mean reversion in real exchange rates evidence and implications for forecasting abstract the stationarity of real exchange rates over the recent flexible exchange rate period is an issue that has long bedeviled researchers in international finance using a constrained multivariate framework this paper provides the strongest evidence yet that real exchange rates were mean reverting over the 1973 93 period we also investigate shifts in long run real exchange rates which may be important for the purpose of forecasting out of sample forecasting shows that the random walk model is outperformed by a mean stationary model especially at long horizons in addition there are substantial forecasting benefits from using a multivariate approach

the european union currencies and the us dollar from post bretton woods to the euro abstract in this paper we study the evolution of the us dollar real exchange rate vis a vis the european union currencies in the floating post bretton woods era both before and after the birth of the euro in the first period we find that most of the persistence shown by this rate is due to the movements of the us dollar during the mid 1980s once these effects are isolated we can conclude that the us dollar real exchange rate exhibits stationarity with those currencies that are closely linked to the german mark however when we include the observations covering the period during which the euro was created we cannot reject the unit root null hypothesis for any currency

enhancing the internal validity of entrepreneurship experiments by assessing treatment effects at multiple levels across multiple trials abstract treatment effects in entrepreneurship experiments could vary significantly due to environmental uncertainty and individual heterogeneity drawing on critical realism experimental replication is useful for assessing the generalizability of the treatment effects or for confirming treatment effects across diverse entrepreneurship settings yet experiments in entrepreneurship have traditionally relied on single experimental trials and have not considered potential variance in treatment effects across contexts accounting for variance in treatment effects is even more pertinent under higher levels of environmental uncertainty to help assess the contingent effects of treatments across contexts we propose a set of methodological and statistical approaches for entrepreneurship researchers using different types of experimental replications and proposed statistical methods one may draw inferences about treatment effects at the trial the treatment and at the individual level we illustrate the proposed approach using experimental replications across three randomized post test experiments

the politics of conflict and consent abstract transaction cost economics claims to model the labor contract in terms of the opportunism practised by workers a recent alternative has seen custom as the main means by which workers impose their control of the contract both fail to explore workers co operative behavior in the workplace pay insufficient attention to managerial behavior and misunderstand the social organization of conflict and consent materials from industrial sociology and labor history are used to illustrate these limitations to show how the labor contract is in fact negotiated and to suggest how an alternative approach might be constructed

the new institutional economics this outstanding book presents new original contributions from some of the world s leading economists including ronald coase douglass c north masahiko aoki oliver e williamson and harold demsetz it demonstrates the extent and depth of the new institutional economics research programme which is having a worldwide impact on the economics profession

deviations from purchasing power parity in the long run this paper demonstrates that deviations from purchasing power parity reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible rate periods for a wide variety of countries and in both monthly and annual data since this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage the paper proposes an alternative explanation which instead relies on financial arbitrage in bonds as the underlying mechanism this paper will demonstrate that deviations from purchasing power parity ppp reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible exchange rate periods for a wide variety of countries and in both monthly and annual data this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage the paper therefore proposes an alternative explanation which does not presuppose free trade in goods but which instead relies on financial arbitrage in bonds as the underlying mechanism the major implication of the theory and the results is that ppp is as likely to be violated in the long as in the short run as an empirical matter deviations from ppp can be observed for most currencies at any instant see kravis et al 21 stockman 37 and genberg 15 among others these deviations are typically both cumulative and persistent the real exchange rate can remain on either side of parity for lengthy but variable time intervals of a year or more as a consequence the current consensus shared

markets hierarchies and information on a paradox in the economics of organization abstract the literature on the economics of organization presents the following paradox on the one hand firms are said to be repositories of superior information about input characteristics on the other hand markets are said to be superior to hierarchies in coordinating resource allocation because hierarchies are forced to aggregate heterogeneous inputs into homogeneous categories this paper suggests reasons for the association of firms with refined input information and argues that it is not their hierarchical features but their provision of an appropriate framework for rent sharing that is responsible for this association

power competition and the free trader vulgaris competition is taken for granted by neoclassical economics its cause is human nature and its functioning is the result of spontaneous interactions as such it is contrasted with power which is an unnatural restriction on human liberty by contrast marx discusses competition as a coercive mechanism historically competition develops with the development of market relations and what today appears as human nature is part of this process thus it is within competition and not outside of it that marx explains the coercive nature of capitalism his critique shows that competition and power appear to be antithetical because market relations are based on individual freedom however class relations are another essential aspect of capitalism by neglecting these relations neoclassical economists including those of a radical inspiration implicitly espouse the ruling class s viewpoint which they simply translate into rigorous mathematical terms in this sense they are the modern expression of what marx called the vulgar political economy

