Employment Flows,Capital Mobility,and Policy Analysis

This article extends Hopenhayn and Rogerson's analysis of firing taxes by introducing a flexible form of capital and considering transitionary dynamics. The article finds that capital is not important for understanding the long run and welfare effects of firing taxes. However, capital is crucial for determining the short run consequences of eliminating this type of policy.     

Malthus's evolutionary model,expectations, and innovation

The conventional view of Malthus is one of a reactionary who failed to understand how innovation could refute his pessimism about population and economic growth. This article aims to show that this is quite incorrect, and has arisen primarily through failing to interpret Malthus as an evolutionary thinker. Malthus had little personal knowledge of the supply side of production in firms, and his growth model is entirely demand-led; but as such it remains one of the most complete demand-side explanations of economic growth in existence. The major role of innovations is highlighted in the article: Malthus's main point is that labour-saving innovation alone will not sustain economic growth in the long run, unless matched by growing demand-instead it would generate economic fluctuations. the article concludes by listing the range of such fluctuations espoused, from the very short run to the very long run (long waves).This article is a revised and shortened version of a paper delivered to the IXth Internationalen Demographischen Seminar at the Institut für Demographie, Humboldt University, Berlin, in October 1990. I should like to thank participants in that Seminar and also the two referees of this Journal for their supportive and constructive comments.     

ESTABLISHMENT DYNAMICS,VACANCIES, AND UNEMPLOYMENT: A NEOCLASSICAL APPROACH

This article introduces and analyzes a Walrasian model of worker flows, job flows, vacancies, and unemployment. Calibrating the model to U.S. data, the article finds that all variables comove with output quite well but that they fluctuate too little. However, the failure is not as bad as in “Shimer's puzzle.” Interestingly, the article also finds that introducing establishment dynamics into the model, while realistic, is irrelevant for understanding unemployment and vacancy fluctuations: The business cycles of the model with establishment dynamics are virtually the same as those of a version with a representative firm.     

The Case,If Any,for Economic Literacy

This article is reprinted as a tribute to Nobel Memorial Prize winner Stigler with the expectation that it will provoke current discussion about the goals and accomplishments of the economic education movement. The article first appeared in the Spring 1970 issue of the Journal of Economic Education.     

Vicarelli,Keynes, and the unstable nexus between investment,liquidity, and finance

The goal of this article is to reconstruct Keynes’s vision of the unstable nexus between investment, liquidity and finance, as set out by the Italian economist Fausto Vicarelli (1936–1986). As argued in the article, one of Vicarelli’s main contributions consists of explaining the inherent instability of financially sophisticated capitalist economies in terms of the interaction (and double dissociation) between investment, saving, and stock-holding decisions, within a Keynesian framework characterized by the presence of fundamental uncertainty. While Vicarelli’s interpretation of Keynes is best understood in the context of the post-Keynesian literature, its relevance goes beyond that, as its sheds light on current issues related to the post-2008 financial crisis and its policy implications.     

Ethnoscapes,National Territorialisation,and the Afghan War

This article pursues the question of how the territorialisation of power in the establishment of the Afghan nation-state has affected the spatial perceptions of political actors and the population at large. This question is particularly topical as spatial references are at present the driving force behind an ethnicisation of politics in Afghanistan. These perceived ethnic spaces, so-called ethnoscapes, not only compete with one another, but also contradict Afghanistan itself as a national territory. Thus since the outbreak of the Afghan war 1979 various political actors have been attempting to mobilise their constituencies over ethnic issues in order to use references to the spatial origins and expansion of their ethnic category to legitimise political claims. The principal argument of this article is that the population’s strong identification with the national territory of Afghanistan has to date prevented an ethnicisation of the masses in the Afghan conflict. Furthermore the article argues that the irreconcilability of the various perceived ethnic territories is an obstacle to the currently much-discussed establishment of ethno-federalism.     

