The instability principle revisited: an essay in Harrodian dynamics

Abstract

Harrod's contribution to economic dynamics is very often reduced to the dynamic equation whose character is unstable. Growth theory and cycle theory based on Harrod's contributions aimed at reducing this instability. Following Harrod, who was strongly opposed to the ‘knife-edge’ interpretation, we define the warranted rate of growth as a ‘moving equilibrium’ and focus on its interaction with the effective rate of growth. Our simple Harrodian model generates various dynamics from stable path, to growth cycle and corridor of stability.     

Explaining the World Heritage List: an empirical study

The UNESCO World Heritage List is designed to protect the global heritage. We show that, with respect to countries and continents, the existing World Heritage List is highly imbalanced. Major econometric determinants of this imbalance are historical GDP, historical population, area in square kilometers of a country, and number of years of high civilization. Surprisingly, economic and political factors, such as membership on the UN Security Council, which should be unrelated to the value of a country’s heritage and therefore should have no impact, are shown to have a systematic impact on the composition of the World Heritage List.     

Voting on the environment: Price or ideology? Evidence from Swiss referendums

Studies on preferences for environmental quality usually posit that price and income explain most of the observed choices. Incorporating recent advances in the economics of non-selfish behavior into the traditional public choice approach, we argue that the willingness to contribute to public goods as well as social norms need to be taken into account when analyzing environmental voting outcomes. We study aggregate results of three ballot proposals in Switzerland put to vote in the year 2000 which foresaw different tax schemes on fossil energy. Our main results show that the aggregate level choice pattern is to be explained by income as well as structural attributes that make costs and benefits of the projects vary. More importantly, our results underline the importance of including variables pertaining to the notion of ideology, both in terms of statistical fit and obtaining unbiased estimates for price and income determinants.     

The effects of the 2005 Bankruptcy Reform in Brazil

This paper studies the effect of the 2005 Bankruptcy Reform in Brazil. Using firm-level data we found that the increase in the level of creditors' protection reduced the cost of debt and increased the amount borrowed by the firms.     

Regional integration and dynamic adjustments: Evidence from gross national product functions for Canada and the United States

We estimate a translog Gross National Product function and test for endogenously determined structural change allowing for anticipated and lagged responses to regional trade agreements. We found that Canada embarked on a long transition path prior to the implementation of the Canada-U.S. Trade Agreement, a result reminiscent of Magee's (2008) results concerning RTAs’ trade creation effects. In contrast, the United States experienced an abrupt structural change a year after the North American Free Trade Agreement took effect. This reflects that smaller economies benefitting from larger changes in terms of trade are confronted to more complex adjustment processes than larger economies.     

Personality and the creativity of frontline service employees: linear and curvilinear effects

Abstract

Previous studies have investigated the relationship between the Five-Factor model of personality and creativity. As this model has been criticised for providing a limited account of an individual’s personality, this study considers additional personality traits that have recently been investigated in the literature as determinants of employee behaviour. Moreover, we also contribute to the existing body of literature by conducting this study in a service setting, for which we predict personality traits will exert differentiated effects on creativity when compared to other settings. Finally, while past research has focused on linear effects, this study examines the existence of non-linear effects between personality and creativity. The results indicate that personality traits apart from the Five-Factor model have an impact on creativity and that the effects of several personality traits on the creativity of frontline service employees differ from those obtained in other settings. Lastly, the findings also show that five of the personality traits have non-linear effects on creativity, and this may be a stimulus for a new stream of research in the human resources literature.     

Substitute goods, auctions, and equilibrium

This paper identifies two notions of substitutes for auction and equilibrium analysis. Weak substitutes, the usual price-theory notion, guarantees monotonicity of tâtonnement processes and convergence of clock auctions to a pseudo-equilibrium, but only strong substitutes, which treats each unit traded as a distinct good with its own price, guarantees that every pseudo-equilibrium is a Walrasian equilibrium, that the Vickrey outcome is in the core, and that the “law of aggregate demand” is satisfied. When goods are divisible, weak substitutes along with concavity guarantees all of the above properties, except for the law of aggregate demand.     

International portfolio reallocation: Diversification benefits and European monetary union

We investigate the determinants of bilateral international equity and bond portfolio reallocation across a large cross-section of countries spanning over two sample periods: 1997-2001 and 1997-2005. We find that the strongest drivers are the marginal diversification benefits arising from the pure asset component and the initial degree of underweight. This evidence suggests that global portfolio reallocations over the asset boom and bust period were determined by optimal diversification considerations. We also find that due to economic and monetary union (EMU) the weight assigned by euro area investors to investment in euro area countries increased significantly in equity and fixed income portfolios, with a trade diverting effect against the British bond market.     

Identification and dimension of the NAIRU

In this paper, we have re-examined the identification of the NAIRU and presented a well-defined reduced form for analysing the equilibrium unemployment rate, using a cointegrated VAR model. We have stated that the NAIRU estimates using the conventional reduced form (or Phillips curve) models are misleading since the natural rate of unemployment cannot be considered as a fixed point calling for the ceteris paribus assumption for all the data involved. This implies that the NAIRU estimates are unable to provide valuable information on the labour market status.