adjustment to labor productivity an application to the economics of discrimination although issues of uncertainty and insurance often have been applied to the labor market few researchers have employed these approaches to the economics of discrimination the discrimination literature is essentially concerned with quantification of wage or employment differences that can be ascribed to either employer or employee distaste for minority or female workers generally wage or employment differences are dichotomized so as to represent respectively productivity and discrimination components following mincer 21 studies usually estimate personal and labor force determined hedonic earnings functions in order to apply chow tests to the separate sets of black white or malefemale coefficients significant differences in the coefficients are a priori evidence of discrimination

contra coercion russian tax reform exogenous shocks and negotiated institutional change the view of institutions as coercion rather than as contracts dominates the comparative politics literature on both institutional creation and the politics of economic reform the emergence of a collectively optimal tax code in russia demonstrates the limitations of this emphasis on coercion this new tax code was not imposed by a strong central leader mandated by international institutions or the result of state capture by powerful economic interest groups rather it is the product of a mutually beneficial exchange between the russian government and the russian oil companies russia s ability to negotiate an effective tax regime also suggests the conditions under which and the microcausal mechanism whereby exogenous shocks promote institutional change and economic reform owing to their mutual vulnerability and interdependence the august 1998 financial crisis generated widely shared perceptions among these actors that the payoffs of cooperation had changed yet the economic reform institution that resulted required a series of incremental strategic moves that established common knowledge

a search interpretation of male female wage differentials a general equilibrium search framework is used to examine the role of gender differences in labor market behavior patterns e g quit rates for personal reasons in determining gender wage differentials for samples of high school and college graduates from the national longitudinal survey of youth nlsy these behavioral patterns are found to be significantly different across the sexes and account for 20 30 of the wage differentials in particular they play a key role in explaining the male female wage differential that remains after controlling for the gender composition across occupations

trade finance specialization and synchronization i investigate the determinants of business cycle synchronization across regions the linkages between trade in goods financial openness specialization and business cycle synchronization are evaluated in the context of a system of simultaneous equations the main results are as follows i specialization patterns have a sizable effect on business cycles most of this effect is independent of trade or financial policy but directly reflects differences in gdp per capita ii a variety of measures of financial integration suggest that economic regions with strong financial links are significantly more synchronized even though they also tend to be more specialized iii the estimated role of trade is closer to that implied by existing models once intra industry trade is held constant the results obtain in a variety of data sets measurement strategies and specifications they relate to a recent strand of international business cycle models with incomplete markets and transport costs and on the empir

gender differences in training capital and wages this paper constructs an equilibrium job matching model where workers differ in their attachment to the labor force the model predicts that workers with weaker attachment to the labor market will receive lower starting wages and lower post training wages and will be placed in jobs that offer less training and use less capital the implications of the model for gender differences in pay and job assignment are tested with the eopp data set ourfindings suggest that while training intensity during the first three months of employment is similar in positions filled by males and females females are employed in positions that have a shorter duration of on the job training and that use less capital these differences in on the job training and capital in positions filled by men and women as well as a lower market value for women s prior labor market experience account for a substantial part of the gap in wages between males and females

international business cycle spillovers since the 1870s this article considers the evolution of international business cycle interdependencies among 27 developed and developing countries since the beginning of 1870s utilizing the generalized vector autoregressive var based spillover index of diebold and yilmaz 2012 which allows the construction of a time varying measure of business cycle spillovers we find that on average 65 of the forecast error variance of the 27 countries business cycle shocks is due to international spillovers however the magnitude of international business cycle spillovers varies considerably over time there is a clear increasing trend since the end of world war ii and until the mid 1980s after that international business cycle interdependencies declined during the period that was dubbed the great moderation and stabilized around the beginning of the twenty first century during the great recession of 2008 2009 international business cycle spillovers increased to unprecedented levels finally developed countries are cons

a new technique for postsample model selection and validation abstract the model selection and granger causality literatures have focused on insample rather than postsample hypothesis testing this is because postsample model validation periods are usually short whereas the correlations in typical postsample forecast errors require large sample methods a resampling based postsample inference procedure is described which explicitly estimates the uncertainty which its large sample approximation induces in the inference significance levels it produces the procedure is applied to postsample forecasting errors from the ashley et al 1980 study examining granger causation between us consumption and advertising expenditures postsample model validation is apparently feasible but requires longer postsample periods than past studies have allocated

balance of payments crises in a cash in advance economy the author shows that a flexible prices sidrauski type model with a cash in advance constraint is capable of depicting some of the phenomena associated with a balance of payments crisis like the onesrecently observed in argentina and mexico current accounts deficits and appreciation of the real exchange rat e it is also shown that these phenomena become exacerbated as the rate of devaluation before the crisis occurs becomes smaller copyright 1987 by ohio state university press