purchasing power parity in the long run a cointegration approach this paper utilizes cointegration analysis to examine purchasing power parity relationships over a long time horizon the results indicate that the exchange rate is cointegrated strongly with the wholesale price index ratio and somewhat weakly with the consumer price index ratio the cointegrating coefficient between the exchange rate and the price ratio is close to one when cointegration is confirmed the hypothesis that the real exchange rate follows a random walk is rejected in most cases finally a new test for common trends finds no such common trends in exchange rates or price ratios copyright 1990 by ohio state university press

advances in supervision technology and economic welfare a general equilibrium analysis abstract we analyze the impact of improvements in the technology by which employers monitor their workers it is unclear a priori whether workers should benefit or not from such advances on the one hand they decrease the total costs of hiring workers and stimulate labor demand on the other hand as supervision becomes less costly employers tend to substitute monitoring for wages as a means of motivating workers we show how the impact on firms and workers of such technological progress depends on the nature of the labor market equilibrium i e whether there is full employment or not and the cost technology of monitoring a distinct possibility is that unemployed workers welcome the changes in supervision because they promote employment while employed workers resist such changes and the more intensive supervision they encourage

the great appreciation the great depreciation and the purchasing power parity hypothesis abstract although there has been much recent work on purchasing power parity ppp neither univariate nor panel methods have produced strong rejections of unit roots in us dollar real exchange rates for industrialized countries during the post 1973 period we investigate the hypothesis that these non rejections can be explained by one episode the large appreciation and depreciation of the dollar in the 1980s by developing unit root tests which account for this event and maintain long run ppp using panel methods we can strongly reject the unit root null for those countries that adhere to the typical pattern of the dollar s rise and fall

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

the 6lucas critique a generalisation the extraordinarily influential lucas critique of various familiar econometric practices is generalized the intention though is not to argue against the possibility of economics as science but to hasten its widespread realization to this end it is argued that a quite significant change of direction in economic practice is warranted and an outline of a sustainable potentially fruitful alternative approach is indicated c 1995 academic press ltd copyright 1995 by oxford university press

specific capital in equilibrium search models abstract this paper develops an equilibrium search model that allows firms to invest in specific capital i show that firms that pay higher wages invest more in specific capital because high paid workers quit at a lower rate also wage offer density has a thin right tail

the response of exchange rates to permanent and transitory shocks under floating exchange rates abstract using the joint behavior of inflation and real exchange rates we develop an empirical model to uncover the sources of the fluctuations in the real dollar exchange rates of four major industrial countries under the current float this model allows us to construct two time series for each country pair one representing the permanent component of each real exchange rate and the other the purely transitory component over the period as a whole transitory shocks played a relatively small but statistically significant role real dollar exchange rates therefore did not simply evolve in response to permanent shocks instead there are instances in which temporary shocks made a substantial contribution we conclude that the random walk model though an approximate statistical description of real exchange rate behavior is a poor guide to model structure jel f31

on some criticisms of critical realism in economics methodological comments on critical realism in economics have proliferated over the past decade typically focusing on tony lawson s economics and reality and reorienting economics which constitute the core of this project in the present paper we select a series of important mostly very recent arguments against critical realism in economics and assess their merits and demerits

purchasing power parity and unit root tests using panel data abstract this paper reports the results of unit root tests for real exchange rates using a panel framework this panel approach provides greatly improved power compared to conventional univariate time series unit root tests we obtain evidence supporting ppp over the recent flexible exchange rate period for g 6 and oecd countries we show explicitly that failure to find such evidence in previous research was due to the low power of the tests

on some recent explanations of why capital hires labor conventional microeconomics contains no explanation of why capital hires labor and not the reverse in view of some surprisingly positive results in the theoretical analysis of worker run enterprise systems recent contributions to the theory of the firm have attempted to explain the dominance of capitalist production relations in efficiency terms the present paper critically reviews works in this area by alchian and demsetz 1972 williamson 1975 1980 and jensen and meckling 1979 and contends that a convincing efficiency argument for the general superiority of capital owners over workers control of enterprises still is lacking

smooth breaks and non linear mean reversion post bretton woods real exchange rates the recent literature on purchasing power parity ppp has emphasized the role of two phenomena that may lead to the rejection of the ppp hypothesis structural breaks and non linear adjustment induced by transaction costs these two hypotheses are analyzed separately in the literature we develop tests for unit roots that account jointly for structural breaks and non linear adjustment structural breaks are modeled by means of a fourier function that allows for infrequent smooth temporary mean changes and is hence compatible with long run ppp nonlinear adjustment is modeled by means of an estar model our tests present good finite sample properties the tests are applied to a set of 15 oecd countries rers and are able to reject the null of a unit root in 14 cases the breaks are usually associated with the great appreciation and later depreciation of the dollar in the 1980s and the estar adjustment appears to play an important role

