the structure of unemployment we test for a unit root in postwar unemployment rates for sixteen oecd countries when a one time structural break is incorporated the unit root hypothesis can be rejected for most of the countries and the measured persistence of unemployment falls dramatically we then test for multiple structural changes and find evidence of one or two breaks for those countries for which the unit root hypothesis could be rejected almost all of the breaks are positive reflecting the sustained rise in european unemployment the major exception is the united states where long term unemployment rose in the 1970s and fell in the 1980s

the turning black tide energy prices and the canadian dollar the authors revisit the relationship between energy prices and the canadian dollar in the amano and van norden 1995 equation which shows a negative relationship such that higher real energy prices lead to a depreciation of the canadian dollar

capital quality improvement and the sources of economic growth in the euro area sources of growth europe s growth slowed in the 1990s reinforcing the overall impression of a need to catch up with the us regarding standards of living in reaction eu leaders adopted the famous lisbon agenda in 2000 the agenda is now under review the aim being to determine why progress on its pro growth goals has been unsatisfactory and what can be done about it the first crucial step in this process is to understand the true sources of the european growth slowdown sources of growth calculations have always been imprecise but evidence from the us suggests that quality upgrading especially in capital goods has substantially worsened the precision problem since the 1990s unfortunately quality adjusted sources of growth calculations however have not performed satisfactorily for europe so europe s leaders are working with potentially misleading accounts of europe s growth slowdown redressing this omission is the goal of this paper failure to account properly for capital quality improvements leads to two mistakes first overall gdp is underestimated our calculations for example show that euro area gdp growth was underestimated on average by 0 7 percentage points annually in the late 1990s however similar quality adjustment figures raise us growth figures in the same period by even more so quality adjusting suggests that the us eu growth gap was even more pronounced than previously believed secondly the sources of growth calculations used to prioritize europe s pro growth policies are skewed our calculations show that the contribution of the slowdown in disembodied technical progress to the overall slowdown is more pronounced after quality adjustment our findings point to the need for adoption of microeconomic measures aimed at enhancing overall efficiency and boosting innovation activity such measures would aim at a better business environment e g by easing regulatory and administrative burden and liberalizing energy and telecommunications markets plutarchos sakellaris and focco vijselaar

a note on the malmquist productivity index in recent years the malmquist index has gained in popularity as a measure of productivity change we demonstrate that in the presence of non constant returns to scale the malmquist productivity index does not accurately measure productivity change the bias is systematic and depends on the magnitude of scale economies

the structure of production technical change and productivity in a port the primary focus of this paper is the modelling and estimation of the structure of production technical change and total factor productivity tfp growth in a port special attention is given to the specification of technical change which is measured as the percent of containerization our findings indicate that technical change has been labour saving and capital using tfp has been growing from 1966 1983 at an annual average rate of 0 11 the main contribution to tfp growth has been containerization on the average 85 of the growth in tfp has been due to containerization and 15 of the growth has been due to economies of scale and output growth

sectoral shocks and aggregate fluctuations abstract this paper presents a multisector dynamic general equilibrium model of business cycles with a distinctive feature aggregate fluctuations are driven by independent sectoral shocks the model hypothesizes that trade among sectors provides a strong synchronization mechanism for these shocks due to the limited but locally intense interaction that is characteristic of such input trade flows limited interaction characterized by a sparse intermediate input use matrix reduces substitution possibilities among intermediate inputs which strengthens comovement in sectoral value added and leads to a postponement of the law of large numbers in the variance of aggregate value added the chief virtue of this model is that reliance on implausible aggregate shocks is not necessary to capture the qualitative features of macroeconomic fluctuations building on horvath 1998 review of economic dynamics 1 781 808 which establishes the theoretical foundation for the relevance of limited interaction in the context of a stylized multisector model this paper specifies a more general multisector model calibrated to the us 2 digit standard industrial code economy simulations prove the model is able to match empirical reality as closely as standard one sector business cycle models without relying on aggregate shocks