on the granger causality between median inflation and price dispersion the granger causal relationship between the size and dispersion of fluctuations in sub components of the us consumer price index cpi is examined using both in sample and out of sample tests and data from january 1968 to december 2008 strong in sample evidence is found for feedback between median inflation and price dispersion the evidence for granger causation from median inflation to price dispersion remains strong in out of sample testing but is less strong for granger causation in the opposite direction the implications of these results for the variety of price level determination models in the literature are discussed

dollar movements and inflation a cointegration analysis many studies have concluded that changes in us dollar values affect us prices however since exchange rates may reflect underlying economic conditions this result may be spurious if those conditions are ignored recent advances in time series analysis permitted investigation of both the short and long term interactions between the us price level and the yen dollar exchange rate taking into account the effects of changes in domestic economic activity such as income interest rates and monetary policy examination of these interactions helps to determine to what extent the yen dollar exchange rate impacts the domestic price level the finding is that there is no long term relation between the two variables in addition the results suggest that in the short run monetary authorities respond to changes in the consumer price index and japanese exchange rates however the price level does not respond to change in the exchange rate

us inflation and the dollar exchange rate a vector error correction model many studies investigating the relation between inflation and exchange rates have found that exchange rates influenced inflation while other studies have failed to do so or reported mixed results these findings however might be spurious as the majority of the earlier investigations suffered from misspecifications of one kind or another the current paper addresses the problem by employing an up to date and powerful cointegration method developed by johansen 1988 in a system of five equation vector error correction model this paper finds that the us inflation exchange rate money supply income and interest rate are cointegrated the cointegration analysis of the data covering the 1973 95 period reveals that the dollar exchange rate has a significant negative impact on the inflation measured by the producer price index it is further established that the exchange rate granger causes the inflation

the relationship between relative prices and the general price level it is very nearly a truismi amaong neoclassical economists that the public is wont to confuse changes in the general price level with relative price changes correspondingl y one might speak of the independence between the two as one of the central postulates of the neoclassical tradition william stanley jevons was aml ong the first to identify this basic dichotomin economic life as well as to attempt to explain the ordinary citizen s seenming incapacity to understand it

microeconomic adjustments in chile during 1977 1981 the importance of being a grupo abstract this paper uses the financial statements of industrial firms to provide an integrated firm level view of the changes in the chilean economy during 1977 1981 both real side and financial shocks had major effects on the performance of some types of firms exportable goods producers did relatively poorly in real activities for reasons probably tied to chile s real prolonged exchange rate appreciation import competing firms that began the period with high protection did even worse apparently reflecting the larger change in their output prices as protection was dismantled the reforms thus shifted demand away from industries least in line with the country s comparative advantage but they also hurt exportables the very sector authorities intended to promote on the financial side the highly positive real cost of peso borrowing reduced industrial profits considerably a handful of powerful conglomerates grupos generated large but presumably unrealized capital gains by investing in the securities of related enterprises such activities allowed them to offset relatively poor returns on real operations and their ownership of the country s major banks allowed them to consolidate control of a large volume of assets with debt finance these two results explain why the grupos were suddenly in considerable financial difficulty when the chilean boom ended in 1982

recombinant property in east european capitalism recombinant property is a form of organizational hedging in which actors respond to uncertainty by deversifying assets redefining and recombining resources it is an attempt to hold resources that can be justified by more than one legitimating principle property tansformation in postsocialist hungary involves the decentralized reorganization of assets and the centralized management of liabilities together they blur the boundaries of public and private the boundaries of enterprises and the boundedness of justificatory principles enterprise level field research data on the ownership structure of hungary s 220 largest enterprises and banks and an examination of the government s recent debt consolidation programs suggest the emergence of a distinctively east european capitalism that will differ as much from west european capitalism as do contemporary east asian variants

fiscal conservatism as a response to the debt crisis abstract in this paper we develop a model in which social conflict and adjustment costs induce delayed inflation stabilization we show that the longer this delay is the less demanding are the conditions that some groups will accept in order to stabilize in the context of the latin american debt crisis our model gives a rationale for the time lag between the outset of the crisis and the implementation of reform programs as well as for the strongly conservative nature of those that are currently being implemented

why free trade losers support free trade industrialists and the surprising politics of trade reform in brazil the rush to free trade that began in latin america in the 1980s remains inadequately explained among several puzzles connected with this shift the degree of support for free trade among industrialists especially stands out this article argues that the inability to account for industrialists behavior lies in political economy s tendency to derive preferences from market position instead the author argues that contextual factors shape preferences and behavior he makes the argument by examining brazilian industrialists a least likely group to endorse the policy shift the author provides evidence that brazilian industrialists supported commercial liberalization despite real distributive consequences factors that help explain support include the effects of economic crisis bundling of free trade with other desirable policies the prevalence of adjustment options and the absence of a distinct class of losers the author relies on survey evidence business rankings and documentary evidence to mak

