Why did the industrial diet triumph? The massification of dairy consumption in Spain, 1965–90

The rise of a mass, agri‐industrial diet after the Second World War was crucial for the culmination of the nutritional transition that western countries had been involved in since the second half of the nineteenth century—but why did the industrial diet triumph? This article takes the massification of dairy consumption in Spain 1965–90 as a study case. Using a newly constructed database and qualitative material within an evolutionary socio‐economic framework, the article reaches two conclusions. First, the massification of dairy consumption was linked to most households’ transition to a softer budget constraint, which was driven mainly by increasing household incomes (and only secondarily by consumer price reductions caused by food industrialization). Second, the reason why the softening of the budget constraint played such a major role was that it was joined by a substantial increase in consumer trust in dairy products, which in turn resulted from industrial standardization. The article is in line with recent work that underlines the dietary change brought about by food industrialization, but questions whether the latter's major contribution was of a quantitative, price‐related nature and suggests that more attention should be paid to the qualitative, preferences‐related dimension.     

When do stable matching mechanisms fail? The role of standardized tests in Chinese college admissions

In this paper, we investigate matching problems where priorities and preferences are misaligned. In the case of centralized Chinese college admissions, students are matched based on their test scores in standardized tests, a noisy realization of their aptitudes due to measurement errors. We show that in this case any matching mechanism that is stable with respect to score is not stable with respect to aptitude. The resulting instability leads to colleges' incentive to participate in early admissions (zizhu zhaosheng), a form of market unraveling. However, a manipulable mechanism such as the Immediate Acceptance mechanism, combined with limited information about priorities, may succeed in mending this market failure. We then design and conduct a laboratory experiment where we compare the performance of two mechanisms (the Immediate Acceptance mechanism and the Deferred Acceptance mechanism), under two timing conditions of the submission of students' rank-ordered lists of colleges (before the exam and after the exam), using a two-stage matching market design with the possibility of early offers. In the experiment, a significant level of market unraveling occurred under mechanisms that are not stable with respect to aptitude, confirming theoretical predictions. We also find that the Immediate Acceptance mechanism under pre-exam submission condition significantly reduces such unraveling.     

When and why did eastern European economies begin to fail? Lessons from a Czechoslovak/UK productivity comparison, 1921–1991

Czechoslovak industrial labour productivity fluctuated around two-thirds of the UK level under the private sector regime between the wars. Under the central planning regime of the postwar period, Czechoslovakia's comparative productivity position initially improved to around three-quarters of the UK level by the early-1960s, before falling back. During the 1980s, the deterioration of Czechoslovakia's productivity performance accelerated sharply, falling to around one-third of the UK level. Central planning was able to achieve a satisfactory productivity performance during the era of mass production, but could not adapt to the requirements of flexible production technology during the 1980s.     

Why did Swedish regional net migration rates fall in the 1970s? The role of policy changes versus structural change, 1945–1985

The relationship between local labour market conditions and regional migration has been widely discussed within research. In Sweden, where interregional migration reached a peak in the 1960s but decreased substantially in the 1970s, the role of economic policy has been especially contended in light of the Swedish model and its official stress on regional mobility. By collecting and creating a new and unique dataset on net-migration, vacancy rates, employment and labour income by county, the pattern of interregional migration in Sweden is analysed over a period of time that also covers the early postwar period (1945–1985), allowing for a detailed evaluation of the drivers of migration at different times. My results suggest that there was no significant change over time in the responsiveness of migration to local labour market conditions. The changing patterns of regional migration were therefore more likely the result of changes in the pace and direction of structural change. I discuss the implications of these results for previous accounts of the Swedish model and of the decline in migration after 1970.     

Why Privatize? The Case of Argentina's Public Provincial Banks

This paper analyzes detailed data on the pre- and post-privatization performance of publicly-owned provincial banks in Argentina. It estimates fiscal savings associated with privatization and describes the technical process that was used. The process included the creation of residual entities for the liabilities that private buyers found unattractive. The paper argues that the Fondo Fiduciario, which was created to convert the short-term liabilities of the residual entities into long-term obligations, helped make these privatizations politically feasible. Given the substantial number of state-owned banks in developing countries, this paper provides insight into the desirability and feasibility of future privatizations.     