Institutions, social norms, and decision-theoretic norms

This article attempts to contribute to the debate on how to define and theorize institutions, particularly regarding normativity and explanations for conformity. Firstly, it proposes some distinctions and concepts: it separates moral from epistemic values, leading to different types of legitimacy and social norms; then it distinguishes different meanings of the term ‘normative’ and introduces the concept of decision-theoretic norm. Secondly, the article defends a broad concept of institutions by arguing that some institutions are neither social norms nor decision-theoretic ones, a point that matters for institutional change and stability. Some conventions from which innovators break are highlighted as an example.     

Marx,Lenin and the Cooperative Movement

Drawing upon the writings of Marx and Lenin, this article refutes the widely shared but incorrect assumption that Marx and Lenin rejected cooperation even as a mode of production for the transitional period. It reviews Marx's belief that cooperatives would gradually supplant capitalistic firms, and that the generalised growth of cooperation would give rise to a new mode of production; the article also analyses Lenin's 1923 article on cooperation in which not only is cooperation described as a major step in the transition to socialism, but even equated with socialism at large. The hypotheses of this article are supported through a close reading of these works and also shed light on numerous implications arising from this reading.     

Habit,Decision-Making,and Rationality: Comparing Thorstein Veblen and Early Herbert Simon

The article aims to contribute to the convergence between institutional and neo-Schumpeterian evolutionary economics. It intends to help unify the behavioral foundations of these two strands of thought by returning to the original views of their main historical inspirations. It thus proposes a comparative analysis of the theory of human behavior developed by Thorstein Veblen and Herbert Simon, respectively. The article notably discusses how Simon’s early work links together the notions of habit, rationality, and the decision-making process, and explores the extent to which his views are consistent with, complementary to, or divergent from Veblen’s. The article highlights several commonalities between Simon and Veblen’s views on habits. However, Simon departs from Veblen in developing a dual model of human behavior which clearly differentiates habit-based from decision-based behaviors. The article argues that neo-Schumpeterian evolutionary economists should go beyond this binary model and build on the pragmatist-Veblenian approach, in which these two dimensions are intimately entangled. This process could allow the economists in question to take advantage of the most valuable insights of institutional economics regarding the interactions between individual choices and habits and institutions.     

What Makes Firms Competitive? States,Markets, and Organisational Embeddedness in Competitive Firm Restructuring in Postsocialist Economies

The prevailing transitions literature suggests that dynamic firms in postsocialist economies are the result of macroinstitutional reforms leading to the making of markets. This article builds on work in comparative political economy and economic sociology to show that the degree of competitive behaviour of postsocialist firms is determined not by the existence of general market institutions alone but by the kinds of organisational allies firms possess and the kinds of markets they compete in. Using firm survey data across 28 postsocialist economies, the article examines the determinants of competitive restructuring by firms, including product innovation, standards upgrade, financial transparency, and investments in research and development. The article confirms insights from comparative political economy which suggest that dynamic enterprise sectors emerge when governance is effective. However, at the firm level, the article finds that transnational ties and supportive policy environments are most significant in the making of dynamic postsocialist enterprises. The article also highlights important regional variation in firm behaviour and discusses the relationship between institutional frameworks, organisational embeddedness, and firm restructuring in postsocialist economies.     

Sticky wages,efficiency wages,and market processes

Work on this article was supported by a grant from the Research Committee of the College of Business Administration, University of South Florida.     

TRAINING,TURNOVER, AND SEARCH*

This article explores a model of firm‐specific training in a job search environment with labor turnover. The main substantive finding is a positive association between training and wages (when dispersed). The article then precisely characterizes how both wage dispersion and firm profitability depend on the flow value b≥ 0 of workers' unmatched time. It is shown that: (i) for all high values b, no equilibrium exists; (ii) for intermediate values b, multiple equilibria arise, where firms earn zero profits, and choose from a general wage distribution; (iii) for all lower values b, there is a unique equilibrium, with firms earning positive profits, and choosing from an atomless set of wages.     

