The 1974 increase in oil price: Optimum tariff or transfer problem?

Zusammenfassung Die ?lpreiserh?hung von 1974: Ein Problem des optimalen Zolltarifs oder ein Transfer-Problem ? —Mit diesem Aufsatz werden zwei Ziele verfolgt: Zun?chst werden die ?lpreisanpassungen von 1974 im Rahmen der traditionellen Handelstheorie erkl?rt. Sodann werden optimale Politiken analysiert, und zwar vom kosmopolitischen und vom nationalen Standpunkt aus. Dabei wird gezeigt, da\ es Arrangements gibt, die sowohl für die ?lexportierenden als auch für die ?limportierenden L?nder vorteilhafter sind als die Preisfestsetzung durch ein Kartell. Au\erdem wird gezeigt, da\ bestimmte unilaterale Politiken, wie die Herabsetzung der Besteuerung von ?limporten, die Wohlfahrt in diesen L?ndern verringern. Die Analyse weist auch darauf hin, da\ es nicht leicht sein dürfte, das ?lkartell und seine Preispolitik auf lange Sicht aufrechtzuerhalten. Zum Beispiel wird eine schnelle Anpassung der Ausgaben der ?lexportierenden L?nder an die neuen Terms of Trade ihre eigene optimale Tarifpolitik beeintr?chtigen.

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Résumé L’accroissement de prix pétrolier en 1974: Un tarif optimal ou un problème de transfert? —Dans cet article on poursuit deux buts: Premièrement, on rationalise les ajustements de prix pétrolier de 1974 au dedans d’un cadre théorique traditionel de commerce. Deuxièmement, on analyse des politiques optimales du point de vue cosmopolite aussi bien que nationaliste. On montre qu’il y a des arrangements qui sont mieux que le cartel de prix pour les pays exportant le pétrole aussi bien que pour les pays important le pétrole. De plus on montre quelques politiques unilatérales qui réduisent le ?welfare? dans ces pays comme par exemple une taxe réduite sur le pétrole importé. Notre analyse montre aussi qu’on ne peut pas facilement maintenir le cartel de pétrole et sa politique de prix à long terme. Par exemple un ajustement prompt des dépenses des pays exportant le pétrole aux nouveaux termes des échanges vaincra leur propre optimale politique tarifaire.

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Resumen El incremento del precio del petróleo del a?o 1974: ? un problema de transferencia o de tarifa óptima ? —En este artículo se persiguen dos fines. En primer lugar se racionalizan los ajustes de precios del petróleo del a?o 1974 dentro del marco teórico del comercio tradicional. En segundo lugar se analizan políticas óptimas desde el punto de vista cosmopolita y nacionalista respectivamente. Se muestra que existen arreglos que permiten una ganancia tanto para el pais exportador como importador de petróleo, en relación a una situación de carteles de precios. Aún más, se muestra que ciertas políticas unilaterales tales como la reducción de impuestos a la importación de petróleo pueden causar una reducción del bienestar en estos países. Nuestro anàlisis también indica que el cartel petrolero y su política de precios sera dificil de mantener en el largo plazo. Por ejemplo, un rápido ajuste de los gastos de los países exportadores de petróleo a los nuevos términos del intercambio derrotará la propia política de la tarifa óptima.

     

Nutrition and national development: Establishing the connection

The three major strands of the nutrition planning literature — the socio-economic consequences of malnutrition, its determinants and characteristics, and the solutions offered to the problem — are examined by the authors and found wanting. There are serious limitations both in analysis of the problems and proposals for action in most work on nutrition policies because macro-level social, institutional, economic and political factors are neglected.     

Does the position in the inter-sectoral knowledge space affect the international competitiveness of industries?

ABSTRACT

This paper empirically investigates how the inter-sectoral knowledge flows affect the international competitiveness of industries, once controlling for both cost and other technological factors. Using patent data on 14 manufacturing industries in 16 OECD countries over the period 1995–2009, we apply a network-based approach to capture the effect of industries' position in the flows of technical knowledge across industries, which we label inter-sectoral knowledge space. We find that (i) centrality and local clustering in the inter-sectoral knowledge space positively affect the export market shares of an industry, (ii) such two effects are rather redundant and (iii) national-level knowledge flows' impacts on international competitiveness are way stronger than international ones. Network measures of position in the knowledge space are found to be more relevant than standard technological indicators such as patent counts. Our results point to the importance of industries being well located in the stream of knowledge flows, rather than being innovative per se, and offer a novel yet robust proxy to measure technological factors affecting trade performances. In addition, we find evidence of geographical boundaries of knowledge flows.     

