Income shares and capital formation: patterns of recent developments

The development of the functional income distribution in the advanced capitalist economies of France, Germany, the United Kingdom and the U.S.A. has shown a marked shift towards the profit share during the 1980s. Starting from this observation the impact of changing income shares on capital formation is studied in a post-keynesian framework. Following a model proposed by Bhaduri/Marglin, different patterns of income distribution and capital accumulation are distinguished theoretically and are examined empirically for the manufacturing sectors of the investigated economies. It is concluded that the development of the profit share and the rate of capital accumulation on average over the business cycle implies that the conditions for co-operative “wage-led growth” have been established again during the cycle covering the 1980s, although these opportunities for co-operation have not been realized by supply-side politics.     

Engels’ pause: Technical change, capital accumulation, and inequality in the british industrial revolution

The paper reviews the macroeconomic data describing the British economy from 1760 to 1913 and shows that it passed through a two stage evolution of inequality. In the first half of the 19th century, the real wage stagnated while output per worker expanded. The profit rate doubled and the share of profits in national income expanded at the expense of labour and land. After the middle of the 19th century, real wages began to grow in line with productivity, and the profit rate and factor shares stabilized. An integrated model of growth and distribution is developed to explain these trends. The model includes an aggregate production function that explains the distribution of income, while a savings function in which savings depended on property income governs accumulation. Simulations with the model show that technical progress was the prime mover behind the industrial revolution. Capital accumulation was a necessary complement. The surge in inequality was intrinsic to the growth process: technical change increased the demand for capital and raised the profit rate and capital’s share. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation. After the middle of the 19th century, accumulation had caught up with the requirements of technology and wages rose in line with productivity.     

The Structure of Production,the Balance of Payments and Growth in Developing Countries: An Essay in Memory of Mohammed Nureldin Hussain 1954–2005

Abstract: This essay commemorates the work of Mohammed Nureldin Hussain who was Chief Research Economist in the African Development Bank, and Editor of the African Development Review from 2003 to his untimely death in 2005. It focuses on five aspects of his work: his emphasis on the role of the structure of production and trade for an understanding of growth rate differences between countries; his development of the balance of payments constrained growth model with capital flows; the application of this model to compare the performance of African and Asian countries; his use of this model as an alternative to the Harrod–Domar growth model for estimating the financing requirements in Africa to meet the Millennium Poverty Reduction targets by 2015 — and also for estimating the impact of the Highly Indebted Poor Country initiative on growth and poverty reduction in Africa, and finally, his critical appraisal in the 1980s of the supply‐side approach to devaluation in his own country, the Sudan.     

The Aggregate Production Function of the Finnish Economy in the Twentieth Century

This article uses the Bayesian approach to estimate the parameters of the normalized constant elasticity of substitution (CES) function with factor‐augmenting technical progress directly, rather than using derived first‐order conditions of profit maximizing behavior. Bayesian estimation is applied because maximum likelihood estimation is sensitive to the starting values of maximization, and the parameters typically fail to converge to the global optimum because of a multimodal likelihood. Thanks to a convenient prior distribution, the posterior simulation of parameters works fairly well. The results indicate that in the long run (over 100 years) the parameters for the elasticity of substitution and capital income share are intimately linked to the shape of capital‐augmenting technological progress. In particular, the linear restriction excludes the possibility that the speed of capital‐augmenting technological progress converges to zero, which seems to lead to upwardly biased estimates of the elasticity of substitution and income share parameters.     

