The Monetary Approach to the Exchange Rate Determination for a “Petrocurrency”: The Case of Norwegian Krone

This paper, by following vector error correction modeling, empirically investigates some of the popular monetary models of the NOK/USD rate. The empirical results suggest that there is some scope for the monetary approach to explain the development of the NOK/USD during the period from 1997 to 2008. The coefficients in the co-integration equation of both money and output differentials are statistically significant and consistent with any of the forms of the monetary models. Moreover, empirical evidence for the proportionality between the exchange rate and relative money is provided. Our findings are robust across different measures of inflation expectations. Although there is no clear evidence regarding the exact version of the monetary model, the estimated unrestricted error correction models can fit the actual NOK/USD exchange rate. Finally, the short-term dynamics of the exchange rate are significantly affected by changes in crude oil prices.     

The Emergence of “Modern” Ownership Rights Rather than Property Rights

There are a number of analytical conundrums in the neo-classical theory of the emergence of private ownership rights, which is closely associated with Demsetz’s works. Reconsidering the internal logic of private ownership rights, the paper argues that, first, the emergence of “modern” private ownership rights should be the subject of analysis rather than ownership rights per se. Second, at least for some latecomer countries, modern ownership rights typically emerge when feudalistic multi-layered proprietary rights over land are abolished and replaced by ownership rights for the purpose of ensuring tax revenue, prompted by pressure from and/or the intrusion of a colonial power, rather than as an efficient response to changes in resource prices. Third, the socio-economic aspect of ownership rights that related to the manner of social formation tended to be concealed in the universal aspect of private property rights that focuses on the materialistic relation between a person and a thing. These arguments urge the bringing of social relations into the basic layer of analysis of ownership rights theory, as the original institutional economists such as Ely and Commons considered.     

Introduction to field experiments in economics with applications to the economics of charity

This special issue highlights an empirical approach that has increasingly grown in prominence in the last decade—field experiments. While field experiments can be used quite generally in economics—to test theories’ predictions, to measure key parameters, and to provide insights into the generalizability of empirical results—this special issue focuses on using field experiments to explore questions within the economics of charity. The issue contains six distinct field experimental studies that investigate various aspects associated with the economics of charitable giving. The issue also includes a fitting tribute to one of the earliest experimenters to depart from traditional lab methods, Peter Bohm, who curiously has not received deep credit or broad acclaim. Hopefully this issue will begin to rectify this oversight.      

‘Modern’ Phillips curves and the implications for the statistical process of inflation

‘Modern’ theories of the Phillips curve imply that inflation is an integrated, or near integrated’ process. This article explains this implication and why these ‘modern’ theories are logically inconsistent with what is commonly known about the statistical process of inflation.     

The meaning of “social capital” as it relates to the market process

There is an unhelpful vagueness in the meaning of social capital. While this article does not provide a definitive interpretation of this important concept, after examining a representative sample of various usages—including the contributions of Becker, Coleman, Jacobs, and Putnam—it offers an interpretation of social capital, emphasizing the emergent character of norms and networks in public space, which is germane to the understanding of the entrepreneurially driven market process.     

The need for a strategic approach on the railways to the management of the vehicle–track interface

Network Rail's decision in 2003 to bring track maintenance back in-house was long-overdue recognition that responsibility for safety on Britain's railways cannot be abdicated – but there was more to it than that. The accidents at Hatfield and Potter's Bar (both in Hertfordshire, UK), in particular, had exposed very vividly how privatisation had encouraged each now separated and competing part of the industry to operate in its own interests: records, data and expertise were fragmented, and track and train operators alike each sought to minimise their individual costs in isolation. This paper argues from a systems analysis perspective that, on vehicle and track maintenance at least, the overall costs to the industry are in such circumstances likely to be higher than if the various parties were to work together towards minimising total track and train maintenance costs between them. Far from increasing efficiency, privatisation had the effect of reducing it.     

Paying for Pollution? How General Equilibrium Effects Undermine the “Spare the Air” Program

Policy-makers have relied on non-coercive mechanisms to achieve socially preferred outcomes in a variety of contexts when prices fail to ration scarce resources. Amid heightened concern about environmental damage and climate change, public appeals for cooperation and pecuniary incentives are frequently used to achieve resource conservation and other prosocial behavior. Yet the relative effectiveness of these two instruments is poorly understood when pecuniary incentives are small. This paper examines the extent to which free transit fares and appeals for car trip avoidance reduce car pollution on smoggy days. Using data on freeway traffic volumes and transit ridership, public appeals for cooperation are shown to have no significant effect on car trip demand. Free transit fares, however, do have a significant effect on car trip demand. But the effect is perverse in that it generates an increase in car trips and related pollution. Free fares also increase transit ridership. These results suggest that free transit rides do not induce motorists to substitute to transit, but instead subsidize regular transit rides and additional trips. Appeals for cooperation have no affect on carpooling behavior.     

The impact of the judiciary on entrepreneurship: Evaluation of Pakistan's “Access to Justice Programme”

In 2002, the Pakistani government implemented a judicial reform that cost $350 million or 0.1% of Pakistan's 2002 GDP. This reform did not involve increased incentives for judges to improve efficiency but merely provided them with more training. Nonetheless, the reform had dramatic effects on judicial efficiency and consequently on entrepreneurship: judges disposed of a quarter more cases and entry rate of new firms increased by half due to the reform. Using data from the World Bank Group Entrepreneurship Database, our estimates suggest that this translates into an increase of Pakistan's GDP by 0.5%.     