Purchasing Power Parity Between the UK and Germany: The Euro Era

We use the Johansen cointegration approach to assess the empirical validity of the purchasing power parity (PPP) between the UK and Germany since the introduction of the euro. We conduct the empirical analysis in the context of the global financial crisis that began in 2007 and find that it directly affects the cointegration space. We fail to validate the Johansen and Juselius (1992) original hypothesis that nonstationarity of PPP associates with the nonstationarity of interest rate differentials to produce a stationary relation. On the other hand, we do not reject PPP. We find that PPP cointegrates with inflation differentials. We also find, contrary to conventional wisdom, that (i) equilibrium adjustment occurs between the German and UK inflation rates, while weak exogeneity exists for the German and UK interest rates and the PPP condition, and (ii) three common trends associated with the German interest rate the UK interest rate, and the PPP condition “push” the system with the German interest rate and the PPP condition playing dominant roles in affecting inflation in both Germany and the UK. These results cast serious doubt on the presumed independence of the UK monetary policy.     

INCOME TAXES AND THE COMPOSITION OF PAY: EVIDENCE FROM THE BRITISH HOUSEHOLD PANEL SURVEY

According to the standard principal‐agent model, the optimal composition of pay should balance the provision of incentives with the individual demand for insurance. Do income taxes alter this balance? We show that the relative share of Performance‐related pay (PRP), on total pay is reduced by higher average and marginal income taxes. Empirical evidence based on the British Household Panel Survey is consistent with the theoretical predictions of the tax–augmented principal‐agent model. Our estimates suggest that a 10% reduction in the marginal income tax rate, holding the average tax rate constant, increases the share of PRP in total pay by 2.25–3.02%, depending on the empirical specification. Similarly, a 10% reduction in the average income tax rate, holding the marginal tax rate constant, increases the share of PRP in total pay by 5.10–5.27%.     

The Global Financial Crisis and Stochastic Convergence in the Euro Area

This paper analyzes the issue of convergence in the original Euro Area countries, and assesses the effect of the global financial crisis on the process of convergence. In particular, we consider whether the global financial crisis pulled the 12 economies of the Euro Area together or pushed them apart. We investigate the dynamics of stochastic convergence of the original Euro Area countries for inflation rates, nominal interest rates, and real interest rates. We test for convergence relative to Germany, taken as the benchmark for core EU standards, using monthly data over the period January 2001 to September 2010. We examine, in a time-series framework, three different profiles of the convergence process: linear convergence, nonlinear convergence, and linear segmented convergence. Our findings both contradict and support convergence. Stochastic convergence implies the rejection of a unit root in the inflation rate, nominal interest rate, and real interest rate differentials. We find that the differentials are consistent with a unit-root hypothesis when the alternative hypothesis is a stationary process with a linear trend. We frequently, but not always, reject the unit-root hypothesis when the alternative is a stationary process with a broken trend. We also note that the current financial crisis plays a significant role in dating the breaks.     

AN ANNUAL CHAIN INDEX OF ITALY'S "REAL" PRODUCT, 1861–1989

The construction and application of a Paasche annual chain index to the Italian GDP figures between 1861 and 1989 is the subject of this article. Comparison with product at constant prices shows, except for war periods, a revaluation of GDP in favour of the annual chain index of around 0.10 percent. The most striking differences are concentrated into periods of marked changes in relative prices, and the new index modifies the temporal pattern of the growth trend by accentuating, without altering the periodization, cyclical fluctuations.     

Special Interests and Technological Change

We study an OLG economy where productivity growth comes from two alternative sources: process innovation and learning-by-doing. There is a trade-off between the two in so far as frequent technological updates reduce the scope for learning on existing technologies. A conflict is shown to arise between the young and the old, because the former favour innovation while the latter prefer learning. We model the interaction between overlapping generations and policy makers as a dynamic common agency problem, where competing generations invest a certain amount of resources to lobby either for the maintenance of the current technology or the adoption of a new one. By focusing on truthful Markov perfect equilibria, we characterize the political equilibrium and show its dependence on the underlying demographic, technological and preference parameters.