China's industrial revolution: challenges for a macroeconomic agenda

China's industrialization over the past 30 years has been an epochal event. As of 2000, the industrial sector's share of GDP has grown to be about two-third of the total. The share of agricultural sector of GDP has expectedly declined from 42.2% in 1970 to 11.9% in 2000. The sector's total output however continues to grow as productivity increases. Has the service sector grown enough to support the overall growth of the Chinese economy?China has earned her recognition as a foreign investment friendly economy. Foreign direct investment with 100% foreign ownership came in plenty, supported by a robust system of profit repatriation based on earnings in convertible currencies of exports of a part of newly manufactured products in China. China imported capital and paid for it by exports. China demonstrates a clear case of the import-export led model of industrialization and economic growth, not the simple export-led growth model, as discussed by some.This paper discusses that challenges ahead of China are overwhelming. We present three issues for immediate attention, (a) Can China sustain a rate of growth of GDP at an annual rate of 10% for an indefinite period? (b) How can China address the issues of income distribution across her 31 province and also amongst the various income groups in a given industrialized province/region? (c) Can China ensure progressive augmentation of high-tech oriented productivity of her workforce by way of ensuring building up of necessary human capital?It is argued that much of this can be accomplished by developing a macroeconomic framework with monetary and fiscal policy guidelines, well specified and transparent. Can China restructure its central bank, the Peoples Bank of China (PBOC)? A progressive money, banking and financial sector with ability to absorb shocks of an industrial economy must be in order. How about the fiscal policy management by the Government of China—its Ministry of Finance?Finally this paper argues that China's economic presence will help optimize the economic gains for the rest of the world. China has joined her Asian neighbors toward sponsoring Asian economic cooperation. Let the European Union paradigm be a learning model, and China has a leadership role to play in further developing Asia's continental economic regional model.     

The Netherlands Bank's narrow monetary policy

Summary In his article Mr. Timmerman describes the way the Netherlands Bank conducts its so-called narrow monetary policy,i.e. the policy pursued in the money and foreign exchange markets. The developments during the period October 1979–July 1981 serve as example of how movements in Dutch money market rates are dominated by exogenous factors. The author concludes that in a small open economy which maintains a stable exchange rate there is no room for an independent money market policy and that the hectic developments in the international money and foreign exchange markets have made illusory what until very recently was regarded as the most important objective of the narrow monetary policy,viz. an orderly money market. P.C. Timmerman was Deputy Director of De Nederlandsche Bank N.V. and is now Managing Director of De Bank van de Nederlandse Antillen. A similar article by the author appeared inZoeklicht op beleid, liber amicorum in honour of Professor G.A. Kessler.     

Profits,dividends and industry restructuring: the Swedish paper and pulp industry between 1945 and 1977

This paper explores the role of profit distribution in the restructuring of the Swedish paper and pulp (P&P) industry between 1945 and 1977. In addressing this issue, we will draw on the life-cycle theory and market imperfection arguments to examine whether the less profitable firms shared more of their profits as dividends, or remained on the market longer by reinvesting the majority of the profits. Our study shows that an increasing share of the profits was distributed to owners over time, and thus less profit was reinvested in industrial renewal. We find that the observed general upward trend in dividends can be attributed to the decline in profit and firm legacy, as firms in the Swedish P&P industry kept dividends up while reducing reinvestment as their profit margins decreased over time. Our study shows that the market imperfections related to capital taxation and investment funds increased rather than decreased dividends.     

J. Soedradjad Djiwandono,Bank Indonesia and the crisis

Soedradjad Djiwandono, Governor of Bank Indonesia during the critical early months of the Asian crisis, had already written extensively on the period (including in this journal), but this book brings a more comprehensive version of his story to a wider audience. His focus is on central bank issues—the exchange rate, interest rates, capital flows and the insolvency of the banking system—but as these are the defining issues of the crisis, the book provides a rare and valuable contribution to the still-incomplete history of this painful period. This review puts his account in context and offers some commentary on the issues.     

How would Capital Account Liberalization Affect China＇s Capital Flows and the Renminbi Real Exchange Rates？

In this paper we study the determinants of gross capital flows, project the size of China's international investment position in 2020, and analyze the implications for the renminbi real exchange rate if China liberalizes the capital account. We assume in this exercise that the renminbi will have largely achieved capital account convertibility by the end of the current decade, a timetable consistent with recent proposals by the People's Bank of China. Our analysis shows that if the capital account were liberalized, China's gross international investment position would grow significantly, and inflows and outflows would become much more balanced. The private sector would turn its net liability position into a balanced position, and the official sector would reduce its net asset position significantly, relative to the country's GDP. Because of the increasing importance of private sector foreign claims and the decreasing importance of official foreign reserves, China would be able to earn higher net investment income from abroad. Overall, China would continue to be a net creditor, with the net foreign asset position as a share of GDP remaining largely stable through this decade. These findings suggest that the renminbi real exchange rate would not be particularly sensitive to capital account liberalization as capital flows are expected to be two‐sided. The renminbi real exchange rate would likely be on a path of moderate appreciation as China is expected to maintain a sizeable growth differential with its trading partners.     