sectoral solow residuals this paper presents capital utilization corrected measures of technology shocks for aggregate and disaggregated two digit standard industrial classification code industries we correct for variations in capital utilization by employing industrial electrical use as a measure of capital services in contrast the standard measures of technology shocks used in the real business cycle literature are based on economy wide data and assume that capital services are proportional to the stock of measured capital to assess the impact of these differences we contrast selected properties of the competing technology shock measures we argue that the properties of technology shocks for the manufacturing sector are quite different than those used in the rbc literature we also find that correcting for capital utilization has important implications for the properties of the solow residual

growth accounting when technical change is embodied in capital this paper revisits the hypothesis that technical change is embodied in capital it extends old results to make them more relevant to the contemporary debates about the adjustment of investment goods for quality change and about the role of embodied technical change as a source of economic growth it is shown that the failure to adjust capital for quality change has the effect of suppressing the quality effects into the conventional total factor productivity residual and it is found that approximately 20 percent of the residual growth of quality adjusted output could be attributed to embodied technical change copyright 1992 by american economic association

not only nokia what finland tells us about new economy growth new economy growth is there a relation between information technologies and the growth rate of productivity is this relation mainly due to the efficiency enhancing effects of few leading industries or rather to the pervasive spreading of it throughout the economy our country study on finland in the 1990s is a contribution to shed light on these issues we find that nokia the world leader in cellular phone production directly and substantially contributed to enhance productivity growth in finland productivity growth gains outside nokia and few other it related service industries have been small temporary or non existent at all though we also provide two pieces of evidence against the existence of technological spillovers between nokia and the other fast growing industries in the finnish economy as shown by the finnish input output table the thinness of the inter industry linkages between the nokia industry and the rest of the economy indicates that productivity gains of the size recorded in the few other fast growing service industries can be associated to nokia s productivity boom only to a very small extent parallel statistical analysis also shows a striking association between the timing and the industry distribution of productivity gains and the declining pace of the price of machinery and equipment investment goods in those industries this is evidence that tfp growth increases in those industries should be mostly attributed to the decline in the world price of computing power altogether we interpret our findings as showing that even in a country endowed with a world class national champion and a policy environment commonly thought of as conducive to growth a new economy takes a long time to show up unlike commonly held tenets it diffusion has shown a limited potential in speeding up this process in finland francesco daveri and olmo silva

age seniority and labour costs lessons from the finnish it revolution the bad labour market performance of the workforce over 50 indicates that an aged workforce is often a burden for firms our paper seeks to investigate whether and why this is the case by providing evidence on the relation between age seniority and experience on the one hand and the main components of labour costs namely productivity and wages on the other for a sample of plants in three manufacturing industries forest industrial machinery and electronics in finland during the it revolution in the 1990s in average industries those not undergoing major technological shocks productivity and wages keep rising almost indefinitely with the accumulation of either seniority in the forest industry or experience in the industry producing industrial machinery in these industries the skill depreciation often associated with higher seniority beyond a certain threshold does not seemingly raise labour costs in electronics instead the seniority productivity profile shows a positive relation first and then becomes negative as one looks at plants with higher average seniority this body of evidence is consistent with the idea that fast technical change brings about accelerated skill depreciation of senior workers we cannot rule out however that our correlations are also simultaneously produced by worker movements across plants the seniority earnings profile in electronics is instead rather similar to that observed for the other industries a likely symptom of the prevailing finnish wage bargaining institutions which tend to make seniority one essential element of wage determination in the end seniority matters for labour costs not age as such but only in high tech industries not in the economy at large this is well tuned with previous research on gross flows of workers and jobs in the us and other oecd countries which unveiled the productivity driving role of resource reallocation or lack thereof between plants to improve the employability of the elderly at times of fast technical change public policy should thus divert resources away from preserving existing jobs and lend more attention to the retraining of old workers to ease their reallocation away from less productive plants or plants where they have become less productive into new jobs francesco daveri and mika maliranta

the new economy in europe 1992 2001 despite the fast catching up in ict diffusion experienced by most eu countries in the last few years information technologies have so far delivered little productivity gains in europe in the second half of the past decade growth contributions from ict capital rose in six eu countries only the uk denmark finland sweden ireland and greece quite unlike the united states this has not generally been associated to higher labour or total factor productivity growth rates the only exceptions being ireland and greece particularly worrisome the large countries in continental europe germany france italy and spain showed stagnating or mildly declining growth contributions from ict capital together with definite declines in tfp growth compared to the first half of the 1990s it looks like that the celebrated solow paradox on the lack of correlation between ict investment and productivity growth has fled the us to migrate to europe

