A reexamination of the demand for UK exports: Evidence from an error correction model

This article examines the demand for UK exports and is focused on five issues. It starts by examining the stochastic properties of the relevant time series. Special attention is paid to the model specification, its dynamic structure, and its temporal stability. In addition, the potential effect of exchange rate uncertainty on export demand is considered. The empirical results show that the determinants of the demand for UK exports are foreign economic activity, export price, foreign prices, and exchange rate uncertainty. The results further indicate that exchange rate uncertainty has a negative effect on exports and that the overall export demand equation requires the inclusion of such a variable in order to exhibit structural stability. Trade policy in the UK, therefore must take into account the response of export demand to changes in real exchange rate volatility.     

Tariffs,the balance of payments,and the demand for money

This paper shows that in a small country the impact of a tariff on the balance of payments depends crutially on the role of relative prices in the demand function for money. An import (export) duty has a perverse impact on the balance of payments if importables (exportables) and money are net complements, but both import and export duties cannot have a perverse impact. A relation between the impact of export and import duties is also derived and is used to reestablish a well-known theorem of Meade on the equivalence of replacing import with export duties and currency depreciation.     

Economies of scale and the demand for money

Cross-sectional data from four Surveys of Small Business Finance demonstrate that economies of scale in money holding exist, that these economies appear to be increasing over time, and that the magnitudes are greater than those estimated for large US corporations. Firms not practising several specific cash management techniques and firms facing constraints in the credit market hold lower money balances. Minority-owned firms exhibit economies of scale similar to the overall sample but cash management practices and credit constraint variables generally do not influence their money holding behavior. Scale economies vary widely across industries but overall means are relatively stable over time.     

Financial liberalization and money demand in Peru: Implications for monetary policy

In 1990 a process of financial liberalization was begun in Peru with the aim of achieving economic stability and sustained development. Due to the economic policies that had been applied throughout the second half of the 1980s, this took place in a context of hyperinflation and financial repression. This article examines the effects that financial liberalization has had on the demand for real balances in Peru and discusses the implications for the conduct of monetary policy.     

The long and short of money and prices: a market equilibrium approach

The paper examines the exogeneity of money and prices within a money demand function. Two modifications to traditional money demand vector error correction modeling are made. The first modification is to introduce a money supply function, while the second is to estimate the behavior of the money sector and real sector simultaneously. Incorporating the additional information removes many of the possible biases and, therefore, allows for more efficient estimation of money and price behavior. Overall, significantly more support is found for the existence of ‘buffer stock’ relationships than has been found in the previous research.     

The dynamics of entry,exit and profitability: An error correction approach for the retail industry

We develop a two equation error correction model to investigate determinants of and dynamic interaction between changes in profits and number of firms in retailing. An explicit distinction is made between the effects of actual competition among incumbants, new firms competition and potential competition from firms outside the market. Effects of cost, demand and general income changes on profitability are investigated to gain insight in the role of retailing in the cost, demand and wage inflationary processes. The relative importance of profitability, growth and unemployment as determinants of net entry are studied. The model is tested using a panel data set of 36 Dutch shoptypes covering the 1977–1988 period.     

A “Pure” long-term interest rate and the demand for money

This article presents the appropriate rate by which to discount a constant, certain, infinite stream of future payments: that is, the yield on a noncallable perpetuity or consol. The American consol series is a daily risk-free “pure” long term interest rate which is undistorted by tax effects, call premiums, and varying duration and reinvestment assumptions. If Hamburger had used the American consol series instead of the U.S. Government Long Term Bond Rate in his money demand function, he would have found more of the “missing money.” His average error (actual minus predicted money demand) as a percentage of actual money demand would have been reduced from 1.43% to 0.93% a 35% error reduction.     

Accounting for money: The legal presuppositions of money and accounting in ancient Greece

This paper aims to extend the purview of Business History to the ancient world by exploring the hypothesis that the development of money was stimulated by legal institutions which regulated payment of compensation for torts. The hypothesis was propounded by Philip Grierson who argued that the Germanic institution of wergeld established the earliest concept of value which underlies money's function as a unit of account. It considers Grierson's thesis in the context of archaic Greece. Although archaic Greek law developed differently from the Germanic wergeld, the legal-political sphere in Greece provides decisive impetus to the development of money and accounting. The article examines the role of commerce in archaic Greece and its relationship to monetisation.     

