original accumulation equity and late industrialization the cases of socialist china and capitalist taiwan abstract this paper explores two dynamic approaches to original accumulation one socialist and one capitalist in a search for clues to the developmental options available for pre industrial predominantly agrarian nations the comparative analysis of two cases which have been hailed in widely divergent literatures for their developmental implications highlights the human costs associated with each indeed it suggests the necessity to rethink the categories of socialist and capitalist development paths the analysis focuses on the relationships among the state the peasantry and the dominant landed classes in the struggle to control and channel the agricultural surplus and on state mechanisms to transfer resources from agriculture to industry and from the private sector to the state and the institutions it controls

agenda restrictions in multi issue bargaining abstract we study a bilateral multi issue bargaining procedure with complete information and endogenous agenda in the procedure proposals must be made on only one issue at a time although the proposer can choose which issue to bring to the table when bargaining frictions are small there is a large multiplicity of equilibrium agreements including ones with delay however equilibrium payoffs cannot be made arbitrarily small perpetual disagreement cannot be supported in equilibrium this multiplicity contrasts with the uniqueness found in the literature for a procedure where offers can be made in any subset of remaining issues

the political business cycle new evidence from the nixon tapes drawing from the personal tape recordings made during the presidency of richard nixon we uncover and report in this paper new evidence that nixon manipulated arthur burns and the federal reserve bank into creating a political business cycle that helped secure nixon s reelection victory in 1972 nixon understood the risks that his desired monetary policy imposed but chose to trade longer term economic costs to the economy for his own short term political benefit

how robust are popular models of nominal frictions this paper analyzes three popular models of nominal price and wage frictions to determine which best ts post war u s data we construct a dynamic stochastic general equilibrium dsge model and use maximum likelihood to estimate each model s parameters because previous research nds that the conduct of monetary policy and the behavior of in ation changed in the early 1980s we examine two distinct sample periods using a bayesian pseudo odds measure as a means for comparison a sticky price and wage model with dynamic indexation best ts the data in the early sample period whereas either a sticky price and wage model with static indexation or a sticky information model best ts the data in the late sample period our results suggest that price and wage setting behavior may be sensitive to changes in the monetary policy regime if true the evaluation of alternative monetary policy rules may be even more complicated than previously believed

bargaining orders in a multi person bargaining game abstract this paper studies a complete information bargaining game with one buyer and multiple sellers of different sizes or bargaining strengths the bargaining order is determined endogenously with a finite horizon there is a unique subgame perfect equilibrium outcome in which the buyer purchases in order of increasing size from the smallest to the largest with an infinite horizon if the sellers have sufficiently different sizes there is a unique equilibrium outcome which has the same bargaining order if the sellers have similar sizes with an infinite horizon there may be multiple equilibrium outcomes with different bargaining orders

bargaining and strikes strikes are generally regarded as an important economic phenomenon and yet good theoretical explanations of them are hard to come by the difficulty is to understand why rational parties should resort to a wasteful mechanism as a way of distributing the gains from trade why could not both parties be made better off by moving to the final distribution of surplus immediately or if it is uncertain to its certainty equivalent and sharing the benefits from increased production

endogenous incomplete contracts a bargaining approach in this paper we argue that by modelling the contracting process as a bargaining game one can endogenize the choice between complete and incomplete contracts this point is demonstrated within a stylized model in which agents can allocate an endowment stream either via a once for all bargain over the entire stream a long term contract or through a series of bargaining rounds a short term contract within this structure short term contracts arise as equilibrium outcomes under very general conditions because a short term contract implies reduced bargaining costs for one of the agents in essence reduced transaction costs produce a short term contract jel classification l14 c78

on the role of confidentiality and deadlines in bilateral negotiations abstract the preference between public and private negotiations for a buyer who sequentially visits two sellers is examined it is shown that the buyer weakly prefers private negotiations so as to create strategic uncertainty about the trade history with substitute goods such uncertainty is valuable only when price offers have short deadlines that prevent a head to head competition with complementary goods strategic uncertainty is valuable to the extent that price coordination becomes a concern for sellers which is likely to be the case when sellers possess high bargaining powers their price offers have short deadlines and or goods are weak complements sellers strategic deadline choices as well as their incentives to disclose information about negotiations are also investigated