capital accumulation and unemployment new insights on the nordic experience this paper takes a fresh look at the analysis of labour market dynamics and argues that capital accumulation plays a fundamental role in shaping unemployment movements this role has generally been examined by considering indirect transmission channels of the capital stock effects i e using variables like interest rates or investment ratios in the estimation of single equation unemployment rate models here we advocate a different approach we directly estimate the effects of capital stock in the labour market by applying the chain reaction theory of unemployment and we find that capital stock is a major determinant of unemployment in the nordic countries in particular the different unemployment experiences of these economies derive from the temporary albeit prolonged negative shocks to capital stock growth in denmark and sweden and the permanent downturn of capital stock growth in finland we are thus able to explain why the crisis of the early 1990s had a more acute impact in finland than in its twin economy sweden

breaking trends and the money output correlation this paper examines the impact on the money output correla tion of a univariate specification that allows time series to be characterized as stationary around a broken trend function though pretesting suggests that u s real output industrial production can be described as broken trend stationary this result has only limited impact on the money output correlation before 1985 there is a strong granger causal relationship between money and broken detrended output but not first differenced output even when different short term interest rates are used as regres sors however after 1985 this relationship weakens significantly whether or not one determines that output has a unit root

the new econometrics of structural change dating breaks in u s labor productivity we have seen the emergence of three major innovations in the econometrics of structural change in the past fifteen years 1 tests for a structural break of unknown timing 2 estimation of the timing of a structural break and 3 tests to distinguish unit roots from broken time trends these three innovations have dramatically altered the face of applied time series econometrics in this paper we review these three innovations and illustrate their application through an empirical assessment of u s labor productivity in the manufacturing durables sector

r d internationalization r d collaboration and public knowledge institutions in small economies evidence from finland and the netherlands this paper investigates domestic and foreign innovating firms determinants of r d collaboration with domestic universities and public knowledge institutes in finland and the netherlands we put particular emphasis on the impact of incoming academic spillovers on the probability to co operate with these public r d institutes based on data from community innovation surveys we find that foreign firms in the netherlands are less likely to co operate with domestic public knowledge institutions than domestic firms while in finland no significant difference can be detected another result is that incoming knowledge spillovers are an important determinant for r d collaboration with domestic public knowledge institutions in both countries in case of foreign firms in finland incoming knowledge spillovers affect the probability to co operate with public knowledge institutions more positively as compared with domestic firms for the netherlands no substantial difference could be found in this respect further innovating firms in finland that require academic or basic knowledge do not co operate significantly more with public knowledge institutions than those that need applied knowledge at the same time they are willing to share knowledge with public r d partners in the netherlands innovating firms that require relatively more basic than applied knowledge increase the probability of co operation with dutch universities and public knowledge institutions but there is reluctance to share proprietary knowledge with public r d partners for both countries no significant difference between foreign and domestic firms with regard to academic knowledge requirements could be found this raises the issue whether finnish innovation policies with a strong focus on r d co operation provide incentives for strategic behaviour by domestic public partners to put more emphasis on applied research

distinguished lecture on economics in government the new economy post mortem or second wind there was an acceleration of u s productivity after 1995 investment in information technology hardware and software contributed importantly to this but was not its sole cause in part heavy it investment perhaps overinvestment was the result of the booming economy and cheap capital besides it the expansion of productive firms boosted productivity together with the competitive pressure this put on other firms to innovate and improve productivity growth has been surprisingly strong in 2001 and the likely trend for the future is in the range of 2 2 to 2 7 percent a year the economy should get a second wind

efficiency gains from port reform and the potential for yardstick competition lessons from mexico abstract this paper shows how measures of relative efficiency performance could promote yardstick competition between port infrastructure operators the illustration is based on a study of the efficiency effects of the mexican 1993 port reform it covers 1996 99 and relies on a stochastic production frontier to show that mexico s ports achieved 2 8 3 3 average annual efficiency gains since reform the port specific measures point to consistent leaders and laggards which would not all be identified by common partial productivity indicators this information could be built into an explicit incentive based regulatory regime aiming at promoting catch up by laggards

