self enforcing arrangements in african political economy abstract self enforcing arrangements are crucial to the study of african political econmy the weakness of formal governance in much of africa makes understanding informal institutions of cooperation particularly important i consider the application of self enforcing arrangements like those described by the ostroms to the problems of violence and social heterogeneity that plague africa

welfare reform and unemployment in new zealand in the early 1990s new zealand cut benefits and tightened eligibility criteria under its main social welfare programmes these benefit changes varied substantially across both time and demographic groups synthetic panel data are used econometrically to isolate the effects of these reforms on several dimensions of unemployment behaviour a simple theoretical model suggests that cutting benefits could either increase or decrease excess labour supply our results indicate that these reforms increased the official unemployment rate by nearly one quarter of a percentage point but significantly reduced broader measures of economic inactivity or the under utilization of labour in the new zealand economy

unions w ages and employment evidence from finland reduced form wage and employment equations derived from a bargaining model are estimated using the two step method proposed by engle and granger 1987 econometrica 55 251 276 wages and employment arinfluenced by varriables which determine profits on the one hand and the utility of the union on the other hand in addition bargaining power appears to matter union strength was discovered to have a positive effect on both wages and employment in the manufacturing industry the a positive effect on both wages and employment in the manufacturing industry the two step method made it possible to evaluate both the long run elasticities and shortrun adjustment step response functions indicate that adjustment is not particularly slow in general this papers to be true for wages but especially for employment hence if the actual real wage employment combination is considered inappropriate it is not primarily due to too slow adjustment rather it implies that the equilibrium is inappropriate

employment policies wage formation and trade union behavior in a small open economy a model of trade union determined wages is developed which provides an explanation of underemployment based on optimizing behavior it is shown that fiscal policy will in general affect employment under perfect foresight and immediate wage flexibility future consequences of short run stabilization policies are discussed ratchet effects with respect to government expenditure and game theoretic interdependence between government and trade union behavior are emphasized if the trade union takes short run policy measures in order to increase employment as an indication of an employment stabilization rule the future behavior of the trade union changes and the result may be a decrease in long run employment

the starfish effect can market entry by one firm encourage further entry by others abstract this paper examines the impact of entry decisions into oligopolistic markets upon the entry and exit decisions of rival producers when learning economies are important entry by one firm may paradoxically make entry more attractive to others by weakening the ability of a dominant incumbent to produce at low cost the likelihood of this outcome depends upon the extent to which variable costs of production decline as output increases and is enhanced by scope economies in the presence of multi market contact as well as by the degree of cost asymmetry between firms it is suggested that entry inducing entry may actually have occurred in part of the market for large civilian passenger aircraft whether or not this is so a more general conclusion is robust in industries where scale and scope effects are large the impact of entry is not just upon competition but on costs and these effects work in opposite directions to influence the entry decisions of other firms

the regional dimension of competitiveness in manufacturing productivity employment and wages in northern ireland and the united kingdom borooah v k and lee k c 1991 the regional dimension of competitiveness in manufacturing productivity employment and wages in northern ireland and the united kingdom reg studies 25 219 229 the regional dimension of competitiveness in manufacturing industry is examined by comparing the uk with one of its poorest regions northern ireland an overview is provided of total factor productivity and real wage developments in northern ireland and the uk over the last two decades these developments are then investigated econometrically through the estimation of labour demand and wage equations the paper identifies a number of factors which may have eroded the competitiveness and hence the employment prospects of the region relative to the uk as a whole over the period borooah v k et lee k c 1991 la competitivite de l industrie manufacturiere sous un optique regional productivite emploi et salaires en irlande du nord et au royaume uni reg studies 25 219 229 on examine les aspects region

policy rivalry among industrial states what can we learn from models of strategic trade policy the economic theory of international trade has changed dramatically over the last decade by admitting into its mainstream a body of literature that focuses on the implications of monopolistic and oligopolistic elements in international markets by applying the tools of the new industrial organization in an international context two new classes of models have emerged models of intra industry trade and models of strategic trade policy the policy implications of models of strategic trade policy were quite disturbing for the economics profession since these models demonstrated that the classical harmony between national and cosmopolitan welfare maximization does not exist if one assumes opportunities for strategic manipulation of oligopolistic international industries this article reviews two prominent models of strategic trade policy the brander spencer model and the krugman model and relates them to more familiar earlier concepts such as stackelberg s asymmetrical duopoly solution and the venerable infant industry argument for government intervention the primary purpose of this article however is to provide a synopsis of the large literature addressing the question of whether models of strategic trade policy can give guidance for government policy

miners wages in post war britain an application of a model of trade union behavior the paper studies the determination of wages in the british coal industry a utility maximising model of a trade union is used to represent the behaviour of the national union of mineworkers a non linear structural model is derived and is estimated by full information maximum likelihood the results are quite encouraging there is support for a neo classical demand curve for miners labour and a significant estimate of workers relative risk aversion