monetary policy rules macroeconomic stability and inflation a view from the trenches i estimate a forward looking monetary policy reaction function for the federal reserve for the periods before and after paul volcker s appointment as chairman in 1979 using information that was available to the fomc in real time from 1966 to 1995 the results suggest broad similarities in policy and point to a forward looking approach to policy consistent with a strong reaction to inflation forecasts during both periods this contradicts the hypothesis based on analysis with ex post constructed data that the instability of the great inflation was the result of weak fomc policy responses to expected inflation a difference is that prior to volcker s appointment policy was too activist in reacting to perceived output gaps that retrospectively proved overambitious drawing on contemporaneous accounts of fomc policy i discuss the implications of the findings for alternative explanations of the great inflation and the improvement in macroeconomic stability since then

bargaining piecemeal or all at once perfect information rubinstein style bargaining models are used to explore questions about multiple issue bargaining is it ever sensible to offer on only a subset of the issues being bargained what is the effect of limiting offers so that they must cover all issues we conclude that in realistic settings the answer to the first question is yes and that restricting offers to those covering all issues may be harmful to one or both parties

monetary policy theory and practice in respect of the theory of monetary policy i am reminded of the comment that jacob viner made many years ago at a meeting of the american economic association about alfred marshall s economics what is new is highly unlikely at this late date also to be true and significant 1 consequently i shall restrict my remarks on theory to trying to summarize what i regard as the present intellectual position

permanent and transitory policy shocks in an empirical macro model with asymmetric information abstract an empirical model that allows for shifts in the inflation target and imperfect policy credibility is estimated imperfect credibility defined by differences between the perceived and actual inflation target obtains because private agents cannot correctly distinguish between permanent target shocks and transitory funds rate shocks learning affects responses to structural shocks important features include the absence of a price puzzle permanent nominal effects of aggregate supply shocks due to partial policy accommodation and the ability to examine responses to a permanent target change and expectations shocks perceptions of permanent target shocks explain sizable movements in bond yields and inflation

competitive industrial policy and macro performance has south korea outperformed taiwan taiwan adopted a competitive industrial policy before south korea but pursued it more cautiously according to orthodox theory taiwan s less interventionist policy should have increased its initial per capita income lead over south korea in fact the income gap narrowed and income distribution improved relatively in south korea casting doubt on the orthodox criticism of south korean industrial policy but some qualification of the south korean success is in order the south korean gains were achieved at the cost of greater consumption fore gone and greater concentration of economic power than in the case of taiwan moreover the crucial post 1985 taiwanese economic slow down was partly due to economic maturation as well as to tardy financial reform and to the opportunities created by the chinese diaspora for taiwanese firms to invest abroad

bargaining with an agenda gradual bargaining is represented by an agenda a family of increasing sets of joint utilities parameterized by time a solution for gradual bargaining specifies an agreement at each time we axiomatize an ordinal solution i e one that is covariant with order preserving transformations of utility it can be viewed as the limit of step by step bargaining in which the agreement of the last negotiation becomes the disagreement point for the next the stepwise agreements may follow the nash solution the kalai smorodinsky solution or many others and still yield the ordinal solution in the limit

multi issue bargaining with endogenous agenda abstract the first part of this paper shows that in a noncooperative bargaining model with alternating offers and time preferences the timing of issues the agenda matters even if players become arbitrarily patient this result raises the question of which agenda should come up endogenously when agents bargain over a set of unrelated issues it is found that simultaneous bargaining over packages should be a prevailing phenomenon but we also point to the possibility of multiple equilibria involving even considerable delay journal of economic literature classification number c78

the importance of the agenda in bargaining abstract this paper discusses a multi issue bargaining game in which the players set up an agenda and negotiate on the issues sequentially according to this agenda we demonstrate that the agenda might play an important role in the bargaining and discuss the relationship between the agenda and the final outcome of the bargaining game assuming that players have conflicting evaluations regarding the importance of the issues under negotiation we identify the type of agenda each player prefers we also show that in such cases the outcome of the bargaining game need not to be efficient by demonstrating the strategic use of the agenda the paper explains the phenomenon of bargaining on the agenda