a note on the variability of inflation and the dispersion of relative price changes abstract the relationship between the variance of inflation and the variability of relative price changes is analyzed empirically a strong positive association is found for 1948 1969 and 1948 1975 application of chow s test indicates structural instability and granger s test suggests a feedback effect between these variables

the temporal price relationship between s p 500 futures and the s p 500 index this paper empirically examines the intraday price relationship between s p 500 futures and the s p 500 index using minute to minute data three stage least squares regression is used to estimate lead and lag relationships with estimates for expiration days of the s p 500 futures compared with estimates for days prior to expiration the results suggest that futures price movements consistently lead index movements by twenty to forty five minutes while movements in the index rarely affect futures beyond one minute

worker effort decisions and efficient gender specific wage tenure profiles i introduction during the past thirty years women have increased their labor force participation female labor market intermittency has decreased and women s total labor market experience and years of tenure with the current employer have increased what these trends imply about the evolution of the gender gap in wages depends in part on gender differences in returns to tenure it is therefore surprising that economists have all but ignored the empirical finding that women have higher returns to tenure than do men over a significant portion of their working lives one reason why this finding has been ignored or treated as an anomaly may be the lack of theoretical constructs which predict an inverse gender gap in returns to tenure several labor market models predict that women should have lower returns to tenure than men human capital theory offers the most frequently cited explanation of flatter earnings profiles for female workers according to human capital theory gains from specialization and exchange lead to one household member specializing in home production and the other in market work since only women bear children historically the outcome of the exchange has been that women have specialized in home production indeed all surveys of time use indicate that women spend on average two to three times as long on housework as men as a consequence of this allocation women anticipate intermittent labor force participation and fewer years overall in the labor force than men this pattern too is borne out in national surveys which invariably find shorter average tenure and fewer total years of labor market experience for women than for men women typically have shorter completed job spells as well hall 1982 table 5 presents evidence that the gender gap in completed job duration is quite large he estimates that 63 8 percent of men but only 49 6 percent of women hold jobs with eventual tenure of at least five years with 37 3 and 15 1 percent of men and women respectively holding jobs with eventual tenure of at least twenty years because of the greater intermittency and shorter anticipated work history for women than men women will find it optimal to acquire less human capital than men 1 lesser quantities of general human capital tends to flatten both the observed earnings experience profile and the observed earnings tenure profile two factors contribute to this pattern first skills deteriorate during periods out of the labor market as in mincer and polachek 1974 which flattens the earnings experience profile for women relative to men second women anticipating discontinuous work histories select into occupations with flatter earnings profiles to minimize the penalty to labor force withdrawals as in polachek 1981 the effects of firm specific human capital on gender differences in wage tenure profiles vary across models for example kuhn 1993 constructs an elegant game theoretic model of gender differences in training and wages if women have a higher exogenous exit rate than men in equilibrium they will be placed in jobs with lower levels of firm specific training with a positive relation between training and productivity and a common share rate of the costs and benefits of specific training for men and women the wage tenure profiles of men will be steeper than those for women in contrast becker and lindsay 1994 argue that firm specific human capital leads to higher returns to tenure for women than men becker and lindsay assume that men and women have the same level of firm specific training however women have greater variance in their opportunity cost of remaining with a firm and so are more likely than men to separate inefficiently by giving women a greater share of both the costs and benefits of firm specific human capital through a steeper wage tenure profile firms reduce undesirable turnover although human capital arguments dominate the literature on gender differences in the labor market other models of wage growth predict flatter wage tenure profiles for women

the exchange rate and the u s wage process an intensive empirical investigation the u s wage growth slowdown since 1982 has generated a large controversy over its causes a hypothesis that has received extensive attention is based on international competitivene ss effects the evidence is mixed and several authors have proposed alternative hypotheses based on economic or noneconomic developments this paper addresses this issue and finds significant effects of international competition on wages in manufacturing services and total hourly private earnings an array of tests indicates that thes e results are robust but that the depreciation of the dollar after 198 5 has not had the large effects of the 1981 85 appreciation copyright 1993 by ohio state university press

global business cycles convergence or decoupling we analyze the evolution of the degree of global cyclical interdependence over the period 1960 2008 using a dynamic factor model we decompose macroeconomic fluctuations in output consumption and investment into a global factor factors specific to country groups and country specific factors we find that during 1985 2008 there is some convergence of business cycle fluctuations among industrial economies and among emerging market economies surprisingly there is a concomitant decline in the relative importance of the global factor we conclude that there is evidence of business cycle convergence within each of these two groups of countries but divergence or decoupling between them