Why did the communist party reform in China,but not in the Soviet Union? The political economy of agricultural transition

The dramatic transition from Communism to market economies across Asia and Europe started in the Chinese countryside in the 1970s. Since then more than a billion of people, many of them very poor, have been affected by radical reforms in agriculture. However, there are enormous differences in the reform strategies that countries have chosen. This paper presents a set of arguments to explain why countries have chosen different reform policies.     

Why do commercial banks hold government bonds? The case of Japan

We investigate the determinants of the demand for Japanese government bonds (JGBs) by commercial banks in Japan. In particular, by estimating portfolio equations for JGB demand and bank loans, based on a panel data set from the late 1990s to the 2000s, we rigorously test the popular assertion that the long stagnation of the real economy caused a shift in the portfolios of commercial banks from bank lending to JGBs. We find that the popular assertion is not empirically supported. Rather, the portfolio shift from loans to JGBs has been caused by a fall in the ratio of the loan rate to unit lending costs, or the bank’s price–cost margin for lending.     

Raiffeisenism abroad: why did German cooperative banking fail in Ireland but prosper in the Netherlands?

Why did imitations of Raiffeisen's rural cooperative savings and loans associations work well in some European countries, but fail in others? This article considers the example of Raiffeisenism in Ireland and in the Netherlands. Raiffeisen banks arrived in both places at the same time, but had drastically different fates. In Ireland they were almost wiped out by the early 1920s, while in the Netherlands they proved to be a long‐lasting institutional transplant. Raiffeisen banks were successful in the Netherlands because they operated in niche markets with few competitors, while rural financial markets in Ireland were unsegmented and populated by long‐established incumbents, leaving little room for new players, whatever their institutional advantages. Dutch Raiffeisen banks were largely self‐financing, closely integrated into the wider rural economy, and able to take advantage of economic and religious divisions in rural society. Their Irish counterparts were not.     

The end of the Asian Myth: Why were the Experts Fooled?

This article examines the reasons behind the overoptimism of a large segment of the economics profession concerning the performance of East Asian economies, which was shattered by the financial crises of 1997–98. It also shows how the crisis placed into bold relief many institutional characteristics of these economies which negate many past attempts to characterize them as open and market-driven.     

Can older workers stay productive? The role of ICT skills and training

This paper quantitatively examines the effects of aging on labor productivity using individual worker data in Korea. We find that information and communications technology (ICT) skills and participation in job-related training can help older workers stay productive. The estimation results present that ICT skills, a measure incorporating an individual’s proficiency in ICT skills and their utilization in the workplace, has a positive effect on the wages of the older workers aged 50–64 with a high level of education or in a skill-intensive occupation. Job training also has a significant positive effect on the wages of older workers. These results imply that compared to younger workers, well-educated older workers can obtain greater productivity increase through ICT skill attainment and their adequate use, and job-training. The evidence suggests that a productivity decrease in line with the aging process can be mitigated by training aging workers to equip themselves with ICT skills.     

The changing role of agriculture with economic structural change – The case of China

We analyze the implication of structural change to the evolving role of agriculture using China as an example. By combining a growth decomposition exercise with Input-Output (IO) and CGE model analyses using China's seven input-output tables (IOTs) in 1987–2017, the evolving role of the agriculture is quantitatively measured. The growth decomposition analysis shows that between 1978 and 2017, China doubled the size of its total labor force, while the absolute number of agricultural workers falls in this period. Rising labor productivity in agriculture has led to rapid agricultural growth without increasing agricultural employment, allowing agriculture to indirectly contribute to the economywide productivity growth through structural change.The measurement of economic integration using an IO approach helps to explain why China's rapid structural change has been accompanied by similar rapid productivity growth within each sector. The general equilibrium effect of structural change on the evolving role of agriculture is further assessed using two CGE models representing the initial (1987) and end (2017) years of a period of 30 years. Similar agricultural productivity shock induces a smaller economywide gain in 2017 than in 1987 in the CGE models, while the gap in the general equilibrium gain between these two years is much smaller than the difference in agriculture's size of the economy in the two years because of stronger linkages between agriculture and the rest of the economy in 2017. About 0.5 unit additional nonagricultural value-added is associated with a unit agricultural value-added increase in 1987, while additional gains in nonagricultural value-added rise to 2.7 unit in 2017.Our analysis of economic integration and implication of structural change to the evolving role of agriculture emphasizes the supply side role for sustainable growth in which agriculture continues to play an important but different role from the past when the demand side effects were stronger. Policies to strengthen supply side linkages have been emphasized in the recent years in China. Exploring further integration between agriculture and the rest of the economy should be part of the new growth strategy.     

