spurious volatility in historical unemployment data this paper shows that the stabilization of the unemployment rate between the pre 1930 and post 1948 eras is an artifact of improvements in data collection procedures prewar methods are used to construct postwar unemployment data that are consistent with the historical data the constructed postwar series is nearly as volatile as the pre 1930 unemployment data the constructed postwar data are systematically more volatile than the actual postwar data because the cyclical behavior of the labor force and productivity are misspecified in the construction procedures the relationship between the actual and constructed postwar unemployment series is used to construct new historical data

testing the response of consumption to income changes with noisy panel data this paper tests the rational expectations lifecycle model of consumption against i a keynesian model and ii the rational expectations lifecycle model with imperfect capital markets the tests are based upon the relative responsiveness of consumption to income changes that can be predicted from past information and income changes that cannot he predicted the tests allow for measurement error in income the results reject the keynesian model and generally support the lifecycle model but the results are not sufficiently precise to rule out the possibility that some households are liquidity constrained measurement error has a strong influence on the relationship between consumption and income

models of currency crises with self fulfilling features the discomfort a government suffers from speculation against its currency determines the strategic incentives of speculators and the scope for multiple currency market equilibria after describing an illustrative model in which high unemployment may cause an exchange rate crisis with self fulfilling features the paper reviews some other self reinforcing mechanisms recent econometric evidence seems consistent with the practical importance of these mechanisms

volunteering and life or financial shocks does income and wealth matter volunteering is a dominant social force that signals a healthy state however although the literature on volunteering is extensive knowledge on how life s discontinuities life and financial shocks affect volunteering is limited because most studies work with static cross sectional data to reduce this shortcoming we use longitudinal data from australia hilda that track the same individuals over time to assess how individuals from different income and wealth groups respond to life and financial shocks with respect to volunteering although both income and wealth can act as buffers against life shocks by providing stability and reducing vulnerability which decreases the need to actually change behaviour patterns we observe more heterogeneity than expected and also stickiness at the lowest income levels response delays in post shock volunteering also suggest that volunteering habits may be driven and influenced by strong commitment and motivation that are not shattered by life or financial shocks in fact the amount of time spent volunteering tends to increase after negative income shocks and decrease after positive income shocks

contractionary devaluation risk evidence from the free silver movement 1878 1900 i identify significant effects of devaluation risk on interest rates and output using us silver coinage policy news between 1878 and 1900 as clean shocks to exchange rate expectations the free sil

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

testing a model of technological trajectories abstract in this paper we test a model of technological trajectories quantitative predictions are based on some qualitative statements described in pavitt s taxonomy research policy 1984 13 343 373 the test concerned both the realism of the predicted associations between industrial sectors and patterns of technical change and the predictive power of the model the data come from central statistical office of italy istat national research council of italy cnr a survey on technological innovation in the italian manufacturing industry the results of the test do not seem inconsistent with the model s predictions although one of them turned out to be of little significe from a statistical standpoint the variability of innovative behaviour at firm level is confirmed once again thus making more challenging the task of those searching for useful theories on industrial patterns of technological innovation

nonmarket institutions for credit and risk sharing in low income countries the design credit and risk institutions in low income countries provides one of the most exciting testing grounds for theories of contracting with imperfect information and limited enforcement this paper reviews some of the recent literature with a special focus on nonmarket institutions that cope with risk and provide credit this literature attempts to bring together insights from economic theory especially information economics contract theory and mechanism design theory however it is also applied being motivated by the circumstance of the poor countries that their authors have visited and studied

cooperation between rivals informal know how trading it has long been recognized that it is difficult for an innovating firm to fully appropriate the benefits arising from its innovations and that desired research might therefore not be performed nelson 1959 pp 297 306 one sometimes possible solution to this dilemma is cooperative r d conducted by firms who share the costs and benefits of particular r d projects johnson 1973

stable coalition structures with open membership and asymmetric firms i study games of coalition formation with open membership where firms form associations in order to decrease their costs before competing on the market according to previous analyses only the grand coalition forms at the nash equilibrium of such games i show that this result hinges on the assumption of symmetric firms i therefore introduce asymmetric firms in a game where only two associations can form i demonstrate that there exists a coalition proof nash equilibrium coalition structure in this game and that when the equilibrium involves two associations all the members of an association have a higher taste for this association than all nonmembers do journal of economic literature classification numbers c70 c72 l13

