HISTORY AND MEASUREMENT IN THE SERVICE SECTOR: A REVIEW

Economic Council of Canada, Employment in the Service Sector
Delaunay, Jean-Claude, and Jean Gadrey, Services in Economic Thought: Three Centuries of Debate
Griliches, Zvi (ed.), Output Measurement in the Service Sectors     

The October 1979 Change in the U.S. Monetary Regime: Its Impact on the Forecastability of Canadian Interest Rates

Subsequent to the October 1979 shift in monetary policy in the United States, interest rates in North America not only reached unprecedented levels but also exhibited unprecedented volatility. Using Canadian data, the authors show that anticipated quarterly changes in long-term rates associated with the rational-expectations model have remained small during this post-shift period. The authors examine three sets of recorded forecasts of long-term interest rates in Canada and note their failure to improve upon the no-change prediction. The “perverse” relationship between the slope of the yield curve and the subsequent movement in long-term rates exists in the Canadian data but is of only modest value in a forecasting context. The excess returns on long-term bonds implicit in the recorded forecasts of the level of interest rates vary sharply, yet there is little evidence that forecasters have identified a predictable component of time-varying term premia.     

GLOBALIZATION,TRADE, AND WAGES: WHAT DOES HISTORY TELL US ABOUT CHINA?

Newly assembled data show that, as China opened up to global trade during the early 20th century, its exports became more unskilled‐intensive and its imports more skill‐intensive. Difference‐in‐differences estimates show that World War I dramatically increased Chinese exports, raising the relative demand for the unskilled workers producing them. When the war ended, trade costs declined and China's terms of trade increased, further stimulating exports. A simulation of a dynamic general equilibrium model demonstrates that the effects of the war on China's terms of trade produces a decline in the skill premium similar to what China experienced in the 1920s.     

The British ‘failure’ that never was? The Anglo‐American ‘productivity gap’ in large‐scale interwar retailing—evidence from the department store sector1

Interwar British retailing has been characterized as having lower productivity, less developed managerial hierarchies and methods, and weaker scale economies than its US counterpart. This article examines comparative productivity for one major segment of large‐scale retailing in both countries—the department store sector. Drawing on exceptionally detailed contemporary survey data, we show that British department stores in fact achieved superior performance in terms of operating costs, margins, profits, and stock‐turn. While smaller British stores had lower labour productivity than US stores of equivalent size, TFP was generally higher for British stores, which also enjoyed stronger scale economies. We also examine the reasons behind Britain's surprisingly strong relative performance, using surviving original returns from the British surveys. Contrary to arguments that British retailers faced major barriers to the development of large‐scale enterprises, that could reap economies of scale and scope and invest in machinery and marketing to support the growth of their primary sales functions, we find that British department stores enthusiastically embraced the retail ‘managerial revolution’—and reaped substantial benefits from this investment.     

What Matters to Individual Investors? Evidence from the Horse's Mouth

We survey a representative sample of U.S. individuals about how well leading academic theories describe their financial beliefs and decisions. We find substantial support for many factors hypothesized to affect portfolio equity share, particularly background risk, investment horizon, rare disasters, transactional factors, and fixed costs of stock market participation. Individuals tend to believe that past mutual fund performance is a good signal of stock-picking skill, actively managed funds do not suffer from diseconomies of scale, value stocks are safer and do not have higher expected returns, and high-momentum stocks are riskier and do have higher expected returns.     

SHOULD THERE BE INTRADAY MONEY MARKETS?

In this article, we consider the case for an intraday market for reserves. We discuss the separate roles of intraday and overnight reserves and argue that an intraday market could be organized in the same way as the overnight market. We present arguments in favor of and against a market for intraday reserves when the marginal cost of overnight reserves is positive. We also consider how reserves should be supplied when the cost of overnight reserves is zero. In that case, the distinction between overnight and intraday reserves becomes blurred, raising an important question: What is the role of the overnight market?(JEL E44, E58)