Adaptive Economic Models

The growth literature has identified four channels of transmission by which the abundance of natural resources can negatively affect economic growth. In this article, I suggest ideology as a fifth transmission channel. To test this hypothesis, I exploit the geography of Bolivia whose western regions have natural resources that differ considerably from its eastern regions. I find that regions with predominantly extractive natural resources tend to choose redistributive and interventionist rather than laissez-faire policies. Additionally, I identify two effects on growth depending upon the type of natural resource that a region possesses in abundance.     

Issues in Macroeconomics

This is a study of the nature of internal diversity within liberal and collaborative market economies. Based on large scale comparative survey data, we assess the extent to which specific clusters of practices are associated with specific varieties of capitalism. Given that recent literature has pointed to internal diversity within specific national contexts, we explore the nature of internal diversity within both liberal and collaborative market economies, and what makes each variety of capitalism distinct. We find that more than one cluster of practices is indeed likely to be encountered in a particular national context, but that this diversity was bounded: only a limited number of alternative paradigms are likely to emerge and persist. The survey findings not only shed light on the nature of this internal diversity, but also reveal the fact that liberal and collaborative markets remain distinct, with the rights accruing to employees being more deeply embedded in a wide cross section of firms within the latter.     

Institutionalism and the New Classical Economics

Neoliberalism has transformed markets supplying public goods. Analysis of five real-world Australian markets reveals the eligibility rules for access and ongoing participation, interaction of participants, the role of intermediaries and government, the extent of competition, complex regulatory regimes shaping and controlling these markets, and key market outcomes. Contrary to neoliberalism's free market rhetoric and the view promulgated by mainstream economics, a spectrum of market configurations and governance regimes were found along with participation being highly dependent on technology access and skills, market outcomes inconsistent with policy rhetoric, market interrelationships posing adverse cumulative impacts, and government is strongly interventionist through multiple roles.     

Changing Perspectives on the Factors of Production

Envy is a complex emotion that influences the behavior of envious and envied individuals. Because envy can imply ill will, discontent or dislike of the envied individual who possesses something that the envious individual desires, or aspiration to emulate the envied position, it can lead the envious individual to undertake costly efforts to reduce the gap between the envied situation and his own situation. The envious individual can seek either to damage or match the situation enjoyed by the envied individual. In return, the envied individual can adopt either envy-appeasing strategies or envy-arousing strategies. We argue that these costly envy-related behaviors impede or stimulate economic development.     

Options-based forecasts of futures prices in the presence of limit moves

The reported analysis examines a simultaneous estimation option-based approach to forecast futures prices in the presence of daily price limit moves. The procedure explicitly allows for changing implied volatilities by estimating the implied futures price and the implied volatility simultaneously. Using futures and futures options data for three agricultural commodities, it is found that the simultaneous estimation approach accounts for the abrupt changes in implied volatility associated with limit moves and generates more accurate price forecasts than conventional methods that rely on only one implied variable.     

Long memory and level shifts: Re-analyzing inflation rates

A key application of long memory time series models concerns inflation. Long memory implies that shocks have a long-lasting effect. It may however be that empirical evidence for long memory is caused by neglecting one or more level shifts. Since such level shifts are not unlikely for inflation, where the shifts may be caused by sudden oil price shocks, we examine whether evidence for long memory (indicated by the relevance of an ARFIMA model) in G7 inflation rates is spurious or exaggerated. Our main findings are that apparent long memory is quite resistant to level shifts, although for a few inflation rates we find that evidence for long memory disappears. First version received: March 1998/final version received: October 1998