On the transformation of theorems

Professor W. Ethier (1979) has argued that replacing land by capital in the familiar 2×2 trade model leaves the four basic theorems unaffected, with time-phasing and a positive interest rate. In fact, Ethier's HOS and FPE theorems are different in kind from the traditional ones. The traditional theorems predict certain results in terms of trade-independent data: Ethier's theorems describe equilibrium in terms of factor endowments and intensities defined by equilibrium prices. Hence his theorems do not support his central message that nothing is lost in trade theory by treating capital as if it were homogeneous land.     

Modelling Intuition in Retail Site Assessment (MIRSA): making sense of retail location using retailers' intuitive judgements as a support for decision-making

Analogues are used by retailers as a forecasting method and as performance benchmarks for new sites. This paper outlines an innovative analogue method that uses the ‘intuitive’ field-level judgements of retail directors obtained through cognitive mapping to classify sites according to their similarity to store analogues. The paper also discusses the problems of existing methods of site assessment relating to their tendency to underplay managerial judgements; outlines an innovative qualitative clustering method that mirrors decision-makers' knowledge to identify analogues by their degree of similarity to a new site; and assesses its value with reference to user responses in a live ‘real-time’ decision situation.     

Prevention of drowning in home pools – lessons from Australia

As an affluent and warm weather country, Australia faced an epidemic of drowning in children under five as the popularity of home pools increased in the late 1960s and early 1970s. In one state child drowning rose by 6.62 per 100,000 in the five years from 1968. Variation across jurisdictions in actions to regulate domestic pools has resulted in Australia representing an unfortunate natural experiment in interventions to prevent child drowning in pools. Mechanisms adopted by various authorities were analysed in detail to identify factors that contributed to success and failure in regulating domestic pools. Despite early identification of the problem and development of what were later demonstrated to be effective interventions, best practice solutions were not established in any jurisdiction until 2002, 25 years after identification of the problem. Key failures in intervention were found to be: failure to act in a timely way, flawed regulation, blockage of timely action and repeal of effective state regulation under political pressure, and blockage of effective standards. Lessons are identified as: inherent weaknesses in the standard setting process, failure of interventions to address major risk categories, failure to act before the hazard grew, failure to consider lesser interventions for tactical reasons, failure to pay attention to advocates, and the need for continuing effort. The paper argues that analysis of the identification of the problem, development of interventions and implementation of mechanisms of prevention illustrate where systemic changes are required and indicate lessons that should be applied in developing and implementing future interventions.     

Does the “Zurich consensus” provide grounds for cautious optimism?

It is now clear that the so-called “Washington consensus”, the obsession with markets and the studied refusal to engage with global problems, is dead. The month of November 2008 may be seen by future generations as a turning point in human civilisation. While the Club of Rome has been warning for decades of the consequences of unsustainable growth, organisations like the World Economic Forum and the International Energy Agency have until recently supported the old market-oriented approach that assumed economic growth would solve all our problems. Now the financial crisis has exploded that myth and triggered rethinking of basic assumptions. A new consensus is emerging that recognises biophysical limits and the interlocking social, economic and environmental challenges we face. This provides grounds for cautious optimism that we may be entering a period of social learning which will allow human civilisation to survive.     

Market Structure and Market Access

We explore an issue at the nexus of domestic competition policy and international trade, the interaction between goods trade and market power in domestic trade and distribution sectors. We examine the effect of variations in conditions of domestic competition in services on trade volumes in goods in the cases of both linear and nonlinear import demand, including standard form CES‐based gravity models of bilateral trade flows. Theory suggests a set of linkages between service‐sector pricing and goods trade supported by econometrics involving imports of 22 OECD countries vis‐a‐vis 69 exporters. Competition in distribution services affects the volume of trade in goods. Additionally, because of interaction between tariffs and pricing, the market structure of the domestic service sector becomes increasingly important as tariffs are reduced. Indeed, depending on the degree of competition, market access concessions on tariffs may be effectively undone in some cases by changes in margins. For exporters, we find that service competition in destination markets matters most for exporters from smaller, poorer countries. Our results also suggest that while negotiated agreements leading to cross‐border services liberalisation may boost goods trade as well, they may also lead to a fall in goods trade when such liberalisation involves FDI leading to increased service sector concentration.     

The Optimal Level and Disposition of Saving and the Mix of Monetary and Fiscal Policy in Intermediate Macroeconomics

The optimal level of saving and its optimal disposition between investment in the domestic capital stock and the accumulation of overseas assets should be an important topic in intermediate macroeconomics courses. This article shows how the analysis of this topic can be presented to students.