Making Sense of the Third Way

Books reviewed in this article:
Anthony Giddens, The Third Way
Tony Blair and Gerhard Schroeder, The Way Forward for Europe's Social Democrats – A Proposal     

The case of labour time reduction without wage compensation: More or less employment?

Summary In this paper a model of a closed economy, including a market sector and a public sector, is presented to analyse the consequences of a reduction of labour time with and without wage compensation. It turns out that a policy of labour time reduction without wage compensation is a very strong instrument to improve production and employment, if the economy is characterized by the Keynesiandemand model. But if the economy is characterized by the neoclassicalsupply model, a relatively large drop in wages is necessary to prevent a policy of labour time reduction from causing a process of stagflation.     

Excess Mortality In Asia Associated With Cigarette Smoking

Abstract

Cigarette smoking has reached epidemic proportions in many Asian countries, and epidemiologists predict massive increases in the number of smoking-related deaths in future decades. This information is of great interest to insurers who would like to sell coverage in these markets with smoker/nonsmoker-distinct pricing. This review examines excess mortality due to cigarette smoking in Asia as determined by a second-quarter 1998 Internet search of the world’s English-language medical literature for references published during the preceding five years. Studies to date which observed fairly low relative risks of mortality in smokers compared with nonsmokers in Asia despite a high prevalence of smoking can be explained by the fact that health outcome data represent early experience. Given similar associations between smoking and mortality in Asian and Western studies, it is likely that mortality patterns of smokers in Asia eventually will mirror those seen in the U.S. and the United Kingdom.     

Interpretation problems of the partial correlation with nonnormally distributed variables

The partial correlation is a commonly used measure for assessing the bivariate correlation of two quantitative variables after eliminating the influence of one or more other variables. The partial correlation is generally interpreted as the correlation that would result if the variables to be eliminated were fixed (not allowed to vary and influence the other variables), which is referred to in the statistical literature as conditional correlation. The present paper demonstrates, by means of theoretical derivations and practical examples, that when the assumption of multivariate normality is violated (e.g., as a result of nonlinear relationships among the variables investigated) the usual interpretation of the partial correlation coefficient will be basically incorrect. In extreme cases the value of the partial correlation coefficient may be strongly positive, close to 1, whereas the conditional correlation may have a large negative value. To solve this problem the paper suggests to partial out a certain function (in most cases the square) of the variables whose effects are to be eliminated if nonlinear relationships are likely to occur.     

Innovation activity in branches of Russia’s agroindustrial sector

The main directions in developing the innovation processes in key branches of the agroindustrial sector of the Russian Federation in the modern Russian economy are considered. The role of the state creating a modern innovation system is presented, as well as activation of scientific research into the agroindustrial sector.     

Purchasing power parity in the short and long run: a reappraisal of the post-1973 evidence

In this paper, an attempt is made to separate the short-run and long-run aspects of the purchasing power parity (PPP) relationship, using the techniques of band-spectral regression and cointegration for eight industrialized countries. The long-run PPP is first tested for all the eight countries, with reference to their nominal bilateral exchange rates vis-à-visthe US dollar. For five European currencies, the analysis is repeated with respect to the Deutschmark, with a separate consideration of the post-EMS period. In the concluding sections, possible reasons for PPP deviations are examined.