Globalisation: A New Growth,New Trade Perspective

The current crisis in Asia has seen the case for more open economic policy come under attack in the developing world. In this article Michael Chui, Paul Levine, Mansoob Murshed, and Joseph Pearlman argue that any reversal of the trend towards globalisation would be a great mistake for policymakers. The association of openness with higher growth is one of the most robust empirical results in economics. Here we explore the mechanisms that explain this result. We argue that current high growth rates in Asia are unsustainable and there is a long-term as well as a short-term problem of ‘over-investment’ in Asia. However, we report research findings that show how international knowledge spillovers and free trade can enable the world economy to grow, the developing countries to progress, and the developed countries to benefit.     

Characteristics of family reunion travelers

Destinations have endowed resources, created resources, and supporting factors that make it attractive and form the basis for destination competitiveness. Local assets and destination marketing organization resources make some target markets more viable than others. This research identified trip characteristics that make some destinations, like one with a hub and spoke system offering a variety of day trips/activities, more attractive to family reunion travelers and this information can aid in the development/management of indispensable products/services/infrastructure adding value over other destinations. By exploring family reunion travelers' characteristics, practitioners can more effectively develop and market their destinations to this niche group travel market segment.     

Delegation and Fiscal Policy in the Open Economy: More Bad News for Rogoff's Delegation Game

This article studies the open-economy Rogoff delegation game, taking into account both intra-country and intercountry interactions between fiscal authorities and central banks. With representative bankers, the Nash equilibrium of fiscal and monetary authorities independently responding to supply-side shocks sees insufficient monetary adjustment and an imbalance towards fiscal stabilization if shocks are sufficiently symmetric; the opposite occurs if shocks are sufficiently asymmetric. Appointing conservative bankers shifts the fiscal–monetary balance away from monetary towards fiscal policy. Unilateral delegation benefits that country; but when all countries independently delegate, the outcome is only favorable if shocks are sufficiently asymmetric.     

ELUSIVE PERSISTENCE: WAGE AND PRICE RIGIDITIES,THE NEW KEYNESIAN PHILLIPS CURVE AND INFLATION DYNAMICS

Abstract We review the main New Keynesian inflation equations that have arisen as a result of aggregation from individual firms' price rigidities. We find that, on the whole, they cannot account for inflation persistence, a key feature of the empirical dynamics of inflation, and with important policy implications. The only exceptions seem to be when indexation is allowed in price setting or when price stickiness is combined with wage rigidity and staggering.     

GROWTH AND WELFARE EFFECTS OF WORLD MIGRATION

Using a two‐bloc endogenous growth model calibrated to two generic sending and receiving countries of equal size, we assess the growth and welfare impact of world migration flows of different skill compositions. The sending country (East) has a lower total factor productivity and a lower endowment of skilled labour. Migration can induce two growth‐enhancing effects: an efficiency effect from the more efficient use of labour in the receiving country (West) and a sectoral reallocation effect from a fall in the host country skilled–unskilled wage rates. Despite growth gains, there are both winners (migrants, the representative Western non‐migrant household) and losers (the representative Eastern household remaining). Remittances can see the latter group joining the winners.     

The Credibility Problem Revisited: Thirty Years on from Kydland and Prescott*

Macroeconomics research has changed profoundly since the Kydland–Prescott seminal paper. In order to address the Lucas Critique, modeling is now based on micro‐foundations treating agents as rational utility optimizers. Bayesian estimation has produced models which are more data‐consistent than those based simply on calibration. With micro‐foundations and new linear‐quadratic techniques, normative policy based on welfare analysis is now possible. In the open economy, policy involves a “game” with policymakers and private institutions or private individuals as players. This paper attempts to reassess the Kydland–Prescott contribution in the light of these developments.     

HURRICANE KATRINA'S EFFECT ON THE PERCEPTION OF NEW ORLEANS LEISURE TOURISTS

Destination image is a critical factor to potential travelers. Many say that Hurricane Katrina was the costliest and one of the deadliest hurricanes in the history of the United States. The purpose of this study was to investigate the tourist destination images of leisure travelers to New Orleans before and after the storm. Further, this study assessed the influence of media exposure and geographic point of origin on perceptions. The results of this research provide fundamental implications for strategic image management that can assist in designing and implementing marketing campaigns to enhance tourism destination images and to overcome prevailing negative ones.     

Probability models and robust policy rules

We consider Sims's (2008) argument that robust policy making requires that policy models be treated as “probability models”. In a welfare-based setting, we estimate by Bayesian methods a number of variants of a New Keynesian macroeconomic model and use both the model odds and posterior densities to design robust interest rate rules consisting of an inflation-forecast-based rule and a wage-targeting one. Each are shown to have distinct robustness qualities and distinct implications for the probability-models approach. To ensure feasible policy, we further impose that rules are stable, determinate and lower-bound compatible. Our results have important implications for the design, evaluation and analysis of the probability models approach to robust monetary policy making.     

Phases of imitation and innovation in a North-South endogenous growth model

A North-South endogenous growth model is developed to examinethree phases of Southern development: imitation of Northernproducts, imitation and innovation, and innovation only. Weshow that the three phases exist as possible equilibria whichdepend on knowledge spillovers and the ease of imitation. Applyingthe model to analyse the impact of R&D subsidies, thereare some clear policy implications: (I) the welfare effectsof subsidies in both blocs depend crucially on the Southernphase; (ii) there are circumstances where the global benefitsfrom subsidies to the South are so substantial as to be Pareto-improvingeven when fully financed by the North.