Indiaʼs mysterious manufacturing miracle

Using data on formal manufacturing plants in India, we report a large but imprecise speedup in productivity growth starting in the early 1990s (e.g., 1993–2007 compared to 1980–1992). We trace it to productivity growth within large plants (200 workers or more), as opposed to reallocation across such plants. As many economists believe Indian reforms during this era improved resource allocation, the absence of a growth pickup from reallocation is surprising. Moreover, when we look across industries we fail to robustly relate productivity growth to prominent reforms such as industrial de-licensing, tariff reductions, FDI liberalization, or lifting of small-scale industry reservations. Even under a generous reading of their effects, these reforms (at least as we measure them) account for less than one-third of the rapid productivity growth in Indian manufacturing from 1980–2007.     

Voluntarily separable repeated Prisonerʼs Dilemma with reference letters

We consider the voluntarily separable repeated Prisoner?s Dilemma model in which players randomly meet and form pairs to repeatedly play Prisoner?s Dilemma only by mutual agreement. While the literature has dealt with the case of no information flow across partnerships, we consider the case in which players can issue a “reference letter” to verify at least that the partnership entered the cooperation phase. We show that such reference letters can be voluntarily provided by the partners even at some cost, and that the sheer existence of a letter shortens the trust-building periods and thus improves social efficiency.     

Japanʼs intangible capital and valuation of corporations in a neoclassical framework

This paper estimates the economic value in the 1980s and 1990s of corporate assets in Japan, including both tangible and intangible assets, based on the neoclassical framework of McGrattan and Prescott (2005). Our estimates use a new micro-data set that comprises the accounting statements of all listed, non-financial companies in Japan. We find that in 1980–1986, a period that immediately preceded Japan?s so-called “bubble economy”, our assessed value of corporate productive assets, net of the value of corporate debt, is approximately equal to the actual stock market value of Japanese corporate equity. The finding differs from previous results based on studies of aggregate data sets or based on studies of micro-data sets that neglected intangible capital. We also show that the Japanese ratio of the amount of intangible capital stock to the amount of tangible capital stock is comparable to the analogous ratios for the U.S. and U.K.     

On deep-rooted problems in China��s economy

China’s economy is currently at a crossroad leading to two different directions. One is to further deepen the reform, concentrate on crucial aspects and relax control over details, govern by non-intervention and let the market play an increasing role and lead the economy; while the other is to enhance the state sector with weakening the private sector, and let the government play a greater role and lead the economy. Which direction should China head for? The answer would undoubtedly be the former. As such, this paper argues that there does not exist the so-called “China Model” and attributes the deep-seated problems caused by those misconceptions in China’s economy to three pairs of “over-emphasis” versus “under-emphasis”, namely, over-emphasis on the government versus under-emphasis on the market, over-emphasis on enriching state versus under-emphasis on enriching the people, and over-emphasis on development versus under-emphasis on public service. Moreover, in regard to how to solve these problems, the paper proposes to further advance the two fundamental transformations of government functions: (1) to transform from a development-oriented government to a service-oriented government, and (2) to transform from an omnipotent government to a limited government.     

On the redistributive effects of Germany’s feed-in tariff

This article assesses the redistributive effects of a key element of German climate policy, the promotion of renewables in the electricity generation mix through the provision of a feed-in tariff. The tariff shapes the distribution of households’ disposable incomes by charging a levy that is proportional to household electricity consumption and by transferring financial resources to households who are feeding green electricity into the public grid. Our study builds on representative household survey data, providing information on various socio-demographics, household electricity consumption, and ownership of photovoltaic facilities. The redistributive effects of the feed-in tariff are evaluated by means of inequality indices. All the indices indicate that Germany’s feed-in tariff is regressive.     

On Hegel’s Interpretation of the Conflict in Antigone

This essay will argue that Hegel’s balanced interpretation of the Antigone is the correct one on the grounds that any interpretation that favors either Creon or Antigone or reduces the conflict to one of personalities and not values would render Antigone a weaker tragedy.     

