Capital inflow-terms of trade ‘nexus’: Does it lead to financial crisis?

The paper models the nexus of foreign capital inflow and dynamic terms of trade to explain financial crisis in the form of sudden stop or reversal of capital inflow. Crisis in this structure is rooted in the role played by dynamic terms of trade rather than informational imperfections as generally found in the existing literature. Inspite of satisfying the regularity conditions for model consistency episodes of sudden crises get magnified due to the non-linearity of the equilibrium relations. This is the novelty of this paper and differentiates it from the standard theoretical literature, and well captures empirical evidence documented in the literature. Non-linearity plays a very important role in the model. Expectation of the exchange rate depreciation has higher potential to generate a financial crisis than shift in the risk perception of foreign lenders or supply shock in the borrowing country.     

A subjectivist’s solution to the limits of public choice

In light of Wittman (1995) and Caplan (2007) this paper contends that the rational-choice approach to political science (“Public Choice theory”) has reached a dead end. By critiquing their treatment of rationality, knowledge assumptions, and views of the democratic process, an alternative is presented based on the core insight of the “Epistemic Primacy Thesis”. This subjectivist approach to political economy is introduced in light of an existing debate between the compatibility (or otherwise) of Austrian economics and Public Choice theory.     

Does Web 2.0 utilisation lead to knowledge quality,improvisational creativity,compositional creativity,and innovation in small and medium-sized enterprises? A sense-making perspective

A few attempts were made to investigate how sense making is triggered through Web 2.0 utilisation and how it enables the accomplishment of key organisational outcomes. The objective of this research is to examine the structural relationship between Web 2.0 utilisation, knowledge quality (KQ) aspects, improvisational creativity, compositional creativity, and small and medium-sized enterprises (SMEs) innovativeness in an emerging market – Malaysia. Built upon sense-making theory, this study proposes that sense making is a progression of four formative constructs. Empirical analyses are based on a sample from SMEs’ top management (N?=?358, response rate?=?21%) using partial least squares approach. The findings indicate that Web 2.0 utilisation influences business entities’ sense-making activities in the way they realise the intrinsic value of knowledge and take action to apply the organisational knowledge. These sense-making activities are conducive to improvisational and compositional creativity of SMEs as well. Contributions, managerial implications, and limitations are discussed.     

Does population control lead to better child quality? Evidence from China’s one-child policy enforcement

Scholarly evidence on the quantity-quality trade-off is mixed in part because of the identification challenge due to endogenous family size. This paper provides new evidence of the causal effect of child quantity on child quality by exploiting regional differences in the enforcement intensity of China’s one-child policy (OCP) as an exogenous source of variation in family size. Using the percentage of current mothers of primary childbearing age who gave a higher order birth in 1981, we construct a quantitative indicator of the extent of local violation of the OCP, referred to as the excess fertility rate (EFR). We then use regional differences in EFRs, net differences in pre-existing fertility preferences and socio-economic characteristics, to proxy for regional differences in OCP enforcement intensity. Using micro data from the Chinese Population Censuses, we find that prefectures with stricter enforcement of the OCP have experienced larger declines in family size and also greater improvements in children’s education. Despite the evident trade-off between family size and child quality in China, our quantitative estimates suggest that China’s OCP makes only a modest contribution to the development of its human capital.     

A brief note concerning Hayek’s non-standard conception of knowledge

Whatever F.A. Hayek meant by “knowledge” could not have been the justified true belief conception common in the Western intellectual tradition from at least the time of Plato onward. In this brief note, I aim to uncover and succinctly state Hayek’s unique definition of knowledge.     

America’s neglected debt to the Dutch,an institutional perspective

America’s early constitutional development owes a good deal to the experience and policies of the Dutch republic. Many of the parallels are direct: In the late 16th century, the Dutch fought a successful war to secede from a major empire. They wrote a declaration of independence and adopted a federal model of Republican governance almost exactly two hundred years before the Americans. Somewhat later, the Dutch republic and its political institutions subsequently inspired and protected enlightenment scholars. Its leading political family and army played a crucial role in curtailing English absolutism in England and in England’s American colonies, and its federal template provided a model for early American institutions.