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

volatility transmission in emerging european foreign exchange markets abstract this paper studies the dynamics of volatility transmission between central european ce currencies and the eur usd foreign exchange using model free estimates of daily exchange rate volatility based on intraday data we formulate a flexible yet parsimonious parametric model in which the daily realized volatility of a given exchange rate depends both on its own lags as well as on the lagged realized volatilities of the other exchange rates we find evidence of statistically significant intra regional volatility spillovers among the ce foreign exchange markets with the exception of the czech and prior to the recent turbulent economic events polish currencies we find no significant spillovers running from the eur usd to the ce foreign exchange markets to measure the overall magnitude and evolution of volatility transmission over time we construct a dynamic version of the diebold yilmaz volatility spillover index and show that volatility spillovers tend to increase in periods characterized by market uncertainty

international business cycles world region and country specific factors the paper investigates the common dynamic properties of business cycle fluctuations across countries regions and the world we employ a bayesian dynamic latent factor model to estimate common components in macroeconomic aggregates output consumption and investment in a 60 country sample covering seven regions of the world the results indicate that a common world factor is an important source of volatility for aggregates in most countries providing evidence for a world business cycle we find that region specific factors play only a minor role in explaining fluctuations in economic activity we also document similarities and differences across regions countries and aggregates jel f41 e32 c11 c32

business cycle transmission from the us to germany a structural factor approach abstract this paper investigates the transmission of us macroeconomic shocks to germany using a large dimensional structural dynamic factor model this framework allows us to investigate many transmission channels simultaneously including new channels such as stock markets foreign direct investment bank lending and the confidence channel we find that us shocks affect the us and germany largely symmetrically trade seems to be the most relevant transmission channel monetary policy reactions to strong price movements seem to play a role as well no clear conclusion can be drawn yet on the role of financial markets and the confidence channel negative domestic influences apparently more than offset positive us influences in the german economy between 1995 and 2000 but the us recession in 2001 appeared to be the main culprit in the german slump

robustness of the relationship between price variability and inflation for us manufacturing we study the relationship between relative price variability and inflation in two different ways we first look at product class census unit values for five time periods between 1958 and 1982 and find evidence of a positive relationship between variability and inflation then we directly update the vining and elwertowski 1976 study for the period 1974 91 using individual commodity series from the bureau of labor statistics we conclude by discussing differences across industries in price stickiness

economic crisis and policy choice the politics of adjustment in the third world the acute economic pressures of the 1980s have forced virtually all of latin america and africa and some countries in asia into painful austerity programs and difficult economic reforms scholars have intensively analyzed the economics of this situation but they have given much less attention to the political forces involved in this volume a number of eminent contributors analyze the politics of adjustment in thirteen countries and nineteen governments drawing comparisons not only across the full set of cases but also within clusters selected to clarify specific issues why do some governments respond promptly to signs of economic trouble while others muddle indecisively for years why do some confine their response to temporary macroeconomic measures while others adopt broader even sweeping programs of reform what leads some countries to experiment with heterodox approaches while most however reluctantly pursue orthodox courses why confronted with intense political protest have some governments persisted while others have altered or abandoned course the answers to these questions are political not economic and they are examined here by thomas m callaghy stephan haggard miles kahler robert r kauman joan m nelson and barbara stallings

exporting recessions international links and the business cycle abstract empirical evidence of decoupling typically focuses on declining business cycle correlations at low frequencies at higher frequencies business cycles strongly co move during recessions but are largely independent during non recessionary periods

how does globalization affect the synchronization of business cycles this paper examines the impact of rising trade and financial integration on international business cycle comovement among a large group of industrial and developing countries the results provide at best limited support for the conventional wisdom that globalization has increased the degree of synchronization of business cycles the evidence that trade and financial integration enhance global spillovers of macroeconomic fluctuations is mostly limited to industrial countries one striking result is that on average cross country consumption correlations have not increased in the 1990s precisely when financial integration would have been expected to result in better risk sharing opportunities especially for developing countries this abstract was borrowed from another version of this item

the dynamic relationship between the dollar and components of u s trade the dynamic response of the nominal trade account to changes in the value of the u s dollar has been posited to follow a j curve pattern recent experience calls this into question the aggregate nominal trade balance is decomposed here into four components both prices and volumes of imports and exports time series specification tests and granger tests of causal priority are employed to identify the existence and nature of the response of each individual component to dollar movements surprisingly weak and delayed responses of both import prices and volumes are found suggesting a new view of trade balance evolution