the quest for prosperity without inflation abstract in recent years activist monetary policy rules responding to inflation and the level of economic activity have been advanced as a means of achieving effective output stabilization without inflation advocates of such policies suggest that their flexibility may yield substantial stabilization benefits while avoiding the excesses of overzealous discretionary fine tuning such as is thought to characterize the experience of the 1960s and 1970s in this study i present evidence suggesting that these conclusions are misguided using an estimated model i show that when informational limitations are properly accounted for activist policies would not have averted the great inflation but instead would have resulted in worse macroeconomic performance than the actual historical experience the problem can be attributed in large part to the counterproductive reliance of these policies on the output gap the analysis suggests that the dismal economic outcomes of the great inflation may have resulted from an unfortunate pursuit of activist policies in the face of bad measurement specifically overoptimistic assessments of the output gap associated with the productivity slowdown of the late 1960s and early 1970s

delays and partial agreements in multi issue bargaining abstract we model a situation in which two players bargain over two pies one of which can only be consumed starting at a future date suppose the players value the pies asymmetrically one player values the existing pie more than the future one while the other player has the opposite valuation we show that players may consume only a fraction of the existing pie in the first period and then consume the remainder of it along with the second pie at the date at which the second pie becomes available thus our model features a special form of bargaining delay in which agreements take place in multiple stages such partial agreements arise when players are patient enough when they expect the second pie to become available soon and when the asymmetry in their valuations is large enough

worker substitutability and patterns of unionisation a strategic three party bargaining model is developed in which one distinguished party the firm has to reac h agreements with the other two each of which is a group of workers in the prebargaining stage the two worker groups decide whether to organize jointly or separately the main observation relates the equi librium pattern of unionization to the substitutability in production between the two groups the outcome is joint or separate unions acco rding to whether the two groups are substitute or complementary facto rs of production the analysis also considers possibilities for firm s strategic intervention in the unionization process copyright 1988 by royal economic society

a note on multi issue two sided bargaining bilateral procedures abstract this note considers a two sided multi issue bargaining problem in which players that belong to the same side may have conflicting priorities regarding the different negotiated issues the note examines different bilateral bargaining procedures and shows the different equilibrium settlements that they yield in particular the note examines the possibility that group heterogeneity conflicting priorities may be exploited in order to gain a better settlement the different potential outcomes that are implied by the different procedures explain why we often observe such intense negotiation over bargaining procedures moreover the conflict over procedure can be substantial among parties with common interest as well as between opposing players journal of economic literature classification number c7

first things first the agenda formation problem for multi issue committees abstract the paper focuses on sequential bargaining procedures in which parties are allowed to differ in several respects we first highlight the strategic effects in the bargaining game and the often conflicting incentives that players need to take into account in forming their preferences over agendas we then show that there is a pareto superior agenda among the issue by issue procedures this consists in setting the most important issue first unless this is difficult urgent in the sense that there is probability of game breakdown after a rejection in the negotiations over this issue in this case parties prefer to negotiate over the easy issue first

selective acceptance and inefficiency in a two issue complete information bargaining game abstract this paper explores the effects of a selective acceptance rule on the outcome of two issue negotiations the alternating offer game introduced here allows for the possibility that settlement may be reached on one issue while negotiation continues about the other this model captures features of laws that are generally believed to increase efficiency the analysis shows that if one issue is indivisible there are inefficient subgame perfect equilibria with no pareto improving alternative equilibria with opposing valuations rapid communication guarantees inefficiency these are unique examples of this strong form of inefficiency in an alternating offer bargaining game with complete and perfect information journal of economic literature classification numbers c72 j30

fragmented property rights and royalty bargaining abstract we consider production by a firm that relies on the patent rights that are held by other actors before production can take place bargains have to be struck with each patent holder over the royalty per unit produced in the negotiations a patent holder must be mindful of the fact that a large royalty will increase the product price and lower demand for the final product hence each patent holder would prefer to gain a large royalty at the expense of rivals when the producer makes the first offer in an alternating offer framework we analyze whether it should conduct negotiations sequentially with some grouping of patent holders or simultaneously we demonstrate that the producer will prefer simultaneous negotiation an individual patent holder would prefer to negotiate early with the producer and then to see remaining rights holders negotiate simultaneously a firm that holds several patents would want to negotiate royalties on each one sequentially and then have simultaneous negotiation of payments to other rights holders

