Technical Change, Growth and Trade: New Departures in Institutional Economics

This article analyses the main theoretical and policy issues emerging from the literature on the evolutionary-institutional economics of technical change, the four distinguishing characteristics of which are that technology is often proprietary in nature; only a part of knowledge is codifiable in handbooks, blueprints, patents, and so on; there are fundamental variations in the above two points across different technological fields; and the evolution of knowledge is highly path-dependent.     

Time Budgets,Life Histories and Social Position

This paper falls into two parts. It has an initial brief theoretical discussion of the use of well structured short- and long-term narrative accounts of individuals' life experiences (respectively time-diary and work/life histories) in establishing the extent of their personal resources, and hence, ultimately, their social position. The second section discusses the development of a new social-positional indicator (currently called the Interim Essex Score or IES), and illustrates its use in an investigation of the consequences of women's career breaks on their subsequent levels of access to economic resources.     

Land Use and the Limits to (Regional) Governance: Some Lessons from Planning for Housing and Minerals in England

This paper examines the supposed shift from government to governance in the context of land-use planning in England and indicates some of the problems which surround increased regional autonomy in governmental systems. It is argued that decision-making processes around land use, especially when they concern conflicts between development and environmental protection, are not easily rendered into the flexible arrangements deemed characteristic of governance. Two case studies in the housing and minerals sectors – presented to illustrate this general argument – show the existence of strong ‘strategic lines’ which tend to subsume local representations and limit the formation of partnerships. In both cases, the strategic line comes dressed in the language of technical (numerical) forecasts and projections which raises problems for any local opposition to the thrust of the strategy. In conclusion it is argued that although some recasting of the planning regime in each sector is underway this has only served to highlight continuing problems in linking strategy and locality, especially in cases of conflict around land use, which regional governance may not easily alleviate. Cet article examine le prétendu changement du gouvernementà la gouvernance dans le contexte de la planification de l’utilisation du sol en Angleterre et montre certains des problèmes liés à la croissance de l’autonomie régionale dans les systèmes gouvernementaux. Les processus de décision concernant l’utilisation du sol, particulièrement quand ils concernent des conflits entre le développement et la protection de l’environnement, ne sont pas aisément résolus par les arrangements flexibles qui sont dits caractéristiques de la gouvernance. Deux cas d’étude dans les secteurs du logement et des mineraux – présentés afin d’illustrer l’argument général – montrent l’existence de fortes ‘strategic lines’ qui ont tendance à inclure les représentations locales et qui limitent la formation d’associations. Dans les deux cas, ‘the strategic line’ prend la forme des prévisions techniques (quantitative) et des projections, ce qui pose des problèmes pour toute opposition locale à la dynamique de la stratégie. En conclusion, bien que certains remaniements soient en cours dans le régime de planification de chaque secteur, ceci n’a servi qu’à souligner les problèmes continus des liens entre la stratégie et la localité, particulièrement en cas de conflit quant à l’utilisation du sol, que la gouvernance régionale risque de ne pas pouvoir résoudre facilement.     

CONVERTIBLE BOND PRICING MODELS

Convertible bonds are an important segment of the corporate bond market, with worldwide outstandings approaching US$235 billion. Simple pricing models value a convertible bond as being equivalent to a straight bond with an embedded option that enables the bond holder to convert to a specific amount of common stock. The straight bond is subject to both interest rate and credit risk, whereas the option to convert is dependent on the underlying stock price, which exposes the convertible bond holder to equity risk. The complexity of these features means that convertible bonds tend to be treated casually in major derivatives and corporate finance textbooks. This paper presents a survey of the theoretical and empirical aspects of convertible bond pricing. The limitations of these studies are highlighted to identify those areas of research that may improve the valuation process and facilitate the application of these securities for corporate financing.     

Mitigating shortage and distribution costs in damaged water networks

Recent events have sparked renewed interest in disaster mitigation for public infrastructures. Presidential Decision Directive 63 identifies water distribution as being among the most vital and vulnerable of our large-scale infrastructures. Water distribution networks are vulnerable to threats such as chemical and biological contamination, cyber attacks on computer-based management systems, and physical destruction from acts of nature and intentional attack. This research develops methods for configuring the undamaged portion of the water network to mitigate the consequences of physical destruction. The approach is to find a hydraulically feasible residual network that can be pressurized to meet the demand of a subset of demand sectors. Demand sectors not pressurized then receive water through truck distribution from pressurized sectors. The objective is to minimize weighted water shortage and water truck distribution costs by identifying sectors to pressurize along with an assignment of unpressurized sectors to pressurized sectors for water delivery by truck. The paper develops an optimization model, describes a solution method, and presents computational results for three example networks.     

An assessment of the Bank of Canada's term PRA facility

This paper empirically assesses the effectiveness of the Bank of Canada's term Purchase and Resale Agreement (PRA) facility in reducing funding pressures, as measured by the CDOR-OIS spread. It examines the behaviour of this spread around both term PRA announcement dates and term PRA operation dates, using an event-study methodology to control for developments in other money markets as well as proxies for Canadian banking sector credit risk. Overall, there is robust evidence that the term PRA announcements reduced bank funding costs at both 1-month and 3-month terms, whereas we find no evidence of an impact from term PRA operations.     

No End to the Racial Wage Hierarchy in South Africa?

The South African apartheid system formally ended with the election of the African National Congress at the first all-race elections held in 1994. As a result, racist policies such as color barring, that particularly hindered the advancement of black workers throughout the apartheid period, are no longer legal. Yet the legacy of apartheid may endure as a result of both the persistence of racial differences in human capital attributes and the possible continuation of discriminatory practices within employment. In this paper the authors examine the evolution of the racial wage hierarchy in the early post-apartheid era against the background of the long-term decline in racial wage disparities observed over the last years of the apartheid regime. They find evidence that the position of black workers between 1995 and 1997 actually deteriorated relative to the overall geometric mean wage, while that of colored, Asian, and white workers improved.     

REVERSE REGRESSIONS AND LONG‐HORIZON FORECASTING

Long‐horizon predictive regressions in finance pose formidable econometric problems when estimated using available sample sizes. Hodrick in 1992 proposed a remedy that is based on running a reverse regression of short‐horizon returns on the long‐run mean of the predictor. Unfortunately, this only allows the null of no predictability to be tested, and assumes stationary regressors. In this paper, we revisit long‐horizon forecasting from reverse regressions, and argue that reverse regression methods avoid serious size distortions in long‐horizon predictive regressions, even when there is some predictability and/or near unit roots. Meanwhile, the reverse regression methodology has the practical advantage of being easily applicable when there are many predictors. We apply these methods to forecasting excess bond returns using the term structure of forward rates, and find that there is indeed some return forecastability. However, confidence intervals for the coefficients of the predictive regressions are about twice as wide as those obtained with the conventional approach to inference. We also include an application to forecasting excess stock returns. Copyright © 2011 John Wiley & Sons, Ltd.     

Beyond survival: the implementation of new forms of work organization in the UK and German steel industries

This paper outlines and analyses the major changes in work-force organization that have been introduced by British and German steel producers in the past decade, against a backcloth of retrenchment in the industry, new product development and technological change. Including multiskilling, a reduction in demarcation and team–working, these changes have had a major effect upon the composition of the work–force and the nature of work undertaken at the shopfloor level.

While these changes have had a common broad trajectory, they have been introduced at a different pace and in different forms. The contrasts are provided not only at the international level, but between plants in the same countries. The paper further outlines the response of trade unions to these changes and the implications for industrial relations at the shopfloor level.