European time-series relationships between inflation and inflation uncertainty: In search of threshold levels

Summary Cross-country studies have found threshold levels of inflation below which the relationship between inflation and inflation uncertainty appears to break down. However, Ball's (1992) theory suggests that threshold levels should be studied in a time-series context. This study documents these threshold levels. For this purpose, the conditional variance of inflation is modeled as a GARCH process that includes not only lagged squared residuals and conditional variance estimates but also a predetermined inflation variable. A two-step procedure is used to identify the ranges of this inflation variable that determine the significance of its coefficient. Empirical results are presented for the four West European G-7 countries: Italy, Germany, the UK, and France.The second author appreciates financial support by The Netherlands Organization for Science Research (N.W.O.). The authors thank Eduard Bomhoff, the editor and two anonymous referees for their useful comments and suggestions.     

Towards the formalization of ‘small is beautiful’: Societal effectiveness versus economic efficiency

Economic efficiency criteria are often based on considerations of concentration, standardization and centralization of activities which may undertake or omit entirely various internal and external diseconomies of by-products associated with any growth process. This paper re-examines the context in which the efficiency criterion is usually applied. The notion of effectiveness is analysed theoretically from two perspectives. Social costs are introduced initially in a static framework and then the inertia of large organizations is discussed in a dynamic perspective. The flexibility of the system in adjusting to rapid changes in technology is analysed from a structural approach based on smaller and more decentralized organizations.     

Reducing the cost of reducing inflation through gradualism,preannouncement or indexation? The international evidence

Zusammenfassung Lassen sich die Kosten einer Senkung der Inflationsrate durch eine nur allm?hliche Rückführung der Inflationsraten, eine Vorankündigung geldpolitischer Ma\nahmen oder eine Anwendung von Geldwertsicherungsklauseln senken ? Der internationale Befund. — Hohe Inflationsraten in den siebziger Jahren haben weltweit eine lebhafte Diskussion entfacht, ob und mit welchen Mitteln die vorübergehende Arbeitslosigkeit, die mit der Rückkehr zur Preisniveaustabilit?t einherzugehen pflegt, gemildert werden kann. Dabei standen drei Vorschl?ge im Mittelpunkt des Interesses: I. allm?hliche Rückführung der Inflationsraten; 2. vor-angekündigte Verlangsamung des Geldmengenwachstums und 3. Zulassung und staatliche F?rderung von Geldwertsicherungsklauseln. Die vorliegende Arbeit testet diese drei Hypothesen für siebzehn L?nder im Zeitraum von 1950 bis 1978. Die Zeit-reihenergebnisse zeigen, da\ Stabilisierungsarbeitslosigkeit durch geldpolitische Vor-ankündigung und Indexierung, nicht aber durch graduelles Vorgehen vermindert werden kann. Die internationale Querschnittsanalyse der Stabilisierungsarbeitslosig-keit l?\t keine klaren Schlu\folgerungen zu. Für fast alle L?nder stehen die Ergeb-nisse im Einklang mit der neoklassischen Auffassung, da\ ein Anstieg der realen Lohnstückkosten — meist mit einem Jahr Verz?gerung — zu einer Zunahme der Arbeitslosigkeit führt.

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Résumé Peut-on diminuer les co?ts d’une réduction de l’inflation par une politique monétaire de type graduelle, le préavis de l’expansion monétaire ou l’in-dexation? L’evidence international. — L’article contient une analyse empirique de la question si les réductions temporaires du niveau de l’emploi qui semblent être associées avec la décélération monétaire et la disinflation puissent être réduites par la politique monétaire de type graduelle (gradualisme), le préavis de l’expansion monétaire ou l’indexation. Les résultats de séries chronologiques sont positifs dans le cas du préavis et l’indexation mais negatifs dans le cas du gradualisme. L’analyse internationale transversale des effets de l’indexation donne des résultats très mixtes. Comme produit secondaire nous démontrons que, pour la majorité écrasante des dix-sept pays analysés, l’évidence est clairement conforme à la vue néo-classique que des augmentations des co?ts de travail réels par unité de produit réduisent l’emploi.

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Resumen Reducir el coste de disminuir la inflatión por medio de gradualismo, annuncio previo de la política monetaria o indización ? La evidencia international. — El estudio contiene un análisis empirico sobre como las reducciones momentáneas en el nivel de empleo, normalmente asociadas con una deceleratión monetaria se pueden educir por medio de gradualismo, anuncio previo de la política monetaria o indización. Los resultados corroboran esta hipótesis con respecto al anuncio previo de la política monetaria y la indización pero no hay evidencia sobre el gradualismo. El análisis sectoral international sobre los efectos de la indización produce resultados muy diversos. Secundariamente, para la casi absoluta mayoría de los diecisiete países analizados, hay evidencia manifiesta de acuerdo con la teoria neoclásica, de que incrementos en el salario real unitario reducen el nivel de empleo.