the game of negotiations ordering issues and implementing agreements abstract we use a two issue bargaining model with asymmetric information to study agent choice of how to structure bargaining we uncover the settings in which different agenda structures are chosen in equilibrium how the order in which issues are bargained over matters and what impact the rules for implementing agreements have if agreements are implemented as they are reached easy issues are negotiated first and hard issues later if agreements are implemented only after all issues are settled then it is size that matters with large issues settled first all parties prefer the former rules of implementation to the latter

korea s macroeconomic prospects and policy issues for the next decade the purpose of this paper is to evaluate korea s macroeconomic prospects and major policy issues for the next decade after reviewing the intial conditions the report examines growth strategies and prospects for growth then it discusses external borrowing options and the role of monetary and fiscal policy in the next decade from the review of korea s macroeconomic prospects for the next decade the report concludes that although the external environment will not be as favorable as in the 1983 86 period still the korean economy will be resilient enough to achieve a 6 7 percent annual growth rate for the next decade areas where new policy actions will be required are in the management of monetary policy and the provision of social welfare although there is an indication of some increase in the protectionist threat against korea s exports the report maintains that the pressures for higher consumption and investment and the less favorable external environment will result in smaller trade surpluses in the years ahead

bargaining and international environmental agreements this article surveys game theoretic papers focused on the negotiation process that leads to an international environmental agreement most of the papers considered apply bargaining theory although other approaches have been considered as well among other issues the papers considered analyze the burden sharing rule that will result from a negotiation over a global public good the role of information asymmetries the impact of unilateral commitments delegation and ratification whether or not countries are going to form groups during the negotiation process and the influence of the expectation of a future bargaining process on investment decisions the basic bargaining model is optimistic as it predicts that countries will reach an efficient agreement immediately however all the developments of this model surveyed afterwards are rather pessimistic and even the basic model has perverse incentives for pre negotiation signals

the short run volatility of money stock targeting abstract the altered allocations of money market volatility obtained by alternative monetary policy procedures are illustrated by stochastic simulations of a staff monthly model the results indicate the nature of the tradeoff between short run volatility in the money stock and in the funds rate that is available to money stock targeting procedures

inventorship and authorship as attribution rights an enquiry into the economics of scientific credit abstract authorship and inventorship are attribution rights upon which individual scientists build their reputation and career social and legal norms concerning their distribution within research teams are currently criticized for failing to inform third parties on individual contributions we examine the case of teams engaged in the double disclosure of their research results through both publications and patents and model the negotiation process taking place between junior or female team members and the senior male ones we suggest that the former may give up inventorship in order to secure authorship even when entitled to the both based on a sample of 680 patent publication pairs related sets of patents and publications we show that very frequently one or more authors of a publication do not appear as inventors of a related patent this is less likely to happen for first and last authors which is in accordance both with our model and the prevailing legal norms on inventorship however the probability of exclusion from inventorship also declines with seniority and increases for women which is compatible with our model only

shifting endpoints in the term structure of interest rates abstract this paper links the term structure to perceptions of monetary policy long horizon forecasts of short rates required by no arbitrage term structure models are heavily influenced by the endpoints or limiting conditional forecasts of the short rate process common assumptions that the short rate is mean reverting or contains a unit root are shown to generate unrealistic yield predictions failures occur because these assumptions inadequately account for historical shifts in market perceptions of the policy target for inflation this paper links endpoint shifts to agent learning about shifts in long term policy goals shifting endpoints in short rate processes significantly improve yield predictions

a cost function analysis of import demand and growth in south africa abstract this study investigates the substitutability relationships among capital labor and imported inputs for south africa utilizing the estimates obtained from an aggregate cost function our results are consistent with the hypothesis that capital is a substitute for both domestic labor and imports but that labor and imports are complementary inputs this latter result suggests that relaxing south african trade restrictions may have a positive impact in both the long and the short run on the demand for domestic labor other results suggest that the reduction of market impediments may also positively impact the production of investment goods and economic growth

