Paying Our Way in the World? Visible and Invisible Dangers of Brexit

The UK economy has long been associated with a weak balance of payments, reflecting an underlying growth model reliant on private household consumption. A deficit in goods trade, chiefly with the EU, has been offset by surpluses in services trade and foreign investment earnings. The Single Market provided wider markets for the UK, but did not fundamentally alter Britain's structural weaknesses. The Brexit vote took place against the background of Britain running its largest peacetime current account deficit. Financing Britain's external position represents a key challenge post-Brexit. Post-Brexit models for Britain partially address this. Any emergent model will critically depend on the nature of the Brexit deal with the EU, not least in terms of the impact on financial services and on supply chains. This paper sets out the recent evolution of the UK's current account position, particularly in relation to the EU. It then highlights particular areas of potential disruption from Brexit and sketches out scenarios of possible evolution of the Britain's external position in response to this.     

David Ricardo: on the art of “elucidating economic principles” in the face of a “labyrinth of difficulties”

Abstract

The paper discusses David Ricardo's analytical achievements. These concern his approach to the theory of value and distribution; his analysis of the effects of different forms of technical progress on income distribution; his analysis of exhaustible resources in terms of differential rent; his discussion of machinery and induced technical progress; and his theory of foreign trade and the principle of comparative advantage. It is argued that Ricardo's analysis has been frequently misrepresented and is a great deal more sophisticated than is commonly acknowledged. There are still ideas in his writings that have yet to be fully explored.     

Contributions of the Galbraith “Technostructure” to the Growing Crisis of the U.S. Economy

This paper lays the methodological foundations of an analytical framework that may help shed some new light on the issue of territorial inequalities in the digital economy. It opposes the recent tendency to build up an evolutionary economic geography as an alternative not only to the so-called "New Economic Geography" (namely "geographical mainstream economics") but also to the institutional economic geography. The paper advocates the development of an evolutionary and institutional approach in economic geography, which would be meso-focused. Finally, it presents some insights that highlight the heuristic potential of this approach in reappraising the territorial features of the digital economy.     

On the governance of “not being governed”

The Art of Not Being Governed illustrates that the people of highland South East Asia were not primitive people “left behind” but instead chose their lifestyles in order to avoid the predation of lowland states. This raises the question of how these people who are ungoverned by nation states provide governance for themselves. We explore this question with two related case studies. One examines a nineteenth century Southern Indian banking caste that provided self-governance. The other examines modern-day stateless Somalia.     

Along the Borgesian Frontier: Excavating the Neighbourhood of “Wider Europe”

What would a non-Eurocentric European Neighbourhood Policy (ENP) look like? Starting off with this perhaps “impossible” question, the first half of the article traces recent shifts in thinking about ENP on the part of EU administrators and intellectuals who argue for a strengthened and reinvigorated neighbourhood policy around the Southern Mediterranean, Middle East and CIS countries, through what has now been termed a differentiated “ENP plus”. Parsing recent EU reports, opinions and speeches, it isolates a crucial ambiguity within this re-framed policy landscape regarding ENP's relationship to the previous round of EU expansion, which has important political consequences for how ENP currently envisions the thorny problem of transition within the neighbourhood. The second half of the article draws on a parable by the Argentinean novelist-philosopher Jorge Luis Borges to frame more sharply the problem of cartographic representation embedded within ENP. Applying the neologism of a “Borgesian frontier” to the space of the European Neighbourhood, the paper concludes by suggesting some potential pathways for re-imagining this space in ways that work along with, rather than are “blind” to, contradictions inherent to Europe's newly minted external borderland. At stake, the article argues, is a politics that can properly re-envision regions of the world located at the limits of Europe's sovereign spatial imagination.     

What Is the Worth of “Comparable Worth”?

Should (could) jobs that are of equal value to an organization pay the same amount of compensation? The issues of this hotly debated controversy are carefully explained and evaluated.     

“Probability of risk aversion” and other applications of derivatives of the certainty equivalent

“Probability of risk” aversion is principally concerned with reactions to scaling up of probabilities of non-zero values of a non-positive random variable by a common factor. Decreasing probability-of-risk aversion is defined and shown to be equivalent to ordinary risk aversion. Implications of this for insurance are pointed out. The sort of scaling involved is the same as that involved in “self-protection,” and it is shown that, for any expenditure on self-protection, say x, a concave utility function will prefer a coinsurance policy, costing x, which leaves probabilities unchanged, but scales down loss amounts by the same proportion as probabilities are scaled under self-protection. Properties of several comparative concepts of decreasing risk aversion are established. Derivatives of the certainty equivalent (CE) are used to elucidate well-known comparative static results in models of expected utility maximization. Finally, the study proves that concavity of the CE implies convexity of the coefficient of absolute risk aversion and examines the role of curvature of the CE in exploring relationships between properties of risk vulnerability, properness, and standardness.

Adam Smith's “tolerable administration of justice” and the Wealth of Nations

Adam Smith argues that a country’s income depends on its labor productivity, which in turn hinges on the division of labor. But why are some countries able to take advantage of the division of labor and become rich, while others fail to do so and remain poor? Smith describes how the security of property rights, through a “tolerable administration of justice,” allows investment and exchange to take place, bringing about economic progress. Recent empirical work on economic development has supported Smith’s emphasis on a country’s political “institutions,” particularly the judiciary, in determining its national income.     