endogenous market structures in international trade natura facit saltum abstract almost all of the large literature on international trade with imperfect competition assumes exogenous market structures the purpose of this paper is to develop a simple model that generates alternative market structures as nash equilibria for different parameterizations of the basic model equilibrium market structure is a function of the underlying technology familiar configurations such as a duopoly competing in exports or a single multinational producing in both markets arise as special cases small tax policy changes can produce large welfare effects as the equilibrium market structure shifts implying discontinuous jumps in prices quantities and profits

the tradeoff between wages and employment in trade union objectives this paper demonstrates that contrary to a widely held opinion the determination of the goals of unions is fully amenable to empirical analysis a characterization of the wage and employment setting process in unionized markets is adopted and its qualitative implications examined the first order condition for this model is fitted to time series data on the newspaper industry from ten cities the international typographical union s objective function reveals very restricted opportunities for substituting wages for employment in response to a change in the slope of the employer s labor demand function larger union locals place greater emphasis on wages versus employment than smaller union locals

outsiders at the bank of england s mpc the monetary policy committee mpc of the bank of england which was established in may 1997 consists of five internal and four external members we study the voting record and show that insiders dissent rarely and typically for higher rather than lower rates whereas outsiders dissent more often prefer lower rates and disagree with the majority when economic growth slows moreover their dissents forecast future interest rate changes we show that a model in which outsiders dislike output below potential more than output above replicates the observed voting pattern well

wages and employment under trade unionism microeconomic models and macroeconomic applications the first part of this paper is a critical survey of microeconomic research into behavioural models of trade unionism although certain formulations of union objectives and models of wage and employment determination in unionized markets have found favor with economists unfortunately only a little is known about their empirical relevance the second part of this paper deals with the daunting problems of applying these models at the macroeconomic level one such model is estimated with data from sweden s mining and manufacturing sector from 1968 to 1982

persistent protection in an international exit game abstract this paper examines the strategic behavior of two countries in a duopoly exit game with declining demand in the export market we consider whether countries have a strategic rational to maintain rather than unilaterally or jointly reduce their subsidies conditions under which persistent subsidization is justified from a national perspective are derived by maintaining subsidies one country can gain a strategic advantage by forcing its rival to exit earlier an outcome where only one country applies the subsidy is not attainable free trade is less likely to occur close to the end of the game

targeted export promotion with several oligopolistic industries abstract we study export promotion policies in situations where several oligopolistic industries compete for the services of a sector specific factor of production the partial equilibrium argument for strategic subsidies must be modified to incorporate general equilibrium effects working through the factor market we find that these effects generally weaken the case for profit shifting subsidies in a benchmark case with symmetric exporting industries fixed coefficients technologies and an inelastic supply of the specific factor free trade is shown to be optimal

regulation in the european community all governments regulate economic activity in their own countries the single european market will involve a significant transfer of regulatory activity from member states to the european community as well as the initiation of regulatory activity in certain areas that have not previously been subject to regulation at all including the activities of member states themselves as in taxation or the provision of subsidies to industry why should governments wish to make such a transfer of powers what do they have to gain

trade union objectives and the cyclical variability of wages and employment the purpose of this paper is to investigate whether a simple monopoly union model of wage and employment determination is consistent with the cyclical movements of wages and employment observed in the finnish manufacturing and mining sector estimation of the two equation model implies that considerably less weight is placed on the variability of employment relative to that of wages in the union s objective function the findings are consistent with the observed cyclical inflexibility of real wages relative to employment however because the data fail to accept certain parameter restrictions embodied in the different model specifications the study raises doubts about the adequacy of the simple monopoly union model to explain the data generation process copyright 1990 by the editors of the scandinavian journal of economics

pay and employment determination in britain what are labour contracts really like the recent growth of unemployment in western economies has prompted new research on the workings of the labour market there has been much interest in particular in the questions what determines the level of real pay and why is it apparently so insensitive to changes in aggregate demand and unemployment european economists now find it hard to take seriously the notion still taught to many undergraduate that wages are determined by the intersection of demand and supply curves roughly half of all british employees belong to trade unions a much higher percentage have their pay fixed by some kind of collective bargain in this country it is negotiations not impersonal com petitive markets which decide what most of us will be paid the difficult problem is that of how to understand this process or to put it differently of how to think up the right model of the world

