Why Need is “A Word We Cannot Do Without” in Economics

Economists in the neoclassical tradition do their best to avoid using the word “need.” Social economists have traditionally been more open to discussions of need. Philosophic discussions of need are also scarce but nevertheless helpful. This essay will argue that need is “a word we cannot do without” in economics, and not only in social economics. Need is objective, satiable, and absolute, by contrast with want or preference as it is defined in neoclassical economics. With this clarification, 1) it is reasonable that public policy should consider need as well as want and aim to satisfy some needs, and 2) for some purposes, such as the economics of health care, conventional demand cannot be understood without the concept of need. Thus, even the narrower purposes of neoclassical economics cannot be achieved without clarifying and using the concept of need, in addition to the more usual motivational assumptions of neoclassical economics.     

Transfers and the Samuelson Rule in Stock Externality Provision—Why Do We Need Them Both?

This paper examines the relationship between the Samuelson rule for efficient provision of stock externality and unilateral transfers for equalization of mitigation costs among the agents. Using a generic model of stock externality provisions, we proved that the revised Samuelson rule that allows transfers is a necessary and sufficient condition for efficient provision of stock externalities. In addition, selection of social welfare weights of the agents plays a key role in directions and magnitudes of the transfers. We discuss the implications of the revised Samuelson rule in economic modeling of climate change, an empirical case of stock externality, through numerical simulations in the RICE model.     

IT Governance： Trend of Chinese Corporate Governance

Now as IT is intrinsic and pervasive within Chinese enterprises, IT has been an integral part of the business and IT governance is becoming the trend of corporate governance. This paper builds a logic model of IT governance to help Chinese enterprises design effective IT governance. IT governance will play a more and more important role in Chinese corporate governance.     

Research on Corporate Governance Cost

According to the concept of corporate governance, we deduce four principles of corporate governance cost. There are （1）any cost caused by relative activities from separation between property right and management right must be reckoned in corporate governance cost; （2）cost of activities in the cross area in which governance activities or other activities cannot be distinguished should be reckoned in relative cost according with characters of the main operational activities; （3）cost caused by corporate governance activities of external ＂Stake Holder＂ also should be reckoned in corporate governance cost. After thorough analysis of the above three principles, we define corporate governance cost as the cost caused by governance activities from separation between property right and management right as well as those originated from external stakeholders. Its boundary accords with the boundary of accountant mergence report forms. We briefly offer some analysis methods of corporate governance cost and some advices of disclosure of relevant information.     

Why Have Corporate Tax Revenues Declined? Another Look

The relative constancy of non-financial corporate tax revenuesas a share of US GDP masks offsetting trends in the ratio ofcorporate profits to GDP (declining) and the average tax rate(increasing). The average tax rate rose steadily between 1996and 2003, an increase largely attributable to the importanceof tax losses. This rise casts some doubt on the role of taxplanning activities in reducing corporate taxes. So, too, doesthe relative stability of the rate of profit (relative to netassets), which might be expected to have declined had the understatementof profits for tax purposes been increasing. (JEL code: H25,G32)     

Thinking of Establishing Corporate Governance Model with Chinese Characteristics

After repeated comparison, we believe that the theory of building Chinese management system should be to stimulate innovation as a core, thus forming a complete Chinese enterprise culture, as well as business development and strategic choice as a means of enterprise organizational change management theories     

Arrangement for Capital Structure in the Framework of Corporate Governance

Using the method of principal component analysis, the paper conducts a systematic study on the issue of how corporate governance influences capital structure. The study manifests the results that the proportion of circulation shares, the ability that other big shareholders contend with the first biggest shareholder, the proportion of corporation-owned shares, and the frequency of directorate meetings all have a positive relationship with the liability level. Meanwhile, the concentration degree of owners＇ equity, the proportion of state-owned shares, the phenomenon that one person serves as both chairman of directorate and general manager, and the intensity of competition in product market are all negatively related to the level of debt. Finally, the scale of directorate, the proportion of independent directors as well as the percentage of management-owned shares have no significant relationship with the capital structure. The statistic analysis also shows that the proportion of independent directors of some Chinese listed companies does not meet the regulation of the CSRC. In addition, the paper tests the impacts of corporate operating characteristics on capital structure.     

The Economics of Ageing—What Do We Face?

We, as taxpayers, face challenging problems in assisting the well-being of old people mainly because preparing for and living through old age is a risky business. Through government, taxpayers can provide some insurance against the risks of old age, especially the risk of bad health and the risk of a long life. However, the ageing population suggests that maintaining this support will require increased taxation. This article quantifies this challenge for Australia and concludes that although increased taxation may be required it will be easily affordable from the much higher incomes generally received due to the secular increase in productivity.     

Populism,Fairness and Competition: Should We Care and What Could We Do?

The rise of populism in a number of countries is one of the most visible signs of the weakening of enthusiasm for trade liberalization and market competition. Market competition is increasingly denounced as leading to unfair results by those who lose jobs, and in some cases risk losing their employment prospects because of the pressure of competition, or those who see their wages stagnate or be reduced. Their perception is that pro‐competitive policies benefit capitalists and a small coterie of highly skilled workers to the detriment of the low‐skilled majority. In a number of countries there have been calls by politicians to reconsider the trade liberalization policy which was actively pursued in recent decades and to change the standard applied by competition law enforcers from a strict consumer welfare standard to a consideration of the trade‐off between efficiency and fairness. The competition community has, to a large extent, strongly resisted such possibilities, arguing that protectionist policies had failed in the past and that the concept of fairness is at best vague, lack economic foundation, and could lead to a weakening of incentives to achieve efficient static and dynamic performances. The article examines three issues related to this debate. First, we examine the theoretical and practical reasons for which some categories of workers lose in the competitive process. Second, we discuss the relationship between inequality and fairness and the contribution of behavioural economics to the exploration of what people consider to be fair or unfair in vertical relationships (i.e. between employees and employers or between consumers and suppliers). Third, we discuss alternative ways in which competition authorities could reconcile fairness and efficiency in their advocacy or enforcement activities.     

