Shocks and rigidities as determinants of CEE labour markets’ performance

In this article, the impact of real wage, productivity, labour demand and supply shocks on eight Central and Eastern European (CEE) economies from 1996–2007 is analysed with a panel structural vector error correction model. A set of long‐run restrictions derived from the dynamic stochastic general equilibrium (DSGE) model is used to identify structural shocks, and fluctuations in foreign demand are controlled for. We find that the propagation of shocks on CEE labour markets resembles that found for OECD countries. Labour demand shocks emerge as the main determinant of employment and unemployment variability in the short‐to‐medium run, but wage rigidities were equally important for observed labour market performance, especially in Poland, Czech Republic and Lithuania. We associate these rigidities with collective bargaining, minimum wage, active labour market policies and employment protection legislation.     

EMPLOYMENT OF OLDER WORKERS IN POLAND: ISSUES AND POLICY IMPLICATIONS1

The aim of this paper is to discuss barriers to the employment of older workers in Poland, where, due to various structural weaknesses and institutional arrangements, this problem has taken on a particularly acute seriousness. After analysing the causes of inactivity amongst older workers, the paper concludes by making policy recommendations.     

Toward a theory of honesty and trust among communicating autonomous agents

This article outlines, through a number of examples, a method that can be used by autonomous agents to decide among potential messages to send to other agents, without having to assume that a message must be truthful and that it must be believed by the hearer. The main idea is that communicative behavior of autonomous agents is guided by the principle of economic rationality, whereby agents transmit messages to increase the effectiveness of interaction measured by their expected utilities. We are using a recursive, decision-theoretic formalism that allows agents to model each other and to infer the impact of a message on its recipient. The recursion can be continued into deeper levels, and agents can model the recipient modeling the sender in an effort to assess the truthfulness of the received message. We show how our method often allows the agents to decide to communicate in spite of the possibility that the messages will not be believed. In certain situations, on the other hand, our method shows that the possibility of the hearer not believing what it hears makes communication useless. Our method thus provides the rudiments of a theory of how honesty and trust could emerge through rational, selfish behavior.This research was supported, in part, by the Department of Energy under contract DG-FG-86NE37969, and by the National Science Foundation under grant IRI-9015423.     

{\varvec{P}}-value model selection criteria for exponential families of increasing dimension

Let $\mathcal{M }_{\underline{i}}$ be an exponential family of densities on $[0,1]$ pertaining to a vector of orthonormal functions $b_{\underline{i}}=(b_{i_1}(x),\ldots ,b_{i_p}(x))^\mathbf{T}$ and consider a problem of estimating a density $f$ belonging to such family for unknown set ${\underline{i}}\subset \{1,2,\ldots ,m\}$ , based on a random sample $X_1,\ldots ,X_n$ . Pokarowski and Mielniczuk (2011) introduced model selection criteria in a general setting based on p-values of likelihood ratio statistic for $H_0: f\in \mathcal{M }_0$ versus $H_1: f\in \mathcal{M }_{\underline{i}}\setminus \mathcal{M }_0$ , where $\mathcal{M }_0$ is the minimal model. In the paper we study consistency of these model selection criteria when the number of the models is allowed to increase with a sample size and $f$ ultimately belongs to one of them. The results are then generalized to the case when the logarithm of $f$ has infinite expansion with respect to $(b_i(\cdot ))_1^\infty $ . Moreover, it is shown how the results can be applied to study convergence rates of ensuing post-model-selection estimators of the density with respect to Kullback–Leibler distance. We also present results of simulation study comparing small sample performance of the discussed selection criteria and the post-model-selection estimators with analogous entities based on Schwarz’s rule as well as their greedy counterparts.     

Firm Productivity and Foreign Direct Investment into Non‐core Activities*

As foreign direct investment (FDI) often originates from multinational enterprises (MNEs) with non‐core activities and not single‐product firms, as MNE theory typically suggests, we hypothesize that such firms are more productive than MNEs without non‐core activities as well as non‐MNE firms. We test this hypothesis using Kolmogorov–Smirnov stochastic dominance Tests and Japanese firm‐level productivity and FDI data for the period 1985–2001. We find that both manufacturing and service multinational firms with non‐core foreign investments stochastically dominate firms without non‐core activities. We also find cost‐complementarities between certain core and non‐core FDI activities that span both manufacturing and service affiliates.     

A comment on The relationship between policies and growth in transition countries

The goal of this article is to point out the likely reasons for the differences between the results obtained by Roxana Radulescu and David Barlow ¹ 1 Radulescu, R. and Barlow, D. (2002). Economics of Transition, 10(3), pp. 719–45. and those presented in most other research papers on the growth determinants in the post‐communist countries. The authors also present the consequences of the impact of the specific composition of the EBRD index on the results of analysis obtained on the basis of econometric models, in which the index is used as a variable.     

Correction to: Higher-order learning

Experimental Economics -     

Panel Data Evidence on the Effects of Fiscal Policy Shocks in the EU New Member States

We identify fiscal policy shocks in the EU new member states using four different methods. We use panel data techniques to estimate the output response to these shocks. We find that investment and export growth increase after fiscal consolidation and decelerate after fiscal stimulus when the shocks are expenditure‐based. In contrast, private consumption does not respond to fiscal policy shocks. Expenditure‐based fiscal consolidations reduce wages, supporting the view that fiscal consolidation of such composition enhances the competitiveness and profitability of domestic enterprises. In contrast, we do not find evidence of fiscal shocks affecting households' confidence.     

New development: Corporatization of local authorities in England in the wake of austerity 2010–2016

A key institutional driver of current reforms within English local government is ‘alternative service delivery’. Our review of councils’ annual accounts between 2010/11 and 2016/17 suggests ‘corporatization’—the creation of local authority companies—is a growing phenomenon across the whole of English local government. This represents such a significant and far-reaching development in the governance, performance and efficiency of local public services that it constitutes a major field-level change at the interstices of the institutions of state, market, corporation and community. In this article, the authors briefly sketch ways corporatization could be regarded as a field-level change, before presenting findings and reflecting on their implications.