how national institutions influence technology policies and firms knowledge building strategies a study of fuel cell innovation across industrialized countries abstract the central thesis advanced in this study is that firms knowledge building strategies can be usefully explained by the variations in their national institutional contexts using an inductive approach a study of fuel cell innovation across the u s france japan and norway demonstrates how countries socio political institutions characterized by their levels of statism and corporatism contribute to variations in technology policies pertaining to investment collaboration internationalization and diversity these technology policies are sources of advantages and disadvantages for firms with implications for their knowledge building strategies the proposed theoretical framework is especially relevant in the context of industry emergence and r d internationalization

location decentralization and knowledge sources for innovation when firms seek to innovate they must decide where to locate their innovation activity this location choice requires firms to make a simultaneous choice about the organizational structure of innovation activity almost by definition multiple locations per firm imply some degree of decentralization we compare predictions of the knowledge based view with the predictions of organizational economics regarding the location and decentralization of r d using firm level data on r d locations in finland we examine the conditions under which firms with multiple r d locations also have greater innovation output our results indicate that multilocation of r d activity is positively associated with imitative innovation output and is strongly correlated with greater external knowledge sourcing we also find that the positive association between multiple r d locations and innovative output does not apply to new to the market innovations the results are consistent with the interpretation that multilocation of r d enables firms to access a broad set of external sources of knowledge in pursuit of imitative rather than new to the market innovation moreover these findings imply heterogeneity in r d strategies between firms pursuing new to the market innovation and firms pursuing imitative innovation it is thus important to distinguish between new to the market and imitative innovations because their determinants may differ

life satisfaction dynamics with quarterly life event data using life satisfaction responses from australian panel data we examine the questions of when and to what extent individuals are affected by major positive and negative life events including changes in financial situation marital status death of a close relative and being the victim of crime the key advantage of our data is that we are able to identify these events on a quarterly basis rather than on the yearly basis used by previous studies we find evidence that life events are not randomly distributed that individuals anticipate major events to a large extent and that they fully adapt to many events within 12 months the estimates can be used to calculate monetary values needed to compensate individuals for life events using a new valuation methodology that incorporates these dynamic factors produces considerably smaller compensation valuations than those calculated using the standard approach

currency crises and monetary policy in an economy with credit constraints this paper presents a simple model of currency crises which is driven by the interplay between the credit constraints of private domestic firms and the existence of nominal price rigidities the possibility of multiple equilibria including a currency crisis equilibrium with low output and a depreciated domestic currency results from the following mechanism if nominal prices are sticky a currency depreciation leads to an increase in the foreign currency debt repayment obligations of firms and thus to a fall in their profits this reduces firms borrowing capacity and therefore investment and output in a credit constrained economy which in turn reduces the demand for the domestic currency and leads to a depreciation we examine the impact of various shocks including productivity fiscal or expectational shocks we then analyze the optimal monetary policy to prevent or solve currency crises we also argue that currency crises can occur both under fixed and flexible exchange rate regimes as the primary source of crises is the deteriorating balance sheet of private firms

good bye financial repression hello financial crash some unintended consequences of financial liberalization in latin america are analyzed in this paper intrinsic imperfectious in financial markets and the policy dilemmas they pose are reviewed first the stylized facts of southern cone experiments in financial liberization are then presented alternative ways of organlzing domestic capital markets under latin american conditions are discussed and an eclectic reform mongering program is proposed

alfred chandler and knowledge management within the firm this essay examines the role of knowledge management defined as the management of processes affecting the creation communication distribution and exploitation of knowledge concerning corporate strategy markets product and process technologies and management practices within the corporation in alfred d chandler s work on the modern corporation along with efforts to avoid transaction cost problems the management of firm specific information and knowledge was central to the 19th century transformation of us corporate structure that chandler examined in the visible hand knowledge management also played a key role in the creation of intrafirm organizations for managing the creation of knowledge management of innovation and acquisition of technologies from external sources industrial r d and the product diversification that emerged from the in house r d facilities of many of these firms contributed to the development of the so called m form corporation examined by chandler in strategy and structure in which corporate management and strategy formulation were organizationally differentiated and separated from functional management finally chandler s last work on the success and failure of united states japanese and western european firms in the modern electronics pharmaceuticals and chemicals industries emphasized the role of the integrated learning base within these firms and the varying degrees of success with which established firms were able to sustain these learning bases and or apply them to new markets and technologies copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

