Status, the Distribution of Wealth, and Growth

We analyze a simple model of endogenous growth in which individuals care about both consumption and their rank in the distribution of wealth. We show that the steady-growth rate of the economy increases with both the strength of the status-seeking motive and the initial equality of the wealth distribution. Contrary to the basic model of endogenous growth, the equilibrium growth rate is not necessarily smaller than in the social optimum, and we identify the circumstances under which the two coincide.     

The Great Inflation and the Greenbook

Can the story of evolving Federal Reserve beliefs in The Conquest of American Inflation simultaneously explain the Great Inflation and the forecasts published in the Greenbook during that time? If Sargent is correct then evolving beliefs should be reflected not only in policy outcomes but also in Greenbook forecasts. In this paper they are. By conditioning on the Greenbook, it is show that both inflation outcomes and Greenbook forecasts can be rationalised by evolving beliefs. The results improve on recent empirical evidence that has been criticised for relying on unrealistic beliefs that produce forecasts inconsistent with the Greenbook.     

Some institutional design for shareholder socialism

Abstract

In times of a declining labour share and an intense international tax competition, some form of market socialism may contribute to hold income inequality in check. However, the concept of market socialism involves three major pitfalls: cronyism, technological stagnation, and power concentration. These pitfalls could be avoided by an appropriate institutional design that includes the combination of public ownership with an extensive use of the stock market, an incentive-compatible mechanism for the takeover of private firms, and participatory democracy.     

The demand-boost theory of exclusive dealing

This article unifies various approaches to the analysis of exclusive dealing that so far have been regarded as distinct. The common element of these approaches is that firms depart from efficient pricing, raising marginal prices above marginal costs. We show that with distorted prices, exclusive dealing can be directly profitable and anticompetitive provided that the dominant firm enjoys a competitive advantage over rivals. The dominant firm gains directly, rather than in the future, or in adjacent markets, thanks to the boost in demand it enjoys when buyers sign exclusive contracts. We discuss the implication of the theory for antitrust policy.     

Steuerpolitik in finanzkritischen Zeiten

Ohne Zusammenfassung     

The innovation–trade nexus: Italy in historical perspective (1861–1939)

This work investigates the relationship between trade and technological specialisation in Italy, during the long time span ranging from Unification to the eve of the Second World War. To do this, new series of Italy’s indices of specialisation in trade and technology are calculated based on official data. Empirical analysis, based on Spearman rank correlation coefficients and fixed-effects regression, shows the emergence of a positive relationship between specialisation in technology and specialisation in trade after the start of the country’s modern economic growth, around the turn of the twentieth century. This, however, was uniquely driven by a negative relationship between technological specialisation and import shares, while no significant relationship between the former and export shares emerges. Furthermore, this finding excludes the most important sector, leading Italian industrialisation, that is, textiles, the outstanding performance of which can be seen as largely determined by its being particularly suited to the country’s factor endowment.