Contract compliance and equal opportunities

In 1983, the Greater London Council adopted a policy of 'Contract Compliance' designed to ensure that firms selling goods and services to the Council complied with its equal opportunity requirements. The initiative aroused wide interest and many other local authorities - 40 are known of to date - have been considering introducing such a policy. Although simple in essence, its execution can be complex and difficult. In April 1986, the Inner London Education Authority, a partner in the GLC policy, took over the Contract Compliance Unit following the GLCs abolition. Linda Smith explains the background to contract compliance, how the GLC, now ILEA, operates the policy; assesses its achievements and its significance and explores some of the lessons learnt in its three years of operation.     

Selecting Sites for New Facilities Using Data Envelopment Analysis

This paper develops a mathematical programming model for obtaining a best set of sites for planned facilities. The model is concerned with those situations where resource constraints are present. The specific setting for the paper involves the selection of sites for a set of retail outlets, wherein the ratio of aggregate outputs to inputs for the selected set is maximal among all possible sets that could be chosen. At the same time, the model guarantees that the only sets of stores allowable are those for which the available resources are used to the maximum extent possible.     

The effect of a currency union on trade: Lessons from the Irish experience

This paper studies the introduction of an exchange rate between Ireland and the UK in 1979 to shed light on the effects of a common currency on the composition of international trade. No evidence is found from time series or panel regressions that the change of exchange rate regime had a significant effect on Anglo-Irish trade. This finding is consistent with previous studies of currency unions between larger, developed countries but conflicts with findings based on more heterogeneous country groupings. The reasons for this discrepancy are discussed.     

RATIONAL EXPECTATIONS AND PRO SPORTS LEAGUES

We put a new set of shoes on that old workhorse, the competitive talent market (CTM) model in sports economics. There exist unique rational expectations equilibria for both national football league (NFL‐type leagues) and major league baseball (MLB‐type leagues) under the CTM model. A cursory statistical test fails to reject the empirical implications for the NFL‐type league. The model also suggests empirical tests of whether or not talent demand (marginal revenues from talent), including induced effects, actually slopes down. But like all models, the competitive talent model should be applied in its context. It describes highly cooperative North American sports leagues that have a wealth of common information. But it may not do the same for other leagues if they lack this common information.     

N‐FIRM OLIGOPOLY WITH GENERAL ISO‐ELASTIC DEMAND

In this note oligopoly with iso‐elastic demand is analysed. Unlike previous studies we consider general iso‐elastic demand rather than the case of unit elasticity. An n‐firm Nash‐Cournot equilibrium for the case of heterogeneous constant marginal costs is derived. The main result is a closed‐form solution that shows the dependency of the equilibrium on the elasticity of demand and the share of industry costs. The result has applications to a wide range of areas in oligopoly theory by allowing comparisons across markets with different elasticities of demand.     

The response of vital rates to harvest fluctuations in pre-industrial Sweden

This study examines whether there was a Malthusian equilibrium mechanism in Sweden in the pre-industrial period. A unique data set on harvests, deaths, marriages and births going back to 1630 is used to calculate cumulative elasticities of vital rates with respect to harvest. While earlier studies have mostly focused on the impact of real wage, this study uses the calorie content of per capita harvests as an indicator of living standards. It finds that there indeed was a response of vital rates to harvest fluctuations, but there were important structural breaks. While positive checks attenuated after 1720, preventive checks were strengthened. After 1870 preventive checks disappeared, and possibly also positive checks. The results are robust to different models and trend specifications, with one crucial difference: while the distributed lag model shows that positive checks were significant up to 1920, the SVAR model shows that positive checks disappeared after 1870.     

Export survival and the dynamics of experience

This paper focuses on developing countries’ pioneer exports to the OECD and obtains several important results on export dynamics, linking export experience and export survival. Using product level data at the SITC 5-digit level for 114 developing countries over the 1962–2009 period, we show that prior export experience obtained in non-OECD markets significantly increases survival of pioneer exports toward the OECD. The experience does not need to last long, as gaining experience for more than two years does not confer any additional benefit. The effect of experience depreciates rapidly with time: a break in export experience prior to entering the OECD reduces the advantage on survival. Finally, the role of prior export experience is particularly relevant for survival in the first two years upon entry into the OECD. The geographic dynamic of export experience reveals that experience is acquired in neighboring, easy to access markets before reaching more distant, richer partners and ultimately serving the OECD with a higher probability of survival.     

Modelling Inflation Volatility

This paper discusses estimation of US inflation volatility using time‐varying parameter models, in particular whether it should be modelled as a stationary or random walk stochastic process. Specifying inflation volatility as an unbounded process, as implied by the random walk, conflicts with priors beliefs, yet a stationary process cannot capture the low‐frequency behaviour commonly observed in estimates of volatility. We therefore propose an alternative model with a change‐point process in the volatility that allows for switches between stationary models to capture changes in the level and dynamics over the past 40 years. To accommodate the stationarity restriction, we develop a new representation that is equivalent to our model but is computationally more efficient. All models produce effectively identical estimates of volatility, but the change‐point model provides more information on the level and persistence of volatility and the probabilities of changes. For example, we find a few well‐defined switches in the volatility process and, interestingly, these switches line up well with economic slowdowns or changes of the Federal Reserve Chair. Moreover, a decomposition of inflation shocks into permanent and transitory components shows that a spike in volatility in the late 2000s was entirely on the transitory side and characterized by a rise above its long‐run mean level during a period of higher persistence. Copyright © 2015 John Wiley & Sons, Ltd.