The non-equivalence of tariffs and quotas under retaliation

This note shows the non-equivalence of tariffs and quotas when foreign retaliation is allowed for. Using a Cournot-Johnson type of retaliation mechanism it is shown that, contrary to the case of tariffs, quota retaliation will lead to the elimination of international trade between the countries involved.     

A cross-national study of corporate governance and employment contracts

Corporate governance (CG) can be seen to operate through a 'double agency' relationship: one between the shareholders and corporate management, and another between the corporate management and the firm's employees. The CG and labour management of firms are closely related. A particularly productive way to study how CG affects and is affected by the employment relationship has been to compare CG across countries. The contributions of this paper to that literature are threefold. (1) An integration of aspects of the labour management literature in the CG debate. (2) Based on a sample of about 1000 firms from 31 countries, we find evidence of complementarities between the CG and the labour management of firms. Extreme cases, in general, outperform mixed cases. (3) Firm differences within countries are more important than scholars have assumed so far. We present the results of the study and implications for future research and for practice.     

Investor Expectations and the North American Free Trade Agreement

The paper uses a stock market event study to examine investors' expectations of NAFTA's effect on the profitability of manufacturing industries in the USA, Canada, and Mexico. The main finding is that factor intensity, specifically a measure of the industry–wide labor–capital ratio, is the most significant determinant of excess returns. The results suggest that investors believed the NAFTA would favor industries that used abundant factors intensively and reduce profitability in industries that relied heavily on scarce factors; and, more generally, that factor intensity is a primary source of comparative advantage. No significant relationship was found between the relative scale of industries among the three countries and the NAFTA's expected influence on profitability.     

The Argentine stabilization plan of December 20th

In this paper an analytical model is developed to incorporate the essential characteristics of the stabilization plan implemented in Argentina in January 1979. The model is based upon a set of simplifying assumptions that only approximate the complexity of the real world. It is assumed that the expectations of inflation and the degree of excess demand or supply in the non-traded goods market are the main intermediate determinants of the rate of inflation in that market, the rate of change of prices of traded goods being determined by the external inflation together with the rate of devaluation. Treating thus the external rate of inflation as exogenous, the only instrument available for influencing the rate of inflation in the long run is the rate of devaluation. Since the model assumes a fixed exchange rate regime, the money supply is endogenous and hence unsuitable as an instrument of economic policy.     

Brain drain and economic growth: A dynamic model

The problem of the international migration of educated people is analyzed in the context of a dynamic economy where individuals are faced with three basic decisions: education, acquisition of physical capital and migration. The paper discusses the transitional and steady-state behaviour of such an economy, and in addition incorporates a detailed dynamic analysis of the effects of minimum wages and of the implementation of a migration tax.     

Notes on output and expectations in the process of inflation

Zusammenfassung Bemerkungen zu Output und Erwartungen im inflation?ren Proze\. — Dieser Aufsatz gibt eine einfache Darstellung einiger dynamischer Aspekte des inflation?ren Prozesses. Das Modell enth?lt das Friedman-Phelps-Konzept der ?natürlichen? Arbeitslosenrate oder — was auf das Gleiche hinausl?uft — das Konzept des ?potentiellen Outputs?, wie es in der um die Erwartungen erweiterten Version der Phillips-Kurve impliziert wird. Der Hauptzweck der Analyse ist es, die genauen Entwicklungspfade des realen und des nominalen Outputs, der realen Kassenbest?nde sowie der tats?chlichen und erwarteten Inflationsraten zu ermitteln. Die sich ergebenden Pfade sind im allgemeinen konsistent mit einigen besonders herausgearbeiteten Fakten. Die Untersuchung betont die Bedeutung von Informationen über den Geldmarkt, den Warenmarkt und die Art des Prozesses der Erwartungsbildung und beleuchtet das Zusammenwirken dieser Faktoren in der Dynamik des inflation?ren Prozesses.

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Résumé Quelques notes sur la production et les attentes en procès d'inflation. — Cet article présente une simple exposition des quelques aspects dynamiques du procès inflationniste. Le modèle personnifie le concept de Friedman-Phelps d'un ?taux naturel de ch?mage? ou équivalentement, le concept de la ?production potentielle? comme impliqué dans la version de la curve de Phillips augmentée par des attentes. Le but essentiel de l'analyse consiste en tracer les exactes voies dynamiques de la production réelle et nominale, des balances des caisses réelles et des taux d'inflation actuels et anticipés. Généralement les voies impliquées sont consistantes avec quelques faits stylisés. L'analyse souligne l'importance des informations concernant le marché d'argent, le marché des matières premières et la spécification du procès par lequel on forme les attentes, et illustre son interaction en dynamismes du procès inflationniste.

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Resumen Notas sobre producciń y expectativas en el proceso de inflación. — Este artículo presenta una exposición simple de algunos aspectos dinámicos del proceso inflacionario. El modelo incluye el concepto de Friedman-Phelps sobre la ?tasa natural de desempleo? o su equivalente, el concepto de ?producción potencial? implicado por la versión de la curva de Phillips aumentada por las aspectativas. E1 objetivo primordial del anĺisis es trazar las trayectorias exactas de la producción nominal y real, de los balances de caja reales y de las tasas de inflación real y anticipada. Las trayectorias implicadas generalmente son consistentes con algunos factores estilizados. E1 anĺisis subraya la relevancia de la información concerniente al mercado del dinero, el mercado de productos y la especificación del proceso por medio del cual se forman las expectativas e ilustra su interacción en la dinámica del proceso inflacionario.

     

Strategic positioning of global manufacturing virtual networks in the aeronautical industry

The evolution of organisations that work in multinational environments has considerably altered their production strategies. One of the consequences has been the appearance of global manufacturing virtual networks (GMVNs), which include all kinds of production centres. These networks establish a new type of vertical and horizontal collaboration between independent companies or even competitors who launch occasional collaborations on projects they could not take on individually. The purpose of this paper is to analyze the main reasons that determine the formation of GMVNs as well as the strategy of the companies involved in these organizations and how GMVN will evolve in the future. For that purpose, a conceptual framework is proposed based on four network features: strategy, structure, communication systems and culture. This work will delve into the strategy network feature by applying a strategic positioning model to a practical case in the aeronautical industry to gain a better understanding of how GMVNs work, its effectiveness by clarifying and putting these organisations in perspective and how they may evolve in the future.     

An Empirical Test of the Institutionalist View on Income Inequality

This paper analyzes the relationship between income inequality and economic growth within the United States using state level data. It describes income inequality in the U.S. since 1960, then employs a two‐step causal model to test the institutionalist contention that income inequality leads to socio‐political instability, which has a negative impact on economic progress. The empirical results offer support for the institutionalist view.     

Markov Chains and Regression toward the Mean

Using the theory of stationary Markov chains, we uncover a previously unknown property of the behavior of betas. Specifically, if the cross-sectional distribution of betas is stationary over time, then the set of firms that remain in an arbitrarily chosen beta interval between one period and the next will not regress toward the mean. This surprising result occurs in spite of the well-known fact that the set of all the firms in the interval will exhibit the regression tendency. Our empirical tests indicate that betas behave in remarkable accordance with this prediction.