Trade liberalization and intersectoral labor movements

This paper examines the impact of trade liberalization episodes on movements of labor across sectors. The aim is to assess empirically whether increased trade openness leads to increased structural change and, if so, to what extent. Results for a set of 25 liberalization episodes suggest weakly negative effects of liberalization on the extent of intersectoral labor shifts at the economy-wide 1-digit level of disaggregation. We do uncover increased sectoral change after liberalization at the 3-digit level within manufacturing, although the estimated effects are statistically weak and small in magnitude. The effects of liberalization on labor shifts differ across individual countries, in a way related to the scope and depth of reforms.     

How to Balance the Outcomes of the Economic Partnership Agreements for Sub‐Saharan African Economies?

Since 2002, the Sub‐Saharan African countries ( except South Africa which already has a free‐trade agreement with the EU ) have embarked on free‐trade agreement negotiations with the European Union. These arrangements will replace the Cotonou scheme, which requires these countries to eliminate their tariffs on ‘substantially’ all their European imports. Based on a general equilibrium analysis, this study estimates the potential effects of these agreements by considering different levels of reciprocity in the commitments of the Sub‐Saharan African countries. It shows that the ‘standard’ EU proposal, whereby Sub‐Saharan African countries would cut tariffs on 80 per cent of their European imports, would not be enough to balance the outcome of the Economic Partnership Agreements. As a result of the asymmetries between European and African protections and supply‐side capacities, African countries could experience a balance of trade deficit of USD 1.8 billion associated with a 0.1 per cent decrease in GDP. This proposal, which also induces an industrial restructuring to the benefit of the agro‐processing industries, will create a significant fiscal burden. A lesser level of commitment could largely mitigate these unfavourable results; by reciprocating tariff eliminations on only 60 per cent of their European imports, African countries would reduce the trade imbalance and fiscal losses induced by these agreements by 21 and 51 per cent respectively.     

The origins,development, and fate of Clower's “stock-flow” general-equilibrium programme

Before becoming the hallmark of macroeconomics à la Wynne Godley, the “stock-flow” analysis was already developed in microeconomics and general-equilibrium theory. The goal was to study the formation of economic plans and the determination of market prices when individuals were supposed to consume, produce, and hold commodities. I show that since the early 1950s, Robert W. Clower used the “stock-flow” price theory to offer microfoundations to a Keynesian business cycle model. I analyse the origins of this microfoundation programme, trace its development, and discuss its fate.     

Parking enforcement and travel demand management

This article deals with on-street, non-free parking policy. The aim is to show how parking meter violation challenges the travel demand management policy. The literature widely admits that only the increase in the enforcement effort both deters drivers from offending and contribute to moderating car use. Nevertheless, the link between parking non-compliance, enforcement effort and travel demand has never been examined. We show that when parking meter violation behaviour, fine level choice, modal split and travel demand are connected, the fine increase paradoxically supports car use and encourages parking violation in the case of large parking congestion in particular.     

Sources of Business Cycles in a Low Income Country

We examine the role of global and domestic shocks in driving macroeconomic fluctuations for Ghana. We are able to study the impact of exogenous shocks, including productivity, credit supply and commodity price shocks. We identify the shocks using a combination of sign and recursive restrictions within Bayesian vector autoregressive models. As a benchmark we provide results for South Africa to document the difference between two economies with similar structures but at different stages of development. We find that global shocks play a more dominant role in South Africa than in Ghana. These shocks operate through three channels: trade, credit and commodity prices.     