bargaining under liquidity constraints unified strategic foundations of the nash and kalai solutions abstract we provide unified strategic foundations for the nash 1950 and kalai 1977 solutions in the context of negotiations under liquidity constraints we propose an n round game where in each round a seller and a buyer with limited payment capacity negotiate a bundle of divisible goods where bundle sizes can vary across rounds according to rubinstein s 1982 alternating offer game the game implements the nash solution if n 1 and the kalai solution if n and bundle sizes are infinitesimal if n is set by one player ex ante the buyer chooses n 1 while the seller chooses n we endogenize liquidity constraints and show they bind for all n even when there is no cost in holding liquidity

an east asian model of economic development japan taiwan and south korea the east asian model of economic development focuses on 5 shared characteristics that seem significant in the contemporary economic development of japan taiwan and korea they are economic characteristics and include 1 high investment ratios 2 small public sectors 3 competitive labor markets 4 export expansion and 5 government intervention in the economy large and efficient investments in human capital and well developed capacities to absorb new technology are 2 other economic features shared by the three one could add overcrowding high man land ratios and scarcity of natural resources though these are handicaps rather than sources of economic strength it is possible however that virtue springs from necessity and that ample arable land or abundant natural resources mainly permit governments to postpone the difficult decisions needed to promote development rather than provide the wherewithal needed to finance development other noneconomic characteristics of the three such as ethnic and linguistic homogeneity relatively compact geography manageable population size and the confucian tradition have not been considered in the model even though they have undoubtedly influenced labor productivity savings behavior and other aspects of economic performance whether the east asian model ought to be followed depends on whether current and foreseeable circumstances are sufficiently like those faced by the three to justify using the same policies that they used applicability of the east asian model should also depend on whether the strategy employed by the three has been responsible for their economic success 2 aspects of the east asian models policy features are noteworthy 1 the policies typically work by influencing rather than replacing private market decisions and 2 the public expects government to intervene to influence economic growth

eurosystem monetary targeting lessons from u s data abstract using a small empirical model of inflation output and money estimated on u s data we compare the relative performance of monetary targeting and inflation targeting the results show monetary targeting to be quite inefficient yielding both higher inflation and output variability this is true even with a nonstochastic money demand formulation our results are also robust to using a p model of inflation therefore in these popular frameworks there is no support for the prominent role given to money growth in the eurosystem s monetary policy strategy

learning and shifts in long run productivity growth abstract an extensive literature has analyzed the macroeconomic effects of shocks to the level of aggregate productivity however there has been little corresponding research on sustained shifts in the growth rate of productivity in this paper we examine the effects of shocks to productivity growth in a dynamic general equilibrium model where agents do not directly observe whether shocks are transitory or persistent we show that an estimated kalman filter model using real time data describes economists long run productivity growth forecasts in the united states extremely well and that filtering has profound implications for the macroeconomic effects of shifts in productivity growth

bargaining frictions bargaining procedures and implied costs in multiple issue bargaining the paper explores how bargaining frictions and bargaining procedures interact to determine players bargaining costs in multiple issue bargaining settings when bargaining frictions take the form of discounting and agreements are implemented as they are reached issue by issue negotiation can generate bargaining costs different from those that occur if all issues are bargained simultaneously these cost differences result in differences in allocations across bargaining procedures such that players disagree on the desired method of bargaining similar results hold for certain fixed cost bargaining friction specifications this analysis provides a potential explanation of both agenda bargaining and incomplete contracts

industrial policy reform in six large newly industrializing countries the resource curse thesis abstract all six large newly industrializing countries nics in this study favored an autarkic industrial policy aip in the 1950s aip required however the rapid build up of heavy and chemical industry hci which caused foreign exchange shortages if the hci matured slowly this is because the import and subsidy demands of the growing protected hci sector became too burdensome for the competitive primary sector whose rents shrank in relative importance as the economic structure evolved the two least well endowed nics abandoned aip early in favor of a competitive industrial policy cip which relied on labor intensive exports to earn foreign exchange and resulted in rapid economic growth in contrast the resource bonus of the four best endowed nics sustained aip longer but the longer aip lasted the harder it became to reform and the slow maturing hci sector adversely affected economic growth in this way the resource bonus became a curse rather than a blessing

