On the role of inflation in consumption function

Zusammenfassung Zur Rolle der Inflation in der Konsumfunktion. - Ziel dieses Aufsatzes ist es, noch einmal zu untersuchen, welche Rolle die Inflation im Konsumverhalten der Haushalte spielt, und zwar sowohl die beobachtete Inflationsrate als auch die Unsicherheit über die Inflationsrate. Zun?chst wird gezeigt, worin die Beziehung zwischen Deatons unfreiwilligem Sparen und der Spezifikation der Konsumfunktion durch Davidson, Hendry, Soba und Yeo besteht; und es wird eine Methode vorgeschlagen, um die genannte Spezifikation als eine Ann?herung aus einem expliziten Modell intertemporaler Konsumentscheidungen abzuleiten. Dann werden diese zwei Spezifikationen der Konsumfunktion verglichen, wo- bei viertelj?hrliche Daten aus dem Vereinigten K?nigreich benutzt werden. Dieser Vergleich spricht für die zweite Spezifikation. Die Ergebnisse deuten darauf hin, da\ Unsicherheit über die Inflationsentwicklung das Konsumverhalten der Haushalte in der Tat negativ beeinflu\t.

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Résumé Sur le r?le de l’inflation dans la fonction de consommation. - Le but de cet article est de ré-examiner le r?le de l’inflation dans la consommation des ménages en terme du taux observé d’inflation aussi bien que de l’incertitude d’inflation. D’abord les auteurs analysent la relation entre l’épargne involontaire d’après Deaton et la spécification de la fonction de consommation par Davidson, Henry, Srba et Yeo et ils suggèrent une méthode de dériver cette spécification comme approximation d’un modèle explicite intertemporal du choix des consommateurs. Ensuite, les auteurs comparent ces deux spécifications de la fonction de consommation utilisant des données trimestrielles de R.U. Cette comparaison supporte la spécification citée en dernier lieu. De plus, les résultats suggèrent que l’incertitude sur l’inflation en fait influence le comportement des consommateurs privés d’une manière négative.

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Resumen Sobre el papel de la inflatión en la función de consumo. - El objeto del presente trabajo es reexaminar el papel de la inflatión en el consumo de los hogares en términos de la tasa de la inflatión observada y de incertidumbre inflacionaria. Primera se muestra cómo es “exactamente” la relation entre el concepto de ahorro involuntario de Deaton y la especificación de la función de consumo de Davidson, Hendry, Srba y Yeo, y se sugiere una forma de derivar esta última especificación como una aproximación a un modelo intertemporal de electión del consumidor. Luego se comparan estas dos especificaciones de la función de consumo utilizando datos para el Reino Unido. Esta comparación resulta favorable para la especificación sugerida. Además, los resultados implican que la incertidumbre inflacionaria tiene un impacto negativo sobre el consumo de los hogares.

     

Equilibrium unemployment with outsourcing and wage solidarity under labour market imperfections

We evaluate the effects of outsourcing and wage solidarity on wage formation and equilibrium unemployment in a heterogeneous labour market, where wages are determined by a monopoly labour union. We find that outsourcing promotes the wage dispersion between the high- and low-skilled workers. When the labour union adopts a solidaristic wage policy, it will dampen this tendency. Further, higher outsourcing will increase equilibrium unemployment among the high-skilled workers, whereas it will reduce it among the low-skilled workers. Overall, outsourcing will reduce economy-wide equilibrium unemployment under the reasonable condition that the proportion of high-skilled workers is sufficiently low.     

Saving and inflation: Some international evidence

This note contains empirical results for the ‘disequilibrium’ saving function specification, in which uncertainty about relative prices in a cross-section sense plays a major role. Quarterly time series evidence from several OECD countries over the period 1967(II)–1980(III) lies in striking conformity with the view - suggested particularly by Deaton - that there is a positive relationship between unanticipated inflation and the saving ratio.     

On Forest Rotation under Interest Rate Variability

The current literature on optimal forest rotation makes the unrealistic assumption of a constant interest rate although harvesting decisions of forest stands are typically subject to relatively long time horizons. We apply the single rotation framework to extend the existing studies to cover the unexplored case of variable interest rate. We show that even in the deterministic case if the current interest rate deviates from its long-run steady state, interest rate variability may change the rotation age significantly when compared with the constant discounting case. Further, and importantly, allowing for interest rate uncertainty as a mean reverting process and forest value as a geometric Brownian motion, we can provide an explicit solution for the two dimensional path-dependent optimal stopping problem. Increased interest rate volatility is shown to lengthen the optimal rotation period. Numerical calculations show that interest rate volatility has a large quantitative importance.     

A new approach in constructing orthogonal and nearly orthogonal arrays

Orthogonal arrays have been constructed by a number of mathematical tools such as orthogonal Latin squares, Hadamard matrices, group theory and finite fields. Wang and Wu (1992) proposed the concept of a nearly orthogonal array and found a number of such arrays with high efficiency. In this paper we propose some criteria for non-orthogonality and two algorithms for the construction of orthogonal and nearly orthogonal arrays evincing higher efficiency than that obtained by Wang and Wu. Received: September 1999     

Landowners’ conservation motives and the size of information rents in environmental bidding systems

We examine landowners’ conservation motives, conservation costs and information rents in environmental bidding systems designed for forestry with the help of Faustmann and Hartman models and data from Finnish conservation program. We show that the Faustmann landowners receive information rents, on average 55% of the rental payments. For the Hartman landowners the high conservation costs of old stands result in low information rents; they are only 13% of the rental payments. This estimate omits amenity benefits the landowners derive from their forests; accounting for these benefits would increase information rents dramatically. Despite the high information rents, landowners’ conservation motives decrease the rental payment required for participation in the conservation program. Hence, landowners’ conservation motives give governments a great opportunity to allocate conservation contracts in a more cost effective way, thereby extracting larger benefits for scarce conservation funds.     

Financial Rating of European Technology Companies: An International Comparison

The purpose of this study is to investigate possibilities to uniform financial rating of technology companies in Europe from the perspective of a potential investor. The data consist of financial statements of 6,370 companies from seventeen European countries and the US in 1993–1996. The data from 1994–1996 are used to measure three–year success and the data from 1993 to predict this success. Success is measured by the principal factor of six performance measures. Country risk, percentage change in GDB, size, and eight financial ratios calculated for 1993 are used as predictors of success in the binary logistic analysis.     

Economic development and evolving state capacities in Central and Eastern Europe: can “smart specialization” make a difference?

We position “smart specialization” (SS) as the third external and conditionality-based reform of economic policy rationales – after Washington Consensus and Europeanization – in Central and Eastern Europe (CEE). We discuss what kind of state, policy, and administrative capacities, or routines, SS presumes. We show that over the years CEE economies have built very different routines, especially for policy coordination and public–private interactions. Design and implementation of functional SS strategies requires critical attention and development of these routines through contextual policy experimentation in all CEE regions. We provide some general guidelines for this.