 32:147–159, 2012) by employing a recently developed and more powerful nonlinear Granger-causality test proposed by Nishiyama et al. (J Econ 165:112–127, 2011) to investigate the existence of Granger-causality from a set of alternative tax burden (ratios) to GDP (per capita GDP), for the period 1947:q1–2009:q3 for the United States of America (USA). The nonlinear Granger-causality test provides strong evidence that personal current taxes and taxes on production and imports Granger-cause GDP and weak evidence that CR Granger-cause GDP. As a consequence, in order to influence (rebalance) the USA’s GDP through taxation, it is recommended to the USA government to adjust the tax structure, focusing on PCT and taxes on production and imports’ shocks. In this case, the tax policy is oriented especially on labour supply and investments.     

The Effects of the Defense Sector on the Productivity of Civilian Industry in the United States and the USSR

In this paper we estimate production functions in order to measure the effects of the defense sector on productivity in the civilian branches of U.S. and Soviet industry. The size of the defense sector is measured by a flow variable, annual expenditures, and a stock variable, the stock of military capital. For the United States, we use annual data from 1948 to 1985, and for the Soviet Union we use annual data from 1965 to 1987. The results of the estimation procedure provide strong support for the hypothesis that increases in the flow of defense expenditures provide a short-term spur to civilian industrial productivity in both countries during the period under investigation. The supply-side crowding-out hypothesis is also supported, and as expected, support is weaker in short-term estimates than in long-term estimates. J. Comp. Econom., December 1993, 17(4), pp. 768-785. Marquette University, Milwaukee, Wisconsin 53233.     

Nash equilibrium search for the best alternative

In a recent paper, Weitzman (Econometrica47 (1979) 641–654) described a policy of “optimal search for the best alternative.” The present paper is concerned with the development and characterization of a policy of “Nash equilibrium search for the best alternative.” Specifically, it is shown that, under certain monotonicity assumptions, and under the assumption that firms have incomplete information regarding the results of rivals' search behavior, a Nash equilibrium search policy exists and has the same form as Weitzman's optimal search policy.     

The tenability of the CIA estimates of Soviet economic growth

This paper evaluates the tenability of the Central Intelligence Agency (CIA) estimates of Soviet economic growth during 1950–1980, published in December 1982. The evaluation involves applying the CIA methodology used in making these estimates to estimate economic growth in the Federal Republic of Germany and the United States and then comparing the results with the official estimates of the respective countries themselves. Use of the CIA methodology understates substantially the growth of both the West German and the U.S. economies, which raises the possibility that it also understates Soviet economic growth.     

Testing of the rational expectations and structural neutrality hypotheses

In this paper we examine the tests of the new classical rational expectations and structural neutrality hypotheses undertaken by Leiderman (1980) using a model of money growth and unemployment for the United States developed by Barro (1977). Employing the data used in the studies by Barro and Leiderman we are able to construct an alternative model of money growth and unemployment against which the Barro-Leiderman model is rejected along with the joint hypothesis of rational expectations and structural neutrality.     

Incentive effects of rate-of-return regulation: The case of Hong Kong electric utilities

A comparison of Hong Kong and United States rate-of-return regulation indicates differences in the definition of the rate base and in the proportion of it permitted a fair rate of return. These differences imply that Hong Kong electric utilities utilize proportionately more fixed (less current) assets, and that these assets are financed proportionately more by equity (less by debt), than their United States counterparts. Our results support both these predictions, providing further evidence that since rate-ofreturn regulation is implemented by reference to reported results, comparatively minor differences in regulatory frameworks can have quite dramatic consequences for utilities' asset structure and financing mix.     

Retrospective study comparing healthcare costs and utilization between commercially insured patients with type 2 diabetes mellitus who are newly initiating exenatide once weekly or liraglutide in the United States

Abstract

Objective:

To compare healthcare costs and utilization between commercially insured patients with type 2 diabetes mellitus (T2DM) in the United States newly initiating exenatide once weekly (QW) or liraglutide.     

Incentive effects of benevolent intervention: The case of government loan guarantees

There has been a substantial recent growth in government loan guarantees to ailing firms in the United States. This paper investigates the potential incentive effects of this practice. Using the simplest available two-period model, it is shown that when firms know that loan guarantees may be forthcoming, they may be induced to adopt riskier investments and take on more leverage. These perverse incentive effects imply that the actual loan-guarantees-related contingent liability of the government could be much larger than suspected. Our policy recommendation is that the government either abandon the practice altogether or set up a federal agency that sells loan guarantees to all firms at prices that depend on the riskiness of the firm's assets and its leverage.     

Liberty and national security in Adam Smith’s possible world

Thomas P. M. Barnett argues that globalization’s spread presents the United States and other liberal democracies with two unprecedented national-security problems, and proposes an ambitious military strategy for their solution. This work argues that a successful strategy to solve one of these problems must also include rational policy, public policy that makes Adam Smith’s simple system of natural liberty a reality. Thus, Barnett’s military strategy and rational policy become complementary elements of a more comprehensive strategy to solve this national-security problem. Knowledge that Smith’s simple system of natural liberty moves the world toward peace can create a need for rational policy among voters.