Macroeconomic Stability or Cycles? The Role of the Wage‐Price Spiral

We formulate a small and stylised dynamic macroeconomic model, and study how different specifications of the supply side affect the model's dynamic properties. The wage‐price equilibrium‐correction model (ECM) and the Phillips curve model (PCM) that both can be used to represent the supply side of a New Keynesian macro model, are synthesised in a generalised model of the wage‐price spiral. We show that the choice of ECM or PCM has implications for the long‐run stability of the macro model, without need of a NAIRU. We also find that the range of theoretically admissible dynamics is wide. For example, both the ECM and PCM may display endogenous cyclical fluctuations in inflation and unemployment, showing that even simple structures can give rise to complex dynamics. In practice that may entail that forecasting the effects of shocks and policy changes is difficult even in the best of circumstances.     

Estimation and decomposition of inefficiency when producers maximize return to the outlay: an application to Norwegian fishing trawlers

This paper deals with estimation of a production technology where endogeneous choice of input and output variables is explicitly recognized. In particular, we assume that producers maximize return to the outlay (RO). For simplicity and tractability we start with a Cobb–Douglas transformation function with multiple inputs and outputs and show how the first-order conditions of RO maximization can be used to derive an estimating equation which is nothing but a partial input productivity equation. This equation does not suffer from the econometric endogeneity problem although the output and input variables are endogenous. First, we consider the case where producers are fully efficient allocatively but technically inefficient. The model is estimated using a single equation stochastic frontier approach. The model is then extended to allow allocative inefficiency and it is estimated as a system using generalized method of moment. Algebraic expressions are derived to decompose the effect of technical and allocative inefficiencies on RO. We also consider translog specifications that are estimated as (1) a single equation frontier model as well as (2) a system. We use a panel of Norwegian fishing trawlers data to estimate the model. Outputs are different species caught while inputs are labor and vessel size. We also control for number of days of operation, age of the vessel and year effects. Empirical results show that the average rate of RO is reduced by about 20 to 30 % due to technical inefficiency. On the other hand, average allocative efficiency is found to be about 78 %. The average overall efficiency is found to be around 60 %.     

The ‘Plateau‐ing’ of the European Better Regulation Agenda: An Analysis of Activities Carried out by the Barroso Commission

In this paper we examine cases commonly characterised as risk‐risk tradeoffs (i.e., creating new risks while solving existing ones), in an attempt to learn lessons that can be valuable for future regulatory decision‐making. A broad range of environmental and health literature was reviewed and numerous cases of proclaimed risk‐risk tradeoffs were analysed in order to determine: 1) why regulatory measures were initially taken, 2) why these measures caused a countervailing risk to emerge, 3) how tradeoffs could have been avoided, and 4) whether the case is a good example of a risk‐risk tradeoff. The analysis reveals that only a small number of these cases can actually be considered risk‐risk tradeoffs. In a large number of cases safer alternatives are and were available at the time decisions were made. In some cases the proclaimed risk‐risk tradeoff simply did not exist or occur, and in some cases countervailing risks were ignored for reasons unknown. In many cases, the countervailing risks could have been anticipated and avoided by proactively seeking safer alternatives, completing a tradeoff and impact assessment, or increasing stakeholder input in the decision‐making process. We conclude that concerns about risk‐risk tradeoffs are not a reasonable argument against future application of the precautionary principle. Indeed, sound decision‐making processes in the face of uncertainty should always consider and attempt to mitigate reasonable risk‐risk tradeoffs.     

Regional strategies for injury prevention: Experiences from six county-wide programs in Sweden∗

Abstract

Community approaches predominate in safety promotion, and most experience has been gained at the local municipal level. Regional and national programs are also underway, partly influenced by the same theoretical and methodological principles as applied locally. In this paper, six already initiated regional (county-wide) injury prevention programs in Sweden are examined with regard to strategic considerations and in the light of principles discussed in the literature. It is argued that the community approach is less suitable for larger settings, such as counties, and that there is a need for additional and complementary approaches for higher societal levels and formal governmental and administrative structures.     

Time Inconsistency and the Exchange Rate Channel of Monetary Policy

This paper analyses time–inconsistency problems related to the exchange rate channel of monetary policy. Within a simple open–economy macroeconomic model, where the exchange rate is the only forward–looking variable, we show that a difference emerges between optimal policy under discretion and under commitment. Moreover, the nature of the time–inconsistency problem resembles that resulting from standard New Keynesian models: when cost–push shocks occur, the exchange rate channel gives rise to excessive output stabilisation and insufficient inertia in monetary policy under a discretionary policy.
JEL classification : E 42; E 52; E 61     

Survival of New Plants in Different Industry Environments in Norwegian Manufacturing: AS Semi-Proportional Cox Model Approach

Using a rich plant level data set from Norwegian manufacturing we analyse possible determinants of survival for ten plant cohorts during the period 1977–92. By specifying a semi-proportional hazards model of plant exit, we are able to accommodate for structural differences between entrepreneurial entrants and new plants of existing firms. Industry heterogeneity in terms of plant size, capital intensity and productivity is also accounted for in the model. According to our estimated models, there are significant structural differences between new small firms and new plants of existing firms. For example, the size of the plant relative to the industry average had less influence on the survival probability for entrepreneurial entrants. Hence, the empirical results suggest that the two types of entrants establish themselves in different market niches with distinct technological characteristics. The results underscore the necessity of adjusting for the dissimilar environments facing plants which enter different industries.