The expectations management approach to stabilization in Argentina during 1976–1982

The main goals of the economic authorities in Argentina during 1976–1982 were to open the economy to foreign trade and to reduce inflation. The stabilization plan relied first on the control of money and wages, later on a preannounced schedule of a declining future exchange rate—actions that were supposed to be accompanied by a fiscal policy to reduce the public sector deficit.The stabilization plan was abandoned in the first quarter of 1981 for two reasons: an important financial crisis during the second quarter of 1980, and a deterioration of fiscal discipline that could no longer assure coherence between the deficit and the preannouncement schedule. The paper also argues that the political situation in Argentina undermined the credibility of the reforms and particularly the stabilization attempts. With the abandonment of the stabilization schedule, new commercial and exchange rate measures were gradually introduced, reversing the policy of opening the economy to foreign trade. The financial reform was reversed in 1982 with the virtual nationalization of deposits.The experience of Argentina suggests that capital inflows responding to interest rate arbitrage play a fundamental role in the short run dynamics of real exchange rates. They can promote the adjustment, or they can precipitate a run on the foreign exchange market. The lesson is that a stabilization plan based on the preannouncement of future exchange rates is highly risky for an economy like Argentina's.     

Elger Blühm (15.8.1923–3.2.2007)

Ohne Zusammenfassung     

The effects of between‐partner congruity on consumer evaluation of co‐branded products

Branding studies, especially those focusing on brand extension, have often centered on establishing the relationship between consumer evaluation and the match between a product concept and the brand (concept congruity). This study introduces an additional type of congruity that arises in the evaluation of co‐branded products, the congruity between brand partners (between‐partner congruity). Between‐partner congruity has not previously been explicitly considered in the co‐branding literature, but is potentially an important influence on consumer perceptions of a brand partnership. Thus, this study represents an initial attempt to understand how the level of between‐partner congruity will affect consumer response to cobranded products. Several findings in the marketing literature have suggested that when respondents have the motivation to resolve incongruity, the relationship between congruity level and evaluation is nonmonotonic. In other words, moderately incongruent concepts are preferred to congruent or highly incongruent concepts to form an “inverted‐U” data function. Yet, when motivation to process is low, evaluation becomes less favorable in a linear fashion as incongruity increases. This study examines whether these findings can be extended to co‐branding. When concept congruity is controlled across brand pairs, the nonmonotonic relationship between between‐partner congruity level and product evaluation is observed when consumers are encouraged to elaborate on the rationale for the partnership (high involvement). However, when consumers attend to the global similarity of the partners (low involvement), product evaluation becomes less favorable as between‐partner incongruity increases. © 2007 Wiley Periodicals, Inc.     

Technology spillover through trade and TFP convergence: 135 years of evidence for the OECD countries

Using a new dataset on imports of technology and total factor productivity (TFP) over 135 years for the OECD countries, this paper tests whether knowledge has been transmitted internationally through the channel of trade. The empirical estimates show that there is a robust relationship between TFP and imports of knowledge and that 93% of the increase in TFP over the past century has been solely due to imports of knowledge. Furthermore, it is shown that knowledge spillovers have been an important contributing factor behind the TFP convergence among the OECD countries over the period 1870 to 2004.     

Order with Law: Social Capital, Civil Litigation, and Economic Development

I use records on commercial litigation in New South Wales to assess the role of norms and social capital during economic development. The data indicate that total disputes fell over time, whereas the rate of out of court settlements increased. Litigation rates were initially higher in frontier areas that arguably needed to adapt institutions to new circumstances because norms and standards were as yet undeveloped. The fraction of settled cases was significantly lower in frontier areas and areas without market access. Patterns related to jury trials, plaintiff recovery rates, and attorney representation are also assessed. The results are consistent with the theory that cooperative solutions emerge as areas gain access to markets, and suggest that order and law are complementary inputs into the process of economic development.     

The case of labour time reduction without wage compensation: More or less employment?

Summary In this paper a model of a closed economy, including a market sector and a public sector, is presented to analyse the consequences of a reduction of labour time with and without wage compensation. It turns out that a policy of labour time reduction without wage compensation is a very strong instrument to improve production and employment, if the economy is characterized by the Keynesiandemand model. But if the economy is characterized by the neoclassicalsupply model, a relatively large drop in wages is necessary to prevent a policy of labour time reduction from causing a process of stagflation.