VARIABLE TRANSACTIONS COSTS, THE CAPITAL ASSET PRICING MODEL AND THE CORPORATE DIVIDEND DECISION: A COMMENT

This comment addresses some econometric issues raised by Theobald's model of capital market equilibrium in the presence of variable transactions costs. Theil's results on specification error analysis in the absence of relevant explanatory variables are invoked. It is shown that for Theobald's model to be consistent with the empirical findings of Black, Jensen, and Scholes, more stringent requirements must be satisfied.     

The Conditions Promoting Compromise in the Workplace

A previous article developed a framework to understand workplace co‐operation. We now elaborate on the key structuring conditions (technology, product markets and institutional regulation) generating different patterns and illustrate from field research how these different workplace regimes develop. Conditions generating positive and sustainable outcomes for both capital and labour are feasible but rare; stronger ‘beneficial constraints’ are needed if they are to be made more frequent. This article provides an alternative to current interpretations of labour–management co‐operation in the industrial relations literature.     

Financing decisions of firms and central bank policy

This paper aims to explain why unhedged foreign borrowing by South East Asian corporations rose sharply during the few years prior to the crisis despite little change in fundamentals. We show that decisions of firms and decisions of the central bank are complementary. Consequently, a small shock to fundamentals may have a large and permanent impact on the equilibrium composition of firms’ borrowing.     

Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms

Both research and development (R&D) and information and communication technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the USA. In this article, we investigate the R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, to estimate a version of the CDM model of R&D, innovation, and productivity [Crépon–Duguet–Mairesse 1998. Research, innovation and productivity: An econometric analysis at the firm level. Economics of Innovation and New Technology 7, no. 2: 115–58] that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities. We explore the possible complementarity between R&D and ICT in innovation and production, but find none, although we do find complementarity between R&D and worker skill in innovation.     

On an absolute measure of distributional change

This paper tries to combine Kolm's ideas on the measurement of inequality with the recent work of Cowell on the generalized entropy families of income distribution and change indices. A ‘leftist’ measure of income distributional change is proposed, which is invariant to equal absolute changes in all incomes and which has other interesting properties.     

GLOBALIZATION AND THE EVOLUTION OF THE SUPPLY CHAIN: WHO GAINS AND WHO LOSES?*

This article focuses on two distinct facets of globalization: decrease in the trade costs of goods and the decline of communication costs between headquarters and production facilities. When the unskilled have about the same wage in two regions, decrease of these costs fosters the agglomeration of plants in the core accommodating headquarters. When the wage gap is significant, process of integration eventually triggers the relocation of plants into the periphery. When this process of relocation is driven by falling communication costs, the welfare of all workers in the core falls whereas that in the periphery rises.     

ON THE APPLICATION OF EFFICIENCY ANALYSIS TO THE STUDY OF THE DIMENSIONS OF HUMAN DEVELOPMENT

This paper is an attempt to translate empirically some of the categorizations of human development reviewed by Alkire (2002) . It compares the estimates of human development obtained on the basis of Sen's (1985 ) capability approach, Narayan et al.'s (2000 ) dimensions of well‐being, Cummins (1996 ) domains of life satisfaction and Allardt's (1993 ) comparative Scandinavian welfare study. To obtain these estimates of human development use is made of techniques developed in efficiency analysis, an approach rarely applied to the study of consumption and standards of living (see, however, Lovell et al., 1994 ). Our database is the British Household Panel Survey. Our findings vindicate the multidimensional approach to human development but show a great empirical resemblance between the four conceptual approaches to well‐being.