Pathways to entrepreneurial growth: The influence of management, marketing, and money

Business growth is considered a worthy goal for firms and a measure of entrepreneurial success, as well as important for economic development. Why some firms grow and others do not, though, remains a subject of debate. Of the small proportion of firms that do grow, it is often assumed that they follow a similar growth trajectory and/or encounter certain stage thresholds; however, the evidence base on this is wanting. The new study of business growth presented here provides an in-depth analysis of 19 New England-based firms. Our findings reveal that fast-growing companies exhibit different rates and patterns of growth: some display rapid growth trajectories (Rapid Growth Pattern); some, slower, more measured rates (Incremental Growth Pattern); others, episodic periods of quick growth followed by sharp retrenchment (Episodic Growth Pattern); and, while no firm actively chose to stop growing, some reached points of stagnation (Plateau Growth Pattern). We found that three key factors—management, marketing, and money—affected company growth across these patterns. While not every factor was critical at each moment of growth for each firm, every entrepreneur cited the relative importance of each factor at some time during the growth of their firm. Thus, fast-growing firms do not grow in the same manner, at the same rate, or with the same outcomes. This article has implications for those seeking to understand the processes of development and patterns of fast-growth businesses.     

Exchange rates,money, and relative prices: The dollar-pound in the 1920s

This paper applies the monetary approach to exchange rate determination to the analysis of the monthly dollar/pound exchange rate during the period preceding the return of Britain to gold in 1925. The analytical framework emphasizes that the exchange rate is influenced by real and monetary factors. Special attention is given to the relationship between the exchange rate and the relative price of traded to non-traded goods. The estimated elasticity of the exchange rate with respect to this relative price is shown to be about 0.4 which provides an independent measure of the relative share of spending on non-traded goods.     

Fostering proactive behaviour: The role of work-related reflection,psychological empowerment,and participative safety for innovative behaviour and job crafting

This contribution aimed at investigating how work-related reflection as cognitive efforts towards developing an understanding of work tasks, the surrounding work context, and one's professional competencies adds to the role of psychological empowerment and participative safety in predicting innovative behaviour and job crafting as two forms of proactivity. Quantitative data from 295 employees of micro, small, and medium-sized organizations in the information sector were collected with a cross-sectional questionnaire. For hypotheses testing, structural equation modelling was employed. The results of the study showed that work-related reflection and psychological empowerment were substantially related to innovative behaviour and job crafting while participative safety only played a minor role. These findings imply that jobs need to contain empowering and sufficiently complex work tasks that require reflection and provide occasions for reflective interactions to enable employees to create efficient routines and adapt to changes at work. Furthermore, experiences of empowerment need to be rooted in social interactions at work. Likewise, the value of reflection will only unfold if employees and supervisors regularly engage in reflection.     

SME development,economic growth,and government intervention in a developing country: The Indonesian story

There is an ongoing debate in the literature on the development of small and medium enterprises (SMEs) in less developed countries (LDCs) on two issues: the survival of SMEs in the course of economic development and the importance of government promotion programs for SME development. This research paper aims to examine those issues empirically with Indonesian data. For this purpose, it develops and tests a set of hypotheses. It shows that both real gross domestic product per capita and government development expenditure (especially that used to finance SME development promotion programs) have positive impacts on SME growth. With this finding, the research argues that SMEs in LDCs can survive, and even grow in the long-run, for three main reasons: (a) they create a niche market for themselves, (b) they act as a “last resort” for the poor, and (c) they will grow along with large enterprises (LEs) because of their increasingly important production linkages with LEs in the form of subcontracting.

The money creation process: A theoretical and empirical analysis for the United States

The aim of this paper is to assess—on both theoretical and empirical grounds—the two main views regarding the money creation process, namely the endogenous and exogenous money approaches. After analysing the main issues and the related empirical literature, we will apply a vector autoregression model and a vector error‐correction model methodology to the United States for the period 1959–2017 to assess the causal relationship between a number of critical variables that are supposed to determine the money supply, that is, the monetary base, bank deposits, bank loans and the nominal level of economic activity. The empirical analysis supports several propositions related to the endogenous money approach. In particular, it shows that for the United States in the years 1959–2017 (a) bank loans determine bank deposits and (b) bank deposits in turn determine the monetary base. Our conclusion is that money supply is mainly determined endogenously by the lending activity of commercial banks and the nominal level of economic activity.