Remittances and misery index in Turkey: is there a link?

This study tests the long run relationship between remittances and misery index in Turkey over the 1975–2011 period, using bounds testing approach. The results indicate that remittances and misery index are co-integrated. The misery index appears to have positive impact on remittance inflows in both short and long run, supporting altruism theory in remittance sending behaviour in Turkey.     

What is unemployment in Europe? Concepts and measurement in the European community household panel

The purpose in this article is to evaluate the consistency between two measures of unemployment in a cross-country context. We use the European Community Household Panel to identify unemployment at an individual level based as well on the ILO criteria for being classified as unemployed as on the individual respondent reporting to be unemployed. This opens a unique opportunity to compare unemployment measured in two different ways based on a cross European Union panel study covering the years 1994 to 2001. The two main questions addressed in this article are to which extent the two unemployment measures differ and whether transition rates out of unemployment depend on which concept we use. Both questions are answered in the affirmative. The overall conclusion is that it is important, especially in some of the EU countries, to include both measures of unemployment as guidelines and indicators for policy.     

Commodity trade between Pakistan and the US: is there evidence of the J-curve?

A few studies that have attempted to estimate the short-run (J-curve) and long-run impact of exchange rate depreciation on Pakistan’s trade balance are either based on aggregate trade data between Pakistan and the rest of the world or between Pakistan and her bilateral trading partners. The findings are mixed at best. Considering the trade balance between Pakistan and the US, as one of its major partners, no significant effects have been discovered. Suspecting that the trade flows between the two countries could suffer from another aggregation bias, we disaggregate their trade flows by commodity and consider the trade balance of 45 industries that trade between the two countries. We find significant short-run effects of currency depreciation on the trade balance of 17 industries. The short-run effects last into the long run in 15 cases. The largest industry that account for more than 10% of the trade seems to benefit from real depreciation in the long run.     

National culture and national savings: is there a link?

We study the effect of national culture on economic decisions, focusing on GLOBE cultural dimensions of uncertainty avoidance and future orientation. Specifically, we study the effect of divergence between cultural values and practices (societal aspirations), on the aggregate savings decision. Using the life-cycle model of savings as our basic model, we find that societal aspirations are important in explaining national savings behavior. In particular, we show that societal aspirations relating to future orientation and uncertainty avoidance have a positive effect on the rate of savings. We interpret our findings to indicate that such societal aspirations lead to mistrust in the societal arrangements and institutions, and induce savings as a means of securing the future and reducing uncertainty. To substantiate this interpretation, we utilize the microfinance industry; showing that high societal aspirations are associated with preference for savings through member-owned microfinance institutions (MFIs) over savings through non-member-owned MFIs.     

Is there a link between alcohol consumption and the level of poverty?

In many developing countries, in addition to household income, there are a number of other socio-economic determinants of poverty. One such hidden socio-economic factor is alcohol consumption and some studies argue that there is a link between alcohol consumption and poverty. The main aim of this study is to measure the effects of alcohol consumption on the level of poverty in a systematic way. Using Sri Lanka as a case study, this article demonstrates that the consumption of various types of alcoholic beverages, particularly, the illegal beverages, has a significant positive association with the level of poverty. The findings of this study suggest that, in Sri Lanka, the consumption of illegal alcoholic beverages increases the likelihood of being in a poor household by 2–3%. The results of this study also find that households who are characterized as nonpoor but are just above the poverty line behave more like the poor rather than the nonpoor in terms of alcohol consumption. Some of the conclusions from this Sri Lankan case study can be applied to other developing countries.     

Can the link between functional and personal income distribution enhance the analysis of inequality?

The aim of this paper is to present a framework which links functional and personal income distribution. In the first part of the paper, Piketty’s book “Capital in the XXI Century” is briefly reviewed. Piketty’s framework is discussed arguing that it can only partially explain levels and changes within personal income distribution. Piketty links the returns from capital r to the rate of growth of national income g in a very innovative way comparing them within a macroeconomic framework. He claims that when returns on capital rise more quickly than the overall economy and taxes on capital remain low, a vicious circle of ever-growing dynastic wealth and growing concentration of wealth takes place. However, the rise in the inequality of personal income distribution cannot only be explained by the rise of capital incomes. An analysis of the generation of personal incomes, and consequently of inequality, requires a suitable framework that links incomes at the macroeconomic level (national accounts) and incomes at the level of the individual/household. It is possible to set up this framework starting from individual endowments and their link to the productive structure: that is to what can be called the “generating function of personal income.” This function transforms personal endowments into personal earnings, given the productive structure, the technologies, and the market rules that determine the functional distribution. Personal income distribution and its inequality are linked to the functional one through the shares of capital and labor owned by each individual. The framework introduced here seems to be a suitable tool to account for the fact that personal income distribution is inextricably tied up to different sources of inequality in the distribution of national income. Sources come from institutional and productive structures (matrix Y), but also from the distribution of endowments and of individual/household entitlements (matrix S). This approach, we argue, allows for the assessment and evaluation of the effects of “ambitious new policies,” aimed at reducing poverty and inequality ex-ante, as suggested by Atkinson in his last book.     