Whence reform? A critique of the stiglitz perspective

This paper discusses the key hypotheses which Joseph Stiglitz proposed, in his wide-ranging critique of the “Washington Consensus”, with regard to transition reforms and economic policies in China and Russia. The primary purpose is to evaluate the Stiglitz perspective in the light of empirical evidence, including the experience of countries outside China and Russia. Although some of the points Stiglitz makes are important for understanding what has happened in the transition, this paper argues that his perspective mis-interprets the key facts of the Chinese transition, mis-describes the facts of the Russian transition and fails to consider the theoretical and policy implications of the success of a “third model”, which is represented by some Central European and Baltic transitions.     

Does belief in objective morality lead to coercion? An analysis of the arguments of Kelsen and Buchanan

Two leading scholars of the 20th century – Hans Kelsen and James Buchanan – both suggested that belief in an objective morality entails a disparaging attitude towards political and individual freedom. The main point was similar: Why let people decide for themselves, whether in politics or ordinary life, if what is objectively right is known? This paper presents their arguments and evaluates them, both by specifying three conditions that need to be met for the arguments to hold (the objective morality must be believed to be known, a belief in a known morality must entail a motivation to see it followed and the content of the known morality must not block coercion) and by relating them to recent experimental research (which nevertheless provides some empirical support).     

Does the digital divide across countries lead to convergence? New international evidence

We examine the convergence of information and communication technologies (ICT) among 47 developed and emerging countries using annual data from 2000 to 2012. We construct an ICT development index using a principal component analysis. The results, based on a dynamic panel data model, reveal a divergence in ICT development. This study identifies two factors that drive a country's digitalization divergence level: the growth of per capita income and the ratio of urban to rural population. In addition, ICT divergence is higher in emerging countries than in developed countries.     

The People’s bank of China’s response to the coronavirus pandemic: A quantitative assessment

The People’s Bank of China (PBoC) has implemented numerous measures to cushion the impacts of the COVID-19 health crisis on the Chinese economy. Since the current monetary policy framework features a multi-instrument mix of liquidity tools and pricing signals, we employ a dynamic-factor modelling approach to derive a composite indicator of China’s monetary policy stance. Our quantitative assessment shows that the PBoC’s policy response to the outbreak of the COVID-19 pandemic has been swift and decisive. Specifically, our estimates reveal that the PBoC has implemented novel policy measures to ensure that commercial banks maintain liquidity access and credit provision during the COVID-19 crisis.     

Does monetary integration lead to income convergence in Africa? a study of the CFA monetary area

Portuguese Economic Journal - The CFA franc area is one of the oldest currency unions, but it has come under intense criticism recently for failing to promote economic growth and income convergence...     

The knowledge bases of the world’s largest pharmaceutical groups: what do patent citations to non-patent literature reveal?

This article examines the knowledge bases of the world’s largest pharmaceutical groups by sales. It builds upon the concepts of knowledge specialisation and knowledge integration as the relevant dimensions along which knowledge bases can be mapped. The former is studied developing indicators of breadth. Breadth is measured by analysing the evolution of specialisation by scientific field over time. It hints at the widening range of bodies of scientific and technological knowledge relevant to firms’ innovative activities. Knowledge integration is studied developing indicators of depth. Depth is measured by analysing the evolution of integration across different typologies of research. It hints at the complex, non-linear interdependencies that link the scientific and technological domains. We develop the analysis on the strength of an original database of 33,127 European Patent Office patents and 41,931 citations to ‘non-patent document’ (of which 19,494 were identified as scientific articles included in the ISI databases) of the 30 largest pharmaceuticals groups during the period 1990–1997. The groups studied seem to have incrementally increased the breadth of their knowledge bases, moving towards the fields proper to the new biopharmaceutical research trajectory. At the same time, some of the groups studied exhibit remarkable depth in knowledge integration in particular fields such as biotechnology, biochemical research and neurosciences.     

Does a stricter enforcement policy protect the environment? A political economy perspective

The conventional wisdom suggests that a stricter enforcement policy can reduce pollution emissions. Nevertheless, this present paper argues that this assertion does not necessarily hold if the stringency of environmental regulation is subject to the influence of lobbying. A stricter enforcement policy increases the polluters’ expected financial burden, and induces them to exert greater political pressure on reducing the stringency of environmental regulation, thereby resulting in a larger amount of pollution emissions. We also show that tightening the enforcement policy can reduce efficiency. We highlight the possibility of policymaking being misguided due to overlooking the political effect of enforcement policy.     