the effects of incomes policies on the frequency and size of wage changes theoretical models accounting for variations in the rate of wage or price inflation rarely take explicit account of the costs of altering money wages or prices and yet these models are often evaluated in terms of their correspondence with data that presumably reflect the existence of such costs at least until the more inflationary experiences of the 1970s the normal situation in british and american manufacturing industry was for wage rates to be adjusted no more frequently than once a year even when there were indications of substantial inflationary pressures the recognition of this point has induced economists to incorporate in some fashion the varying time pattern of wage settlements into their fitted models of wage inflation but all have taken this pattern as exogenously determined 2 by contrast this paper considers the determinants of the probability of a new wage settlement in addition to the determinants of the size of the wage change conditional upon a new settlement taking place this distinction between the occurrence of an event and the extent of the occurrence has been investigated in the literature on the demand for durable goods e g cragg 1971 on labour force participation and hours of work e g heckman 1974 and on the choice of transport modes e g domencich and mcfadden 1975 but with few exceptions it has been neglected in empirical work on wage inflation 3 yet the distinction is an important one with immediate relevance to the evaluation of the effects of incomes policies on the course of wage inflation the typical procedure in this literature is to regress some aggregate index of wage changes on dummy variables that indicate the presence or absence of incomes policies but this procedure does not make full use of information about the form of these incomes policies that is incomes policies have sometimes taken the form of specifying a permissible ceiling on wage increases in which case they are designed to affect the extent of occurrence of the event but not the occurrence of the event on other occasions incomes policies have operated by postponing the implementation of new wage settlements in which case they are directed towards the occurrence of the event one purpose of this paper is to re evaluate the effectiveness of incomes policies by making use of information both on the frequency of wage settlements and on the size of wage changes when a settlement takes place

trades unions seniority and unemployment the paper offers a general equilibrium model of an economy containing powerful trades unions which set the wage levels to which competitive firms adjust which have some perception of the bearing of their policies on the economy as a whole and within which seniority and majority rule prevail it is shown that increases in the dole or in the size of the workforce increase the level of employment and depress the net wage and that technical improvements have the opposite effect several externalities are identified these make possible less conventional outcomes for instance an increase in the dole sometimes may be unambiguously welfare improving

work sharing employment and wages the paper analyzes the effects of a reduction in working time on wages and employment with a monopoly union in general it is not clear in which directions these variables move but if employment and working time are perfect substitutes the effects are related to how working time has been determined initially the wage increases if initial working time is smaller than or equal to the trade union optimum whereas the result is unclear when it is larger in this case it is never optimal for a trade union to reduce both the wage and working time in response to a recessionary supply shock the analysis may help to explain varying attitudes towards work sharing in different countries

classical unemployment accommodation policies and the adjustment of real wages a model of wage formation and stabilization policy in economies with strong trade unions is developed the analysis provides a theoretical underpinning for the assertion that accommodation policies may cause wage inflation and ultimately reduce employment various methods of accomplishing a real wage adjustment are discussed i a policy of complete nonaccommodation 2 continued accommodation policies but with lower employment targets 3 social contracts and 4 tax based incomes policies tip

a wage structure theory of inflation industrial conflicts and trade unions the wage structure theory in this paper has three levels i the micro level considers the relative wage income r between two groups one r termed r is a conflict equilibrium which also gives the minimum number of conflicts the deviation of r from r is the labormarket tension ii these concepts are shown to generalize to the macro level leading to a macro conflict relation and a conflict augmented phillips curve iii institutions are introduced into the theory and it is shown how a central trade union reduces the number of conflicts by internalizing parts of the wage structure

optimal policies and marketing board objectives abstract in this paper we examine optimal tax subsidy policies with export marketing boards that compete as oligopolists in world markets by taking a targeting approach to identifying optimal policies we are able to show how optimal policies vary with the objectives of board the nature of competition in world markets as well as assumptions about market segmentation and regulation in none of the cases examined does a marketing board without tax subsidy policy replicate the social optimum moreover we show that the policies necessary to attain the social optimum are quite different with the institutional variation considered arbitrage and regulation is the only case considered in which the optimal export policy is definitely a tax and in which the marketing board s objective does not affect policy

signalling with many signals this paper examines a market with asymmetric information where there are many signals available and where both the costs of signaling and the product value may depend on many privately known characteristics under a weak condition on the relationship between the marginal cost of increasing the signals and the product value a separating set exists whereby the value of every seller s product is inferred from the seller s optimal choice of signals the separating set constructed is pareto dominant and corresponds to recently proposed equilibrium notions in signaling and screening models copyright 1987 by the econometric society

the direction of wage spillovers in manufacturing this study develops a model of wage behavior for both union and nonunion workers in the u s manufacturing sector and tests that model with separate union and nonunion wage change series covering the period 1960 to 1978 the empirical results support the traditional view that union wage behavior influences or spills over into nonunion wage changes but not vice versa these results are of particular interest because they contrast sharply with an earlier study by flanagan that reported an opposite spillover effect flanagan s results are shown to be quite sensitive to the choice of model specification and data period