Prediction of two periods by simple autoregressive models with one lag

Summary Three different methods are compared by their ability to predict two periods ahead in simple autoregressive models with one lag. In this study both artificial and historical time series are used. In spite of intuitive objections the usual least squares method performs relatively well. Moreover attention is paid to the estimation results, as they provide some links with other studies of the autoregressive model.I am indebted to Dr. M. M. G. Fase and professor A. H. Q. M. Merkies for useful suggestions and remarks and above all to professor J. S. Cramer for his critical comments and his great help in drafting this article. Currently I am research associate of the Econometric and Special Studies Section of the Domestic Research Department at De Nederlandsche Bank N.V., P.O. Box 98, Amsterdam, but the main part of this study was completed at the Instituut voor Actuariaat en Econometric of the University of Amsterdam.     

Firm-level human capital and innovation: Evidence from China

This paper examines the role of human capital in firms' innovation. Based on a World Bank survey of manufacturing firms in China, we use two firm-level datasets: one from large metropolitan cities, and one from mid-sized cities. Patents are used as an indicator of innovation. The human capital indicators we use include the number of highly educated workers, the general manager's education and tenure, and the management team's education and age. We use the Negative Binomial and Instrumental Variables estimators to estimate patent production function models that are augmented by our human capital variables. We also use the zero-inflated Negative Binomial model to examine the likelihood of innovation. We find that the human capital indicators play an important role in influencing patenting, and that some of the human capital variables appear to have a greater impact on patenting in mid-sized cities. Our human capital estimates are obtained after controlling for firms' R&D, size, market share, age, and foreign ownership, as well as fixed effects to control for industry-specific characteristics, and firms' location and geography.     

Determinants of Household Income Mobility in Rural China

This article uses multivariate regression and decomposition analyses to assess household income mobility determinants and their contributions to income mobility in rural China from 1989 to 2006. The findings indicate that households with lower initial income level, higher share of wage income, higher educational level of household members, larger number of non-agricultural employed household members and younger heads are more mobile. Moreover, besides initial income, change in the share of wage income, change in the share of non-agricultural employed household members, and change in average year of education of household members are the most important factors that account for income mobility. These findings necessitate more emphasis on policies that promote non-agricultural employment and education to enhance household income mobility in rural China.     

关于城市商业银行改革发展思路的探索

随着国有商业银行的改制步伐加快、股份制银行引进外资,以及外资银行进入我国带来愈加紧迫的压力,历史上一直被认为发展受限制很多的城市商业银行的危机感日渐深重。在此背景下,作者以招商银行的优势和成功经验为参照,针对城市商业银行存在的问题,提出了今后应对新形势变化、适应新的监管要求的改革与发展思路。     

中国工业企业的增长动能、配置效率与经济利润

传统宏观经济增长的分解框架仅仅关注微观的技术进步效应和资源配置效应，无法识别要素层面的这两种效应以及两种要素的经济利润。为此，文章借助一个新的基于要素层面的全要素生产率增长分解框架，采用1998-2007年中国工业企业数据，对中国工业企业的增长动能、配置效率以及经济利润进行了分析。研究发现：（1）中国工业企业的生产率增长是其产出增长的主要推动力量，这个结论在不同所有制、不同产业以及不同地区均适用。中国工业企业正逐渐由劳动密集型向资本密集型和技术密集型转移。（2）企业自身技术进步对全要素生产率增长的增进效应贡献最大，企业之间的资源配置效率显著抑制了全要素生产率的提升，从抑制效应大小来看，其抑制作用抵消了企业技术进步的绝大部分。具体到资源配置效率程度大小来看，行业内部企业之间的资本配置效率年均恶化程度至少是劳动配置效率的两倍，而行业之间的资源配置效率对全要素生产率的影响微弱。（3）就要素获取的经济利润份额来看，资本占优，高达3.2%，资本利润是劳动利润的至少四倍，劳动利润的上升极为有限。民营企业、技术密集型企业以及中东部地区企业获取了更大的资本利润，而外资获得了更多的劳动利润，体现了外资进入中国的战略取向。东部获得了更多的利润说明其反哺中西部地区的必要性。     

