Imperfect information and the business cycle

Imperfect information has played a prominent role in modern business cycle theory. This paper assesses its importance by estimating the new Keynesian (NK) model under alternative informational assumptions. One version focuses on confusion between temporary and persistent disturbances. Another, on unobserved variation in the inflation target of the Central Bank. A third on persistent mis-perceptions of the state of the economy (measurement error). And a fourth assumes perfect information (the standard NK-DSGE version). Imperfect information is found to contain considerable explanatory power for business fluctuations. Signal extraction seems to provide a conceptually satisfactory, empirically plausible and quantitatively important business cycle mechanism.     

Water Rich, Resource Poor: Intersections of Gender, Poverty, and Vulnerability in Newly Irrigated Areas of Southeastern Turkey

The provision of water for drinking and irrigation is often assumed to alleviate poverty, though results are likely to be mixed for different individuals. This paper examines the intersections of gender poverty, livelihoods, landlessness, and related considerations in the context of large-scale water development in Turkey’s Southeastern Anatolia region, particularly exploring what such an analysis allows for an understanding of variable and differentiated effects of ongoing changes. Findings suggest that certain populations experience enhanced vulnerabilities, and considerable losses, in addition to any gains and benefits of ongoing changes (particularly the landless, poor, some women, and those who previously engaged in animal husbandry). This discussion contributes to a growing gender and water literature, arguing for an intersectional analysis that understands gender as necessarily conditioned by poverty, livelihoods, and other factors. Further, I argue for the need to further enrich analyses of differentiated benefits and vulnerabilities of water-related changes through consideration of geographic, spatial, and place-specific dimensions.     

A Public Choice Analysis of the Evolution of Tort Law:

A bstract . Economic analysis has generally concluded that most loss shifting under current standards of personal injury liability is allocatively non- Pareto optimal. The economic and legal arguments that support this conclusion are reviewed and an explanation is offered of why our legal system has evolved over time into an inefficient institution. It is argued that state sponsored lotteries and current personal injury liability laws have enough In common to be similarly viewed as a system of income redistribution demanded by the citizenry and supplied by the public sector.     

A characterization of piecemeal second best policy

This paper derives conditions under which prices may be set proportional to marginal cost in some sectors of the economy when fixed distortions exists in other sectors. Two simple neoclassical economies are considered - one with fixed producer prices and one with variable producer prices. In the former case, nacessary and sufficient conditions are derived for piecemeal policy in terms of properties of derivatives of the demand functions. These conditions are then interpreted in terms of separability properties of utility functions where we find that only weak separability is required. In the latter case, sufficient conditions are derived which involved both demand and supply derivatives. These are also interpreted in terms of separability properties of utility and production functions. The analysis differs from previous ones in that we use a dual formulation of the problem and obtain conditions in terms of demand and supply derivatives which are observable, and we explicitly take into consideration the budgetary constraint of the government. Because of the latter, the factor of proportionality in applying piecemeal policy is not necessarily unity. So, in general, complete laissez faire is not optimal.     

Inflation and growth: Explaining a negative effect

The paper presents a monetary model of endogenous growth and specifies an econometric model consistent with it. The economic model suggests a negative inflation-growth effect, and one that is stronger at lower levels of inflation. Empirical evaluation of the model is based on a large panel of OECD and APEC member countries over the years 1961–1997. The hypothesized negative inflation effect is found comprehensively for the OECD countries to be significant and, as in the theory, to increase marginally as the inflation rate falls. For APEC countries, the results from using instrumental variables also show significant evidence of a similar behavior. The nature of the inflation-growth profile and differences in this between the regions are interpreted with the credit production technology of the model in a way not possible with a standard cash-only economy. Research assistance by László Konya, Rezida Zakirova, and Anton Nakov and comments by Michal Kejak, Myles Wallace and Toni Braun are kindly acknowledged, along with comments from the 17^th European Economic Association Meetings, Venice, and the 10^th International Panel Data Conference, Berlin. We also thank the editors and referees for valuable comments, and the first author is grateful to Central European University for research funds.     

The adoption and use of information technology: a longitudinal study of a mature family firm

Through a longitudinal study of a mature family firm, this paper investigates the adoption and use of information technology in a family business. It is argued that the adoption and use of information technology is influenced by five key factors. These factors are discussed, leading to a presentation of a series of implications and conclusions.     

Internal Wage Structures and Organizational Performance

This paper considers whether a hierarchical or compressed wage structure is positively associated with relatively high levels of organizational performance. To date, there has been little empirical research in this area (especially in the UK). Thus we present an operational measure of a compressed/hierarchical wage structure, using UK manufacturing micro–data in five industrial sectors, and examine its relationship with labour productivity. We find that the wage compression argument holds in one sector but not for the majority of sectors and that taking into account other, intra–industry characteristics, namely size and ownership differences, further weakens the relationship.     

Foreign Ownership and Productivity in the United Kingdom Estimates for U.K. Manufacturing Using the ARD

Review of Industrial Organization - There is a general assumption in much of the literature on FDI that foreign owned plants have higher productivity. The purpose of this paper is to answer the...