the productivity and efficiency of the australian electricity supply industry australia s electricity supply industry has been through a period of reform over the last 10 years the purpose of this paper is to analyse the changes that have occurred to the australian electricity supply industry over the past 30 years in order to evaluate to what degree these reforms have improved the productivity and efficiency performance of the industry

estimating the trans log cost function with insufficient observations abstract if the production technology is non homothetic efficient estimation of the trans log approximation requires joint estimation of the cost and share equations in this note we adopt the method of extraneous estimation to obtain a method of efficient joint estimation when there are insufficient observations on the cost equation

factor hoarding and the propagation of business cycles shocks this paper analyzes the role of variable capital utilization rates in propagating shocks over the business cycle to this end we formulate and estimate an equilibrium business cycle model in which cyclical capital utilization rates are viewed as a form of factor hoarding we find that variable capital utilization rates substantially magnify and propagate the impact of shocks to agents environments the strength of these propagation effects is evident in the dynamic response functions of various economy wide aggregates to shocks in agents environments in the statistics that we construct to summarize the strength of the propagation mechanisms in the model and in the volatility of exogenous technology shocks needed to explain the observed variability in aggregate u s output other authors have argued that standard real business cycle rbc models fail to account for certain features of the data because they do not embody quantitatively important propagation mechanisms these features include the observed positive serial correlation in the growth rate of output the shape of the spectrum of the growth rate of real output and the correlation between the forecastable component of real output and various other economic aggregates allowing for variable capital utilization rates substantially improves the ability of the model to account for these features of the data

on the proper modelling of multioutput port cargo handling costs cargo handling activities involve various heterogeneous outputs e g general cargo containers dry and liquid bulk and so on these activities in ports however have been usually analysed using aggregate descriptions of output such as total tons moved the main purpose of this article is to show that ignoring this heterogeneity may lead to two types of problems i the underestimation of the relevance of key dimensions i e marginal costs per product and economies of scope and ii a bias in the estimates of the relevance of other dimensions economies of scale to do so we rely on a unique new dataset on three cargo handling firms operating in a spanish port between 1991 and 1999 we use it to estimate both a multi output cost for these three operators as well as an aggregate cost function the policy conclusions are derived from an explicit and detailed comparison of these two sets of estimates

microeconomic uncertainty and macroeconomic indeterminacy we propose a stylized intertemporal macroeconomic model wherein the combination of decentralized trading and microeconomic uncertainty taking the form of privately observed and uninsured idiosyncratic shocks creates an information problem between agents and generates indeterminacy of the macroeconomic equilibrium for a given value of the economic fundamentals the economy admits a continuum of equilibria that can be indexed by the sales expectations of firms at the time of investment the walrasian equilibrium is one of these possible equilibria but it is reached only if firms are optimistic enough with a weaker degree of optimism equilibrium output employment and real wages will be lower than in the walrasian equilibrium moreover the range of possible equilibria will depend positively on the wage elasticity of the labour supply and on the magnitude of the information problem between buyers and sellers in our case the variance of the idiosyncratic shocks stochastic simulations performed on a calibrated version of the model show that pure demand expectation shocks may generate business cycle statistics that are not inconsistent with the observed ones 2006 elsevier b v all rights reserved

sectoral phillips curves and the aggregate phillips curve sector level phillips curves are estimated in french data there is considerable heterogeneity across sectors with vastly different estimates of the backward looking component of inflation and the duration of nominal rigidities a multi sector model of inflation dynamics is calibrated on the basis of these sectoral estimates aggregate inflation simulated on the basis of heterogeneous sectors displays comparable dynamics to actual data a comparison is drawn between the policy trade offs implied by a phillips curve based on macroeconomic estimates vs one based on a model with heterogeneous sectors the difference is sizeable

how does the border affect productivity evidence from american and canadian manufacturing industries abstract this study reports on how much productivity fluctuations are industry specific versus country specific for the manufacturing industries in canada and the united states the correlation between cross border pairings of the same industry are found to be more often highly correlated than previously thought furthermore the study confirms earlier findings that the similarity of input use can help describe the comovement of productivity fluctuations across industries