Legal Remedies for Breach of the Regulatory “Contract”

We present a model of the regulatory contract that focuses on the mutual investment of buyer and seller and recognizes the cost of contractual renegotiation and the importance of breach remedies when contracts are incomplete. We model renegotiation as a litigation game played before a quasi-judicial administrative court. We find that the standard contractual remedy of expectations damages cannot implement first-best levels of investment for both buyer and seller. If the seller fully recovers its sunk investment upon buyer breach, however, then first-best levels of investment by both buyer and seller can be supported provided litigation costs are small enough.     

“The End of Autocracy”: Analysing Representations of the Austro-Hungarian Dissolution as the Foundation of US Hegemonic Discourse

This paper investigates the manner in which the break-up of the Austro-Hungarian Empire was represented to the US public using a qualitative content analysis of articles from three major US newspapers in October and November, 1918. Against a geopolitical backdrop of the increasing global presence of the United States and assertion of its influence in international affairs, the analysis shows that three key themes were emphasised in the popular US political narratives at the end of World War I: national self-determination, legitimacy of governance, and the role of Eastern European diasporas and representatives in the United States. Throughout the essay, these themes are connected to key discussions of US hegemony in political geography. The critical geopolitics approach highlights how the articles signposted boundary markers of identity at a crucial, transitional point in US history, helping to crystallise an American sense of ‘Self’ increasingly based upon world leadership, and sending compelling messages about the expected behaviours of nations, states, and individuals. This work concludes that the stage was set early in the twentieth century for a phase of US global intellectual and moral leadership, and that the ascendance of US hegemony globally was accompanied by an active media project at home which sought to redefine Americans' collective sense of themselves as vanguards of liberal democratic values in a world of outdated and undemocratic regimes.     

A Political Economy Application of the “Tragedy of the Anticommons”: The Greek Government Debt Crisis

The tragedy of the anticommons unfolds when separate social agents—be they private owners of a property who intend to use the property for their own economic benefit or political actors who pursue their political objectives—do not hold effective rights to use their economic or political power for their own purposes without consent of the other players of the economic or political game. I shall discuss the Greek government debt crisis and the Eurozone countries’ policies toward Greece within the analytical framework of the tragedy of the anticommons in this paper. I do not intend to dig deep into the structure and long-term trends of public and private finances in Greece. I shall only show that the successive bail-out programs of the Eurozone countries were doomed to fail because of these countries’ competitive and non-cooperative approach to the Greek financial problems. I shall also show that a coordinating agency, say the IMF, can foster the coordinated outcome only under strict informational conditions.     

Validity of the “Principle of Maximum Product Differentiation” in a unionized mixed-duopoly

Developing a location-price spatial model in a unionized mixed-duopoly, we find that the welfare-maximizing nature of the public firm implies a lower degree of product differentiation such that, in contrast to the private duopoly, the “Principle of Maximum Product Differentiation” is not reproduced. Considering two different wage-regimes for the public firm, this paper examines the effects of wage regulation imposed on civil servants. It is shown that, when a public firm’s union is prohibited from collective bargaining, the firm is more competitive, and the degree of differentiation is less. Moreover, regulation always reduces both the private firm’s profit and the level of social welfare.     

Passing the “Torches of Freedom”: Smoking Behaviors of Women in Nepal

Globally, men constitute a larger percentage of smokers than women, but the rate of women smokers is growing. Smoking is a feminist issue: there are unique consequences for women's health, well-being, and agency. Recently passed anti-smoking legislation in Nepal, which has the highest rate of women smokers in South Asia, omits gender-conscious recommendations, potentially diminishing the impact of the legislation on women's lives. Relying on the 2001, 2006, and 2011 waves of the Nepal Demographic and Health Survey, this paper expands the dialogue around women's smoking and places it at the forefront of research on women's health issues. The results indicate that for women in Nepal, formal education and visiting a health facility mitigate smoking behaviors, whereas being employed and living in certain regions promotes smoking behaviors. The aim is for this and the ensuing inquiries to change government anti-smoking legislation in order to improve women's health.     

Medium-term fluctuations and the “Great Ratios” of economic growth

Evidence for the OECD countries show that the “great ratios”, such as the unemployment rate, factor shares, Tobin's q, and the investment-capital ratio, fluctuate significantly on medium-term frequencies of 8–40 years duration. To explain these medium-term fluctuations, we establish a macro-dynamic model where the q-theory of investment is combined with sluggish real-wage adjustment in the labour market. In this framework, responses to shocks show persistence and amplification. A high degree of real-wage rigidity combined with a low elasticity of factor substitution leads to damped internal oscillations and hump-shaped impulse-response functions.     

Gini's “Transvariazione” and the measurement of distance between distributions

This paper notes that Gini's concept of Transvariazione corresponds to the idea of overlapping of distributions. It shows that this concept is implicit in some measures of income inequality such as the Pietra and Gini Index and is at the basis of various measures of distance between distributions. An empirical illustration is provided, based on Israeli data for the period 1978–1994.     

On the Impact of “Callback” Competition on International Telephony

In this paper we build a simple three-country model to evaluate the impact of callback on international telephony. The effects on both accounting rates and collection prices are studied. Callback firms exploit arbitrage opportunities in collection prices among countries, rerouting calls that originate in countries with high prices for international phone calls via countries with low prices. Contrary to what is commonly perceived, we show that callback tends to magnify the distortions associated with the current accounting rate regime. In particular, callback puts upward pressure on low price countries accounting rates and on collection charges. Callback companies are assumed to enjoy a volume price discount on each rerouted call; we show that the larger the price discount offered to callback companies, the higher the prices for international calls in the country hosting callback.