export subsidies as an outcome of the management labor conspiracy a mercantilistic trade policy is often introduced as a tool to generate more jobs in some key industries when employment in an export import industry is perceived to be low the government would be tempted to adopt measures of export promotion import protection to increase it by effectively guaranteeing employment however these policies would reduce incentives for the private sector to reach efficient labor contracts for example the labor union might refuse to sign a profit sharing contract with management and unilaterally demand high wages believing that the resulting loss in competitiveness would not affect the well being of its members since the government would protect the industry it is also conceivable that management and the labor union conspire to reach inefficient contracts so as to invite government intervention in certain cases trade policies only transfer income without any allocative effect this is not merely a theoretical curiosum free trade advocates have often pointed out that protectionist policies would have deleterious effects on the pattern of collective bargaining in the trade sensitive sectors this paper constructs simple models to illustrate this point for export subsidies and so it can be viewed as an addition to the literature that aims to bring attention to the pitfalls of the new mercantilism such as eaton and grossman 1986 dixit and grossman 1986 and horstman and markusen 1986 unlike these studies however the government policies considered here are reactive in the sense that the private sector moves first anticipating the government s response dixit and kyle 1985 carmichael

how pollution taxes may increase pollution and reduce net revenues this paper develops a positive theory of pollution taxation by a federal authority when pollution abatement subsidies are used by local governments environmental and industry lobby groups influence governments with campaign contributions first pollution may increase in the pollution tax because the abatement subsidy increases decreases with the tax and pollution increases decreases in the abatement subsidy this occurs because the lobbying incentives change at a pollution tax reform second pollution taxes may reduce net revenues because subsidy expenditures rise third pollution may increase simultaneously as net revenues fall finally the welfare effect of a pollution tax may be negative

government intervention in production and incentives theory a review of recent contributions national science foundation the commissariat general du plan and the center for energy policy research at m i t

public provision of sales contingent claims backed finance to smes a policy alternative abstract in europe and elsewhere governments intervene to stimulate innovation in the sme sector and because smes face financial constraints in particular governments encourage the provision of debt and equity venture capital finance to such firms this paper discusses sales contingent claim scc backed finance funding secured only on a claim written on sales that offers a different repayment profile to debt and equity the attractiveness of such finance to firms as well as the behaviour of firms financed in this way are analysed for various reasons scc backed financial instruments are generally not available to smes on the market but it is argued that wider availability could further stimulate the growth and innovative activity of smes the correction of this market incompleteness by the introduction of government schemes providing scc backed corporate finance for smes in higher risk higher tech sectors is recommended the workability of such a scheme is explored by looking at existing examples aimed largely at project finance for larger firms

dumping and dynamic competition abstract when the current output level affects future production costs domestic and foreign profit maximizing firms may set prices below current costs to gain experience antidumping enforcement which poses a barrier to below cost sales by foreign rivals changes the payoff structure of competition and alters the equilibrium decisions of both foreign and domestic firms a comparison of the nash equilibria with and without antidumping rules shows that these rules change market outcomes even when they do not appear to be binding ex post this positive analysis of antidumping enforcement complements previous studies that have considered the motivation for dumping

unemployment insurance and union wage setting the authors examine alternative systems of financing unemployment insurance benefits in an economy with wage sett ing unions where as in some nordic countries each union runs its o wn unemployment insurance system it is shown that a higher lump sum grant to the union s unemployment insurance fund increases employment whereas higher marginal subsidies have ambiguous effects an unempl oyment insurance tax on wages has no effect on employment whereas an unemployment insurance tax on profits unambiguously increases employ ment the authors also analyze a case where wages are set at the firm level and premiums at the industry level copyright 1988 by the editors of the scandinavian journal of economics

real and nominal propagation of nominal shocks the role of real and nominal propagation mechanisms in generating persistent real effects of nominal shocks is analysed analytically in a fully specified intertemporal general equilibrium model while neither a real propagation mechanism capital acccumulation with one period nominal contracts nor nominal propagation staggered nominal contracts in the absence of any real propagation can generate plausible impulse responses with strong persistence it is shown that the two mechanisms interact so as to strengthen persistence possibly unit roots and generate more plausible impulse responses

a dynamic model of trade union behaviour this paper constructs a dynamic model of trade union behavior in which union membership is endogenous unemployed workers are assumed to leave their union as they seem to in reality and the union must therefore solve an intertemporal optim ization problem the results imply that conventional static models ov erstate the distortions caused by monopoly unionism and that the rece nt empirical mod els of union behavior may be misspecified the paper s analysis can be seen as an attempt to construct a model of the pos t entry closed shop copyright 1987 by the review of economic studies limited

work rules featherbedding and pareto optimal union management bargaining this article examines a model of semiefficient bargaining in which the union and the firm bargain over wages and various types of work rules the results are compared to the outcomes that are associated with fully efficient bargaining i e over wages and the level of employment and bargaining solely over wages