foreign debt balance of payments and growth prospects the case of the republic of korea 1965 1988 the rapid buildup in the external debt of the developing countries since 1973 has created serious economic and political difficulties that could frustrate the development efforts of these countries and threaten the international financial system in terms of outstanding debt the republic of korea ranks fourth among third world borrowers and has experienced a noticeable deterioration in its debt servicing capacity yet at the same time it is widely recognized that the country has successfully adjusted to a series of adverse external developments since 1973 and in the process has maintained growth momentum while avoiding the financial difficulties other countries now face the exceptional performance of its economy in recent years supports this assessment the purpose of this study is twofoid the first is to analyze korea s experience with debt accumulation and management over the past two decades with a view to identifying some of the factors that may explain its successful debt management the second objective is to examine the prospects of the national economy for the 1984 88 period section 2 discusses profiles of the country s external obligations and analyzes several aspects of the outstanding debt pertinent to the discussion section 3 is devoted to a discussion of the evolution and causes of the country s foreign debt accumulation this discussion is followed by a review of its response to external and internal shocks in sections 4 and 5 section 6 examines questions related to the efficiency and optimality of foreign borrowing section 7 investigates the prospects of the national economy for the next five years for this purpose this section highlights some of the target revisions made in 1983 for the remainder of the fifth five year economic and social deveiopment plan 1982 86 and the government s macroeconomic projections through 1988 comparisons are made with simulation exercises under a number of scenarios that generate projections for the economy until 1990 a summary and concluding remarks constitute the final section

negotiations in multi issue committees abstract we propose a non cooperative bargaining approach to the problem of collective decision making in committees by modelling this process as a sequential bargaining game the main objective of the paper is to discuss the formation of the agenda in multi issue committees and its relation to the importance of the issues we start by asserting that in the case of a single issue the set of all equilibrium outcomes of our game coincides with the set of coalitional stable outcomes we then consider multi issue committees to discuss the problem of forming agendas we argue that from the point of view of efficiency and stability the most important issues should be put first on the agenda we conclude with a sufficient condition on players preferences which guarantees the efficiency and stability of the bargaining outcomes for every possible agenda

perhaps the 1970s fomc did what it said it did briefing forecasts prepared for the federal open market committee fomc are used to estimate changes in the design of us monetary policy and in the implied policy target for inflation from 1970 through 1997 both estimated policy rate responses and fomc transcripts are consistent with intermediate targeting of monetary aggregates throughout the great inflation of the 1970s the unpublished fomc targets for m1 growth are tabulated empirical results support an effective inflation target of roughly 7 in the 1970s and 3 thereafter a notable difference in the 1970s monetary policies of the us and germany is the absence of explicit public objectives for us long run inflation

the incredible volcker disinflation abstract the reduction in inflation that occurred in the early 1980s when the federal reserve was headed by paul volcker is arguably the most widely discussed and visible macroeconomic event of the last 50 years of u s history inflation had been dramatically rising but under volcker the fed first contained and then reversed this process using a simple modern macroeconomic model we argue that the real effects of the volcker disinflation were mainly due to its imperfect credibility in our view the observed upward volatility and subsequent stubborn elevation of long term interest rates during the disinflation are key indicators of that imperfect credibility studying transcripts of the federal open market committee recently released to the public we find to our surprise that volcker and other fomc members likewise regarded the long term interest rates as indicative of inflation expectations and of the credibility of their disinflationary policy drawing from the transcripts and other contemporary sources we consider the interplay of monetary targets operating procedures and credibility during the volcker disinflation

term structure views of monetary policy under alternative models of agent expectations abstract term structure models and many descriptions of the transmission of monetary policy rest on the empirical relevance of the expectations hypothesis small differences in the perceived policy reaction function in var models of agent expectations strongly influence the relevance in the transmission mechanism of the expected short rate component of bond yields mean reverting or difference stationary characterizations of interest rates require large and volatile term premiums to match the observable term structure however short rate descriptions that capture shifting perceptions of long horizon inflation evident in survey data support a more substantial term structure role for short rate expectations

optimizing multi stage negotiations abstract we consider procedures where issues of varying importance and risk are negotiated in stages negotiation at any stage requires an agreement at each previous stage if negotiation terminates players realize the benefits from all earlier agreements we formalize this process by a strategic n stage negotiation game the expected subgame perfect equilibrium outcome is characterized by an intuitive compact formula which aggregates all the structural elements of the multi stage process we describe the optimal negotiation agenda for a given decomposition of the bargaining problem and we derive intuitive prescriptions for an optimal decomposition