Walras's tâtonnement : a reply to Rebeyrol and Costa

Abstract

About 50 years ago a lively discussion was started in the ‘Notes and Memoranda’ sections of the Economic Journal about the new welfare economics that had been initiated by Kaldor and Hicks 10 years earlier and was heavily criticized by Little in 1950. Altogether 18 Notes appeared dealing with questions of definition, of limitations, of practical relevance and theoretical details. This paper gives an overview of this discussion and presents it as a methodological approach of the past which that declined as a consequence of the spread of the referee process.     

A bootstrap-corrected causality test: another look at the money–income relationship

Previous studies of the causal relationship between money supply and real output are based on asymptotic distributions. If the assumption of normality is not fulfilled and if ARCH effects are present, asymptotic distributions perform inaccurately. In this paper, we reinvestigate the potential causal relationship between money and output by applying an alternative methodology based on the leveraged bootstrapped simulation techniques using data from Denmark, Japan, Sweden, and the US. We find unidirectional causality from money to output for the sample countries except for Sweden for which causality is bi-directional. This finding of unidirectional causality between money and output supports monetary business-cycle models and reveals one important policy implication—that is, in looking for the sources of output fluctuations, money might be a major factor.

A ray of hope? Another look at the Italian textile industry

Despite increasing competition from newly industrializing countries, Italy’s textile industry has continued to be an important contributor to the domestic economy. Many observers attribute this resilience to the industry’s focus on quality. Here, we take note of that view but also examine production and cost relationships to explore the existence of returns to scale and the interrelationships among inputs to gain additional insights about the future prospects for this industry. The findings are consistent with constant returns to scale and a substitute relationship between all input pairs except for domestic capital and foreign intermediate goods. The results also suggest some increasing flexibility in the labor market, perhaps including informal sector arrangements, greater responsiveness of labor demand to the price of capital, and more international production sharing arrangements. An increasing elasticity over time of the demands for domestic capital and domestic intermediate goods with respect to the price of foreign substitutes was also observed. Since further economies of scale do not exist, maintaining the Italian textile industry’s reputation for outstanding quality will likely be an important survival strategy for some products. For others, production sharing may be necessary to maintain international competitiveness.     

Research on the institution of China construction employee based on relation theory

Based on the theory that the management is about dynamic ＂relations＂, this paper analyzes the relationship between the construction industry and the ＂peasant laborer＂ in different stages, different contents and different aspects. It establishes the three-dimensional model for these relations and points out that a good relationship between the construction enterprise and the construction employees in this crucial time of construction industry is a very crucial link of the achievements, as well as the well-being of the construction enterprises.     

Experiment-inspired comments on John Roemer’s theory of cooperation

Abstract

We report on a nonsocial experiment where we find that all participants choose the dominant strategy in the experimental payoff, and compare it with the payoff-isomorphic, but social, Prisoner’s Dilemma treatment presented in a recent paper by Bosch-Domènech and Silvestre where 28% choose cooperation instead of the dominant strategy. The contrast reinforces Roemer’s emphasis on human cooperation. Next, we argue that Roemer’s Simple Kantian Equilibrium works well as a theory of cooperation under the assumption of monotonicity (positive or negative externalities), but not when efficient cooperation requires the division of labor by coordinating dissimilar tasks.     

Income,inequality, and the stability of democracy — Another look at the Lipset hypothesis

This paper studies the endogenous emergence of political regimes, in particular democracy, oligarchy and mass dictatorship, in societies in which productive resources are distributed unequally and institutions do not ensure political commitments. The political regime is shown to depend not only on income levels, but also, in particular, on resource inequality. The main results imply that under any economic environment a distribution of resources exists such that democracy is the political outcome. This distribution is independent of the particular income level if the income share generated by the poor is sufficiently large. On the other hand, there are distributions of resources for which democracy is infeasible in equilibrium regardless of the level of economic development. The model also delivers results on the stability of democracy. Variations in inequality across several dimensions due to unbalanced technological change, immigration or changes in the demographic structure affect the scope for democracy or may even lead to its breakdown. Among other historical examples, the results are consistent with the different political regimes that emerged in Germany after its unification in 1871.     

Determinants of TFP growth: A close look at industries driving the EU–US TFP gap

This paper explores the determinants of the EU–US TFP growth gap using EU KLEMS. As found in previous analyses, TFP growth appears to be driven by catching-up phenomena associated with the gradual adoption of new technologies. TFP growth is also significantly driven by developments at the “technological frontier”, especially since the mid-1990s. Industries with higher R&D expenditures and higher adoption rates for ICT-intensive technologies appear to exhibit higher TFP growth rates, whilst human capital has mostly a significant effect across countries. Regarding determinants in industries relevant for the different TFP performance of the EU versus the US, ICT-producing industries appear to benefit from R&D in terms of stronger spillovers from TFP gains at the frontier, network utilities are strongly affected by product market regulations, whilst the retail and wholesale trade industry is significantly influenced by consumption dynamics which permit a better exploitation of scale economies.     