why capital suppliers usually hire workers what we know and what we need to know abstract a fundamental question for economics is why large firms in market economies usually assign control rights to capital suppliers rather than labor suppliers a diverse collection of answers can be found in the literature but unfortunately little theoretical consensus has emerged and few attempts have been made to resolve this issue through systematic empirical investigation this paper reviews a number of different hypotheses clustering around work incentives the financing of firms and collective choice we identify the strengths and weaknesses of each approach filling in theoretical gaps where necessary and conclude with some suggestions for empirical research

anti williamson a marxian critique of new institutional economics new institutional economics explains capitalist institutions by means of neoclassical tools this method consists of introducing non market institutions as solutions to market failures the explicit or implicit assumption is that in the beginning there were markets in this paper we criticise this conception inherited from neoclassical economics by focusing on williamson s theory first we discuss williamson s speculative method which idealises the market and presents it as natural and universal we then suggest that williamson s categories his method and conception are themselves products of bourgeois ideology in this sense we conclude williamson himself is ultimately an institution of capitalism

abstraction tendencies and stylised facts a realist approach to economic analysis in his numerous methodological asides and assertions that feature in his more empirically oriented postwar contributions nicholas kaldor makes frequent reference to notions of abstraction tendencies and stylized facts however the employment of such terms seems rarely to be explicitly questioned justified or explicated this paper argues that such notions can be readily explicated and their employment justified through adopting an explicitly realist approach to economic analysis it is also argued that realism represents a serious alternative to current orthodox approaches to economics without suffering from some of the latter s more obvious limitations copyright 1989 by oxford university press

an equilibrium model of search unemployment this paper develops a simple general equilibrium model with sequential search in which a nondegenerate wage offer distribution is endogenously determined we use this model to analyze the comparati

are real exchange rates nonstationary evidence from a panel data test it is well documented that real exchange rates between the united states and many industrialized countries in the post bretton woods period are integrated this result implies that purchasing power parity ppp does not hold even as a long run relationship this paper demonstrates that the failure to reject the unit root hypothesis may result from the low power of existing univariate test procedures i test for unit roots in real exchange rates by employing a more powerful panel based procedure using both cpi and wpi real dollar exchange rate data i strongly reject the null hypothesis of a unit root my results provide overwhelming support for the long run ppp under the current float copyright 1996 by ohio state university press

realism underlabouring and institutions despite recent advances economic methodology has found it difficult to transcend certain positivist premisses and concerns we argue that developments in philosophy and social theory under the heading of critical realism are particularly significant with respect to overcoming these problems to illustrate we focus upon various themes that arise in a recent collection concerned with economic methodology and institutionalist economics relating these themes to relevant aspects of this realist position in so doing we argue that an economic methodology restricted to description and an institutionalism committed to some form of methodological individualism are not only unnecessary but problematic

smith and newton some methodological issues concerning general economic equilibrium theory there is general consensus that in economics adam smith is in the words of jevons the father of the science in this setting it has regularly been argued that neoclassical and modern mainstream economics carry through the methodological impetus brought into the discipline by smith moreover economists conventionally take it for granted that smith applied newton s method to political economy because newton s method is thought to be similar to that of modern mainstream economics the association of smith with newton is taken to further bolster the claim that modern mainstream economics continues the smithian tradition support for this commonly accepted view is gathered from smith s panegyric attitude to newton s conception of philosophy this shared conviction among economists underpins some interpretations of the invisible hand and of the intention behind the controversial chapter 7 of book i of the wn baptising smith as a forerunner if not the founder of theories of general economic equilibrium e g robbins 1962 1932 schumpeter 1994 1954 arrow hahn 1971 jaffe 1977 hollander 1973 1987 samuelson 1977 1992 as an offspring of the same tradition walras the architect of the equilibrium system has been set alongside newton the discoverer of the world system samuelson 1952 p 61

interlinked contracts and social power patronage and exploitation in india s waste recovery market abstract interlinked contracts have been examined almost exclusively in the context of the rural sphere this article describes the nature of exchange regimes between two sets of primary collectors of recyclable waste that is waste pickers and itinerant buyers and their dealers in the city of delhi far from the casualised labour transaction commonly described for the unorganised urban sector the findings portray a picture of personalised and surprisingly long term exchange between the parties while a new institutional economics approach might explain the underlying motivation and consequent general form of the implicit contracts it cannot explain the differential nature of each it is suggested that in order to do that a political economy approach must be taken this would understand interlinked transactions as being embedded within and consequently influenced by the particular social context in this case of an inequitable and impermeable caste hierarchy amongst those that engage in waste work