specialization and diversification in agricultural transformation the case of west punjab 1903 92 in this article the role of crop specialization and diversification in agricultural transformation is investigated empirically changes in aggregate land productivity are associated structurally with inter crop and inter district reallocation of land use results from a region with the oldest history of agricultural commercialization in developing countries show that cropping patterns of subsistence agriculture changed substantially with rising concentration of crop acreage in districts with higher and growing productivity rapid specialization in crop production was observed at the district level recently after a phase with sporadic specialization these changes reflected comparative advantage and contributed to the improvement in aggregate land productivity

does the new economy measure up to the great inventions of the past abstract during the four years 1995 99 u s productivity growth experienced a strong revival and achieved growth rates exceeding that of the golden age of 1913 72 accordingly many observers have declared the new economy to be an industrial revolution even more important than the second industrial revolution of 1860 1900 which made the golden age of productivity growth possible this paper dissects the recent productivity revival subtracts out a cyclical component and concludes that there is no revival of the productivity growth trend in the 88 percent of the private economy lying outside of the durables manufacturing sector the paper explains this surprising finding by pointing to limitations in computers and the internet in comparison with the great inventions of the past

imperfect competition and indeterminacy of aggregate output abstract this paper shows imperfect competition can lead to indeterminacy in aggregate output in a standard dsge model with imperfect competition indeterminacy arises in the model from the composition of aggregate output in sharp contrast to the indeterminacy literature pioneered by benhabib and farmer j benhabib r farmer indeterminacy and increasing returns j econ theory 63 1 1994 19 41 and gali j gali monopolistic competition business cycles and the composition of aggregate demand j econ theory 63 1 1994 73 96 indeterminacy in our model is global hence it is more robust to structural parameters in addition sunspots in our model can be autocorrelated the paper provides a justification for exogenous variations in desired markups which play an important role as a source of cost push shocks in the monetary policy literature our model outperforms a standard rbc model driven by technology shocks in several dimensions including the volatility of labor market and the hump shaped output dynamics

a stochastic frontier model of the productive efficiency of korean container terminals a central objective of port privatization and or deregulation policies is stimulating greater efficiency by engendering a more competitive market and commercial approach to management korea provides a prime example of a nation that is implementing such policies also its ports play a pivotal role in world shipping particularly in the ever burgeoning container market the success of these policies in increasing the productive efficiency of korean container terminals is assessed the uk container terminal sector provides a useful benchmark for comparison since privatization and deregulation have formed an integral part of uk port reforms for nearly 20 years and the effect on efficiency having had time to mature will be much easier to gauge the stochastic frontier model is justified as the chosen methodology for estimating productive efficiency levels and is applied to cross sectional data under a variety of distributional assumptions a panel data model is also estimated results are consistent and su

monitoring structural change in dynamic econometric models the classical approach to testing for structural change employs retrospective tests using a historical data set of a given length here we consider a wide array of fluctuation type tests in a monitoring situation given a history period for which a regression relationship is known to be stable we test whether incoming data are consistent with the previously established relationship procedures based on estimates of the regression coefficients are extended in three directions we introduce a procedures based on ols residuals b rescaled statistics and c alternative asymptotic boundaries compared to the existing tests our extensions offer better power against certain alternatives improved size in finite samples for dynamic models and ease of computation respectively we apply our methods to two data sets german m1 money demand and u s labor productivity

productivity growth technical change and economies of scale of korean fossil fuel generation companies 2001 2012 a dual approach abstract this paper examines total factor productivity tfp growth technical change and economies of scale measure of korean fossil fuel power generation companies gencos between 2001 and 2012 for the empirical investigation we estimated the cost function along with specification tests in order to find the most appropriate empirical model empirical results show tfp deterioration technical regress and economies of scale for the study period the optimal size of the korean gencos was also found which is employed in developing policies regarding tfp growth and technical advance

a firm specific analysis of economies of density in the u s railroad industry an understanding of the nature of costs of production is important in every regulated industry both for policy makers and firms policy makers may be interested in whether there are economies of scale in production and in whether there are technological aspects of an industry that will pose difficult problems if an industry is regulated regulators and firms may be interested in costs for ratemaking purposes and in decisions about the effects of introducing new services or discontinuing existing services historically most cost studies in regulated industries have used data drawn from a cross section of firms or from a combination of cross section and time