is the mpc s voting record informative about future uk monetary policy it is shown that the voting record of the monetary policy committee of the bank of england helps predict future policy rate changes this result is robust to the inclusion of market participants expectations as measured by the slope of the term structure of money market rates and interest rate futures moreover expectations seem to adjust to the information contained in the voting record which suggests that publishing the minutes of mpc meetings increases the transparency of monetary policy

cross country evidence on labor market institutions and young adult employment through the financial crisis i develop and analyze a set of cross country facts regarding employment and wage setting institutions over the decade surrounding the 2008 financial crisis among long industrialized countries young adult employment declined more than prime age employment over this time period i show that differences in countries wage setting institutions strongly predict variations in the magnitude of declines in young adult employment both unconditionally and conditional on changes in macroeconomic conditions young adult employment declined 5 percentage points less in countries where wage setting is driven by collective bargaining arrangements than in countries with statutory wage floors evidence on the evolution of legislated minimum wage rates and of an asymmetry in the relationship between growth and young adult employment suggest an important role for a standard wage rigidity mechanism

optimal policies with strategic distortions abstract this paper analyzes the jointly optimal levels of a variety of policy instruments when markets are imperfectly competitive a targeting principle to identify optimal policies under imperfect competition is derived using the concept of a strategic distortion this allows us to interpret when trade policy is first best and links the literature on optimal policies with imperfect competition to the standard targeting literature we show that optimal tax subsidy policy depends crucially on the presence of other regulations and assumptions about market segmentation

walras keynes equilibria coordination and macroeconomics in decentralised market economies supply constrained equilibria may persist as coordination failures sustained but not caused by price rigidities this feature may be arbitrarily severe even at prices compatible with competitive equilibrium the supply constraints may originate in rational expectations some implications for macroeconomics are drawn the possibility of coordination failures explains why organised labour may resist wage flexibility these features are illustrated in elementary macroeconomic prototypes like rbc or barro grossman malinvaud prototypes

central bank communication and monetary policy a survey of theory and evidence over the last two decades communication has become an increasingly important aspect of monetary policy these real world developments have spawned a huge new scholarly literature on central bank communication mostly empirical and almost all of it written in this decade we survey this ever growing literature the evidence suggests that communication can be an important and powerful part of the central bank s toolkit since it has the ability to move financial markets to enhance the predictability of monetary policy decisions and potentially to help achieve central banks macroeconomic objectives however the large variation in communication strategies across central banks suggests that a consensus has yet to emerge on what constitutes an optimal communication strategy

communication by central bank committee members different strategies same effectiveness the paper assesses the communication strategies of the federal reserve the bank of england and the european central bank and their effectiveness we find that the effectiveness of communication is not independent from the decision making process the paper shows that the federal reserve has been pursuing a highly individualistic communication strategy amid a collegial approach to decision making while the bank of england is using a collegial communication strategy and highly individualistic decision making the european central bank ecb has chosen a collegial approach both in its communication and in its decision making assessing these strategies we find that predictability of policy decisions and the responsiveness of financial markets to communication are equally good for the federal reserve and the ecb this suggests that there may not be a single best approach to designing a central bank communication strategy

union behavior industry rents and optimal policies abstract this paper examines the welfare gains from strategic industrial policy in the u s steel industry focusing on the role of capacity utilization and the potential gains from capturing labor rents with underutilized capacity strategic policies to capture labor rents lead to an endogenous response that diminishes their importance on the other hand reducing domestic labor market distortions results in welfare gains nearly as large as those from the optimal subsidy this suggests that the focus on labor rents as the subject of industrial policy is overstated at least in manufacturing industries such as integrated steel

insiders and outsiders in wage determination a firm starts with a group of insiders or seasoned workers there is also a large pool of outsiders who are initially less productive but are transformed into insiders after one period of employment the firm gains from having a large pool of insiders some of whom may be laid off in bad years insiders gain from keeping their numbers small if the insiders set their wage unilaterally they will choose a path that in this extreme case prevents employment of outsiders even if future employment prospects are good if the wage path is set by bilateral bargaining the extra advantage to the firm permits employment of some outsiders in some situations

unemployment and the labour management conspiracy we study a model in which management and a union bargain sequentially first choosing a rule that will later determine the level of employment and then choosing a wage the government then chooses an output or an employment subsidy an exogenous natural turnover rate in the unionized sector creates unemployment whenever the union wage exceeds the competitive wage government intervention can increase both the equilibrium amount of unemployment and worsen the intersectoral allocation of labour because of the induced change in the endogenous wage unemployment weakens but does not eliminate the possibility of a labour management conspiracy

labor union objectives and collective bargaining we consider a model oflabor union behavior in which workers make decisions about wages and employment by simple majority rule we show that under general conditions such a union has a well behaved objective function different from those previously postulated in the literature we then show that the union s majority preferences generally lack a von neumann morgenstern utility representation and thus cannot be inserted into traditional bargaining models we then develop and characterize the solutions to a new bargaining model that is consistent with the structure of union preferences several comparative statics results are presented