the architecture of economic systems hierarchies and polyarchies the authors present new ways of looking at economic organizations andsystems individuals judgments entail errors they sometimes reject good projects and accept bad projects the architecture of an economicsystem specifying how the decision making units are organized togetherwithin a system who gathers what information and who communicates what with whom affects its performance both because it influences thenature of errors that individuals make within the system and becauseit has a critical effect on the aggregation of individuals errors theperformance of two polar architectures decentralized polyarchical versus centralized hierarchical decision making authorities are analyzed and compared copyright 1986 by american economic association

was it real the exchange rate interest differential relation over the modern floating rate period in this paper we explore the relationship between real exchange rates and real interest rate differentials in the united states germany japan and the united kingdom contrary to theories based on the joint hypothesis that domestic prices are sticky and monetary disturbances are predominant we find little evidence of a stable relationship between real interest rates and real exchange rates we consider both in sample and out of sample tests one hypothesis that is consistent with our findings is that real disturbances such as productivity shocks may be a major source of exchange rate volatility this paper investigates the empirical relationship between major currency real exchange rates and real interest rates over the modern post march 1973 flexible rate experience the exchange rates examined here include the dollar mark dollar yen and dollar pound rates our two major findings are as follows first the data do not indicate a strong correspondence between real interest rate differentials short term or long term and real exchange rates this finding appears to conflict with the predictions of most monetary and portfolio balance models of exchange rate determination though the conflict can be substantially reconciled if aggregate disturbances are primarily real in nature i e changes in productivity tastes etc it is true that in many cases the sign of the estimated exchange rate interest rate differential relationship is consistent with the possible predominance of financial market disturbances but the relationship is not stable enough to be statistically significant second although one does find some evidence of a unit root in both real exchange rates and long term but not shortterm real interest differentials these two series do not appear to be linearly cointegrated hence the nonstationarity or near nonstationarity in the two series cannot be attributed to the same factor in section i we briefly describe a class of small scale monetary models of exchange rate determination the importance of this class of models for empirical work derives from its strong predictions about how the exchange rate will move

real exchange rate behavior the recent float from the perspective of the past two centuries using annual data spanning two centuries for dollar sterling and franc sterling real exchange rates we find strong evidence of mean reverting real exchange rate behavior using simple stationary autoregressive models estimated on prefloat data we easily outperform nonstationary real exchange rate models in dynamic forecasting exercises over the recent float such stationary univariate equations explain 60 80 percent of the in sample variation in real exchange rates although the degree of short run persistence may be high the econometric estimates imply a half life of shocks to the real exchange rate of about 6 years for dollar sterling and a little under 3 years for franc sterling

the unknown masterpiece marx s model of capital this paper develops an alternative to traditional interpretations of karl marx rooted in his 1859 preface widely regarded as the definitive summary of his materialist conception of society it does this by reading marx in the light of the ontology of realism and the reproductive mode of inference via an examination of some pivotal texts centered around the grundrisse notebooks the paper indicates how a realist understanding of marx s reproductive method can be used to reconstruct and develop its creation marx s model of capital copyright 1998 by oxford university press

post walrasian and post marxian economics it is widely believed that the failure of the socialist experiment should have had a devastating effect on radical economics yet radical economics is not only alive and well but flourishing years before the official demise of marxist socialism they had broadened their critique of standard economics well beyond the received marxist literature indeed their arguments offered striking parallels with the mainstream critiques of walrasian economics provided by the newly developing strand of thought i shall refer to as information economics in walrasian economics information is free moreover there are no costs associated either with making or enforcing contracts but with imperfect and costly information and incomplete risk markets the field of information economics has established that 1 in general markets are not constrained pareto efficient 2 markets may not clear 3 markets may not exist or when they exist may be thin 4 rents are pervasive and indeed reputation rents are necessary to ensure that high quality products get produced that workers do not shirk and so on 5 even when there are many participants in a market competition may be highly imperfect and 6 the distribution of income matters for economic efficiency

increasing evidence of purchasing power parity over the current float we conduct unit root tests of real exchange rates with the united states dollar and the german mark as base currencies using samples of data which begin in 1973 and end between 1982 and 1996 we find that as the sample is extended the evidence of ppp strengthens with panel but not univariate methods because of the sharp rise and fall of the dollar in the early 1980s rejections of the unit root null do not monotonically increase with the sample size the evidence of ppp is uniformly stronger when the mark is used as the base currency

