CURRENT COST ACCOUNTING: IMPLICATIONS FOR THE DEFINITION AND MEASUREMENT OF CORPORATE INCOME

This paper is in 7 sections. Section 1 gives as background a chronological account of the steps taken in the United Kingdom, from 1974 to late 1977, towards the development of a new system of accounting in company reports which would allow for the effect of changing costs and prices on the measurement of profit and of capital employed in the business. Section 2 discusses the main features of the system, known as current cost accounting, as it is seen in the United Kingdom. Section 3 surveys the relationship between current cost accounting and the national income and expenditure statistics, and the likely implications of the introduction of current cost accounting upon the quality of macro-economic statistics, including estimates of national and sector balance sheets. Section 4 describes some of the problems of implementing current cost accounting, particularly in special situations, and outlines the solutions which were proposed in the "Exposure Draft" published in 1976 by the accountancy profession in the United Kingdom. Section 5 considers the definition of distributable profit in relation to the need to maintain capital, considering the concept of gain, the system of valuing assets and liabilities, and the enterprise's capacity to take on additional debt as a means of financing its assets. Section 6 briefly surveys the implications for taxation, price control and price setting. Section 7 concludes by surveying the scene at the end of 1977 and by looking at likely future developments.     

THE MEASUREMENT OF HOUSING OUTPUT: U.S. AND SOVIET CASE STUDIES

This paper examines the measurement of the output of the Housing industry in real GNP accounts of the U.S., the Soviet Union, and selected OECD countries. These real GNP accounts make use of quite different Housing indexes, based on different types of data. This paper's major empirical finding is that the (measured) growth rate of Housing output can be extremely sensitive to the type of index used.
After reviewing the concept of housing quality, the paper presents U.S. and Soviet case studies. The BEA and the CIA do not use identical procedures to measure Housing output for the U.S. and the Soviet Union: the BEA measures many more aspects of housing quality improvements than the CIA does. This difference in the two agencies' procedures increases the growth rate of the US. Real Estate industry relative to the growth rate of the Soviet Housing industry. The idea behind the two case studies is to remeasure Housing output far the Soviet Union (U.S.) using an index that approximates the BEA (CIA) index. The purpose of these studies is the calculation of numerical magnitudes: to what degrees are the levels and growth rates of Housing sensitive to the type of index that is used. The calculations for the U.S. are useful because they show the important role of housing quality growth in the U.S., and because they make the magnitudes reported for the Soviet Union more credible. The Soviet case study provides numerical support for the proposition that the post-WWII growth rate of Soviet housing quality has been considerable and exceeds the growth rate implicit in the CIA output figures.     

WELFARE EFFECTS OF GOVERNMENT INTERVENTION IN EDUCATION

Distortive effects of government intervention, especially in international trade, have received considerable attention. But not much literature exists on similar effects of public policies toward education. This paper provides a review of government intervention in education and its likely effects on economic growth and equity. Although governments may act with good intentions, educational policies often have adverse effects on social welfare. Less government involvement in education might actually lead to greater and more equally distributed real income, especially in developing countries.
Section I of this paper identifies and documents the extent of government-induced distortions directly or indirectly related to education. Section II assesses the likely effect of such distortions on social welfare. The final section discusses the role of government in education.     

Taxation and income distribution: The Colombian tax reform of 1974

In late 1974 the Government of Colombia implemented a major tax reform package embracing virtually all aspects of the revenue system. The reform was designed to serve allocative and stabilization as well as redistributive goals. This paper focuses upon the likely impact of the 1974 tax measures upon income distribution. Section 2 describes the prevailing distribution of income prior to the reform. Section 3 presents a short outline of the principal features of the 1974 package, and sections 4 through 6 provide an evaluation of its redistributive effects. The authors conclude that the initial impact of the reform was undoubtedly progressive, as it likely served to shift as much as 1.5 percent of GDP away from the top quintile of the income distribution.     

Monitoring Wage Developments in EMU

The purpose of this paper is to provide a brief review of aggregatewage developments in the EU member states. We start with a short discussion of wage bargaining mechanisms, their impact on labour market outcomes, and take a look into the crystal ball to learn about possible future developments. Section III analyses nominal wage developments focussing, in particular, on the evolution of cross-country patterns as anindicator for the synchronisation of wage developments. Section IV discusses real wage growth in relation to productivity developments using a somewhat refined 'real wage gap indicator';and Section V simply concludes.     