Cross-country performance of Lévy regime-switching models for stock markets

This article compares the performance of regime-switching Lévy models across sixteen (16) international stock markets. From a cross-country perspective, the empirical application is dedicated to the study of equity markets in the Americas, Asia and Europe. The results are of interest for a financial audience in order to document the sensitivity of stock indexes to the intensity of jumps, under changing economic regimes (expansion or recession). We pick up singularities in Japan and Malaysia compared to other countries and regions of the world.     

The effect of family welfare support on the likelihood of having another child and parents’ labor supply

Governments have recently attempted to reverse the below-replacement fertility rates in Europe by reducing child-rearing costs through child benefits, grants and paid leaves. This article examines the causal effect of family allowances on the likelihood of having another child, and on the extensive and intensive margins of labor supply. Evidence from Switzerland suggests that higher child benefits incentivize parents to have more children but do not affect their employment choice. The effect is larger for low-income families. These findings imply that policies aimed at improving the economic well-being of families are likely to increase fertility rates without distorting labor market outcomes.     

Tackling Keynes’ question: a look back on 15 years of Learning To Consume

Two centuries of continuous economic growth since the industrial revolution have fundamentally transformed consumer lifestyles. Here Keynes raised an important question: will consumption always continue to expand in the same manner as it has in the previous two centuries? If so, how? This paper critically reviews a body of work that has adopted the Learning To Consume (LTC) approach to study the long run growth of consumption (Witt 2001). By borrowing certain established insights from psychology and biology about how consumers learn and what motivates them to consume, it highlights how rising income, new technologies and market competition have combined to trigger important changes in both the underlying set of needs possessed by consumers and how they learn to satisfy these needs. Methodological issues and open questions are discussed.     

Broadening the concept of rational economic behavior: A case study of cheese making at the Abbey of Tamié

Through an analysis of the business activities of a Trappist monastery, an attempt is made to add to the understanding of how ethical considerations, custom, and culture, as well as the profit motive, affect how actual economic decisions are made. This analysis is implemented through a case study of the cheese-making business of a monastery in the French Alps where the tradition of cheese, agriculture, and monks is important to the culture and customs of the area. The analysis finds that the monks are able to successfully conduct their business in ways that honor their custom and culture within the religious confines imposed by the monastery.     

The “Cambridge” critique of the quantity theory of money: A note on how quantitative easing vindicates it

Through quantitative easing markets have been flooded with liquidity, but rather than inflation we have witnessed a general deflation because of the liquidity trap environment in which the banking system operated; this article revisits the arguments against the quantity theory in the “Cambridge” tradition of John Maynard Keynes, Richard Kahn, and Nicholas Kaldor, and defends their soundness and topicality.     

Does the impact of private education on growth differ at different levels of credit market development?

Using an overlapping generations model, we show that the impact of private financing of education on growth depends on credit market development, being positive when credit markets are adequately developed but negative if sufficiently low levels of credit market development occur alongside relatively high private financing intensities. Employing cross-country data, we find that reduced-form growth relationships are statistically significant and robust under various controls and samples. We also lay out conditions under which economies with missing credit markets are dynamically efficient and outperform, in terms of growth, economies with complete credit markets. The latter may explain large cross-country differences in savings and growth, while facilitating the evaluation of policies on financing education.     

Is the Pareto–Lévy law a good representation of income distributions?

Mandelbrot (Int Econ Rev 1:79–106, 1960) proposed using the so-called Pareto–Lévy class of distributions as a framework for representing income distributions. We argue in this article that the Pareto–Lévy distribution is an interesting candidate for representing income distributions because its parameters are easy to interpret and it satisfies a specific invariance-under-aggregation property. We also demonstrate that the Gini coefficient can be expressed as a simple formula of the parameters of the Pareto–Lévy distribution. We subsequently use income data for Norway and seven other OECD countries to fit the Pareto–Lévy distribution as well as the Generalized Beta type II (GB2) distribution. The results show that the Pareto–Lévy distribution fits the data better than the GB2 distribution for most countries, despite the fact that GB2 distribution has four parameters whereas the Pareto–Lévy distribution has only three.     

If at first you don’t succeed: applying for and staying on the Supplemental Nutrition Assistance Program

We examine households’ applications to and participation in the Supplemental Nutrition Assistance Program using administrative records from South Carolina. We model application resolutions with multinomial logit (MNL) specifications where the possible outcomes are acceptance, denial due to income ineligibility, denial due to a failure to provide sufficient information and denial due to other reasons. For cases with successful applications, we model the durations of participation spells using competing risk hazard specifications that distinguish among exits that result from missed recertifications, financial ineligibility, incomplete or missing information and other reasons. The application and hazard outcomes depend on past programme behaviour and observed characteristics. The results indicate that a household’s application and participation history affect its subsequent application success and programme tenure.