Belief in the opponentsʼ future rationality

For dynamic games we consider the idea that a player, at every stage of the game, will always believe that his opponents will choose rationally in the future. This is the basis for the concept of common belief in future rationality, which we formalize within an epistemic model. We present an iterative procedure, backward dominance, that proceeds by eliminating strategies from the game, based on strict dominance arguments. We show that the backward dominance procedure selects precisely those strategies that can rationally be chosen under common belief in future rationality if we would not impose (common belief in) Bayesian updating.     

After Hayek: On Theodore Burczak’s socialism after Hayek

Burczak reformulates socialism to escape Hayek’s strictures against central planning. While Hayek supports a social safety net as well as other liberal reforms, Burczak points out that these reforms fall outside Hayek’s theoretical framework. We explain that this is because Hayek narrowed the classical economists’ conception of sympathetic agency to imitation and rule following. By contrast, liberal reform proposals follow from the theoretical framework of Adam Smith and John Stuart Mill. For Smith and Mill, sympathy is a richer concept in which people change places imaginatively with others. Sympathetic agency allows a wide range of other regarding actions and political reforms.

On the optimality and sustainability of Turkey’s current account

We analyze Turkey’s current account optimality and sustainability between 1992 and 2004. Using the intertemporal benchmark model for Turkey’s current account we test for its intertemporal solvency. Based on traditional and alternative tests (which account for persistence in the current account), we conclude that Turkey breached the intertemporal solvency condition in the sample period. In addition, stationarity tests of the deviation between actual and optimal net external liabilities series confirm that Turkey’s current account deficit was unsustainable for that period. However, further econometric investigation and analysis of reforms causes us to question our conclusions of non-optimality and unsustainability of the Turkish current account for the latter part of the period. We are indebted to two anonymous referees for insightful comments and suggestions. We would also like to thank seminar participants at Middle Eastern Technical University, Ankara, Turkey, for comments on an earlier version of this paper. Responsibility for all errors remains with the authors.     

On science and reform: the parable of the new economics, 1960s–1970s

The article considers Paul Samuelson, Robert Solow, James Tobin, Walter Heller, and Arthur Okun qua political economists. The focus is on their combination of a faith in economic science and a passionate public spirit. The article aims to substantiate two related arguments. The first is that these “new economists” were public intellectuals, regularly addressing public opinion, and engaging with the major economic and social issues of the times; the second is that their value judgements gained the upper hand over scientific discourse when they were confronted with the 1970s inflation.     

On the origin of money,or Menger’s one-sided reading of Genovesi’s Lezioni

Abstract

By examining Menger’s interpretation of Genovesi’s arguments on the origin of money, this note shows that Genovesi is a subtle theorist managing to blend the Cartalist with the Mengerian approaches to the origins of money. Far from resting exclusively on the Mengerian unattended consequences of the uncoordinated behaviours of rational agents trying to minimise their transaction costs, Genovesi shows how governments can and do create fiat money with a positive value in connexion with their ability to raise taxes. For Genvesi both trust (à la Menger) and authority (à la Cartalist) are necessary to explain the positive value of money.     

On the Operation and Organization Mode of the Enterprise＇s E-commerce

The E-business organization of enterprise comes into being due to the demand of era. With the development of the society, it has been developing from H type to U Mode, to the shape of matrix and then to the shape of the network. The evolution of these modes is derived from the necessity to serve customers and society better. This is the current E-business organization mode.     

On Sugden’s “mutually beneficial practice” and Berge equilibrium

Cooperative behavior is often observed in ordinary market transactions. To account for this observation, Robert Sugden proposes a team reasoning theory in which the common interest of team reasoners is defined by the notion of mutually beneficial practice. We study the relationships between mutually beneficial practices and Berge equilibria (a Berge equilibrium is a strategy profile such that a unilateral change of strategy by any one player cannot increase another player’s payoff). We propose two sufficient conditions under which a (strict) Berge equilibrium is a mutually beneficial practice.