The Fiction of Neutral Inflation

Though less frequent with the years, intermittent calls for 'reflation' to stimulate the economy can occasionally still be heard from Keynesian economists and politicians. Eli Schwartz, Professor of Economics at Leghigh University, Pennsylvania, examines the effects of inflation, anticipated and unanticipated, on participants in the economy. Professor Schwartz argues that, in spite of the short-term political benefits, the longer-term costs are so high that less myopic politicians may perceive the electoral advantages in tackling inflation.     

Producer cooperatives: the British experience

The British producer coop movement, though small, is of particular interest because of its rapid current growth and its unusual variety of organizational forms. In this paper, the history, institutional structure, recent development and economic performance of the sector are discussed and policy implications drawn. It is concluded that coops should be particularly aware of problems in management, finance and internal democracy. There remains considerable scope for further public intervention including the formation of specialized support agencies for activities like marketing and training, and to assist in the creation of new coops.     

Real Wages and Employment: Four Great Economists: Pigou, Simons, Keynes and Hansen

Professor Eli Schwartz of Lehigh University reviews the theories of Pigou, Simons, Keynes and Hansen concerning unemployment. He concludes that we are in a'Pigovian'world where unemployment is due to defects in the labour market.     

Minimum wages in Spain

In Spain the minimum wage appears to have no significant employment-reducing effect for workers over 18. For the under 18s, however, minimum wages and employment are negatively related. The government should consider lowering the minimum wage for younger workers.     

Input specificity and global sourcing

This paper identifies a new industry-equilibrium channel through which a firm’s productivity affects its organizational choice. In a two-country model with firm heterogeneity and incomplete contracts, we show that the degree of input specificity and the hold-up friction in an outsourcing relation become a function of the final good firm’s productivity when inputs are not completely specific. We examine the implications for the equilibrium international sorting pattern of firms.     

Establishing the need for a low‐cost Canadian debt relief procedure

Canada does not have a low‐cost bankruptcy option for debtors with low incomes and low assets. In this article, we present empirical evidence of the need for such an option by estimating the number of debtors who might benefit from it. We then review the successful low‐cost bankruptcy options in operation in New Zealand and in the United Kingdom and recommend that Canada adopt a similar system.     

Platform Competition With Cash-Back Rebates Under No Surcharge Rules

We analyze competing strategic platforms setting fees to a local monopolist merchant and cash-back rebates to end users, when the merchant may not surcharge platforms’ customers, a rule imposed by some credit card networks. Each platform has an incentive to gain transactions by increasing the spread between its merchant fee and user rebate above its rival's spread. This incentive yields non-existence of a pure strategy equilibrium in many natural environments. In some circumstances, a mixed strategy equilibrium exists where platforms choose fee structures that induce merchants to accept only one platform with equal probability, a form of monopolistic market allocation.     

Rejoinder to Paul Krugman

We provide a brief rejoinder to Krugman [2008, Response to Nelson and Schwartz. Journal of Monetary Economics 55, this issue] on three issues that are central to his original New York Review of Books article and his reply to our setting the record straight: (i) criticisms of Friedman; (ii) criticisms of monetarism; and (iii) interpretations of history.