business cycle synchronization during us recessions since the beginning of the 1870s this paper examines the synchronization of business cycles across the g7 countries during us recessions since the 1870 s using a dynamic measure of business cycle synchronization results depend on the globalisation period under consideration on average us recessions have significantly positive effects on business cycle co movements only in the period following the breakdown of the bretton woods system of fixed exchange rates while strongly decoupling effects among the g7 economies are documented during recessions that occurred under the classical gold standard during the 2007 2009 recession business cycles co movements increased to unprecedented levels

inflation and the distribution of price changes across markets a causal analysis recent advances in time series methodology are applied to the investigation of causal relationships between monthly changes in the consumer price index and changes in its dispersion across different consumption categories this dispersion is associated with the degree to which relative prices are changing past inflation rates seem useful in forecasting changes in relative prices but not vice versa there is also a significant contemporaneous correlation between these series hence it is concluded that fluctuations in the inflation rate help cause fluctuations in relative prices but not vice versa unless the entire effect occurs within a month the analysis also serves to illustrate a new way to implement the granger causality concept

employment unemployment and the minimum wage a causality model some empirical work concerning the minimum wage tends to confirm the negative impacts of the law on employment but much of that work leaves the existence and size of the fiat s effects uncertain furthermore many of the theoretical and statistical advances of the past 1 decades have yet to be incorporated into the analysis of the law s effects we apply time series and causality testing analysis developed from the transfer function to the minimum wage employment unemployment series we find some evidence that the minimum wage has lowered the employment of white male teenagers age 16 19 and nonwhite males over the age of 20 however these impacts are small no other significant employment impacts are discovered and no significant unemployment impacts are found additional study of the law s impacts using advanced statistical methods is required

on inflation and real price variability this paper studies the consequences of costly price adjustments for the variability of real prices accompanying inflation for constant elasticity demand and cost of production it is shown that a higher demand a lower cost of production or a lower cost of price adjustment leads to less intertemporal variability of real prices if the marginal cost of production does not increase too fast then the average real price is less than the real price that would prevail in the absence of inflation additionally a higher demand a lower cost of production or a lower cost of price adjustment leads to a higher level of real prices

variability of inflation and the dispersion of relative prices evidence from the chinese hyperinflation of 1946 1949 abstract this paper uses data from the chinese hyperinflation of 1946 1949 to focus on the relationship between the variability in the general price level and the dispersion in relative prices the issue is important because it bears on the natural rate hypothesis which supports the postulate that these two monetary variables are independent our results reinforce the bulk of previous evidence which suggests a positive correlation between the variation in inflation rate and the dispersion in relative prices during inflationary episodes

comparative democratization big and bounded generalizations comparative studies of democratization have produced two types of generalizations those having nearly universal application and those applying to a range of countries within a region in the first category are such arguments as the role of high levels of economic development in guaranteeing democratic sustainability the centrality of political elites in establishing and terminating democracy and deficits in rule of law and state capacity as the primary challenge to the quality and survival of new democracies in the second category are contrasts between recent democratization in post socialist europe versus latin america and southern europe for example in the relationship between democratization and economic reform and in the costs and benefits for democratic consolidation of breaking quickly versus slowly with the authoritarian past the two sets of conclusions have important methodological implications for how comparativists understand generalizability and the emphasis placed on historical versus pr

microeconomic adjustments in argentina during 1976 1981 the importance of changing levels of financial subsidies abstract this paper uses the financial statements of argentine industrial firms to study the micro level impact of recent liberalization and reform attempts the main lesson is that extremely large subsidies were provided to the industrial sector by way of negative effective financial costs these negative costs appeared first in the late 1970s because of real currency appreciation and unconstrained access to foreign credit then again in 1981 because of an exchange insurance program we also find that the argentine government s announced intention to promote exporting activities did not translate into relatively favorable product market conditions for exporting firms to the contrary the real currency appreciation squeezed exporters profits while redundant tariff protection insulated import competing firms from world competition at least until 1980