土地集合信托计划的法律问题研究——以PPP模式下的城中村改造为视角(上)

城中村改造在中国语境下的讨论既是一个老生常谈,又是一个非常有现实意义的问题。为了解决城中村改造过程中衍生的各类问题,在西方国家大受欢迎的PPP模式逐渐成长为中国城中村改造进程中的选择手段,而土地信托方式在PPP模式下的应用,则是为PPP模式的推广,尤其是城中村改造方面提供了崭新的融资路径。可是,一个崭新的模式究竟会在运作过程中遇到怎样的问题?是否可以为这些问题从法律方面找到解决的可能?怎样能够让信托制度为PPP模式进行城中村改造提供更大动力?这些都是本文讨论的焦点所在。文章分为五个部分进行论述,第一个部分是论文的基础,将介绍PPP模式和信托在城中村改造运用的概念、现状,并且指出在运用过程中所要面对的主要法律问题;第二部分将重点探讨PPP模式下信托将要面对的多轮融资反稀释的问题;第三部分将讨论信托计划在城中村改造中退出机制的问题;第四部分将从法律层面分析信托计划所面临的监管,以及风险控制问题;最后一个部分将对本文所涉及到的法律问题给出相应的建议。     

Should public policy respond to positional externalities?

A nice suit is one that compares favorably with those worn by others in the same local environment. More generally, a positional good is one whose utility depends strongly on how it compares with others in the same category.¹A positional externality occurs when new purchases alter the relevant context within which an existing positional good is evaluated.² For example, if some job candidates begin wearing expensive custom-tailored suits, a side effect of their action is that other candidates become less likely to make favorable impressions on interviewers. From any individual job seeker's point of view, the best response might be to match the higher expenditures of others, lest her chances of landing the job fall. But this outcome may be inefficient, since when all spend more, each candidate's probability of success remains unchanged. All may agree that some form of collective restraint on expenditure would be useful.In such cases, however, it is often impractical to negotiate private solutions. Do positional externalities then become legitimate objects of public policy concern? In attempting to answer this question, I employ the classical libertarian criterion put forth by John Stuart Mill³, who wrote the state may not legitimately constrain any citizen's freedom of action except to prevent harm to others. I argue that many positional externalities appear to meet Mill's test, causing not just negative feelings but also large and tangible economic costs to others who are ill-equipped to avoid them. I also discuss an unintrusive policy remedy for positional externalities, one modeled after the use of effluent charges to curb environmental pollution.The paper is organized as follows. Section 1 notes the deep similarity between the conditions that give rise to positional arms races and those that give rise to conventional military arms races. Section 2 follows with a review of evidence concerning the strength of concerns about relative position. Section 3 describes some of the tangible economic costs that people experience as a result of positional externalities arising from such concerns. Section 4 takes up the question of whether collective action directed against positional externalities is consistent with respect for individual rights. Section 5 describes how a progressive consumption tax could neutralize many of the most costly effects of positional externalities.     

THE ECONOMICS OF SECTION 301: A GAME-THEORETIC GUIDE*

Extrapolating from some simple game-theoretic models, this paper suggests that invoking Section 301 will tend to shift the terms of agreement in the US's favor. This shift will be larger (a) the greater the harm to the targeted country from having its access to the US market limited; (b) the smaller the targeted country's ability to harm the US in retaliation; (c) the smaller the costs within the targeted country of complying with the US demands; and (d) the greater the benefit to the US – in the US negotiators' perception – from the demanded liberalization. But these determinants of the success of a Section 301 action do not identify the areas where the social gains from freer trade are largest. Thus there is a tendency to direct Section 301 actions at the wrong targets. Section 301 increases bargaining frictions: attempts to exploit the bargaining power that comes from either private information or commitments can lead to costly delays to agreement or even the possibility of a complete breakdown in the negotiations. And the use of retaliatory strategies can upset an existing global equilibrium and lead to counter-retaliation.     