     

Innovation,information and long-term growth

Short-term and partial analyses have led to overpessimistic predictions (non-conjunctural unemployment, decline of certain countries, and a slowdown in creativity). A more general approach is based on the idea of industrial revolution: the neolithic—cultivation and domestication; in the 19th century—coal, steel, railways; in the mid—20th century—petrol, cars, etc. A fourth revolution is beginning (electronics, information sciences, telematics, biotics, aquaculture, solar power etc), but this is still in an embryonic phase, whereas earlier revolutions are in their mature stage. An interpretation based on the information sector can lead to a certain pessimism. This can only be avoided by a broader definition of the economy (pattern recognition) in which man, and human investment, have an equal place alongside material investment.     

Where Does Education Pay Off in Sub-Saharan Africa? Evidence from Two Cities of the Republic of Congo

Using first-hand data from the 2009 Employment and Informal Sector Survey (EESIC) in the two largest cities of the Republic of Congo, Brazzaville and Pointe-Noire, we analyze the impact of education on labour market outcomes, and identify the segments where education pays off the most. Multivariate analyses of the risk of unemployment and sectoral choice indicate that young people face serious difficulties in the labour market: for most of them, their only choice is to remain unemployed or to join the informal sector. To measure the specific impact of schooling on earnings, we address issues related to sample selection and endogeneity of education in the earnings function. The results shed light on heterogeneity in the returns to schooling across the two main cities and institutional sectors. An important finding is that the informal sector does not systematically lag behind the formal sectors in terms of returns to education. We emphasize convex returns to education, meaning that the last years in secondary and tertiary schooling yield the highest returns, while those of primary education are generally lower. This convexity is also apparent in the informal sector, where education (albeit on another scale) again appears as an important determinant of earnings.     

Multinationality and downside risk: The roles of option portfolio and organization

Multinational operations confer firms a portfolio of switching options that offer potential operating flexibility in the context of input cost variability, helping firms reduce downside risk. We suggest that two conditions may shape the relationship between multinationality and downside risk. When subadditivity is present in a firm's option portfolio, such as when the firm operates affiliates in host countries with similar labor cost developments, multinationality is less likely to reduce downside risk since less valuable opportunities exist for shifting operations. Multinationality is more likely to reduce downside risk if a firm's organization facilitates the coordination of cross‐border activities, enabling the exploitation of the shifting opportunities. Analysis of a comprehensive panel dataset of Japanese manufacturing firms and their foreign manufacturing affiliates provides support for these conjectures. Copyright © 2013 John Wiley & Sons, Ltd.     

Innovations in well-being tourism in the Nordic countries

Since the development of community-based tourism (CBT) governments, development agencies and NGOs have placed considerable emphasis on this development model. However, CBT has been strongly criticized with respect to low economic impact in terms of jobs and income, the result of small-scale interventions, its low life expectancy after external funding ends, the monopolisation of benefits by local elites, or the lack of business skills to make it operational.

This article explores the viability of the CBT model to support socio-economic development and poverty alleviation via a Nicaraguan case study. The characteristics and effects of different modes of organising community tourism were examined, based on an impact assessment and lifecycle analysis of the CBT Nicaraguan Network. The results showed how traditional top-down CBT, created and fully funded by external organisations, reflected the general criticisms of the approach, while bottom-up CBT, borne as a result of a local initiative, demonstrated longer life expectancy, faster growth, and more positive impacts on the local economy. The findings suggest a shift is required in the attention of donors and policy-makers towards redistribution policies that strengthen the skills, resources, and conditions of micro, community-based and family entrepreneurship, together with a stronger orientation towards the domestic markets.     

Cultural tourism as tourist segment for reducing seasonality in a coastal area: the case study of Andalusia

The present paper analyses the seasonal concentration on the Andalusian coastline, a Spanish Mediterranean coastal destination characterised by its high seasonality in the summer months. The analyses were conducted by separating tourists according to their main travel motivation, and distinguishing sun and sand tourists from cultural and other segments tourists, based on their place of origin and on the coast they visited. The quantitative tools applied included the additive decomposition of the Gini index and the calculation of the relative marginal effects. The proposed methodology serves as a useful tool for tourism managers and administrators interested in reducing seasonality, since it facilitates the identification of tourists segments that can effectively contribute to the reduction of seasonal concentration. Among the main results for the studied area, it was found that given the heterogeneity of the groups of tourists (both domestic and foreign), it was much more effective to separate tourist segments by their main travel motivation. The cultural segment was the most favourable for deseasonalisation, especially within domestic tourists, since with foreigners the same deseasonalising effect was not present in all the coasts analysed.