hierarchies markets and power in the economy an economic perspective this paper adopts the transaction cost economics perspective for purposes of examining hierarchies markets and power in the economy transaction cost economics works out of an economizing perspective in which markets and hierarchies are alternative modes of governance and the object is to ascertain which transactions go where and why the role of power in this setup is strictly limited partly because power tends to be myopic transactions are not examined in their entirety and partly because it is tautological power needs to be operationalized whereupon the refutable implications that accrue to this perspective can be derived copyright 1995 by oxford university press

perfect competition and the creativity of the market from the perspective of the walrasian general equilibrium model entrepreneurial and opportunistic behavior seems foreign can the model be refashioned so that it can accommodate such behavior many would say no but we argue the contrary indeed we present a reformulation of the model that serves as a gateway to rather than a detour from such contemporary issues as innovation and incentives the trick is to reexamine what perfect competition means starting with an historical summary of general equilibrium we sketch an image of the perfect competitor as an active market opportunist seeking out profit potentials wherever he can

the re emergence of ppp in the 1990s abstract in this paper we investigate purchasing power parity ppp in a panel with 17 countries for the period 1972 through 1996 the novel feature of our panel methodology is that results are invariant to the choice of a benchmark on numeraire currency in the panel we allow individual country effects in the relation between prices and exchange rates in this way we can identify the currency pairs for which ppp holds or does not hold we conclude that there is substantive evidence for ppp although not to the same extent for every currency evidence in favor of ppp is strongest for many exchange rates relative to the dmark and weakest for the japanese yen for this currency a trend like variable like productivity growth is missing

cointegration between exchange rates and relative prices another view abstract in this paper the cointegration property of exchange rates and relative prices as implied by the purchasing power parity theory ppp is reexamined using a time varying parameter tvp approach such an approach recognizes the possibility that the lack of cointegration between exchange rates and relative prices found in recent literature may be the result of the nonstationarity of the cointegrating regression parameters themselves the tests of cointegration in a tvp framework indicate that ppp is better supported and point to the presence of structural instability in the long run equilibrium relationship between exchange rates and relative prices

economics for sustainable rural systems abstract critics often reproach the discipline of economics for supporting developments that result in environmental and social degradation this article identifies where such censure is valid but proceeds to argue that the rationale underlying economic techniques is at fault rather than the techniques themselves within the rural context we suggest that economics can make a valuable contribution to the design and achievement of sustainable ways of living valid criticism of economics focuses on its assumptions about value since this has led to emphasis of favourable effects of markets and laissez faire policies exposing rural areas to more rigorously competitive market conditions encourage their transformation by increasing mechanisation industrialisation and a less sustainable use of resources new approaches and policies are required if different outcomes are to be achieved an initial step is to identify desirable outcomes a matter of social choice however society makes multiple demands on rural resources and such issues cannot be adequately captured within a neo classical welfare model an alternative hierarchical framework in the tradition of systems thinking capable of analysing the complex relations associated with rural resource use provides appropriate emphasis to the economic links between goals at different levels within the system and appears to have some heuristic value an empirical counterpart of the hierarchical framework input output analysis generates information to support social choices and can also contribute to the understanding of economic systems and their interaction with the wider social cultural ethical and environmental universe the article concludes with some revised economic policy prescriptions to promote rural sustainability

some behavioral perspectives on the dominance of hierarchical over democratic forms of enterprise abstract this paper explores possible reasons why participatory modes of organization whole potentially viable and preferable to hierarchical modes for a large majority of workers may be dominated by the latter in capitalist market economies after exploring the developmental preconditions for the evolution of a mature participatory mode using a behavioral approach to organizations it is suggested that since the interest of those possessing scarce managerial skills may lie with hierarchical firms a participatory sector may be uncompetitive unless rights to enter labor contracts are redefined thus the analysis offers a partial explanation of the political nature of the demand for workplace democracy

some new stylized facts of floating exchange rates abstract this paper re examines real exchange rate behavior of oecd currencies under the current float using the more extensive dataset that an additional decade s worth of experience has made available what emerges is a new set of stylized facts which suggest that the problems of the current float were not as commonly believed generic to that system but in fact rather specific being largely confined to one sub period the early and mid 1980s and one currency the us dollar this dollar behavior ranks as one of the important puzzles of the past 25 years

