The London Business School econometric model of the UK

This paper describes the London Business School econometric model — the first fully computerized model of the UK — which has been used for regular public forecasting since 1966. The model, estimated on quarterly data, is organized around the income expenditure accounts with a fully integrated flow of funds sector which ensures consistency between portfolio decisions and income, savings and investment decisions. Aggregate demand is built up from its individual components so that demand influences are important for the short- and medium-term behaviour of the model. But there are important supply-side effects which work through the real exchange rate and real wages. Monetary conditions have a powerfull effect on the model through the exchange rate, personal sector wealth and interest rates. Wages and employment are determined in a labour market in which employment decisions depend on the level of demand and real wages while real wages depend on the level of unemployment, real benefits and direct and indirect taxes as well as underlying trends in productivity. Asset prices move in any period to clear both the spot and the future market in assets so that current asset prices in the equity, gilt-edged and foreign exchange markets reflect all current information about the expected state of the economy. In contrast, goods prices adjust sluggishly. The combination of continuously clearing asset markets and sluggish wages and prices gives the model many of the theoretical characteristics associated with the open-economy models of Dornbusch and Buiter and Miller.     

Instrumental variables regressions involving seasonal data

Various approaches to handling seasonal data are known to be equivalent in the context of least squares estimation of a fixed-regressor linear model. This note extends these results to models which have stochastic regressors and are estimated by the method of Instrumental Variables.     

FUTURES PRICES AS FORECASTS OF COMMODITY SPOT PRICES: LIVE CATTLE AND WOOL*

In this paper the foundations on which the predictive interpretation of futures prices rests are discussed, and possible reasons for the differential predictive performance of futures prices as between different commodity markets examined. The predictive performances of futures, and spot prices themselves, are tested empirically, using Australian data for wool (a continuous inventory commodity) and finished live beef cattle (virtually a non-storable commodity), by means of instrumental variables estimation.     

Toward a bias corrected currency equivalent index

The currency equivalent index measures the discounted economic capital stock of money producing the monetary service flow, but does so under assumptions that cause downward bias. We propose an extension that will correct for a significant amount of this bias.     

Open-mindedness in diverse team performance: investigating a three-way interaction

Studies have shown that open-minded dynamics contribute to diverse team effectiveness; however, there are few studies on the factors that influence the impact of open-mindedness. Survey data from 218 members of 47 professionally diverse teams support a significant relationship between open-mindedness and performance. Professional identification and professional salience were found to moderate the relationship with opposing effects. The study data indicate that although open-mindedness provides a context that facilitates the open exchange and discussion of diverse ideas and perspectives in interprofessional teams, this is less influential when members strongly identify with their profession. Conversely, member focus on professional differences enhances the value of team interaction characterised by receptiveness and openness. Analysis confirms a three-way interaction between open-mindedness, professional identification and salience on performance.     

The Canadian underground and measured economies: Granger causality results

Using new time-series data for the size of the Canadian underground economy, the relationship between unreported and measured GDP in that country is examined. Granger causality tests are conducted, with a proper allowance for the non-stationarity of the data. It is found that there is clear evidence of such causality from measured GDP to ‘hidden’ output, but only very mild evidence of Granger causality in the reverse direction. This result supports similar evidence for New Zealand reported by the first author, and has several interesting policy implications.     

Henry George Under the Microscope: Comments on "Henry George's Political Critics"

The annual supplement of the AJES for 2008 titled Henry George: Political Ideologue, Social Philosopher, and Economic Theorist had as its first and longest essay "Henry George's Political Critics" by Professor Michael Hudson. It offered a multitude of criticisms, most of which Prof. Hudson seemed to agree with. All purported to be criticisms of George as a political strategist, though some seem more to originate from Hudson's disagreement with theoretical positions George was bound to take. The purpose of this short paper is to show that Professor Hudson's long article fails to do what it seems intended to do. That is, it fails to show that trade unionists and especially socialists were "natural allies" of the Georgist movement, that it was George's fault that that they were not, and that George "allied" his movement irrevocably to "capital," rejecting its "natural allies."     

The US Budget Deficit in Perspective

Is the budget deficit the major problem facing the new administration? Giles Keating of Credit Suisse First Boston in London, argues that the size and significance of the Federal budget deficit is greatly exaggerated.     

SOME HUMAN ASPECTS OF GIVING AND TAKING FARM MANAGEMENT ADVICE

Superimposed on, or underlying, the technical aspects of giving farm management advice are a variety of human considerations. The techniques used and the advice given cannot be divorced from the individuals involved and the way in which advice is communicated. Management advice will be sought for a variety of reasons and from a variety of sources. It will have its own special problems, stemming from the nature of the subject itself, and will generate its own longer term benefits. Differing advisory styles exist but it is possible to suggest some general guidelines and conclusions.     

The Japanisation of Xerox

The impact of Japanese competition has led to attempts by Western organisations to implement elements of Japanese management. The process has been described as'Japanisation'. Here the authors examine the Japanisation of Rank Xerox and Xerox Corporation. Xerox has benefitted from the learning experience of its Japanese joint venture, Fuji Xerox, and has been described as the most'Japanised'of Western companies.