ON THE CONCEPT OF POWER IN ECONOMICS

In this paper we start with the standard definition of power and indicate how orthodox neoclassical economics fails to handle some of the key issues of power. In Sections II and III we discuss in the context of recent advances in economic theory some of the battlefields, so to speak, for the exercise of power: bargaining games in Section II and economic organizations and capitalist authority relations in Section III. In all of this we focus on the underlying structural factors. In the last Section we discuss some problems with both the behavioral and structural concepts of power.     

Vertical Restraints and Market Access

This paper analyzes vertical restraints in relation to market access issues. In Section II we briefly review the recent three major trade conflicts between Japan and the USA in light of vertical restraints. In Section III we review the major policy lessons of the economics literature of vertical restraints, and analyze whether we need a special treatment for vertical restraints abroad for a market access reason. In Section IV we evaluate the policy options towards foreign foreclosure and suggest that nondiscriminatory application of foreign or home competition policy should be the mechanism to address such concern instead of trade policy actions such as voluntary import expansions.     

Contribution-based vs. earnings-related retirement pension systems: some policy proposals for Italy

This paper analyses the relationship between contributions paid and benefits received within the current old age pension scheme, evaluating the implications of reinforcing the link between individual contributions and benefits, in a framework where welfare assistance and social security are kept separate. Section 2 describes the theoretical model, adopted to examine the factors affecting the contribution-based and the earnings-related annual pension or the total pension benefits over the entire retirement period. The consequences that different levels of relevant parameters have on the ratio between the two yearly pensions are, then, analysed. Section 3 illustrates the longitudinal sample of private employees belonging to the National Institute for Social Security (INPS–FPLD), in particular of those who will retire between 1995–96 and 2001: it is used to calculate the annual earnings-related and contribution-based pension. In aceteris paribussituation, allowing for all intragenerational redistribution transfers currently provided by the pension system (through a supplement to an established minimum pension, through ceilings and reversory rights), the annual contribution-based pension appears to be in 1995 about two thirds of the annual earnings-related one. This implies that the State could currently save one third of its expenditure for new FPLD pensioners, by simply switching to a criterion of social security fairness (giving each to his own in actuarial terms) without relinquishing any of the distributive corrections currently enacted within the pension system. Through this potential reform, in the next 7 years total State savings at constant prices would reach 14 000 billion lire, or 2·2% of the stock value of pensions in the same time interval.     

TOTAL INCOMES IN THE UNITED STATES, 1946–1976: A SUMMARY REPORT

Extended accounts of total income and product and associated capital stocks for the United States, in current and constant dollars, are offered for the years 1946 to 1976. They include intangible and tangible capital accumulation and non-market and market outputs in all sectors, services of government and household capital and of unpaid household labor, and opportunity costs of students. Defense and police services are classified as intermediate product; a portion of commercial media services is counted as final product. Expenses related to work are subtracted while the values of employee training and human capital formation and net revaluations of existing tangible capital are added.
Total incomes (TISA) net national product was 50 percent greater than official Bureau of Economic Analysis (BEA) NNP in 1976. BEA gross private domestic investment was only about 18 percent of TISA gross capital accumulation. Intangible investment and TISA net domestic capital accumulation grew more rapidly than BEA net private domestic investment. Household investment has been growing while there have been sharp declines in government investment, particularly in research and development. Contrary to some views of the import of the narrower BEA accounts, total capital accumulation appears to have risen considerably more rapidly than total consumption, 6.3 percent versus 2.2 percent per annum from 1946 to 1976, thus increasing sharply its share of TISA GNP.     

Beyond the principle of population: Malthus's Essay

Abstract

After an introductory section, this article reviews reasons and arguments establishing the invalidity of Malthus's construct of a ‘principle of population’. Section 3 propounds that Malthus's theory is located beyond the principle of population, with the oscillation figure as its centre. Section 4 takes note of the trajectory which the Essay describes between natural and moral science, assesses inequality and growth as the two focal points of Malthus's theory and eventually observes Malthus looking forward to a state beyond the dictates of growth.     