up the average cost curve inefficient entry and the new protectionism abstract a two country model is developed in which each country produces one good with increasing returns the goods being perfect or imperfect substitutes with cournot nash behavior and free entry certain restrictive trade policies have effects opposite to their favorable effect under noentry assumptions import tariffs and export subsidies lead to inefficient entry that raises rather than decreases the average production cost of and price charge by the domestic industry with negative welfare consequences we argue that these predictions of our model are closely consistent with extensive canadian data on entry exit and firms responses to trade liberalization

trade policy to promote entry with scale economies product variety and export potential with scale economies product variety and export potential production of socially desirable varieties of a product may be privately unprofitable if competition from imported varieties of the same general product is in part responsible for this market failure either tariffs or subsidies may be used to promote domestic entry this paper demonstrates that in domestic welfare terms tariffs may be superior to subsidies for this purpose furthermore because domestic firns will export as well as produce for the domestic market tariff protection which induces entry may give rise to intra industry trade that benefits foreigners and domestic residents la politique commerciale pour promouvoir 1 entree de producteurs domestiques dans les cas ou coexistent des e conomies d e chelle une varie te de produits et des possibilites d exporta tion quand coexistent les economies d echelle la variet6 de produits et les possibilit6s d exportation l auteur montre qu il peut etre non profitable au niveau prive de produire une variett de produits socialement d6sirables si c est la concurrence de vari6t6s import6es d un produit gdneral qui est responsable de cette defaillance du march6 on peut utiliser soit les droits de douane soit les subsides pour promouvoir l entr6e de producteurs domestiques ce memoire demontre que l utilisation des droits de douane est une solution pref6rable en termes de bien etre domestique de plus comme les entreprises domestiques vont exporter en plus de produire pour le march6 domestique la protection douaniere qui suscite l entr6e peut aussi donner lieu a du commerce intra industrie qui a des retombees ben6fiques pour les etrangers et pour les residents de l economie domestique

trade unions and optimal labour contracts the recently revived literature on wage and employment determination under trade unionism has in our opinion contributed important insights into the functioning of especially european labour markets it suffers however from a potentially serious deficiency with a few exceptions it neglects completely the issue of risk shifting between workers and employers 3 in particular it disregards entirely the possibility of such risk shifting in economies characterized by more or less encompassing trade unions and centralized wage setting as e g the scandinavian countries the netherlands and austria a typical feature of trade unions in these countries is that they are not only concerned with wage setting but strive in various ways to increase their member s welfare at the expense of the employers by reducing their members exposure to risk for instance unions demand limits to the employers right to require overtime or co lay off workers or they demand occupational safety rules work injury insurance health insurance etc an actual employment contract hence not only entitles the worker to a certain wage and the employer to a certain number of working ho urs in return but is really a package of rights and responsibilities for both parties increases in the amount of insurance such a package provides are sometimes explicitly declared to be obtained through foregone wage increases while risk shifting hence is of prime importance to real world unions the formal trade union literature is almost entirely concerned with wage and employment setting under certainty

the determination of wages employment and work hours in an economy with centralised wage setting sweden 1950 83 a key component of recent explanations for the growth in unemployme nt in western europe is a negative relation between wage rates and employment this paper examines the evidence for such a relationship for swedish manufacturing industry and also investigates the corresponding movements of hours of work the findings form the ingredients of a structural model of the labor market which is estimated using time series observations from 1951 t o 1983 the greater volatility of employment relative to earnings is measured by a specific parameter which in this model relates to the objectives of trade unions copyright 1988 by royal economic society

payroll taxes and wage inflation the swedish experiences payroll taxes levied on employers have become an increasingly important part of the swedish tax system these taxes including various collective fees agreed on in central wage negotiations amounted to about 6 of the wage bill of private business in 1950 but had reached 40 in the late 1970s payroll tax increases have been quite dramatic during the last decade with tax rates climbing from 14 to 40 attempts to estimate the extent to which payroll tax increases have been directly shifted back onto labor as lower wages are reported in this paper the basic message of the empirical analysis is that payroll tax increases have produced some backward shifting on wages although the shifting appears to be far from complete a onepercent statutory wage cost increase is associated with an actual wage cost increase of about one half of a percent

the control of export credit subsidies and its welfare consequences a two stage bertrand duopoly model demonstrates how the sequence of firm and government actions can explain the origins of export credit subsidies and can affect the welfare consequences of international agreements to adopt subsidy rate ceilings firms act first by stating prices in applications for export credit and can induce positive subsidies by inflating the prices the subsidies transfer rents from governments to firms without changing welfare defined as profits less subsidy expenditures governments become the first to act by adopting subsidy rate ceilings that bind ceilings cause firms to lower prices such that if a positive ceiling binds welfare falls