externalities in economies with imperfect information and incomplete markets this paper presents a simple general framework for analyzing externalities in economies with incomplete markets and imperfect infonnation by identifying the pecuniary effects of these externalities that net out the paper simplifies the problem of determining when tax interventions are pareto improving the approach indicates that such tax interventions almost always exist and that equilibria in situations of imperfect information are rarely constrained pareto optima it can also lead to simple tests based on readily observable indicators of the efficacy of particular tax policies in situations involving adverse selection signaling moral hazard incomplete contingent claims markets and queue rationing equilibria traditional discussions of externalities have emphasized the distinction between technological externalities in which the action of one individual or firm directly affects the utility or profit ofanother and pecuniary externalities in which one individual s or firm s actions affect another only through effects on prices while the presence of technological externalities imply in general that a competitive equilibrium may not be pareto efficient pecuniary externalities hy themselves are not a source of inefficiency the fact that prices change has of course important consequences there are both distributional and allocational effects but the distribution effects net out gains for example hy firms whose prices increase are precisely offset by losses e g to individuals who must pay higher prices and there are no welfare losses from the allocation effects as long as the price changes involved are small if firms are maximizing profits and individuals are maximizing utility both facing prices that correctly refiect opportunity costs then standard envelope theorem arguments imply that changes in profits or utility induced by changes in allocations resulting from any small change in prices are negligible

a realist appraisal of post keynesian pricing theory this paper argues that based on the ontological insights of critical realism epistemological guidelines can be established to review post keynesian pricing theories critically consequently the paper suggests a basis on which the coherence of post keynesian pricing theory can be established crucially some often cited contrib u t i o n s are inconsistent with such a realist define d post keynesian economics the role of empirical work in critical realism is discussed

a critical realist interpretation of evolutionary growth theorising the article discusses a critical realist interpretation of evolutionary growth theorising by focusing on some of its basic characteristics the evolutionary ontology is complex differentiated structured systemic open ever changing and radically uncertain its methodology tends to be increasingly based on appreciative theorising retroductive explanations and interdisciplinary analysis after discussing these features the article suggests that critical realism may indeed constitute an important philosophical and methodological foundation for the future development of evolutionary theories of economic growth

contested exchange political economy and modern economic theory university of california berkeley department o f economics berkeley c a l i f o r n i a working paper 8876 contested exchange political economy and modern economic theory samuel bowles and herbert gintis june 8 1988 key words c o n t e s t e d exchange p o l i t i c a l jel c l a s s i f i c a t i o n economy

a panel project on purchasing power parity mean reversion within and between countries abstract previous time series studies have shown evidence of mean reversion in real exchange rates deviations from purchasing power parity ppp appear to have half lives of approximately four years however the long samples required for statistical significance are unavailable for most currencies and are potentially inappropriate because of regime changes in this study we re examine deviations from ppp using a panel of 150 countries and 45 annual post wwii observations our panel shows strong evidence of mean reversion that is similar to that from long time series ppp deviations are eroded at a rate of approximately 15 annually i e their half life is around four years such findings can be masked in time series data but are relatively easy to find in cross sections

financial markets and the political structure of the enterprise abstract this paper argues that competitive financial markets disfavor democratic enterprises even assuming such enterprises suffer no allocational deficiencies this conclusion follows from five assertions a the democratic enterprise requires access to credit markets b access to credit presupposes access to equity markets c the democratic firm s optimal risk level is lower than that desired by stockholders d the risk level assumed by the firm is costly to observe subject to inaccurate measurement and contractually unenforceable and e the incentives required to induce stockholder favorable risk behavior are more costly for democratic firms than for firms with stockholder accountable management

the power of environmental indifference a critical discourse analysis of a collaboration of tourism firms international attempts have not succeeded in addressing climate change leaving an even heavier responsibility on countries firms and people as tourism is an expanding branch in the world economy it is crucial to focus on how climate change issues are addressed in this industry as well this paper analyses a group of tourism firms in norway that join together to promote growth and profitability in winter tourism the span in how these firms deal with environmental issues ranges from ecotourism till not addressing the subject at all although the majority of the firms have environmental issues on the agenda environmental issues are not included in the cooperation we use critical discourse theory to explore how this stance on environmental issues within a cooperation has come about and categorize the firms into three discourses neoclassical economics environmental economics and ecological economics our data indicate that the hegemonic power of neoclassical economics hampers an environmental focus in the network this power is exerted through the position of being environmentally indifferent the paper adds knowledge to economic discourses on firm level

the ontology of economic power in capitalism mainstream economics and marx mainstream economics conceives power to be incompatible with perfect competition this conception i argue derives from its deductivist method and the empirical realist ontology that it presupposes following marx i show that capitalism constantly reproduces asymmetrical constraints on classes of individuals independent of the market form my ontological argument is rooted in the philosophy of critical realism my conclusion is that the dichotomy power competition is ontologically untenable if capitalist relations necessarily involve power it is not simply because neoclassical competition does not exist in reality as radical mainstream economists suggest but rather because capitalism altogether is a system of power