narrative sign restrictions for svars we identify structural vector autoregressions using narrative sign restrictions narrative sign restrictions constrain the structural shocks and or the historical decomposition around key historical events ensuring that they agree with the established narrative account of these episodes using models of the oil market and monetary policy we show that narrative sign restrictions tend to be highly informative even a single narrative sign restriction may dramatically sharpen and even change the inference of svars originally identified via traditional sign restrictions our approach combines the appeal of narrative methods with the popularized usage of traditional sign restrictions

innovation and cooperation implications for competition and antitrust n k robel laureate robert solow and his colleagues on mit s industrial productivity commission recently noted dertouzos lester and solow 1989 p 7 undeveloped cooperative relationships between individuals and between organizations stand out in our industry studies as obstacles to technological innovation and the improvement of industrial performance and later p 105 that interfirm cooperation in the u s has often though not always been inhibited by government antitrust regulation these striking conclusions warrant further exploration unfortunately industrial organization textbooks still discuss horizontal cooperation and competition almost exclusively in terms of standard cartel theory on the other hand vertical cooperation contracting is viewed differently and some textbooks provide treatments of supplier buyer relationships in which cooperation is viewed as enhancing efficiency both in the textbooks and in policy discussion among economists cooperation among competitors is highly suspect being perhaps the last bastion of what was once referred to as the inhospitality tradition in antitrust as a result very little literature addresses how cooperation among competitors can promote competition notwithstanding that cooperation among competitors may sometimes be essential if innovating firms are to compete in today s increasingly global markets imai and baba 1989 such cooperation is already important in japan and in europe 1

how important are banks for development national banks in the united states 1870 1900 abstract do banks matter for growth and if so how this paper examines the effects of national banks in the united states from 1870 to 1900 i use the discontinuity in entry caused by a large minimum size requirement to identify the effects of banking for the counties on the margin between getting a bank and not gaining a bank increased production per person by 10 national banks in rural areas improved agriculture over manufacturing moving counties toward geographic comparative advantage since these banks made few long term loans the evidence suggests that the provision of working capital and liquidity matters for growth

monetary intervention mitigated banking panics during the great depression quasi experimental evidence from a federal reserve district border 1929 1933 the federal reserve act divided mississippi between the 6th atlanta and 8th st louis districts during the great depression these districts policies differed atlanta championed monetary activism and the extension of aid to ailing banks st louis eschewed expansionary initiatives during a banking crisis in 1930 atlanta expedited lending to banks in need st louis did not outcomes differed across districts in atlanta banks survived at higher rates lending continued at higher levels commerce contracted less and recovery began earlier these patterns indicate that central bank intervention influenced bank health credit availability and business activity

the benefits of commitment to a currency peg aggregate lessons from the regional effects of the 1896 u s presidential election we develop a method to use the one time cross sectional impact of a cleanly identified shock to identify its aggregate impact through the use of a factor model we apply this methodology to evaluat

leveraging research and development assessing the impact of the u s advanced technology program this paper examines the factors that affect a firm s chances of winning an award from the advanced technology program atp and the subsequent impact of the award on a firm s success in raising additional funds for its research and development rd the halo effect from the award increases the success of these firms in attracting additional funding from other sources our conclusion is that the atp is leveraging activities that have a strong potential for broad based economic benefit

volunteer labor supply abstract we model the supply of volunteer labor which received an explicit wage of zero quantitatively important it constituted over 5 percent of the entire labor supply in the united states in 1980 both consumption and investment models are considered the former positing volunteering as an ordinary consumer good while the latter posits it as a means of obtaining on the job experience empirical estimation based on survey data discloses statistically significant effects of price and income variables on the supply of volunteer labor

imitation costs and patents an empirical study it has long been recognised that the costs of imitating new products have an important effect on the incentives for innovation in a market economy as arrow i962 and others have pointed out if firms can imitate an innovation at a cost that is substantially below the cost to the innovator of developing the innovation there may be little or no incentive for the innovator to carry out the innovation in their discussions of the innovation process economists frequently have called attention to the major role played by the costs of imitation but there has been little or no attempt to measure these costs to test various hypotheses concerning the factors influencing them or to estimate their effects in this paper we report some findings of what seems to be the first study of this topic in addition we present data regarding the effects of patents on imitation costs and on the rate of innovation