the temporal development of strategy patterns in the u k insurance industry much writing in the field of strategic management remains an exercise in comparative statics cross sectional research designs are combined with the static metaphors of contingency thinking to analyse the fit between the positioning and resource base of the firm and its performance in differing environments however the inadequacies of this tradition are increasingly recognised even by scholars who have created it porter 1991 strategy can no longer be conceived through the static language of states or positions and must now be understood as an innovation contest where the bureaucratic and inflexible will not survive this paper takes up the challenge to explore the dynamics of industry and firm strategy development the empirical focus of the paper is the u k insurance industry in a period of upheaval between 1990 and 1996 by means of an innovative cross correlational time series analysis we are able to show the ebb and flow of strategic change in the industry and the patterns of initiation and imitation as certain firms lead areas of strategyand others follow these findings are interrogated and inter preted by drawing on and developing theoretical ideas from three literatures which historically have not talked to one another these are the literatures on innovation institutionalism and contextualism the empirical results show firms pursuing multiple strategies at one point in time and also altering the strategic agenda over time a cross correlational analysis of nine firms in the u k insurance industry reveals the existence of leaders and laggards in the development of a variety of strategic initiatives theoretically the paper examines the mixture of external conditions and internal context and processes which contribute to the development of early and later adopters of strategies in an industry over time

investigating the causal relationship between quits and wages an exercise in comparative dynamics this paper examines the causal relationship between wages and quits in u s manufacturing industries logit and regression models then relate causality test results to industrial characteristics once these relationships are identified they can be used to predict the causality classification for each industry based on the characteristics of that industry this technique can help the researcher choose the appropriate theoretical model for analysis one finding is that quits respond to wages in most industries but not in industries with highly skilled workforces

measuring financial asset return and volatility spillovers with application to global equity markets we provide a simple and intuitive measure of interdependence of asset returns and or volatilities in particular we formulate and examine precise and separate measures of return spillovers and volatility spillovers our framework facilitates study of both non crisis and crisis episodes including trends and bursts in spillovers and both turn out to be empirically important in particular in an analysis of sixteen global equity markets from the early 1990s to the present we find striking evidence of divergent behavior in the dynamics of return spillovers vs volatility spillovers return spillovers display a gently increasing trend but no bursts whereas volatility spillovers display no trend but clear bursts

how should structural adjustment programs be designed abstract more than seven years have elapsed since the onset of the generalized debt crisis of 1982 yet the affected countries have still not managed to stabilize their economies these countries must now attempt structural adjustment in the midst of pervasive macroeconomic and political instability structural adjustment packages should be designed with this reality in mind this paper argues that structural adjustment programs should strive for sustainability rather than the economic liberalization that they presently stress illiberal policies which do not damage overall macro stability are preferable to liberal policies which are inherently unsustainable or engender macro instability liberalization programs that are not sustainable are likely to bring few benefits but have high costs in terms of private investment the paper discusses some of the chief implications of this opinion for the design of adjustment programs

from comparative public policy to political economy putting political institutions in their place and taking interests seriously the historical institutionalist tradition in comparative politics commonly assigns analytical primacy to political institutions whereas this polity centeredness may be quite justifiable for purposes of comparative public policy students of comparative political economy should pay systematic attention not only to economic institutions but also to a range of economic structural variables that lie beyond the conventional confines of institutional analysis providing the basis for an analysis of collective actors and their interests such an approach is needed to account for institutional change and policy realignments within stable institutions

privatisation discontent and utility reform in latin america abstract privatisation faces strong and increasingly popular opposition in latin america this paper uses individual data on social attitudes socioeconomic status and demographic information from three waves of latinobarometro surveys 1998 2000 and 2002 in 17 countries to study the role of privatisation of utilities and its distributional impact we find that disagreement with privatisation is most likely when the respondent is on a low to middle income and when it involves a high proportion of public services such as water and electricity this complements recent empirical research that points to distributional concerns in the implementation of privatisation in latin america particularly because of inadequate regulation of utilities

on the normality of relative price changes abstract the purpose of this paper is to present evidence on the non normality of relative price changes in west germany based on annual data for forty industries krengel et al n d the question of normality is examined only for germany

banking currency stock market and debt crises in spain 1850 1995 abstractwhat type of crisis is generated when debt increases we extend the literature by framework by introducing currency and stock market crises in the analysis we apply our proposal to the case of spain since this is a country that has experienced a very important amount of financial crises from the nineteenth century onwards we find the same results as the previous literature for the determinants of banking and debt crises but substituting external and public debt with perpetual debt and where perpetual debt has a less important role than crises in the private sector moreover we find evidence in favour of the hypothesis that currency crises depend strongly and positively on financial centre crises and negatively and mildly on perpetual debt we justify the negative relalionship due to an inflation tax we also find evidence in favour of the hypothesis that stock market crises depend only positively and strongly on financial centre crises

the discreet charm of formal institutions postcommunist party competition and state oversight why do some new democratic political politicians constrain themselves and reduce their discretion to extract resources from the state and the processes of privatization postcommunist democracies show surprising variation in the adoption of formal institutions of monitoring and oversight these institutions regulate markets empower citizen oversight and police the use and distribution of state assets these have arisen rapidly in some countries and with considerable delays in others accounts that link institutional creation to european union imposition initial bargaining and parliamentary divisions do not fully explain the variation instead in the nine consolidated democracies and free markets examined here robust political competition triggered mechanisms of anticipatory institution building and moderation of government behavior