What is really common in the run-up to banking crises?

Arguing that crises are similar if they are predictable from historical experience, we employ panel logit models to examine similarities in the run-ups to the current global financial crisis and historical banking crises. Asset bubbles are the most common precursors.     

What is behind low wages in central and eastern Europe?

This paper compares wages across Europe in relation to the characteristics of workers and firms, with a particular focus on wage levels in central and eastern European countries. Worker and workplace endowments can be taken as a proxy for labour productivity. We estimate the extent to which wage differences observed at an aggregate level can be related to the different compositions of workforces and workplaces, as well as the types of jobs conducted in separate countries. We also decompose the observed differences in returns on endowments by identifying the sectors and occupational categories that contribute most to the wage gaps observed at the aggregate level. The wage gaps in low-wage countries actually appear larger once differences in worker, work and workplace characteristics are controlled for. In contrast, the differences in wages between high-wage countries diminish when we control for these endowments. The wage gap between East and West thus seems to be explained by a much lower return on skills and other characteristics rather than by differences in the composition of workforces and firms. Sectoral and occupational analysis suggests that central and eastern European countries have developed a generalised low-cost and low-wage model, with relative returns particularly low on higher skills. There is much less wage disparity across European countries in more labour intensive and lower-paid services sectors, such as accommodation and food service activities. The magnitude of the wage gap seems to be driven by the relative position of sectors and occupations in high-wage countries.     

Adam Smith and the division of labour: is there a difference between organisation and market?

The paper claims that, in The Wealth of Nations, the divisionof labour refers simultaneously to two different things: a socialdivision of labour and an organisational division of labour.The central point is that the organisation of work (the organisationaldivision of labour) in the firm is the logical counterpart ofthe social division of labour, and that these reflect two inseparableaspects of the process of the division of labour. Smith is thusconcerned with organisations as well as with markets, each functioningaccording to the same principle. Hence, Smith does not believethat the organisational and the social divisions of labour arefundamentally different, although he does recognise some variationbetween them and describes different states of the divisionof labour within the firm, liberal and capitalist.     

On the Time‐Varying Relationship between Unemployment and Output: What shapes it?

This paper revisits, by means of both time series and panel data analyses, the empirical regularity popularized by Okun's (Proc Bus Econ Sect, 98‐103, 1962) seminal paper focusing on a sample of 20 advanced economies between 1978 and 2015. Not only do we provide arguably better estimates of the Okun's Law coefficient (OLC) (using the gap version) by employing a new filtering technique, but more importantly, we also contest the hypothesis that the OLC has been static over time. By estimating country‐specific time‐varying Okun coefficient models, we confirm that the unemployment‐output responsiveness has been changing over time. The dispersion between countries’ OLCs has been determined by some (structural) characteristics. The starting level of unemployment and the phase of the business cycle increase the estimated OLCs, while informality and certain labour and product market policies lower them. Our evidence sustains the fact that aggregate demand policies aiming at increasing output growth can equally contribute to the recovery in labour markets.     

Transferable Licenses Versus Nontransferable Licenses: What is the Difference?

This paper questions the presumption that transferable licenses are worth more and result in higher welfare. We show that the price of a transferable license may be lower than that of its nontransferable counterpart if the underlying quota is not very severe. However, transferability is preferable to nontransferability if consumer surplus and license revenue have equal weight in the welfare function. We also examine whether licenses will be monopolized by domestic producers with market power. The models have implications for several issues, including the design of pollution permits and how to maximize revenue from ticket sales.     

BIG data – BIG gains? Understanding the link between big data analytics and innovation

ABSTRACT

This paper analyzes the relationship between firms' use of big data analytics and their innovative performance in terms of product innovations. Since big data technologies provide new data information practices, they create novel decision-making possibilities, which are widely believed to support firms' innovation process. Applying German firm-level data within a knowledge production function framework we find suggestive evidence that big data analytics is a relevant determinant for the likelihood of a firm becoming a product innovator as well as for the market success of product innovations. These results hold for the manufacturing as well as for the service sector but are contingent on firms' investment in IT-specific skills. Overall, the results support the view that big data analytics have the potential to enable innovation.     

What is the right balance between US monetary and fiscal policy? Explorations using simulated wavelet-based optimal tracking control

This paper uses wavelet-based optimal control to simulate fiscal and monetary strategies under different levels of policy restrictions. The model applies the maximal overlap discrete wavelet transform to US quarterly GDP data and then uses the decomposed variables to build a large 80-dimensional state-space linear-quadratic tracking model. Using a political targeting design for the frequency range weights, we simulate jointly optimal fiscal and monetary policy where: (1) both fiscal and monetary policy are dually emphasized, (2) fiscal policy is unrestricted while monetary policy is restricted to achieving a steady increase in the market interest rate, (3) only monetary policy is relatively active, while fiscal spending is restricted to achieving a target growth rate, and (4) monetary policy emphasizes short-run stabilization, while fiscal policy utilizes political cycle targeting. The results show that fiscal policy must be more aggressive when the monetary authorities are not accommodating the fiscal expansion and that the dual-emphasis policy leads to a series of interest rate increases that are balanced between a steadily increasing target and a low, fixed rate. This research is the first to construct integrated fiscal and monetary policies in an applied wavelet-based optimal control setting using US data.     