Return to the “natural” process of decision-making leads to good strategies

A novel approach to strategic management, Risk-Constrained Optimization (RCO), is an ensemble of special models, procedures, and algorithms to generate, evaluate, and help in executing good alternative strategies. RCO is a patented system of planning under uncertainty that searches for the most acceptable compromise between improving results and reducing risk in our decisions. Risk management and scenario planning dominate over optimization. RCO still uses maximization, but only in combination with several protective filters that screen, modify, and scale back the strategies, as necessary. As with any protective equipment, RCO could reduce the need for knowledge about the future.JEL Classification: D21, D81, C61I would like to acknowledge extremely helpful and insightful comments of Professor Mark Perlman (to whom this article owes very, very much), Professor Irma Adelman, Erwin Rezelman, Dr. Victor V. Masch, and an anonymous reviewer. I also greatly appreciate help in editing by David Owens and Professor Irving Rothman.     

Housing and unemployment: The search for the “American Dream”

This paper constructs a model of search and bargaining across two different markets: the labor market and the housing market. Interestingly, the model highlights that housing prices and frictions in the housing market have a profound impact on labor market activity through the desire of workers to eventually purchase a home, the “American Dream.” In particular, higher housing prices adversely affect workers’ incentives in the labor market as employment can eventually lead to access to housing through the ability to purchase a home. Similarly, labor market frictions can impact housing market activity. Notably, tighter housing markets are associated with higher unemployment rates and less job creation. Consequently, our work suggests that policymakers should be very careful in implementing policies targeted towards housing – housing markets are likely to generate significant external effects to other sectors of the economy, especially the labor market.     

Legal Remedies for Breach of the Regulatory “Contract”

We present a model of the regulatory contract that focuses on the mutual investment of buyer and seller and recognizes the cost of contractual renegotiation and the importance of breach remedies when contracts are incomplete. We model renegotiation as a litigation game played before a quasi-judicial administrative court. We find that the standard contractual remedy of expectations damages cannot implement first-best levels of investment for both buyer and seller. If the seller fully recovers its sunk investment upon buyer breach, however, then first-best levels of investment by both buyer and seller can be supported provided litigation costs are small enough.     

To search or not to search? The effects of UI benefit extension for the older unemployed

In Finland the older unemployed can collect unemployment insurance benefits until retirement, while the entitlement period for younger groups is two years. In 1997 the eligibility age of persons benefiting from extended benefits was raised from 53 to 55. This paper takes advantage of this quasi-experimental setting to identify the effect of extended benefits on transitions out of unemployment among the older unemployed. We apply a competing risks version of a split population duration model to account for multiple exit routes and the possibility that some of the older unemployed may not be active in the labour market due to pension rules. Our finding is that roughly half of the unemployed with extended benefits withdraw from job search.     

Stanfield’s Concepts of Social and Political Economy: Introduction to the Special Issue

This paper examines the contributions of James Ronald Stanfield to social and political economy. We start the analysis with Stanfield’s contribution to institution building through his education of PhD students, building a graduate program in political economy, and through the associations of social and political economy. Then we go on to scrutinise his creative developments and applications of the notions of economic surplus and social reproduction. This is followed by his extensive work on Karl Polanyi and the disembedded economy. Finally we explore his path-breaking analysis of the great capitalist restoration, the nurturance gap and love. Stanfield was one of the greatest institutionalists and social economists of the last hundred years, and these four areas of energetic creativity are his prime achievements in the area.     

The Next Five Years (2022–2027) Will Be Crucial for Building a Modern Socialist Country in All Respects: Implications from the Report to the 20th National Congress of the CPC

As pointed out in the Report to the 20th National Congress of the Communist Party of China (CPC), the next five years (2022–2027) will be crucial for beginning to build a modern socialist country in all respects. Firstly, the next five years will be a period of historical transition in the central task of the CPC. The central task of the CPC will be to realize the Second Centenary Goal of building China into a great modern socialist country in all respects. At this crucial stage for getting our efforts off to a good start, China should understand and pursue the Five-Sphere Integrated Plan to advance the rejuvenation of the Chinese nation on all fronts through a Chinese path to modernization. Secondly, the next five years will be a period of deep reform in which strategic opportunities, risks and challenges are concurrent. Alongside a new round of scientific and technological revolution and industrial transformation well underway, the new principal contradiction facing Chinese society, a historical transition in the central task of the CPC, and a shift in the international balance of power, profound and complex changes are taking place in China’s internal and external environment for development. Uncertainties and unforeseen factors are rising and must be dealt with appropriately. Thirdly, the next five years will be a key period of achieving China’s overall development objectives for 2035. It is a paramount stage of meeting the 14th Five-Year Plan goals, formulating the 15th Five-Year Plan goals, and realizing Chinese modernization by 2035. China should uphold the CPC’s overall leadership, follow the path of socialism with Chinese characteristics, apply a people-centered development philosophy, remain committed to deepening reform and opening up, and carry forward our fighting spirit. Fourthly, the next five years will be a crucial period of accelerating the creation of a new pattern of development and pursuing high-quality development. Chinese modernization should be advanced through a series of strategic initiatives, such as building a high-standard socialist market economy, modernizing the industrial system, propelling rural revitalization across the board, promoting coordinated regional development, and boosting high-standard opening up. Fifthly, the next five years will be an impact period of unprecedented downward pressure on the national economy under various factors and risks beating expectations. In order to achieve the 14th Five-Year Plan goals and the overall development objectives by 2035, it is necessary to defuse the threefold pressure composed of increasing demand shrinkage, supply shocks and flagging market expectations, as well as intensifying potential risks. To accomplish the main objectives and tasks for the next five years, it is necessary to observe objective laws, apply the new development philosophy, continue to pursue economic development as central task, adopt system-based thinking, take steady steps to sustain progress, and promote high-quality development in a scientific and effective manner.