De samenhang tussen rentestanden in Nederland 1962–1970

Summary This paper examines the question how much independent variation exists among observed market interest rates in the Netherlands. Therefore a particular form of factor analysis, viz. principal component analysis, has been applied to a time series of monthly data for the period 1962–1970. Ten money market rates as well as ten capital market rates are analysed separately. By doing this we have found that on the money market about 96% of total variation is explained by the first component; an additional percentage of 2 is explained by the second principal component. For the capital market these percentages are 90 and 8. Similar results are obtained when subperiods are studied or when the money and capital market are pooled together.The main insights to be gained by this analysis are the following. First our results suggest that the first component identifies the true interest rate. The second principal component, which is highly correlated with the rate of return on shares, reflects the risk aspect of the rate of interest. The third component seemsto be related to the rate of inflation. The second results is that our analysis shows that the use of many different interest rates in macro models has only a limited economic meaning. The this conclusion is that the usual textbook distinction between money and capital markets does not show up in the principal components obtained.Ik ben veel dank verschuldigd aan de heren P. M. Cambeen en R. L. Coenen, medewerkers op de Studiedienst van de Nederlandsche Bank N.V., die mij behulpzaam zijn geweest bij het uitvoeren van de berekeningen voor dit onderzoek. Vanzelfsprekend komen eventuele tekortkomingen geheel voor miju rekening.     

Wages,Productivity and Labour's Declining Income Share in Post‐Apartheid South Africa

The Marikana incident in 2012, as well as the protracted strikes by platinum miners, metal and postal workers in 2014 suggest that not all is well in the South African labour market. Even though those in employment are better off than the unemployed poor, macroeconomic data indicate that labour's share in gross value added has declined significantly during the first two decades following the first democratic election in 1994. A falling share of labour in income also means, by definition, that average labour productivity growth outstrips real wages growth. Data for South Africa suggest that productivity has indeed increased faster than wages in South Africa. This article argues that financialisation and more aggressive returns‐oriented investment strategies applied by for instance large investment institutions translated into higher required rates of return on capital, which in turn caused an increased implementation of capital‐augmenting labour‐saving technology that reduces labour's share in income.     

要素交易管制背景下产业资本对居民要素收入的侵蚀机理

基于不同程度的交易管制约束以及要素购买方决策均衡的相应变化,文章构建了要素收入份额模型,考察交易管制对收入分配的影响。模型研究表明,准入许可管制程度越高,产业资本的收入份额越大,居民持有资本收入份额越小,劳动收入份额相对降低;对居民要素交易机会的限制越大,要素保留价格越低,供给弹性越小,要素收入份额越小。     

企业员工培训:入世后的改革与创新

工商银行有必要实行股份制改造。从国家政策、资金市场、投资者购买股票、工商银行自身发展等方面来说 ,工商银行实行股份制改造是完全可能的。工商银行实行股份改造可分两步走 ,一是在产权制度上建立国家控股的股份制 ;在组织制度上 ,建立逐级控股基础上的公司制 ;在管理制度     

The Triple Taxation of Corporate EquityProfits

In the absence of liquidations and share repurchases, the value of corporate equity is the net present value of all future dividends. This net present value is subject to three taxes: the corporate income tax, the dividend income tax, and the capital gains tax. Algorithms are developed for calculating the aggregate tax rate on corporate equity net present value. Although the lowest aggregate tax rate occurs when all earnings are paid as dividends, corporations increase shareholder value by reinvesting earnings whenever the after-tax returns of doing so exceed the discount rate. It is these high return investments that are subject to the highest aggregate tax rates, potentially exceeding 90 percent of pre-tax value under current law.The author would like to thank Stephen Shmanske for his insights and support in the preparation of this paper. The author is also grateful to Donald Wort and Gary McBride for their comments. All remaining errors and omissions are the responsibility of the author.     

我国农村居民收入结构变化的实证研究

文章通过实证分析发现，家庭经营性收入虽然其主体地位没有改变，但其所占比重和对农民收入的贡献率在下降。而工资性收入虽然所占比重次于家庭经营性收入，但所占比重和对农民收入的贡献率在上升。而财产与转移性收入所占比重及贡献率都较稳定，对农民收入的影响较小。针对这种结构变化，相应提出了增加农民收入的建议。