a critical assessment of transaction cost theory and governance of public services with special reference to water and sanitation this is a pre copyedited author produced version of an article accepted for publication in cambridge journal of economics following peer review the version of record hulya dagdeviren and simon a robertson a critical assessment of transaction cost theory and governance of public services with special reference to water and sanitation cambridge journal of economics vol 40 6 1707 1724 january 2016 is available online at https doi org 10 1093 cje bev079

stagnant productivity and low unemployment stuck in a keynesian equilibrium a major challenge is to build simple intuitive macroeconomic models for policy makers and professional economists as well as students a specific contemporary challenge is to account for the prolonged slow growth and stagnant productivity that has followed the post financial crisis recession along with low inflation despite low unemployment notably in the uk we set out a simple three equation model which extends the core model in our two recent books carlin and soskice 2006 2015 to one with two equilibria and two associated macroeconomic policy regimes one is the standard inflation targeting policy regime with equilibrium associated with central bank inflation targeting through monetary policy it is joined by a second keynesian policy regime and equilibrium with a zero lower bound zlb in the nominal interest rate and a zlb in inflation in which only fiscal policy is effective ragot 2015 our approach is related to the benigno and fornaro 2016 keynesian wicksellian model of growth with business cycles it diverges from new keynesian models because although we attribute model consistent expectations to the policy maker we do not assume that these are the basis for inflation and growth expectations of workers and firms we compare our approach to ravn and sterk s related multiple equilibrium new keynesian model ravn and sterk 2016

a model intervenes the many faces of moral hazard this article builds on advances in social ontology to develop a new understanding of how mainstream economic modelling affects reality we propose a new framework for analysing and describing how models intervene in the social sphere this framework allows us to identify and articulate three key epistemic features of models as interventions specificity portability and formal precision the second part of the article uses our framework to demonstrate how specificity portability and formal precision explain the use of moral hazard models in a variety of different policy contexts including worker compensation schemes bank regulation and the euro sovereign debt crisis

the contractual nature of the firm for their helpful comments i am grateful to armen a alchian yoram barzel keith leffler john s mcgee and dean worcester 1 ronald h coase the nature of the firm 4 economica 386 1937 the paper however was written several years earlier see note 3 infra 2 the social sciences citation index provides the following information breaking down the period of 1966 80 into three five year periods the total citations of coase s firm paper for each subperiod are 1966 70 17 citations 1971 75 47 citations and 1976 80 105 citations

causality and interdependence in pasinetti s works and in the modern classical approach the formal representation of economic theories normally takes the form of a model that is a system of equations which connect the endogenous variables with the values of the parameters which are taken as given sometimes it is possible to identify one or more equations which are able to determine a subset of endogenous variables priorly and independently of the other equations and of the value taken by the remaining variables of the system the first group of equations and variables are thus said to determine causally the remaining variables in pasinetti s works this notion of causality has often been emphasized as a formal property having the burden to convey some deep economic meaning in this work we will go through those pasinetti s works where this notion of causality plays a central role with the purpose to contextualize it within the econometric debate of the sixties to enucleate its economic meaning and to show its connections with other fields of the modern classical approach

the relative absolute nature of knowledge and economic analysis central to economic analysis are assumptions and hypotheses concerning the extent and nature of the knowledge held by individuals in this respect it is a noticeable feature of realist accounts that they tend to focus upon the pervasiveness of uncertainty as an undeniable fact of economic life nonrealist or instrumentalist accounts in contrast tend to assume that agents have perfect information correct foresight rational expectations and so on it is also apparent that this realist focus upon uncertainty tends to give rise to a concentration of attention upon those situations in which possibly numerically measurable probabilistic knowledge is thought to be available clearly such accounts are important nevertheless i wish to suggest that such a restricted choice of focus for the realist is not entirely satisfactory since in particular it tends to lead to a neglect of the widespread observation that feelings of certainty and claims to truth are also pervasive in human society i want to suggest moreover that if we are to account for the latter observation and economists concerned with realism of analysis surely need to then various arguments and conclusions have to be taken on board which in turn appear to bear consequentially upon the nature and conduct of economic analysis in general section i below discusses such possible limitations of existing realist accounts of agent knowledge in some detail the suggested route for responding to and resolving apparent problems which involves the argument that aspects of knowledge can have a relative as well as an absolute character is described in sections ii and iii and the various analytical consequences of the account there set out are discussed in section iv section v contains concluding comments and touches upon ways in which the proposed account might be appraised and rnade operational