How do dimensions of proximity relate to the outcomes of collaboration? A survey of knowledge-intensive networks in the Dutch water sector

There is a growing body of literature on the importance of proximity for innovation and other knowledge-related outcomes. We examine the impact of geographical, social, organisational, and cognitive proximity for a heterogeneous population, including people from academia, knowledge institutes, industry, and government. We analyse data on 1020 ego–alter relationships, derived from a survey among water professionals in the Netherlands. The use of survey data allows for more refined indicators of proximity and more diverse collaboration outcomes than those common in the literature. Social and cognitive proximity have a positive effect for all outcomes examined. Geographical and organisational proximity have a negative effect on hard (tangible) outcomes yet a weak positive (if any) effect on soft (intangible) outcomes. We do not find evidence for the suggestions in the conceptual literature that proximity follows an inverted U-curve where most outcomes are achieved in relations with some but not too much proximity.     

Does increased credibility of elections lead to higher political competition? Evidence from India

A large amount of administrative effort is directed towards making elections credible and reducing electoral fraud in large democracies. However, it is not clear if such policy efforts have a feedback effect on political competition. In this paper, we exploit plausibly exogenous variation in perceptions of electoral credibility following the introduction of a technology-induced voting reform in India and find significant impacts on political competition. Electronic voting machines in India were mandated to include an additional layer of transparency by the introduction of a Voter-Verified Paper Audit Trail (VVPAT). We find that with the introduction of VVPAT, the winning margins and vote share of winners decline whereas the number of candidates in the average race increases. The results are robust to econometric concerns arising out of staggered implementation of the program providing support to our identification design. Our results also point to heterogeneous effects of the VVPAT roll-out in constituencies that received it only once relative to those that got the VVPAT in two successive elections. Interestingly, we note that much of the welfare improvement through increased political competition is reversed with more experience, suggesting the presence of important learning effects.     

On the ‘Origins’ of Sraffa’s Production Equations: A Reply to de Vivo

In this rejoinder to de Vivo’s comment on Gehrke and Kurz (2018, ‘Sraffa’s constructive and interpretive work, and Marx.’ Review of Political Economy) we first ask what could possibly be meant by seeking to identify the ‘origins’ of Sraffa’s production equations. We then show that in his comment de Vivo has abandoned his original view, according to which the magnitudes in Sraffa’s ‘first equations’ are to be interpreted in Marxian (labour) value terms, without advising the reader. In addition, we show that his ‘new’ view is not supported by evidence from Sraffa’s papers. De Vivo misconstrues several propositions of Sraffa and misunderstands his ‘reduction method’ by means of which the values of commodities are reduced to some basic product or to labour. The criticisms de Vivo levels at the interpretation advocated by us are without any foundation.     

Geographic patterns of Poland’s FDI: the investment development path perspective

The purpose of the present study is to incorporate geographic analysis of FDI into the classic IDP model. By supplementing the traditional analysis of the net outward investment (NOI) position with an analysis of geographic patterns in inward and outward FDI, the authors strive to offer a better explanation of Poland’s current NOI position and provide more in-depth support to some necessary policy recommendations. Hence the main contribution of this study to the international business scholarship is two-fold. It (1) further develops the IDP research methodology; and (2) provides a better understanding of the idiosyncratic nature of the IDP of Poland.     

Bringing Balance to the Force? A Comparative Analysis of Institutionalisation Processes in the G20’s Mutual Assessment Process and the EU’s Macroeconomic Imbalances Procedure

Events from 2008 onwards have bought the old consensus on the sound money and finance paradigm (the ‘Great Moderation’) into bold relief. One manifestation of this crisis of belief is the increased focus on global imbalances, institutionally reflected in the creation of the Mutual Assessment Process (MAP) at the G20 level and subsequently the Macroeconomic Imbalances Procedure (MIP) at the European Union (EU) level. Comparing both newcomers to international macroeconomic policy coordination, this article analyses four features that shape (and we show, institutionalise) the process of paradigm contestation: presence, position, promotion and plausibility. We argue that although initially the G20’s MAP scored higher in terms of presence, position and promotion, it is the EU’s MIP, which heralds a more substantial shift in macroeconomic management. Collectively, both indicate the increased prominence of global imbalances as the subject of inter- or supranational management, and a broadening of the notion of necessary or legitimate economic governance.     

Does Tourism Improve the Community’s Well-Being in Marine-Protected Areas?

International Advances in Economic Research -