Latin American Development: What About the State,Conflict and Power?

Abstract:

Several authors have raised the similarities between Latin American structuralism and economic institutionalism, pointing out the possibilities of reciprocal enrichment between both approaches but highlighting, at the same time, the mutual ignorance between them. However, the eventual interaction between these theories was hampered by the advent of the neoclassical—and neoliberal—offensive, and the displacement of Latin American contributions, both in its structuralist and dependency variants. The replacement of these contributions by the neo-structuralist approach implied a displacement of the characteristics of original structuralism, associated with the conception of central-peripheral economies, and the central role of the state for Latin American development. These displacements, I argue, limited the possibility of finding the means to achieve the so-called social transformation, to which institutionalists and structuralists referred. The present article tries, on the one hand, to critically analyze the neo-structuralist discourse, evaluating how these displacements affect the possibility of proposing a structural transformation in Latin America (led by the state). On the other hand, it seeks to recover the dimensions associated with power, conflict and the centrality of the state to rethink the challenges of structural transformation, from which articulations between structuralism and institutionalism could be proposed.     

Markets,Morality and Climate Change: What,if Anything,is Wrong with Emissions Trading?

This article explores whether emissions trading is morally defensible To do so it examines three different kinds of moral consideration Which might be used to judge emissions trading. The first kind makes what I term an ‘ethical’ objection, and holds that utilising market instruments to combat climate change is inherently objectionable. I examine three versions if this ‘ethical’ argument but find none persuasive. The remainder of the article considers two additional moral considerations, both of which appeal to principles of justice. Drawing on these it argues that emissions trading can be morally defensible but only it it meets these two demanding moral criteria. First, the costs of emissions trading should be shared equitably. The paper examines what this might mean and criticises the leading account of what constitutes a just distribution of emissions Second, emissions trading must make an appropriate contribution to climate mitigation. A number of ways in which current emissions trading schemes signally fail to meet this second criterion are then noted. The article concludes that emissions trading schemes could in principle be morally defensible but only if new schemes are introduced or existing schemes are radically redesigned in line with the principles outlined in the article.     

Europe,the Green Line and the Issue of the Israeli-Palestinian Border: Closing the Gap between Discourse and Practice?

The article analyses how the Europeans (meaning European states and the EC/EU) have progressively turned a discourse about the Israeli-Palestinian border into a foreign policy practice. While much of the literature highlights the existence of a ‘gap between discourse and practice’ when it comes to Europeans’ foreign policy stance towards the Arab-Israeli conflict, we argue that the gap is dynamic and has changed across time. In the absence of an internationally and locally recognised border between Israel and Palestine, the Europeans have aimed at constructing one on the 1949 armistice line, the so-called Green Line. They have done so in stages, by first formulating a discursive practice about the need for a border, then establishing economic practices in the late 1980s-early 1990s, and most recently practicing a legal frame of reference for relations with Israel and the Palestinian Authority (PA) based on the Green Line. The outcome is that, for what concerns European countries and EU legislation, the Green Line has been increasingly taken as the Israeli-Palestinian border. However, gaps never fully close and more contemporary events seem in fact to point to a re-opening of the gap, as the article explores.     

Power,Intergroup Conflicts and Social Stratification in the United States: What has the Global Crisis Taught us?

Abstract

Drawing on early sociological analyses of how power and intergroup conflicts can affect the development of modern economies, this paper investigates how the recent Global Crisis (GC) has affected the stratification of the US society. The paper argues that the consumerist society has reinforced the historical stratification of social identities with white men in high-paid, high-social status managerial and financial occupations at the top, and black women in low-paid, low-status service occupations at the bottom. This paper calls for a deconstruction of the neoliberal individual into a unique combination of identities in a stratified capitalist society in order to reveal how social stratification has evolved during the GC. The paper finally concludes on the importance of heterogeneous identities in reflecting the diversity of societal and economic interests in order to address the issues of financial stability and sustainability at the corporate and societal levels.     

Trade and unemployment: What do the data say?

This paper documents a robust empirical regularity: in the long-run, higher trade openness is associated with a lower structural rate of unemployment. We establish this fact using: (i) panel data from 20 OECD countries, (ii) cross-sectional data on a larger set of countries. The time structure of the panel data allows us to control for unobserved heterogeneity, whereas cross-sectional data make it possible to instrument openness by its geographical component. In both setups, we purge the data of business cycle effects, include a host of institutional and geographical variables, and control for within-country trade. Our main finding is robust to various definitions of unemployment rates and openness measures. Our benchmark specification suggests that a 10 percentage point increase in total trade openness reduces aggregate unemployment by about three quarters of one percentage point.