Crisis or transformation? Japan viewed from Hungary*

This paper challenges the view that Japan has been in crisis in the past decade. After citing some basic contradictory facts, the author first summarizes his arguments for the prevailing crisis mood by grouping them into ‘superficial’, ‘middle‐of‐the‐scale’ and ‘profound’ reasons. Then, in order to better prove his point that one should speak about the necessary transformation of the Japanese economy and society, rather than about the crisis, he gives a wider than usual coverage of the main areas of transformation.     

Latin American multinationals: A historical and theoretical approach*

Among the so‐called multinationals from the South, Latin American multinationals are outstanding for being pioneers. Their history goes even back to the end of the 19th century. In this article, we sketch a brief history of Latin American multinationals, but we concentrate on their development and growing importance since the 1980s within the context of economic reforms and globalization. We then apply a theoretical and typological perspective in order to characterize these multinational companies and to identify the elements that will condition their future behavior and development     

A class of multiattribute utility functions

A function u(z) is a utility function if u′(z) > 0. It is called risk averse if we also have u′′(z) < 0. Some authors, however, require that u ⁽ⁱ⁾(z) > 0 if i is odd and u ⁽ⁱ⁾(z) < 0 if i is even. The notion of a multiattribute utility function can be defined by requiring that it is increasing in each variable and concave as an s-variate function. A stronger condition, similar to the one in case of a univariate utility function, requires that, in addition, all partial derivatives of total order m should be positive if m is odd and negative if m is even. In this paper, we present a class of functions in analytic form such that each of them satisfies this stronger condition. We also give sharp lower and upper bounds for E[u(X ₁,... , X _s )] under moment information with respect to the joint probability distribution of the random variables X ₁,... , X _s assumed to be discrete and representing wealths. Partially supported by OTKA grants F-046309 and T-047340 in Hungary.     

How do conventions evolve?

The paper argues that, even in the absence of bureaucratic inertia, the transition from one convention to a superior one can be blocked. Because of the self-reinforcing mechanism generated by coordination effects, the economy can be locked-in to an Pareto-inferior convention. In the framework of evolutionary game theory, convention appears to be an evolutionary stable strategy. We show that the endogenous diffusion of a superior convention is possible but requires the presence of some social or cultural differentiation in order that coordination effects can be localized. The social or cultural links provide no information about the structure of the game, but help people to coordinate themselves by providing external points of reference. We construct a model where matching between agents respects a certain localization of interactions related to social or cultural similarity. These results are used to enlighten the surprising success of japanese labor management in US and UK transplants.     

Optimum income taxation and layoff taxes

This paper analyzes optimum income taxation in a model with endogenous job destruction that gives rise to unemployment. It is shown that optimal tax schemes comprise both payroll and layoff taxes when the state provides public unemployment insurance and aims at redistributing income. The optimal layoff tax is equal to the social cost of job destruction, which amounts to the sum of unemployment benefits (that the state pays to unemployed workers) and payroll taxes (that the state does not get when workers are unemployed).     

Insight into the impact of energy caps on the costs of cellular networks with different layouts and technologies

We investigate the options of a network operator who needs to reduce its carbon footprint, expressed in terms of a global energy cap. First, we propose two ways to meet the energy limitations: by efficiently managing the energy consumed by the legacy networks or by installing additional capacity to the initial topology. We show the power savings that can be obtained in both cases as well as the incurred costs. Then we identify the initial composition of the network and the available technology in the upgrade phase as the factors that have the most influence on the ability of a network to meet the energy caps. Finally, we show the intrinsic unfairness of the energy caps, which are imposed to all the networks without taking into account the differences among them. In conclusion, we highlight the fundamental role of carbon markets and emission trading systems to guarantee a measure of fairness between the operators.     

Intertemporal and spatial location of disposal facilities

The optimal capacities and locations of a sequence of landfills are studied, and the interactions between these characteristics are considered. Deciding the capacity of a landfill has some spatial implications since it affects the feasible region for the remaining landfills, and some temporal implications because the capacity determines the lifetime of the landfill and hence the moment of time when the next landfills should be constructed. Some general mathematical properties of the solution are provided and interpreted from an economic point of view. The resulting problem turns out to be non-convex and, therefore, it cannot be solved by conventional optimization techniques. Some global optimization methods are used to solve the problem in a particular case in order to illustrate how the solution depends on the parameter values.      

Income inequality in the U.S.: The Kuznets hypothesis revisited

Using annual data from 1919 to 2002, the structural transformation hypothesis proposed by Simon Kuznets helps explain the U-shape of U.S. top 1% or 0.01% income share distributions. Flexible autoregressive lag representations are employed and generalized methods of moments reinforce our results. First, as the employment share in goods producing activities falls, income inequality increases in the long run. Second, federal top taxation has only shortterm negative impacts. Third, these major results hold to business cycle controls (linear time trend and real output fluctuations) and to robustness checks of structural changes documented for the U.S. economy around the late 1970s.