national innovation systems and the intermediary role of industry associations in building institutional capacities for innovation in developing countries a critical review of the literature abstract developed over the past three decades the national innovation system concept nis has been widely used by both scholars and policy makers to explain how interactions between a set of distinct nationally bounded institutions supports and facilitates technological change and the emergence and diffusion of new innovations this concept provides a framework by which developing countries can adopt for purposes of catching up initially conceived on structures and interactions identified in economically advanced countries the application of the nis concept to developing countries has been gradual and has coincided in the nis literature with a move away from overly macro interpretations to an emphasis on micro level interactions and processes with much of this work questioning the nation state as the most appropriate level of analysis as well as the emergence of certain intermediary actors thought to facilitate knowledge exchange between actors and institutions this paper reviews the nis literature chronologically showing how this shift in emphasis has diminished somewhat the importance of both institutions particularly governments and the political processes of institutional capacity building in doing so the paper suggests that more recent literature on intermediaries such as industry associations may offer valuable insights to how institutional capacity building occurs and how it might be directed particularly in the context of developing countries where governance capacities are often lacking contributing to less effective innovation systems stagnant economies and unequal development

hourly payment and volunteering the effect of organizational practices on decisions about time use we examine how organizational practices making an economic evaluation of time salient such as hourly pay can lead people to spend less time on uncompensated work volunteering using nationally representative survey data in study 1 we showed that with other factors that might affect time decisions controlled people paid by the hour were both less likely to volunteer and spent less time volunteering than counterparts who were not paid hourly study 2 showed that having people calculate their hourly wage was associated with decreased willingness to volunteer and that this experimental manipulation only affected people not paid by the hour because work organizations are typically institutionalized in every sense of that term scott 1995 with their management practices often assuming a taken for granted quality e g zucker 1977 people can learn decision rules and ways of thinking at work that they may then take with them into other spheres of their lives specifically people may develop a particular psychology of time and come to make different decisions about time use depending on the management practices relevant to the evaluation of time to which they are exposed although we believe that management practices and the dimensions of decisions about time that they may affect are many we begin our inquiry by focusing on the effects of hourly payment on the decision to volunteer time we argue that being paid by the hour almost inevitably makes salient an economic frame for the evaluation of time being compensated on an hourly basis predisposes people to assess how they spend their time in terms of the monetary returns from their decisions e g evans barley kunda 2004 we further argue that this monetary or economic frame surrounding time use is particularly relevant for decisions about work and work like activities in this article we focus on volunteering a theoretically important class of work that is freely undertaken without remuneration tilly tilly 1994 because volunteering has been defined as work done without pay it is logical to argue that to the extent that the practice of hourly payment increases the salience of the economic evaluation of time people paid by the hour should be less willing to volunteer and should volunteer less of their time than those not paid by the hour we used a large nationally representative survey with numerous control variables as well as an experiment in which people calculated their hourly wage to illustrate the effect of the framing of compensation on decisions about time use

capitalism as an engine of progress economists from marx to schumpeter have touted capitalism as an engine of technical progress but what kind of an engine is it what are its key components how does it work

lessons from an economy with limited market functions r d in hungary in the 1980s abstract in the former socialist countries science developed as a leading force hungary became a special case since its science policy in the last two decades served the idea of new economic mechanism introduced in 1968 market oriented socialism still remained a shortage economy with lack of competition and of market demand for technical development the r d institutions had adjusted to the economic environment and had developed a great deal of business oriented activities to survive the falling budget support the relationship between academia and industry was unbalanced as a special kind of science push model due to the economic environment of shortage the original model was upside down instead of leading economic growth r d institutions had to adjust to the lower technical level of the industry facing political and economic transitions the scientific and business interests and values have been mixed or are overlapping and are both in danger if the market economy does not soon develop

managing exchange rate crises evidence from the 1890s abstract this paper investigates the effectiveness of the monetary authority s borrowing policies in resolving exchange rate cises it shows why obtaining loans or lines of credit in foreign currency may avoid at least temporarily the devaluation of a fixed rate and discusses the problem of the optimal size of the loan and or the line of credit the analysis focuses on a particular episode of foreign exchange rate pressure during the troubled years between 1894 to 1896 the results suggest that the borrowing policy followed by the us treasury in those years was effective in avoiding the collapse of the united states gold standard and that the amount of the borrowing undertaken by the treasury might have been optimal

