Fiscal Consolidation and the Public Sector Balance Sheet in South Africa

Between 1994 and 2008 the South African government reduced its debt/GDP ratio from almost 50% to 27%. Unfortunately this reduction was accompanied by a significant decrease in government's fixed capital/GDP ratio from 90% to 55% – fiscal sustainability might have been restored, but government's balance sheet did not improve. A similar story can be told for State Owned Enterprises. Since the Great Recession the fiscal situation worsened markedly – the public debt ratio again approaches 50%. To restore fiscal sustainability this article suggests that the government faces two options: (1) to create room for future countercyclical policy, the government must cut current expenditure and reduce the public debt/GDP ratio to its pre‐crisis level, or (2) substitute much‐needed infrastructure capital expenditure for current expenditure while stabilising the debt/GDP ratio at its post‐crisis level. Given that the much lower fixed capital/GDP ratio inhibits economic growth, the latter option might be more sensible.     

Buy or wait,that is the option: the buyer's option in sequential laboratory auctions

We report results from an experiment on two‐unit sequential auctions with and without a buyer's option (which allows the winner of the first auction to buy the second unit). The four main auction institutions are studied. Observed bidding behavior is close to Nash equilibrium bidding in the auctions for the second unit, but not in the auctions for the first unit. Despite these deviations, the buyer's option is correctly used in most cases. The revenue ranking of the four auctions is the same as in single‐unit experiments. Successive prices are declining when the buyer's option is available.     

Covered arbitrage margin and transaction costs

Zusammenfassung Gedeckte Arbitragemarge und Transaktionskosten. — Dieser Aufsatz untersucht die Rolle der Transaktionskosten bei der Erkl?rung der beobachteten Abweichungen von der gedeckten Zinsparit?t zwischen den amerika-nischen und britischen Schatzwechseln im Rahmen des gegenw?rtigen Systems be-grenzt floatender Wechselkurse. Nach einer kritischen Betrachtung der von Frenkel und Levich erarbeiteten Methode, die relevanten Transaktionskosten zu sch?tzen, wird eine alternative Methode vorgeschlagen, wobei deren Hinweis aufgenommen wird, die Informationen zu nutzen, die sich aus den Abweichungen von der Dreiecks-oder geographischen Wechselkursarbitrage ergeben. Die so ermittelten Sch?tzungen gehen in eine Regressionsanalyse ein, aus der sich ergibt, da die Transaktionskosten eine signifikante Auswirkung auf die gedeckte Arbitragemarge haben, obwohl sie deren Umfang in dem untersuchten Fall nicht voll erkl?ren.

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Résumé La marge d’arbitrage à couvert et les frais de transaction. — Cet article explore le r?le des frais de transaction comme facteur explicatif pour les déviations observées de la parité d’intérêt couverte entre bons du Trésor du Royaume Uni et des Etats-Unis sous le régime actuel des taux de change flottants dirigés. Après une revue critique de la méthode suggérée par Frenkel et Levich pour estimer les frais de transaction d’importance nous proposons une méthode alternative en exploitant de plus leur suggestion d’utiliser l’information donnée par les déviations d’arbitrage triangulaire ou géographique sur les taux de change. Puis nous procédons à utiliser nos estimations dans une analyse de régression qui nous mène à la conclusion que les frais de transaction ont un effet signifiant sur la marge d’arbitrage à couvert bien qu’ils ne l’expliquent pas complètement dans le cas analysé.

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Resumen Márgen de arbitraje cubierto y costos de transaction. — En estel artículo se investiga el rol de los costos de transactión como explicatión para las desviaciones observadas de la tasa de interés de paridad cubierta entre valores del Reino Unido y los EEUU bajo el régimen presente de tasas de cambio flotantes manejadas. Después de una revisión crítica del método desarrollado por Frenkel y Levich para estimar los costos de transacción relevantes, proponemos un método alternativo explotando más aún la sugerencia de usar la información provista por las desviaciones del arbitraje triangular o geográfico sobre las tasas de cambio. Entonces procedemos a usar nuestras estimaciones en un análisis de regresión que nos lleva a la conclusion, que lós costos de transacción tienen un efecto significativo sobre el márgen de arbitraje cubierto, a pesar de que ellas no dan cuenta totalmente de su tama?o en el caso bajo análisis.

     

Relaciones laborales y medidas de ajuste frente a la crisis. Análisis microestadístico comparativo de Francia y Gran Bretaña

En este estudio comparativo, los autores analizan los vínculos entre las relaciones laborales y los ajustes salariales o de plantilla tras la crisis de 2007–2008, a partir de dos encuestas comparables sobre empresas de Gran Bretaña (WERS) y de Francia (REPONSE) en 2010–2012. Pese a las diferencias contextuales (composición del tejido productivo, circunstancias temporales e intensidad de la crisis), los vínculos entre las relaciones laborales y las estrategias de ajuste son parecidos (la presencia sindical no logra evitar los ajustes). Por lo tanto, la diferenciación de los sistemas de relaciones laborales no permite explicar las divergencias entre las modalidades de ajuste a nivel macroeconómico.     

The Missing Link Between the Theory and Empirics of Path Dependence: Conceptual Clarification,Testability Issue,and Methodological Implications

Path dependence is a central construct in organizational research, used to describe a mechanism that connects the past and the future in an abstract way. However, across institutional, technology, and strategy literatures, it remains unclear why path dependence sometimes occurs and sometimes not, why it sometimes lead to inefficient outcomes and sometimes not, how it differs from mere increasing returns, and how scholars can empirically support their claims on path dependence. Hence, path dependence is not yet a theory since it does not causally relate identified variables in a systematized manner. Instead, the existing literature tends to conflate path dependence as a process (i.e. history unfolding in a self‐reinforcing manner) and as an outcome (i.e. a persisting state of the world with specific properties, called ‘lock‐in’). This paper contributes theoretically and methodologically to tackling these issues by: (1) providing a formal definition of path dependence that disentangles process and outcome, and identifies the necessary conditions for path dependence; (2) distinguishing clearly between path dependence and other ‘history matters’ kinds of mechanisms; and (3) specifying the missing link between theoretical and empirical path dependence. In particular, we suggest moving away from historical case studies of supposedly path‐dependent processes to focus on more controlled research designs such as simulations, experiments, and counterfactual investigation.     

Factoring out the impossibility of logical aggregation

According to a theorem recently proved in the theory of logical aggregation, any nonconstant social judgment function that satisfies independence of irrelevant alternatives (IIA) is dictatorial. We show that the strong and not very plausible IIA condition can be replaced with a minimal independence assumption plus a Pareto-like condition. This new version of the impossibility theorem likens it to Arrow's and arguably enhances its paradoxical value.