anti dumping and countervailing duties under oligopoly abstract this paper constructs a conjectural variations model of international oligopoly in which the home country s optimal policy responses to the foreign government s subsidies and foreign firms dumping can be calculated some theoretical support is found for tariffs that countervail part of the foreign export subsidy the optimal fraction depends on the size of own and cross effects in demand and on the extent of market competition however no normative case is found for anti dumping duties

on the design of incentive schemes under moral hazard and adverse selection abstract this paper characterizes a class of optimal incentive schemes in a simple principal agent model which allows for moral hazard and adverse selection we show that incentive compatible allocation can always be approximately implemented through a menu of quadratic incentive schemes it is also proved that the set of incentive compatible allocations is independent of the distribution of the additive uncertainty which affects the outcome informational requirements and economic interpretation of quadratic and linear schemes are discussed

a complete solution to a class of principal agent problems with an application to the control of a self managed firm this paper considers a class of principal agent problems which have the following features 1 there is adverse selection because the principal ignores the value of one parameter of the agent s true characteristics 2 leaving aside the information parameter the principal s welfare as well as the agent s welfare depend on two types of variables observable to both of them the first ones possibly multidimensional are called action variable s and the second one which is one dimensional has in general the meaning of a money transfer 3 the principal is a stackelberg leader of the two person game he can commit himself to decision rules which are admissible on informational grounds he optimizes within the adequate class taking into account besides the agent s reaction one constraint which has generally the meaning of an individual rationality constraint and sometimes of a feasibility constraint the optimization is limited to the class of non stochastic mechanisms 4 the problem can also receive an alternative interpretation the principal faces a continuum of agents of unknown characteristics the distribution being known however stylized principal agent problems of this type have often been considered in the economic literature in particular the reader will later be able to recognize that the standard income tax model a la mirrlees 1971 the quality or quantity choice model of the monopolist a la mussa and rosen 1978 or maskin and riley 1982 and the model of government regulation of the private monopolist of baron and myerson 1982 all belong to

the market for news we investigate the market for news under two assumptions that readers hold beliefs which they like to see confirmed and that newspapers can slant stories toward these beliefs we show that on the topics where readers share common beliefs one should not expect accuracy even from competitive media competition results in lower prices but common slanting toward reader biases on topics where reader beliefs diverge such as politically divisive issues however newspapers segment the market and slant toward extreme positions yet in the aggregate a reader with access to all news sources could get an unbiased perspective generally speaking reader heterogeneity is more important for accuracy in media than competition per se

mass migration unions and government intervention the widening gap between the dismal economic situation in the less developed economies and the economic prospects of migrants to western economies has generated a potential for mass migration at the same time the developed economies have experienced high and persistent unemployment among their unskilled workers who would have to compete with new immigrants we use a model that distinguishes labor markets by skill and concentrate on the imperfectly competitive mechanism of wage determination in the unskilled labor market to demonstrate that additional immigration might be beneficial precisely because of potential replacement effects if the wages of skilled workers are positively affected by additional unskilled labor this may lead to higher employment and output our results thus qualify standard economic reasoning based on competitive models or on the literature on rural urban migration in developing countries

strategic tariffs and endogenous market structures trade and industrial policies under imperfect competition abstract this paper examines strategic tariff policy tariff induced entry and endogenous market structures in a developing country setting it improves on recent theoretical treatments of optimal trade policy under imperfect competition by allowing for forward looking import substituting investment induced by an anticipated time consistent tariff policy it shows that the optimum tariff is robust across a subset of market structures and cost and demand specifications however it will usually involve insufficient or excessive entry by domestic firms and consequently industrial policy of various kinds is a necessary supplement to strategic tariff policy

federal reserve communications and newswire coverage in this article we explore the determinants of newswire coverage of federal reserve fed communications our sample covers all 344 forward looking communications made in the period may 1999 to may 2004 we find first that there is a higher likelihood of newswire coverage for monetary policy reports and speeches by chairman greenspan than for testimony and speeches by other fed members furthermore communications with an explicit monetary policy inclination or tone different from the current interest rate path are particularly likely to be covered however the release of important macroeconomic news reduces the likelihood of newswire coverage second speeches by regional fed presidents are relatively less likely to be reported than speeches by board members nevertheless newswire coverage of fed president speeches is more likely if central bank communication is stale finally our results indicate that ben bernanke played a distinguished role even before his chairmanship