the revenge of homo economicus contested exchange and the revival of political economy recent developments in microeconomic theory have shown that the self interested behavior underlying neoclassical theory is artificially truncated it depicts a charmingly victorian but utopian world in which conflicts abound but a handshake is a handshake but a handshake is not always a handshake studies of principal agent analysis the economics of information radical political economy mechanism design and transactions cost economics have all focused on the difficulties involved in policing and enforcing the actual process of market exchange abandoning the victorian world of neoclassical theory will redirect economists to an older conception of their profession what once was called political economy by taking optimizing more seriously post walrasian economics has inspired a revolution in economic thought fostering both new theoretical departures and alternative conceptions of the capitalist economy we will offer our own interpretation of this literature focusing on the widely recognized fact that the terms arising from exchange are not generally enforceable at zero cost to the exchanging parties where some aspect of the good or service supplied is both valuable to the buyer and costly to provide the absence of third party enforcement of claims gives rise to endogenous enforcement strategies we refer to this relationship as a contested exchange because unlike the transactions of walrasian economics the benefit the parties derive from the transaction depends on their own capacities to enforce competing claims

real exchange rates and structural breaks cointegration tests often fail to detect the existence of long term relationships such as purchasing power parity for two reasons i these tests have low power and ii structural shocks can alter the long run real exchange rate in this paper the long run movements of five exchange rates relative to the us dollar and five european exchange rates relative to the deutsche mark are investigated in particular corrected cointegration tests are applied which take into account the possibility of a structural break at an unknown date empirical evidence is found that structural changes can be responsible for most exchange rate deviations from their equilibrium defined by purchasing power parity or a generic monetary model

searching for stationarity purchasing power parity under the current float abstract using panel data methods we investigate long run purchasing power parity by testing for unit roots in real exchange rates of industrial countries under the current float the evidence against the unit root hypothesis is stronger for larger than for smaller panels for monthly than for quarterly data and when the german mark rather than the united states dollar is used as the base currency while we find that accounting for serial correlation considerably weakens the evidence against the unit root null the results as a whole are consistent with long run purchasing power parity

aggregation is not the solution the ppp puzzle strikes back we acknowledge financial support from the spanish ministry of education through grants sej2006 00369 and sej2005 05215 the fundacion ramon areces the barcelona economics program of crea and from the aragon s research unit seim

understanding the empirical literature on purchasing power parity the post bretton woods era abstract this paper argues that the empirical failure of statistical tests of ppp in post bretton woods data is largely due to the low power of the tests employed this result is demonstrated using monte carlo experiments on the size and power of different testing procedures a new procedure based on horvath and watson econometric theory 11 pp 984 1014 1995 has greater power than previous approaches using the horvath watson procedure we find moderate evidence in favor of ppp in the post bretton woods era

wage differentials employer size and unemployment the unique equilibrium solution to a game in which a continuum of individual employers choose permanent wage offers and a continuum of workers search by sequentially sampling from the set of offers is characterized wage dispersion is a robust outcome provided that workers search while employed as well as when unemployed the unique nondegenerate equilibrium distribution of wage offers is constructed for three cases 1 identical workers and employers 2 identical employers and an atomless distribution of worker supply prices and 3 identical workers and an atomless distribution of job productivities copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

an empirical examination of long run purchasing power parity using cointegration techniques this paper presents an empirical analysis of long run purchasing power parity ppp for five major exchange rates using recently developed econometric techniques on the cointegration of economic time series our empirical results are extremely unfavourable to the ppp hypothesis as a long run equilibrium condition even with an allowance made for measurement error and or tranportation costs in particular we are unable to reject the hypothesis of non cointegration of the exchange rate and relative prices for any of the countries concerned far from finding a stable long run proportionality between exchange rates and relative prices our results therefore suggest that they tend to drift apart without bound

post modernism and the notion of rationality in economics this article assesses contributions from economists who see the postmodernist framework as providing a viable alternative to the behavioristic model of action in economics it is found that although postmodernism identifies many of the problems of mainstream economics it too remains unable to sustain the notions of choice and agency that it preaches because it fails to escape the anthropocentrism of positivist philosophy once this anthropocentrism is abandoned it can be seen that agency lies not only in linguistic redescription but also in the understanding of real causal mechanisms that exist and act independently of any individual human agents c 1995 academic press inc copyright 1995 by oxford university press

the overvaluation of purchasing power parity abstract recent panel studies of purchasing power parity have reported strong evidence of mean reversion in real exchange rates however these studies fail to control for cross sectional dependence in the data this failure has dramatic consequences raising the significance level of tests with a nominal size of 5 percent to as much as 50 percent it is shown in this paper that controlling for cross sectional dependence no evidence against the random walk null can be found in panels of up to 64 real exchange rates this finding cannot be attributed to low power as there is ample power in panels of this size to reject the unit root null