International Differences in Fiscal Outcomes during the Global Crisis

We examine the cross‐country dispersion in fiscal outcomes during 2008–09. Controlling for output, we find that the declines in the overall and structural fiscal balances were larger for those countries experiencing larger increases in unemployment and where credit growth during the pre‐crisis period was more rapid. However, controlling for output and unemployment, there is no systematic covariation between fiscal outcomes and a wider range of initial conditions and country characteristics that have been cited as possible drivers of fiscal outcomes during this episode.     

International trade and economic convergence: the credit channel

In this paper, we examine a particular mechanism by which internationaltrade accelerates economic convergence. We develop a model ofgrowth under credit constraints in which international tradeexpands access to credit. We show in numerical simulations thatreasonable values for openness generate convergence rates thatmatch well the empirical estimates. We econometrically investigatea key prediction of the model - that more open economies exhibitgreater debt to output ratios - and find substantial supportin the data for this claim. This remains true even when we controlfor a host of additional factors and conduct robustness checks.     

Contractualism In the Public Sector

Contractualism in the public sector is more than just another fad. Its use will continue into the next century, meaning that we need to model what a pure model of contractualism entails for the delivery of services in the public sector. The article suggests such a model and states the limits of its employment.     

Ontological uncertainty and innovation

This paper explores the relationship between uncertainty and innovation. It distinguishes three kinds of uncertainty: truth uncertainty, semantic uncertainty, and ontological uncertainty, the latter of which is particularly important for innovation processes. The paper then develops some implications of ontological uncertainty for innovation processes at three levels of organization, by means of three theories: a narrative theory of action at the level of individual economic actors; the theory of generative relationships at the meso-level of agent interaction; and the theory of scaffolding structures at the macro-level of market systems. These theories are illustrated by means of examples drawn from a prospective study on the emergence of a new market system around a technology for distributed control.JEL Classification: D800, O300, L100 Correspondence to : D.A. Lane, Cannaregio 4392, Venezia 30121, ItalyThe authors would like to acknowledge the financial support for the research reported here from the European Commission IST-FET program, the Italian Ministry of Universities, Instruction and Research, and the Santa Fe Institute. We thank our colleagues in the ISCOM research project and the participants in the SFI workshop on scaling and social organization for valuable comments and discussion.     

Financial Globalisation and the Crisis

The global financial crisis provides an important testing ground for the financial globalisation model. We ask three questions. First, did financial globalisation materially contribute to the origination of the global financial crisis? Second, once the crisis occurred, how did financial globalisation affect the incidence and propagation of the crisis across different countries? Third, how has financial globalisation affected the management of the crisis at national and international levels?     

Disinflation,switching nominal anchors and twin crises: The irish experience

This paper reviews the Irish disinflation of 1979-86 and the subsequent success in maintaining a low and stable average inflation rate. Joining the German-led EMS in 1979 broke a 153-year link with Sterling and hence is an example of a country switching nominal anchors in order to disinflate. Reducing inflation was made more difficult by a parallel fiscal crisis and the tension in maintaining competitiveness against diverging trading partners (the UK and continental Europe). Having paid the costs of disinflation and fiscal adjustment, Ireland has made a remarkable economic recovery in the last decade, combining rapid GDP and employment growth with an average annual inflation rate of only 2.4 percent.