INFORMATION,RISK SHARING,AND INCENTIVES IN AGENCY PROBLEMS

This article studies the use of information for incentives and risk sharing in agency problems. When the principal is risk neutral or the outcome is contractible, risk sharing is unnecessary or dealt with by a contract on the outcome, so information systems are used for incentives only. When the outcome is noncontractible, a risk‐averse principal relies on imperfect information for both incentives and risk sharing. Under the first‐order approach, this article relaxes Gjesdal's criterion for ranking information systems and finds conditions justifying the first‐order approach when the principal is risk averse and the outcome is noncontractible.     

Democracy, size of bureaucracy, and economic growth: evidence from Russian regions

This article considers the impact of sub-national political systems on economic growth by applying the case of Russian regions from 2000 to 2004. It investigates two dimensions of the sub-national systems. First, it studies the influence of democracy on economic performance, providing evidence of a non-linear relationship between democracy and economic growth. Regions with high levels of democracy, as well as strong autocracies, perform better than hybrid regimes. Second, this article considers the influence of the size of the bureaucracy on economic outcomes and confirms the ??grabbing hand?? view on bureaucracy rather than the Weberian idea. Increasing the size of the bureaucracy is associated with a decline in economic performance. In addition, this article analyzes the potential interaction between these two characteristics of sub-national politics as factors of economic growth, but does not establish any robust results.     

Real and nominal UK interest rates,ERM membership,and inflation targeting

This article estimates a two-factor term structure model to analyze the time-varying mean-reverting levels of the UK real and nominal short-term interest rates. Before and during British membership in the ERM, the mean-reverting levels of real and nominal short rates have a strong negative correlation. Afterward, when the UK implemented an inflation targeting policy, the mean-reverting levels have a strong positive correlation. The article also reports empirical evidence of a link between the time-varying central tendencies and inflation in the disinflation period before the implementation of the inflation targeting policy.     

The searchers,II: How consumers can find cost-effective,quality health care

The original "Searchers" article appeared in the March 2000 issue of Employee Benefits Journal. It described the use of a patient satisfaction survey at Southwest Texas State University (SWT) to assist employees at the annual open enrollment period to better select their managed care organization (MCO). This article revisits that process, but further describes the subsequent publication of a recommended list of preferred physicians and the use of the peer review to report consumer concerns about the performance of individual physicians.     

Bank Deregulation, Supervision, and Agency Problems

This article argues that the financial instability of the 1980s following financial deregulation in Australia can be partly traced to a lack of attention to agency problems in banking. Because the market for corporate control and corporate governance structures in banking were unsatisfactory, the benefits of increased competition in financial product markets were offset by inadequate monitoring and controls on bank management. It is also argued that the current emphasis of prudential supervision on capital adequacy requirements can provide only a partial solution to achieving efficiency and stability in the financial sector—because it focuses only upon the agency relationships between owners and government/depositors. Complementary developments in corporate governance and control are required to address agency relationships involving bank management. Some recent developments in this area and in supervision of non-bank financial markets are assessed from the perspective developed in this article.     

Extramarital Affairs, Marital Satisfaction, and Divorce: Evidence from Hong Kong

This article provides the first empirical study on how the perceived changes of marital satisfaction affect marital stability using a unique data set obtained in Hong Kong. It is found that the change of marital satisfaction due to extramarital affairs clearly increases the probability of divorce, but it is not the only determinant of marital instability. In particular, the presence of dependent children in a family and good marital quality before the discovery of extramarital affairs would lower the probability of divorce. Moreover, this article generates several interesting policy implications. (JEL D1 , J1 )     

Marx, devalorisation, and the theory of value

This article investigates the implications of devalorisationof fixed capital in Marx's value theory. It shows why an exact,algebraic value theory is impossible. It also indicates howanalysis of devalorisation provides a basis for understandingthe nature of crises.     

Credit Markets With Differences in Abilities: Education, Distribution, and Growth

This article presents an endogenous growth model in which credit markets affect time allocation of individuals with different educational abilities. Credit markets allow the more able to specialize in studying and the less able to specialize in working. This specialization can increase growth and welfare. This article also shows that in economies with high (low) levels of education abilities, the opening of credit markets induces a more disperse (equal) income distribution. The role of intergenerational transfers in overcoming the absence of credit markets is also discussed, as well as other forms of credit markets imperfections.