MONITORING THE LABOUR MARKET: A PROPOSAL FOR A COMPREHENSIVE APPROACH IN OFFICIAL STATISTICS (ILLUSTRATED BY RECENT DEVELOPMENTS IN FRANCE,GERMANY AND THE U.K.)1

This paper analyses the weakness in labour demand which appeared in 1973–78 in France, Germany, and the U.K. and attempts a comprehensive assessment of it. Hitherto, the situation in labour markets has usually been measured by official figures of the registered unemployed which tend to understate unemployment itself and neglect other dimensions of labour slack, such as reversal of previous migration flows or declines in labour force participation or in working hours which may contain highly significant cyclical movements cushioning unemployment. The report proposes the adoption of a more comprehensive concept for labour market monitoring, along lines already used in the annual reports of the German Institute of Employment Research. Such an approach presents advantages in economic and labour market policy analysis. A simplified form of the proposed monitoring tables is presented in Annex Tables F-1 to F-4, G-1 to G-4 and U-1 to U-4. They can be considered as a potential satellite to existing national accounts. It is also suggested that analysis of the degree to which labour potential is used be conducted on a regular basis. The possibilities of this approach are outlined in considerable detail in Section V and in the annex. The different dimensions of the use-of-potential account are summarised in Table 3. The report contains a review of the literature on the full employment rate of unemployment and its components. This is one of the major issues on which a judgement must be made in use-of-potential analysis. This review is presented in Section VI of the report. It emerges from the analysis that Germany had the biggest labour slack (8.6 percent of potential) in 1978 though its unemployment rate (3.8 percent of the labour force) was the lowest of the three countries.     

Patents,profitability, liquidity and firm size

Much has been written on the need for a more rapid rate of technical progress in the British economy but there is little in the way of hard facts on the characteristics of firms that innovate and those that do not, on the factors determining a firm's rate of innovation, and on the relationship between innovation and profitability. The present paper attempts to give some quantitative content to the discussion by examining the relationship between a firm's size, its profitability, its liquidity and the number of patents obtained in three United Kingdom industries - Chemicals, an Electrical Engineering and Electronics grouping, and Machine Tools. These three industries were chosen because they are technologically based and so place heavy emphasis on research and development.

The plan of the paper is as follows. Section 1 discusses the patents data and the use of patents as an indicator of innovative activity. The size characteristics of patenting and non-patenting firms are considered in Section 2. Section 3 presents the model relating patenting to firm size, liquidity and profitability. Sections 4 to 6 report in turn the results for the Chemical industry, the Electrical Engineering and Electronics grouping, and the Machine Tools industry. Section 7 investigates whether any short-ran profitability may be found to result from inno-vative activity. Section 8 compares our results with those obtained for the United States. Section 3 is a summary of our results.     

Industrial growth in India: Performance and prospects

The objective of this paper is to analyse the trends in industrial growth since the mid-fifties and examine the factors that contributed to industrial stagnation after the mid-sixties. More specifically, the paper focuses on the pathology of the organised industrial sector while also documenting the broad trends in the unorganised sector. Section 1 presents a brief review of the long-term trends in the growth of value added and productivity in the industrial sector. Section 2 analyses the major factors that contributed to the dual phenomenon of a slowdown in the growth of heavy industries and continued slow growth of consumer goods industries after the mid-sixties. In the light of this analysis, an attempt is made in section 3 to draw some implications for policy if industrial growth is to be revived in the future.     

REGIONAL ACCOUNTS: THEORETICAL AND PRACTICAL PROBLEMS ENCOUNTERED IN THE RECENT EXPERIENCE OF ARGENTINA

This paper examines some problems in the recent experience with regional accounts in Argentina. In Section I a detailed exploration of the possibility of an adaptation of the UN System of National Accounts to any one regional division of a country is presented. The proposal is introduced in matrix form, compatible with the SNA. In Section II selected problems in the definition of the concept of residence and their implications, particularly in the production accounts, are discussed. The presentation is based upon examples for the construction sector, interregional transport, the services of public administration, and the branches of public enterprises resident outside the region. In Section III the principal conclusions of the usefulness, possibility and priorities of regional accounts in Argentina are noted.     

Submissions to the Online Section of the Journal of Economic Education

The associate editor for the Online Section of the Journal of Economic Education briefly describes a successful submission to the section. Many examples are given from recent issues.