Reconstructing growth theory: A survey

Summary Recent developments in the theory of economic growth aim at endogenising long-run growth. The paper discusses models in which technological change arises as a by-product of certain economic activities as well as models where some economic actions are explicity aimed at technological improvements. In addition, separate sections are devoted to the specific reconstruction of growth theory by M. Scott and models explaining stages of economic development. For expositional purposes the algebra is kept to a minimum. The focus is on theoretical models for a closed economy. Empirical work is only mentioned in passing.We are indebted to S. Kuipers, F. van der Ploeg and A. van Schaik for useful comments on an earlier version.     

Regional business cycle synchronization in Europe?

We analyse regional business cycle synchronization in the Euro Area, using gross value added in 53 NUTS 1 regions for a period of 30 years (1975–2005), detrended by Hodrick–Prescott and the Christiano–Fitzgerald filters. We conclude that, on average, synchronization has increased for the period considered with exceptions during the eighties and the beginning of the nineties. Still, the correlation of the business cycle in some regions with the benchmark remained low or even decreased. Our findings also support the hypothesis of the existence of a ‘national border’ effect.     

Tourism and cultural revival

Cultural change is a recurrent concern in tourism anthropology studies. Host societies frequently remodel their culture following the creation of a tourist resort. But, that does not necessarily imply an acculturating process, since what actually takes place is pragmatic cultural production work in response to the touristic demands that offer consolidated economic alternatives and livelihood. As for the Pataxó Indians of Porto Seguro of Brazil, they have sponsored a “cultural revival” process. In other words, they have generated the traditions that start being exhibited commercially in arenas where the prospect of emergent ethnic tourism is perceived.     

PIOUS LIES: THE JUSTIFICATION OF STATES AND WELFARE STATES

Institutions, customs, laws are often, and sometimes implausibly, credited with efficiency. They serve a good purpose and if they had not arisen, we would have invented them. The claim is reassuring, though it may be no more than a pious lie. The creation of the state by social contract, and the adoption of supposedly rational customs by primitive peoples, serve as examples. Interpreting the welfare state as a mutual insurance scheme from which all can expect to profit is a classic of the kind.     

Central Bank Intervention and Heterogeneous Exchange Rate Expectations: Evidence from the Daily DEM/US-Dollar Exchange Rate

In this paper we propose a generalisation of the noise trader transmission mechanism to examine the impact of central bank intervention on exchange rates. Within a heterogeneous expectation exchange rate model intervention operations are supposed to provide support for chartist or fundamentalist forecasts, which forces portfolio managers to adjust their foreign currency positions. The empirical examination of the hypothesis is done by applying a Markov regime-switching approach to daily DEM/US-dollar exchange rates and intervention data of the Deutsche Bundesbank and the Federal Reserve from 1979 to 1992. It is shown that chartists profits rose whenever these central banks intervened on the foreign exchange market. This is not true for those who follow a fundamentalist approach.JEL Classification Numbers: F31, C32, E58, G15