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

conceptual issues in the design of trade policy for industrialization abstract this paper considers the following question starting from first principles what kind of a case can be made for an industry oriented trade policy and what would such a policy look like the answer lies in an explicit consideration of specific market failures and externalities which in the absence of corrective policies may leave industry in command of a socially suboptimal share of the economy s resources the paper considers such market failures and the role that trade policy can play in addressing them special attention is paid to a the appropriate level of protection b price versus nonprice measures c the role of targeting selectivity and uniformity d the stability of incentives over time and e the qualitative aspects of trade regimes

foreign and domestic multinational presence in the uk the determinants of multinational presence in uk manufacturing industry in 1979 are analysed it is argued that maultinational presence may result from strategic interaction as well as other firm and industry characteristics the determinants of both foreign and uk multinational presence are estimated using a dataset that enables both types of multinational to be indentified results show an important effect of both scale and concentration on multinational presence

union wages temporary lay offs and seniority it is widely believed that the seniority system in conjunction with the collective bargaining process contributes significantly to the determination of the unemployment level in unionized sectors causa i empiricism suggests that real wage demands often remain buoyant in these sectors in the face of seemingly high rates of unemployment among union members james medoff 1979 p 380 convincingly documents the evidence that adjustment through lay offs is substantially greater in unionized firms than in comparable non unionized firms the usual but somewhat informal explanation is that the outcome of union voting is greatly influenced by senior workers who are fairly certain that they will not be laid off when normal shifts in the industry s demand for labour occur 2 these inframarginal workers are believed to vote for higher wage settlements than they would if their own jobs were not so secure

monetary policy in the media just like private companies depend crucially on their ability to reach customers policymakers must communicate with private agents to be successful and much of this communication is channeled through the media this is especially true for central banks which need to build credibility among the general public this paper analyses how favorably the print media report about the european central bank s ecb monetary policy decisions favorableness is inter alia influenced by the amount of information communicated by the ecb there are however also indications of a critical monitoring role of the media which reports more negatively when inflation exceeds the inflation target

trade and capital account liberalization in a keynesian economy this paper analyzes the process of trade and capital account liberalization in a keynesian framework with unemployed resources previous studies on this subject have ignored the potential interactions between the liberalization process and the pre existing distortions in the economy this paper derives the optimal liberalization policy given the keynesian context and solves for explicit formulas for the import tariffs and the capital account tax in a two period general equilibrium model it is argued that a trade reform is likely to have recessionary effects in the short run if the capital account has already been liberalized

rational choice round robin and rebellion an institutional solution to the problems of revolution abstract two collective action problems plague successful revolution on the one hand would be revolutionaries confront a participation problem whereby no rationally self interested individual has an incentive to participate in rebellion on the other hand individuals face a first mover problem whereby no rationally self interested individual has an incentive to lead rebellion this paper argues that 18th century merchant sailors who confronted these problems devised a novel institution to facilitate maritime revolution and assist them in overthrowing abusive captains this institution was called a round robin round robins helped overcome both the participation and first mover problems by aligning the interests of individual sailors desiring mutiny and restructuring the payoffs of leading versus following maritime rebellion

purdah on the rationale for central bank silence around policy meetings many central banks share the practice of purdah a guideline of abstaining from communication around policy meetings although seemingly contradicting the virtue of transparency by withholding information precisely when it is sought after intensely it has been justified on grounds that such communication may create excessive market volatility this paper assesses the purdah for the federal reserve and confirms that financial markets are substantially more sensitive to central bank communication around policy meetings short term interest rates react three to four times more strongly in the purdah before federal open market committee meetings than otherwise and volatility increases compared to a reduction otherwise

coordination without command stretching the scope of spontaneous order how far can we stretch the scope of spontaneous order gordon tullock s important work on the economics of non human societies shows how these societies are able to coordinate without command despite features economists typically see as limiting the scope of spontaneous order using tullock s insights i search for the human ant nest spontaneous institutional arrangements that create human cooperation despite the presence of these obstacles i find two significant examples of this both in precolonial africa the first demonstrates the effectiveness of spontaneous order in the face of threats of violent theft the second shows the effectiveness of spontaneous order in the face of social heterogeneity these cases suggest a broader scope for spontaneous order than conventional wisdom permits

international r d rivalry and industrial strategy this paper presents a theory of government intervention which provides an explanation for industrial strategy policies such as r d or export subsidies in imperfectly competitive international markets domestic net welfare is improved by the capture of a greater share of the output of rent earning industries although the subsidy ridden noncooperative international equilibrium is jointly suboptimal behaviour of governments and firms is modelled as a three stage subgame perfect nash equilibrium the assumption that the government is the first player in this game allows it to influence equilibrium outcomes by altering the set of credible actions open to firms

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

distortion triggered lobbying and welfare a contribution to the theory of directly unproductive profit seeking activities abstract the paper considers the normative implications of lobbying for non exclusive income generated by an exogenously specified policy intervention such lobbying activities are a subset of what bhagwati has termed directly unproductive profit seeking dup activities it is demonstrated that the welfare effects of lobbying triggered by a policy distortion depend critically on whether the direct impact of the policy constraint is on price or an quantity it is also shown that several standard comparative static welfare analyses of alternative policy distorted states are significantly affected once the policy intervention is assumed to be continuously accompanied by lobbying for the associated non exclusive income