redistribution under the right in latin america electoral competition and organized actors in policymaking unexpected social policy expansion and progressive tax reforms initiated by right wing governments in latin america highlight the need for further theory development on the politics of redistributi

capital mobility and coalitional politics authoritarian regimes and economic adjustment in southeast asia this article investigates the coalitional bases of authoritarian rule to explain striking variation in adjustment policy to the asian financial crisis in indonesia and malaysia given currency depreciation with financial sector fragility holders of mobile assets prefer to maintain an open capital account while owners of fixed assets and labor favor restrictions of capital mobility to facilitate expansionary macroeconomic policies differences in adjustment policy across the two countries reflect differences in the political coalitions supporting the authoritarian regimes these findings illuminate the nature of political conflict during financial crises and show how a nuanced view of the coalitions supporting authoritarian rule can yield powerful insights into the political economy of authoritarianism and economic adjustment in a global economy

relative prices and money a vector autoregression on brazilian data recent data on brazilian agricultural prices industrial prices and money supply are analyzed in a vector autoregression the empirical findings show strong one way granger type causality from money supply to agricultural prices while feedback is observed between industrial prices and money supply under the usual monetarist ordering of contemporaneous innovation covariance agricultural prices do not adjust faster than industrial prices to a shock in the money supply

real dollar exchange rate under the bretton woods and floating exchange rate regimes abstract the focus of the paper is on real exchange rates for the dollar over the period 1957 to 1985 most such exchange rates followed an almost steplike pattern showing relatively little movement in the late 1950s and 1960s falling abruptly and then remaining low in the 1970s and finally in the 1980s rising back to levels close to those that prevailed initially contrary to much recent commentary therefore the period that appears different is not the last five years but the decade that preceded them an important factor underlying this pattern of exchange rate movement according to results presented in the paper was the behavior of monetary policy and hence inflation in the united states what remains to be established is the precise mechanism linking money and real exchange rates and the relative strength of those links

measuring the world economy this paper provides an empirical assessment of whether the world economy has become smaller in terms of economic distance over the last decades we adopt a cross sectional spatial econometric approach relating domestic output volatility to distance weighted averages of other countries output volatility using a sample of 135 countries and rolling 10 year time windows over the period 1955 to 2006 using descriptive measures test statistics and spatial econometric estimates we find that cross country interdependence was virtually insignificant in the early post war period but has increased strongly from the mid 1960s to the mid 1980s and remained at a high level since then results for the most recent period suggest that common shocks to output volatility have a magnified impact and roughly quadruplicate through international spillover effects which are transmitted through both trade and financial openness

a model of exchange rate dynamics this model treats the exchange rate as an asset price that depends on expectations concerning exogenous real and monetary factors that will affect relative prices and absolute price levels in future periods changes in exchange rates reflect both expected changes in these exogenous factors and changes in expectations occasioned by new information the model explains the random component in exchange rate behavior the source of divergences from purchasing power parity the anticipatory response of exchange rates to future expected disturbances and the causes of exchange rate overshooting

the dynamic relationship between the dollar and us prices an intensive empirical investigation abstract the empirical bivariate relationships between the dollar and us prices during the recent floating rate period are analyzed using time series methodology results indicate a long distributed lag from the dollar to the cpi but no relationship in the opposite direction and that a permanent 10 per cent decline in the dollar was ultimately followed by a cpi rise of 4 85 per cent similar results are obtained for various components of the cpi including services while substantially smaller price responses are reported in other studies that typically employ shorter lag structures in the context of structural econometric models

understanding the evolution of world business cycles abstract this paper studies the changes in world business cycles during the period 1960 2003 we employ a bayesian dynamic latent factor model to estimate common and country specific components in the main macroeconomic aggregates output consumption and investment of the g 7 countries we then quantify the relative importance of the common and country components in explaining comovement in each observable aggregate over three distinct time periods the bretton woods bw period 1960 1 1972 2 the period of common shocks 1972 3 1986 2 and the globalization period 1986 3 2003 4 the results indicate that the common g 7 factor explains on average a larger fraction of output consumption and investment volatility in the globalization period than it does in the bw period

trade interdependence and the international business cycle a stochastic general equilibrium model of the world economy is developed to analyze the contribution of trade interdependence to international business cycles we test some of the implications of the model using data from ten major industrial countries and a variety of detrending techniques to calculate the cyclical component of output we find that the significance of trade in the transmission of economic disturbances across countries is not robust to the choice of the detrending method in general the role of trade interdependence is moderate and seem to have been stronger in the period before 1973