the economic crisis of the 1990s in finland finland s depression a tale of bad luck and bad policies in the 1990s finland underwent a deep depression as its gdp dropped about 14 and unemployment rose from 3 to almost 20 this is a story of bad luck and bad policies bad luck took the form of external shocks the collapse of trade with the former soviet union in 1991 but also sharp cycles in the oecd area however bad luck is far from being the whole story in the absence of bad policies finland would have experienced a recession not a depression bad policies included a poorly designed financial regulation and mistaken reactions to the onset of the crisis of particular interest is the role of financial factors in triggering the crisis and aggravating the effects of bad policies not only were consumption and investment spending hurt by the credit crunch but there is evidence that the private sector s indebtedness has increased structural unemployment which explains why the recovery is proceeding with few job creations a number of general lessons emerge they concern the deregulation of financial markets the policy reaction to massive capital inflows and the role of employment policies seppo honkapohja and erkki koskela

long run growth uncertainty observed macroeconomic forecasts display a positive correlation between expectations of long run growth of endogenous variables e g output and cyclical activity existing business cycle models appear inconsistent with the evidence this paper presents a model of the business cycle in which households have imperfect knowledge of long run growth rate of endogenous variables and continually learn about these growth rates the model features comovement and mutual influence between households growth expectations and market outcomes it can replicate the evidence on growth forecasts and suggests that optimism and pessimism about long run growth rates is a crucial ingredient in understanding business cycle fluctuations

real business cycle models past present and future in this paper i review the contribution of real business cycles models to our understanding of economic fluctuations and discuss open issues in business cycle research this abstract was borrowed from another version of this item

dynamics of productivity change in the australian electricity industry assessing the impacts of electricity reform the australian electricity industry has undergone a significant reform since the mid 1990s key changes comprised functional unbundling market restructuring regulatory reform public corporatisation and privatisation technological development has been another indisputable constituent of these changes in the wake of ict revolution the principle rationale behind these changes has been that they would improve productivity of the industry and social well being of people this paper examines the dynamics of productivity changes in the australian electricity industry and conducts several hypotheses testings to identify whether industry s efficiency measures are truly improved as a result of the reform driven changes malmquist total factor productivity index approach and anova are used for this purpose the results reveal that the productivity gains in the industry have been largely driven by technological improvements and to a lesser extent by reform induced comparative efficiency gains on average at national level and for the entire industry there are efficiency gains that to large extents can be attributed to functional unbundling and public corporatisation and to a lesser extent to market restructuring and privatisation the results however reveal that the reform driven changes have made insignificant contribution to comparative efficiency at the level of thermal generation

on measuring natural resource scarcity conclusions concerning trends in natural resource scarcity may depend critically on the choice of scarcity index unfortunately the prevalence of vertical integration in natural resource industries has hindered the use of some otherwise desirable scarcity measures in this paper duality theory is used to derive an econometric procedure for estimating one such measure the shadow price of the resource in situ empirical results for the canadian metal mining industry indicate that resource scarcity as measured by this shadow price has decreased substantially over time

regulation capital vintage and technical change in the electric utility industry this paper presents estimates of the rate of technical change in the electric power industry over the period 1951 78 the estimated model directly incorporates the effects of rate of return regulation and uses both a time trend and a vintage index to represent disembodied and embodied technical change respectively the results indicate that disembodied technical change was the primary source of cost reduction during 1951 70 and that tighter regulation as represented by a one point reduction in the rate of return would have reduced the rate of technical change by an average of 1 2 during 1951 78 34 references 18 footnotes 3 tables

the relative efficiency of public and private firms in a regulated environment the case of u s electric utilities abstract the relative efficiency of privately owned and publicly owned electric utilities is investigated using theoretical and econometric models that allow for the effects of both ownership type and regulation the estimation results indicate that the two types of firms are equally cost inefficient in the united states the average effect of inefficiency is to increase the cost of production by 2 4 percent holding output constant inefficiency increases the average quantities demanded of capital and labor and decreases the average quantity demanded of fuel