“We Don’t Need Money,We Need to be Together”: Forced Transnationality in Deportation’s Afterlives

As US deportations and repatriations climbed to unprecedented levels, half of Mexican immigrants deported have at least one family member who is a US citizen, and one in five have at least one child who is a US citizen. This paper applies the analytic of forced transnationality, extending its scope beyond one person’s deportation to reveal cascading effects of travel and trauma for families remaking lives across the US-Mexico border. To do so, our research draws on interviews with mixed-status families, where transnational children have legal permission to reside in the US (including citizenship) and live with caregivers (like parents) who do not. In the wake of the rupture of prolonged detention and deportation, families seek to suture themselves as a collective social subject that is reshaped by forced transnationality.     

Trade‐Induced Unemployment: How Much Do We Care?

It is a common perception that a government, especially in the face of elections, is particularly sensitive to the presence of trade‐induced unemployment. In this paper, I ask: how much weight does the incumbent politician actually attach to unemployment resulting from trade? To answer, I build a model that captures government's sympathy to trade‐affected workers and allows me to decompose the channels through which trade‐induced unemployment affects the level of sectoral protection chosen by a politically‐driven incumbent official. I provide empirical evidence that the US government is very sensitive to the presence and the magnitude of trade‐induced unemployment. Specifically, I estimate the weight that the office holder attaches to the welfare of trade‐affected workers to be positive, significant, and four times larger than the weight on the welfare of those who are not affected by trade.     

Openness, Productivity and Growth: What Do We Really Know?

Comparative data for 93 countries are used to analyse the robustness of the relationship between openness and total factor productivity growth. Nine indexes of trade policy are used to investigate whether the evidence supports the view that total factor productivity growth is faster in more open economies. The results are robust to the use of openness indicator, estimation technique, time period and functional form, and suggest that more open countries experienced faster productivity growth. Although the use of instrumental variables help dealing with endogeneity, issues related to causality remain somewhat open, and require time series analyses to be adequately addressed     

Why Do Prices Remain Stable in the Bubble and Bust Period?

In spite of a large swing in real output growth in the bubble and bust period, aggregate prices remained relatively stable in Japan. Empirical results show that such price rigidity can be explained by the customer market model combined with financial constraints. The degree of financial constraints that firms face in the bubble and bust period fluctuates significantly, and the impact of financial positions on firms’ prices is counter-cyclical. In booms, liquidity-abundant firms invest in market share by keeping prices down, while in a recession financially constrained firms charge a high price to locked-in customers who remain loyal. Such counter-cyclicality is clearly observed in the pricing behavior of large firms that produce differentiated goods. In contrast, small firms whose product brand is not well established in the market cannot lock in customers, and hence financial constraints do not affect their pricing decisions.     

Why Have We Ignored “The Distribution of Benefits from College Instruction”?

The authors have been concerned about the fact that many economics education researchers concentrate on aggregate scores when attempting to measure the impact of various experimental approaches. Noting that the effect of an innovation might be positive for some students and negative for others, they argue that the members of an experimental group should not be treated as if they were all equal in skills and abilities. Then they suggest disaggregation procedures and give the results of their own analyses of various subgroups of students who were exposed to computer-assisted instruction. Their findings lend support to those who favor disaggregated analyses.     

Why Excel?

Advanced Placement economics leaves thousands of high school students with a misleading impression of modern economics. The courses fail to cover key sources of growth and prosperity, including private ownership, dynamic competition, and entrepreneurship. The tools of public choice economics are totally ignored. Government is modeled as a corrective device available to impose ideal solutions. Market failure is covered, but there is no such thing as government failure. The macroeconomics course reflects the simplistic 1960s Keynesian view of stabilization policy. Time lags, incentive effects, secondary effects of budget deficits, and other factors that complicate effective use of stabilization policy are almost entirely ignored. In contrast, the 20 Voluntary National Content Standards in Economics of the Council for Economic Education illustrate what a balanced course in modern economics would look like.     

Why Do the Rich Save More? A Theory and Australian Evidence*

We provide a theory to explain the existence of inequality in an economy where agents have identical preferences and have access to the same production technology. Agents consume a ‘health’ good which determines their subjective discount factor. Depending on initial distribution of capital the economy gets separated into different permanent‐income groups. This leads to a testable hypothesis: ‘The rich save a larger proportion of their permanent‐income’. We test this implication for savings behaviour in Australia. We find that even after controlling for lifecycle and health characteristics, higher permanent income is positively related with higher savings rates and better saving habits.     

Why stare decisis?

All Courts rule ex-post, after most economic decisions are sunk. This can generate a time-inconsistency problem. From an ex-ante perspective, Courts will have the ex-post temptation to be excessively lenient. This observation is at the root of the rule of precedent, known as stare decisis.Stare decisis forces Courts to weigh the benefits of leniency towards the current parties against the beneficial effects that tougher decisions have on future ones.We study these dynamics and find that stare decisis guarantees that precedents evolve towards ex-ante efficient decisions, thus alleviating the Courts' time-inconsistency problem. However, the dynamics do not converge to full efficiency.