Real wage rigidities, accommodative demand policies, and the functioning of EMU

Real Wage Rigidities, Accommodative Demand Policies, and the Functioning of EMU. — The paper shows that the primacy of politics over economics in the decision to start EMU with eleven countries on January 1, 1999 could have serious consequences concerning the functioning and stability of EMU, in particular during the transition phase. The paper demonstrates empirically that real wages in EMU member countries are highly rigid by international comparison and that demand policies played a considerable role in absorbing adverse shocks in the past. Considering that real wages are unlikely to become much more flexible soon, and taking also into account that the use of demand policies in EMU is severely curtailed, it becomes clear that EMU will face a severe crisis if large asymmetric shocks do in fact occur.     

Organizational adaptation to disruptions in the natural environment: The case of climate change

Dynamic and intensified changes in the global ecosystem result in significant disruptions to the natural environment. One of the most prominent examples of this is climate change and the resulting natural disasters. As firms are embedded within the natural environment, they need to adapt to any environmental disruptions that transpire. Using Swiss and Austrian electric utilities as case studies, this paper empirically explores the underlying organizational capabilities necessary to enable adaptation to climate-related disruptions to a firm's resource supply, production processes, and product distribution. Through a case- and literature-based iterative process of analytical induction, three organizational capabilities are derived: climate knowledge absorption as an essential information generating and internalizing capability, climate-related operational flexibility as a short-term adjustment capability, and strategic climate integration as a long-term, innovation-focused capability.     

Product liability and safety: Perspectives from business versus public policy makers

Product liability and the improvement of product safety are major concerns confronting business executives and public policy makers. This article reports the results of a mail survey that explored some of the major issues surrounding product liability and safety. The survey solicited the opinions of manufacturing executives, insurance executives, and state insurance commissions. Analysis of the data involved comparison of the opinions of the three groups of respondents. In general, the respondents agreed that (1) the increased emphasis on safety has caused prices to rise, but products are safer; (2) the salesforce should be used more as a source of information on the safe use of products; (3) a good safety record is a competitive edge for a manufacturing firm; (4) small businesses should not be treated more leniently than large ones in product liability cases; and (5) the CPSC's activities have generally been favorable. In contrast, manufacturing and insurance executives were more negative regarding the application and enforcement of strict liability than were insurance commission respondents.     

Terra incognita,Wirtschaftskrise und Unternehmertum

Zusammenfassung  Dem Staat sind bei der Bew?ltigung der Finanzkrise umfangreiche Aufgaben zugewachsen. Das Potential des freien Unternehmertums wird dabei eher vernachl?ssigt. Inwieweit k?nnen die privaten Unternehmer zu einem neuerlichen Aufschwung beitragen? Welche Voraussetzungen sollte der Staat schaffen, um ihnen dies zu erleichtern? Prof. Dr. Norbert Berthold, 56, ist Inhaber des Lehrstuhls für Volkswirtschaftslehre, insbesondere Wirtschaftsordnung und Sozialpolitik n]Bayerischen Julius-Maximilians-Universit?t Würzburg. Für hilfreiche Anmerkungen danke ich Dipl.-Volkswirt Matthias Kullas.     

EU-Osterweiterung: eine Bilanz nach zehn Jahren

Ten years after the biggest enlargement in the history of the EU, the integration of the new member states is assessed positively. It is considered an economic success when looking at the income levels. However, due to overly optimistic assumptions and the crisis, economic integration and the catching-up process will take much longer for the new EU member states than originally expected. Moreover, new challenges are looming, especially as the Central and Eastern European accession countries adopt the euro. Smaller countries introduced the euro as quickly as possible, whereas larger countries have been much more hesitant, thinking twice not only because of several unsolved problems in the euro area but also because they use the exchange rate tool much more intensively. All new member states have to make sure they continue to increase their productivity and competitiveness. Findings suggest that after having entered the EU, the new eastern member states appear to have been developing rather stringent competition cultures. Bulgaria and Romania’s transition performance significantly differs from the pattern in the 2004 accession countries, both in terms of quantitative growth and institutional quality. These countries show that EU funds can be highly counter-productive since they help to conserve old structures.     

Growth and social security: the role of human capital

This paper studies the growth and efficiency effects of pay-as-you-go financed social security when human capital is the engine of growth. Employing a variant of the Lucas model [Lucas, R.E., 1988. On the mechanics of economic development. Journal of Monetary Economics 22, 3–42.] with overlapping generations, it is shown that a properly designed, unfunded social security system leads to higher output growth than a fully funded one. Furthermore, the economy with an unfunded social security is efficient, while the other one is not. These results stand in sharp contrast to those obtained in models where the reason for economic growth is physical capital accumulation.     

Eliteuniversitäten — Gewinner im Wettbewerb um Studierende?

The German Excellence Initiative was intended to strengthen university-based research and to create a set of internationally competitive elite institutions. The present article analyses whether or not designation as an elite institution has had an impact on the number of first-year students. Our results indicate that this is not the case. This observation might be explained by the fact that the Excellence Initiative mainly focuses on the reputation of the university as a whole, while students are more interested in the reputation of their preferred field of study. Hence, students compare the quality of faculties or degree programmes rather than the reputation of universities.     

Regionale Disparitäten in Deutschland — Auf dem Weg zu gleichwertigen Lebensverhältnissen?

Das aus dem Grundgesetz abgeleitete Ziel der gleichwertigen Lebensverh?ltnisse in ganz Deutschland stellt eine wichtige Rechtfertigung für bundespolitische Aktivit?ten dar. Die Schwerpunkte dieser Aktivit?ten bilden bundeseinheitliche Regelungen und die interregionale Umverteilung von Finanzmitteln. Doch sp?testens seit Mitte der neunziger Jahre haben sich die nach wie vor erheblichen regionalen Disparit?ten nicht mehr wesentlich verringert. Es stellt sich die Frage, was den Konvergenzprozess behindert und wie er wieder angesto?en werden kann.     

Confronting stylized facts with reality

The article focuses on the role of interest groups in policy making under conditions of globalisation. Building on the Stolper–Samuelson theorem from international trade theory, it has been argued in the literature that interest groups’ domestic political negotiation power varies with the mobility of their factor of production, and that therefore a policy shift towards the interests of capital owners (i.e. liberalisation of domestic regulations) should be observable. Drawing on empirical evidence from detailed case studies in the area of state banking regulation in the United States, Switzerland, and Spain, the article presents examples for bank associations and other representatives of the capital side to blocking or considerably delaying government-initiated attempts at liberalisation. It also demonstrates that the role of interest groups in policy making varies considerably between countries, and that therefore highly specific patterns of interaction exist between interest groups and national political systems. The article concludes therefore that the consideration of situation-specific context, rather than the use of generalising assumptions on a highly aggregated level, is called for in the analysis of interest group influence on policy making.     

Optimal Taxation in the Presence of Black Markets

Received November 21, 2000; revised version received May 19, 2001