The Role of Economics in Interdisciplinary and Problem-Oriented Programs

Although research on the teaching of economics beyond the introductory course appears to be increasing, it is still rare. This study is one of the few that deals with the intermediate level. Ault and Rutman used a three-part test (one part of which was made up of an essay question) in measuring student knowledge before and after instruction in intermediate theory. They compared an experimental group being taught through a problem-centered format (in combination with the usual lecture-discussion approach) with a control group getting only the lecture-discussion treatment. The experimental students did no better than the control students, but the authors discuss several variables that might help to explain these results.     

Prostitution services: an exploratory empirical analysis

This study provides an empirical analysis of the market for some male prostitution services in the UK. Flexible working hours, part-time working, and multiple job holding are considered as important labour market characteristics in this service sector. Statistical models helping explain the provision of a deviant and a more mainstream sexual service is reported, utilizing cross-section data drawn from individual prostitute advertisements. The significance of various declared intrinsic endowments of the prostitutes are examined in relation to the offer of these services, including age, ethnicity, physique, and masculine demeanour.     

Parental preferences and choice of school

This paper provides a UK high resolution microeconometric study of parental preferences and the choice process for secondary schools. Given the particular geographical features of the region, first preference almost entirely related to one of two state schools, which is a situation that perhaps better reflects the real nature of the options faced by most parents in the UK. In contrast to earlier work, distance and access considerations were explicitly incorporated in the preference and choice models estimated and found to be a significant influence on parental decisions. Further significant factors were found, dependent upon the parents' actual choice of school.     

A coming ‘Magnesian’ age? Small states,the global system,and the international community

Since Plato, we have considered that the ideal polis, or political community, is the small state, akin to the idyllic ‘Magnesia’ of the Laws. The Platonic ideal, however, generally has been considered unrealistic. Even in the ancient world, the Alexandrine model ‐ an expanding, pluralistic network of large trading cities under a single aegis ‐ came to contradict it. Subsequent history, especially the imperialism of the nineteenth century which swallowed up many small polities around the world, seemed to prove that only large and powerful entities were ‘fit’ to survive. Why, then, are there still so many small‐sized countries in the world today? Why is their number actually increasing? Decolonisation, the end of bipolarity, democratisation, trade liberalisation and the digital revolution are five factors that have given small states more freedom. Yet many are vulnerable, and the economics of their situations are precarious. The workings of the global system, particularly the globalisation of business, may harm them even while promoting their freedom. The international community, a large part of which is now in fact made up of small states, should be prepared to act, for the global public good as well as out of sheer political and also environmental self‐interest, to help safeguard the livelihood of the world's many and varied small states, whose ‘Magnesian’ venues and values can be of both functional and normative importance for mankind as a whole.     

Licensing and innovation with imperfect contract enforcement

Licensing promotes technology transfer and innovation, but enforcement of licensing contracts is often imperfect. We model contract enforcement as a game with perfect information but probabilistic enforcement and explore the implications of weak enforcement on the design of licensing contracts, the conduct of firms, and market performance. An upstream firm develops a technology that it can license to downstream firms using a fixed fee and a per‐unit royalty. Strictly positive per‐unit royalties maximize the licensor's profit if competition among licensees limits joint profits. With imperfect enforcement, the licensor lowers variable royalties to avoid cheating. Although imperfect contract enforcement reduces the profits of the licensor, weak enforcement lowers prices, increases downstream innovation, and in some circumstances can increase total economic welfare.     

BANKING LICENCES, BAILOUTS AND REGULATOR ABILITY

I analyse a model in which it is socially optimal for banks to manage depositor funds but in which concerns about fraud discourage depositing and justify regulation. The regulator screens bankers and decides the level of charter value which they will receive as incentive to prevent fraud. She can also encourage deposits by insuring them. The optimal policy depends upon the regulator's screening ability: high ability regulators rely upon charter value and low ability regulators rely upon deposit insurance. I relate these findings to the regulation of transition economy banks, to operational risk management, and to banking competition policy.     

The determinants of foreign direct investment into European transition economies

Using a panel dataset of bilateral flows of foreign direct investment (FDI), we study the determinants of FDI from Western countries, mainly in the European Union (EU), to Central and Eastern European ones. We find the most important influences to be unit labor costs, gravity factors, market size, and proximity. Interestingly, host country risk proves not to be a significant determinant. Our empirical work also indicates that announcements about EU Accession proposals have an impact on FDI for the future member countries. Journal of Comparative Economics 32 (4) (2004) 775–787.     

THE HARROD–BALASSA–SAMUELSON HYPOTHESIS: REAL EXCHANGE RATES AND THEIR LONG‐RUN EQUILIBRIUM*

Frictions and perturbations may influence currency values in the short run, but it is generally acknowledged that real‐exchange rates eventually settle toward equilibrium. The puzzle then is how gradually this parity is reached given the fluidity in foreign exchange markets. Persistent differences in the relative productivity of countries—a broad characterization of the Harrod–Balassa–Samuelson hypothesis—may help explain this puzzle. This article introduces methods to estimate equilibrium adjustment paths semiparametrically, and then sort how each of these components influences the dynamics of exchange rates. This is done in a dynamic panel setting by introducing novel local projections methods for cointegrated systems. Productivity shocks affect dynamics, and after adjusting for these factors, adjustment toward equilibrium is relatively rapid.