The colonial roots of land inequality: geography,factor endowments,or institutions?

Land inequality is one of the crucial underpinnings of long‐run persistent wealth and asset inequality. This article assesses the colonial roots of land inequality from a comparative perspective. The evolution of land inequality is analysed in a cross‐colonial multivariate regression framework complemented by an in‐depth comparative case study of three former British colonies: Malaysia, Sierra Leone, and Zambia. The main conclusion is that the literature tends to overemphasize the role of geography and to underestimate the role of pre‐colonial institutions in shaping the colonial political economic context in which land is (re)distributed from natives to colonial settlers.     

Why did China Benefit from a Joint Venture Policy？A Case Study of Shanghai

Mandatory joint venture requirements have played an important role in many developing countries' foreign investment policies. However,such policies have been criticized in some of the economic literatures on the grounds that they deter investment and lead to the development of inefficient industries. A significant amount of foreign direct investment in Shanghai has been in the form of joint ventures. Yet,by many measures,Shanghai has benefited enormously. This article argues that there are three reasons to explain Shanghai's successful use of the joint venture for its industrial development. First,local firms and industries have had the capability and willingness to learn from joint ventures and other foreign invested firms. Second,the joint venture policy has been more likely than not to have "crowded in" local investment rather than crowd it out. Third,investment authorities in Shanghai have had sufficient bureaucratic capacity and political insulation to prevent the joint venture policy from being manipulated by rent seekers.     

Stock price targeting and fiscal deficit in Japan: Why did the fiscal deficit increase during Japan’s lost decades?

The purpose of this paper is to explain why Japan’s fiscal deficit increased so dramatically in the 1990s and the 2000s. We focus on the role of “stock price targeting” to explain why the fiscal expenditure increased so much. After presenting a simple model to describe government behavior with an optimistic view about stock price and output growth, the paper tests whether the model can explain Japan’s fiscal expenditure. The empirical results, using biannual and high-frequency data of the 1990s and the 2000s, show that the stock price targeting can track Japan’s fiscal expenditure reasonably well, especially in the 1990s. They imply that without the stock price targeting, the total amount of biannual fiscal stimulus from 1992 to 2000 would have been lower by 2.5 trillion yen on average.     

The role of infrastructure in China’s regional economic growth

This study investigates the relationship between infrastructure capital and China's regional economic growth for the period 1990–2013. Four types of infrastructure are considered: electricity generating capacity, roadway, railway, and telecommunications. Using a vector error correction model, we find mixed support across time period and region for the contribution of infrastructure investment to economic development. With regard to road construction in lagging regions in particular, the impact appears to have become negative under a program of ramped up efforts. The results resonate with the theoretical literature on the inverse U-shaped relationship between infrastructure investment and growth which posits a “crowding-out effect” of private capital when infrastructure investment becomes too dominant.     

Should East Asia’s currencies be pegged to the yen? The role of invoice currency

Growing concern that a dollar peg exposes East Asian economies to fluctuations in the dollar–yen exchange rate has stimulated research on currency basket regimes as alternatives for these economies. However, existing studies have mostly ignored an important characteristic of East Asia, i.e., most of its international trade is invoiced in the U.S. dollars. This paper investigates how the preponderance of dollar invoicing affects optimal currency basket regimes for East Asian economies. I develop a three-country center-periphery sticky-price dynamic stochastic general equilibrium model for the analysis. The model is solved numerically by taking second-order approximations to the policy functions with the expected lifetime utility of households chosen as the welfare criterion. Contrary to the conjecture of existing literature, I show that predominance of dollar invoicing implies that the dollar should receive a smaller weight than suggested by bilateral trade shares between emerging markets in East Asia and the United States. The results hinge on the interaction of different degrees of pass-through implied by the choice of invoice currency and endogenous responses of monetary policies in the center countries.