The Interaction of Wage Bargaining Institutions and an Independent Central Bank – A Methodological Reflection on Current Theories

The paper analyses the increasingly popular literature on strategic interactions from a methodological viewpoint. These political economy approaches focusing on interactions between wage bargaining institutions and an independent central bank do not follow unified methodological rules and so cannot be categorised under a single particular paradigm. Moreover, the literature remains in a way circumscribed by the limits of our logical capacities and of mathematical tractability and therefore relates to the 'real world' of wage bargaining and economic policy institutions in a very limited way only. A consideration of the vast complexity of institutional conditions that impact economic performance in EMU reminds and cautions one that actual economic policy research is able to cover only very few of the numerous conditions responsible for the overall outcome.     

Testing the bounds: Empirical behavior of target zone fundamentals

Standard target zone exchange rate models are based on nonlinear functions of unobserved economic fundamentals, which are assumed to be bounded, similarly to the target zone exchange rates themselves. Using a novel estimation and testing strategy, I show how this key but often overlooked assumption may be tested. Empirical results cast doubt on its validity in practice, providing a reason for well-documented empirical difficulties of these models in the literature.     

ASSET FORFEITURE AS A LAW ENFORCEMENT TOOL

This article examines the impact on deterrence of laws that allow the seizure of assets used in the commission of a crime but owned by someone other than the offender. The results suggest that forfeiture can be used effectively, in combination with more standard tools (criminal fines or imprisonment), as a deterrent under certain conditions, but the risk of overuse is real. In particular, complete forfeiture (seizure of the entire value of the asset) is not generally socially optimal, but when enforcers are rent‐seekers who care primarily about the revenue generated by forfeiture, they will use the tool to the maximum extent allowed by law. (JEL H11, K14, K41)     

Technical Change in a Model with Fair Wages and Unemployment

This paper uses a variable rate-of-growth model of life-cycle saving as developed by Fry and Mason (1982) to show that demographic factors were behind the rapid rise in saving in Japan, Korea, and Taiwan. The steady decline in the population dependency ratio in an environment of rapid economic growth was the determining factor driving the trend rise in savings in these three countries. Furthermore, demographic trends can also explain the difference in saving ratios in Japan, Korea, and Taiwan. When one compares these countries at the same stage in their development, Koreans did save "little" relative to Japan, but not relative to Taiwan, and this difference in saving can be explained by Korea's higher rate of dependency. [E21, N15]     

‘Stop Being a Tourist!’ New Dynamics of Urban Tourism in Berlin‐Kreuzberg

Berlin is witnessing a massive tourism boom, and parts of it can be described as ‘new urban tourism’, which shows a preference for off the beaten track areas and ‘authentic’ experiences of the city. This form of tourism seems especially salient in Kreuzberg. It is here that an openly articulated critique of tourism attracted national attention in 2011 and has not ceased to do so since. This article aims to better understand the conflictive potential of (new urban) tourism in Kreuzberg. We argue that the readily expressed negative attitudes against tourists and the easily accepted link between tourism and gentrification have to be explained against the backdrop of certain housing‐market dynamics. Rising rents and a diminution in the number of flats available for rent are fuelling fears of gentrification in Kreuzberg, while the interest shown in new urban tourism and the comparatively low‐priced real‐estate market in Berlin result in a growing number of holiday flats. Although adding only slightly to the tightening of the housing market, holiday flats render complex processes of neighborhood change visible and further sustain an already prevalent tourism critique.     

Some economics of content protection

We are grateful to a perceptive referee for many constructive comments on an earlier version of this paper entitled The Economics of Content Protection: A Dual Approach. The usual disclaimer applies.