absorptive capacity coauthoring behavior and the organization of research in drug discovery we examine the interface between for profit and publicly funded research in pharmaceuticals firms access upstream basic research through investments in absorptive capacity in the form of in house basic research and pro publication internal incentives some firms also maintain extensive connections to the wider scientific community which we measure using data on coauthorship of scientific papers between pharmaceutical company scientists and publicly funded researchers connectedness is significantly correlated with firms internal organization as well as their performance in drug discovery the estimated impact of connectedness on private research productivity implies a substantial return to public investments in basic research

collective invention during the british industrial revolution the case of the cornish pumping engine in this paper we argue that together with individual inventors and firms what robert c allen 1983 has termed as collective invention settings that is settings in which rival firms freely release each other pertinent technical information were also a crucial source of innovation in the industrial revolution period until now this has been very little considered in the literature this paper focuses on one of these cases the cornish mining district in cornwall during the early nineteenth century a notable collective invention setting gradually emerged this case is particularly remarkable because it was capable of generating a continuous and sustained flow of improvements in steam pumping technology which in the end greatly contributed to improve the thermodynamic efficiency of the steam engine in this paper we study in detail the specific economic circumstances that led to the formation of this collective invention setting and we analyses its consequences for the rate of technological innovation

industrial research and sources of innovation a cross industry analysis of italian manufacturing firms abstract this paper deals with sources of innovation in the italian manufacturing industry it uses an extensive database on 8 220 firms which developed technological innovations during the period 1981 85 r d turns out to be a major source of innovation for a limited number of innovating firms non r d performers mainly rely upon the acquisition of external technology equipment and machinery the paper shows that there is not a statistically significant difference between innovation sources in r d firms versus non r d firms this suggests that the presence of an r d laboratory does not make any difference in how the overall technological information is gathered by innovating enterprises the analysis of the role played by r d activities in innovation development shows that it accounts only for 17 9 percent of costs while production investment absorbs 51 5 percent of total financial resources as a conclusion r d activity being only one phase of the innovation process cannot be an accurate indicator of a firm s commitment to technological innovation r d is often a minor source of innovation and policy measures should not concentrate just on r d support encouraging and financing innovative suppliers and users may be more effective than helping manufacturers of final products

knowledge and competitive advantage the coevolution of firms technology and national institutions this issue of jibs offers reviews of two books that analyse the dynamic interaction between the business environments and business strategies in very different ways the institutional underpinnings for business strategies are a major research topic for comparative management aiming to explain why in different contexts firms pursue different strategies and with different implications for performance j peter murman in knowledge and competitive advantage takes a historical perspective focusing on the co evolutionary processes between national innovation systems business strategies and performance this books thus adds to the industry level longitudinal research reviewed in jibs no 4 2003 tom murtha et al s managing new industry creation and david mckendrick et al s from silicon valley to singapore

arresting banking panics federal reserve liquidity provision and the forgotten panic of 1929 scholars differ on whether central bank intervention mitigates banking panics in april 1929 a fruit fly infestation in florida forced the u s government to quarantine fruit shipments from the state and destroy infested groves in july depositors panicked in tampa and surrounding cities the federal reserve bank of atlanta rushed currency to member banks beset by runs we show that this intervention arrested the panic and estimate that bank failures would have been twice as high without the federal reserve s intervention our results suggest that similar interventions may have reduced bank failures during the great depression

the payoff to work without pay volunteer work as an investment in human capital despite the widespread belief that volunteer work enhances an individual s employment prospects the hypothesis that volunteer work increases one s earnings has

the roles of science in technological innovation abstract one of the central issues in science policy during the past decade has been the extent to which the national levels of expenditure on scientific education and research influence the standard of living this paper provides empirical evidence to show that the pay off from this investment in science is more complex and indirect than previously supposed

banks free banks and u s economic growth the federalist financial revolution may have jump started the u s economy into modern growth but the free banking system 1837 1862 did not play a direct role in sustaining it despite lowering entry barriers and extending banking into developing regions we find in county level data that free banks had little or no effect on growth the result is not just a symptom of the era as state chartered banks seem to have strong and positive effects on manufacturing and urbanization jel g21 n21 o43

realignment expectations and the us dollar 1890 1897 was there a peso problem we investigate dollar sterling exchange rate expectations during the period 1890 1908 we show that the dollar faced a peso problem in that for much of the period financial markets expected it to depreciate against sterling but this never in fact happened i e expectations were persistently biased drawing on the economic history of the period we identify 11 events which probably gave rise to realignment expectations once the dollar s adherence to the gold standard was settled as a political matter in the 1896 presidential election expectations of dollar realignment abruptly subsided and united states interest rates fell relative to british rates