Inter-Fuel and Inter-Factor Substitution in NSW Manufacturing Industry*

This paper uses the absolute price version of the Rotterdam model to investigate inter-factor (energy, labour, capital, material), and the inter-fuel (electricity, solid fuel, liquid fuel, gas, other fuel) substitution in NSW manufacturing during the period 1968-69 to 1980-81. Input demand elasticities with respect to input prices and production volume are derived, analyzed and compared with results from previous studies. While generally previous results are confirmed, some divergencies do occur. These are attributed to choice of time period and region.     

Has the EMS reduced member-country exchange rate volatility?

Using tests for unit roots, serial correlation, and conditional heteroskedasticity, we find that the stochastic structure of the percentage changes in both the Franc/DM and Lira/DM rates is well described by a low order autoregression with ARCH disturbances. While this assertion is not rejected in either the Pre-EMS or the EMS period, we present evidence indicating a structural shift between sub-periods. In particular, while ARCH is present in each sub-period, its explicit parameterization changes dramatically.Likelihood-ratio tests indicate the desirability of a bivariate analysis, and significant ARCH effects are found in the conditional variances and covariances over both subperiods. Likelihood ratio tests also indicate substantial structural change between the subperiods. The conditional variances of exchange rate innovations are used as natural measures of exchange rate volatility; it is found that volatility decreases substantially for both rates in the EMS period. Furthermore, the Franc shows a relatively greater volatility decrease with the move to the EMS, a result consistent with the narrower parity bands established for the Franc. Finally, the covariation of shocks to the two intra-EMS rates is shown to decrease between the Pre-EMS and EMS periods.     

Cumulative causation in the formation of a technological innovation system: The case of biofuels in the Netherlands

Despite its worldwide success, the innovation systems approach is often criticised for being theoretically underdeveloped. This paper aims to contribute to the conceptual and methodological basis of the (technological) innovation systems approach. We propose an alteration that improves the analysis of dynamics, especially with respect to emerging innovation systems. We do this by expanding on the technological innovation systems and system functions literature, and by employing the method of ‘event history analysis’. By mapping events, the interactions between system functions and their development over time can be analysed. Based on this it becomes possible to identify forms of positive feedback, i.e. cumulative causation. As an illustration of the approach, we assess the biofuels innovation system in The Netherlands as it evolved from 1990 to 2007.     

MARKET STRUCTURE, PROGRAM DIVERSITY, AND RADIO AUDIENCE SIZE

This paper examines the relationships among radio station listenership, the number of program formats, and the number of stations. These relationships are statistically significant and consistent with theory, but the interrelationships are numerically small. The results imply that proposals by the federal Communications Commission and Congress to relax ownership restrictions must induce substantial changes in station numbers in order to noticeably increase programming diversity. Merely modest changes in these numbers will have only small diversity effects. The paper's results also imply that merely mandating the number of formats in a market may not be in the interests of listeners.     

Teacher Training and Teacher Optimism about the American Economic System

The amount and type of economic-education training teachers receive have predictable effects on the teachers' optimism about the future of the American economic system.     

TRADE,STRUCTURAL REFORM,AND INSTITUTIONS IN SUB‐SAHARAN AFRICA

Sub‐Saharan African countries have traditionally lagged the rest of the developing world in terms of overall trade relative to gross domestic product. But, there is growing interest among these countries to initiate trade policies and improve quality of institutions as a way to promote trade and boost foreign direct investment. This article extends the gravity model of trade to include proxies for trade reform policy and institutional quality among the 15 countries of the Economic Community of West African States (ECOWAS) for data spanning 1984–2006. Alternative methods of estimation based on ordinary least squares, Heckman two‐step procedure, and Poisson pseudo‐maximum likelihood produce predictions that are consistent with the standard gravity model. They further highlight the evidence of restrictive trade policies and weak institutions that contribute to the failure of ECOWAS countries to boost bilateral trade. (JEL F13, F15, O19, O55)