Featuring Capability: How Carmakers Organize to Deploy Innovative Features across Products

Innovative features such as hands‐free car entry and ignition systems, stop‐start devices, telematics systems, and panoramic windshields are increasingly important to carmakers' innovation strategies. However, while product‐centric innovation has been extensively studied, there is less insight into the way companies implement their feature‐innovation strategies. The capability to explore, integrate, and deploy such attractive features is a critical dynamic capability; it allows carmakers to refresh their products, develop their competences, and maintain the efficiency of their traditional new product development. This research investigates the structures and processes of feature innovation in the automotive industry. It is based on a global investigation encompassing 9 generalist carmakers and 26 cases of feature innovation. The results show a clear trend, over the past decade, toward a structure of autonomous “advanced engineering” units and processes that are responsible for exploring innovative features and transferring them to multiple products. This paper details the key attributes of these units, and the role they play along the multiproduct learning cycle. Supplementing this structural analysis, the paper also identifies the coordination patterns between exploration and new product development activities. These results provide industry‐level insights into the way firms organize their feature‐innovation capability, and bring empirical elements to the ambidexterity literature.     

State provision of constitutional goods

This paper investigates the impact of constitutional rights on the level of public expenditure in a large sample of countries. To do so, we construct a panel of 73 countries from 1960 to 2011. We first investigate factors that drive constitutional changes regarding constitutional rights. To address potential endogeneity concerns in the choice of constitutional rules, we rely on an instrumental variable within estimation (country and time fixed effects) to estimate the impact of constitutional rights on government size. We find that larger governments tend to inscribe fewer rights in their constitutions, but we do not detect any impact of constitutional rights on the government size.     

The signaling role of policy actions

In an economy affected by shocks that are imperfectly known, the monetary instrument takes on a dual stabilizing role: as a policy response that directly influences the economy and as a vehicle for information that reveals the central bank's assessment to firms. Because mark-up shocks cannot be neutralized by monetary policy, providing firms with more information about these shocks exacerbates their reaction and creates a larger distortion. Recognizing the signaling role of its instrument, the central bank distorts its policy response in order to optimally shape firms’ beliefs. While providing firms with more information is always detrimental to the output gap, it has a more subtle effect on price dispersion depending on whether information is provided through the transparency channel or through the signaling channel. Although more transparency is always detrimental to welfare, the information that is conveyed by the monetary instrument improves welfare when firms’ coordination is highly valuable.     

Growth and risk at the industry level: The real effects of financial liberalization

This paper analyzes the effects of financial liberalization on growth and volatility at the industry level in a large sample of countries. We estimate the impact of liberalization on production, employment, firm entry, capital accumulation, and productivity. In order to overcome omitted variables concerns, we employ a number of alternative difference-in-differences estimation strategies. We implement a propensity score matching algorithm to find a control group for each liberalizing country. In addition, we exploit variation in industry characteristics to obtain an alternative set of difference-in-differences estimates. Financial liberalization is found to have a positive effect on both growth and volatility of production across industries. The positive growth effect comes from increased entry of firms, higher capital accumulation, and an expansion in total employment. By contrast, we do not detect any effect of financial liberalization on measured productivity. Finally, the growth effects of liberalization appear temporary rather than permanent.     

Disequilibrium as the origin,originality, and challenges of Clower's microfoundations of monetary theory

Abstract

Robert W. Clower's article “A Reconsideration of the Microfoundations of Monetary Theory” (1967) deeply influenced the course of modern monetary economics. On the one hand, it questioned Don Patinkin's (1956) project to integrate monetary and Walrasian value theory. On the other hand, it was the fountainhead of the cash-in-advance models à la Robert J. Lucas (1980), one of the most widely used approaches to monetary theory since the 1980s. Despite this influence, Clower's project to integrate monetary and value theory remains an enigma. My paper intends to resolve it. This is a difficult task since Clower never completed the monetary theory outlined in his 1967 article. To overcome this difficulty, I characterise the intellectual context from which Clower's contribution emerged and have recourse to a reconstruction of his project. This reconstruction is based on the analysis of published and unpublished materials, written by Clower before and after the 1967 article. It is argued that Clower sought to elaborate a disequilibrium monetary theory whilst retaining the two pillars of Patinkin's integration, i.e., the introduction of money into utility functions and the real-balance effect. I trace the origins, account for the originality, and discuss the challenges of this project.