globalization taxation and burden shifting in latin america most researchers interested in the relationship between global markets and public policy focus on advanced industrial democracies in contrast we examine competing hypotheses as to globalization s effect on governments by expanding the scope of the discussion to include developing nations more specifically we investigate the relationship between international market integration and the evolving burden of taxation on capital as well as the subsequent response of markets to shifts in tax policy in latin america since the late 1970s consistent with our theoretical expectations we find that global market forces are more constraining vis a vis tax policy in latin america than in the world s wealthiest nations despite these market based pressures however national politics continue to influence tax policy in latin america in a manner consistent with findings on advanced industrial democracies as such developing nations continue to have some room to manipulate policy though within the context of a more strictly neoliberal context than their counterparts in advanced industrial democracies

the impact of differences in turnover rates on male female pay differentials economic theory suggests that wages vary with turnover rates because of hiring and training costs workers viewed as likely to quit can anticipate a wage discount workers in industries with high layoff rates may demand a compensating wage premium by pooling time series industry turnover rates by sex with 1970 census data we are able to examine the effect of past industry turnover on current earnings turnover proves to be important for both males and females although the wage discount for a high quit probability is larger for females when differences in turnover are taken into account the portion of the male female earnings gap explainable by human capital and socioeconomic variables increases by a factor of one half

sources and propagation of international output cycles common shocks or transmission abstract this paper studies the generation and transmission of international cycles in a multi country model with production and consumption interdependencies two sources of disturbance are considered and three channels of propagation are compared technology disturbances which are mildly correlated across countries are more successful than government expenditure disturbances in reproducing actual data the presence of a common component to the shocks and of production interdependencies appear to be crucial in quantitatively matching the properties of the data

a new look at forecasting annual corporate earnings in the u s a abstract in this study composite earnings per share models are estimated for 35 chemical food and utility firms during the 1981 1982 period although it is generally held that financial analysts produce superior earnings forecasts when compared to time series model forecasts the results of this study indicate that analysts fared very poorly in 1982 and the average mean square forecasting error of analyst forecasts may be reduced by 74 2 percent by combining analyst and univariate time series model forecasts this reduction is very interesting when one finds that the univariate time series model forecasts do not substantially deviate from those produced by random walk drift models the arima 0 1 1 process moreover despite the high degree of correlation existing among analyst and time series forecasts the ordinary least squares estimation of the composite earnings model is a better forecasting model than the composite earnings models estimated with ridge regression and latent root regression techniques

distributional coalitions and the politics of economic reform in latin america for much of the discipline of economics a closed economy is seen as the result of efforts of distributional coalitions and rent seekers to maintain sector specific protections accordingly economic liberalization is explained by the policy consistency of uncompromising reform elites students of the politics of economic adjustment in the developing world in turn have argued that reform programs concentrate costs in the present and disperse benefits in the future hence losers are prepared to engage in collective action whereas prospective winners facing uncertainty about payoffs remain disorganized they thus posit the cohesiveness and insularity of policymakers as the main variable for explaining successful reform both economists and political scientists therefore adopt a collective action approach that overlooks how groups organize in support of liberalization in the recent latin american experience however these reforms have preserved market reserves for firms that provided vital political support to and often colluded with policymaking elites this setting has thus reproduced incentives for rent seeking behavior even in the presence of comprehensive liberalization this evidence supports two interrelated theoretical claims first distributional coalitions may proliferate when the state withdraws from the economy not only when it intervenes second interest based variables retain explanatory power in political economy which state autonomy arguments disregard irrespective of whether the economy is closed or open which neoclassical perspectives overlook to highlight the centrality of interest groups favoring marketization therefore the article suggests modifications to the dominant theories of collective action and the literature on the politics of economic adjustment

trade liberalization and economic stabilization in mexico lessons of experience abstract this article reviews the mexican trade liberalization of the past decade special attention is paid to the circumstances by which it was triggered to the macroeconomic environment and to the design of the process particularly the speed and extent of the trade reforms it is argued that although far reaching liberalization measures were carried out in a relatively short period of time the exposure of domestic industry to foreign competition was delayed considerably as a result of the exchange rate management during the process

dynamic linkages among real interest rates in international capital markets abstract short run and long run dynamic linkages among weekly real interest rates for g 10 countries are examined using a variety of time series tests these tests give special attention to the time series properties of nominal interest rates ex ante expected rates of inflation and real interest rates term structure information is used to recover a theoretically consistent measure of ex ante expected inflation in sample and out of sample granger causality tests are also examined to evaluate lead lag relationships among real interest rates the results provide strong support for well integrated markets particularly in the long run the results imply leadership roles for the us in international asset markets