allocative disturbances and specific capital in real business cycle theories chanted albeit in varying degree with business cycle theories that either posit unexplained nominal wage and price rigidities or rely on misperceptions about nominal variables as a key driving force one response to this disenchantment has been a concentration of research effort on real business cycle theories aside from dissatisfaction with competitor theories the very visible oil price shock episodes of the 1970 s lent plausibility to the view that exogenous real disturbances cause large fluctuations in aggregate economic activity this essay on real business cycle theory considers the role of allocative disturbances in aggregate economic fluctuations when human and physical capital are specialized by allocative disturbances i mean events that impinge on the economy by inducing a costly time consuming reallocation of specialized resources at least since the publication of ricardo s principles in 1817 economists have recognized some of the potentially important aggregate consequences of allocative disturbances ricardo writes

power in firm networks what it means for regional innovation systems christopherson s clark j 2007 power in firm networks what it means for regional innovation systems regional studies 41 1223 1236 the role of power within regional firm networks is noted in empirical studies but insufficiently theorized it is suggested that network functioning is conflictual and that more powerful network members particularly transnational corporations tncs leverage regional resources to advance their sustainable competitive advantage the agendas and power exercised by tncs within regionalized firm networks have significant implications for regional policy and the uneven allocation of resources and capacities within and among regions the findings indicate that transnational firm access to resources that are critical to innovation including university research and skilled labour negatively affects the potential for innovation by small and medium size firms christopherson s et clark j 2007 le pouvoir au sein des reseaux d entreprise son importance pour les systemes d

assessing empirical approaches for analyzing taxes and labor supply recent surveys on the labor supply responses of men document a divergence in the estimates of substitution and income effects obtained using various estimation approaches generally studies accounting for nonlinear tax schedules in a static setting via a piecewise linear approach produce estimates that typically imply higher substitution and lower income responses than are suggested by empirical work applying other approaches this paper demonstrates that maximum likelihood estimation of a consumer choice problem with nonlinear budget sets implicitly relies on the satisfaction of inequality constraints that translate into behaviorally meaningful restrictions these constraints arise not as a consequence of economic theory but instead as a requirement to create a properly defined statistical model in the analysis of piecewise linear budget sets the implicit constraints required by maximum likelihood in estimation amount to imposition of slutsky conditions at all wage income combinations associated with kink points in the analysis of differentiable budget sets the tacit constraints invoked by maximum likelihood also involve inequality restrictions on slutsky terms the empirical work presented in this study supports the contention that these implicit constraints play a major role in explaining the discrepancies in estimates found in the literature on men s labor supply

a comparison of the dynamics of industrial clustering in computing and biotechnology abstract this paper compares the dynamics of the process by which industrial clusters emerged in the us computing and biotechnology industries it examines whether new companies are attracted by industry strength in particular sectors or by the strength of the science base at particular locations in biotechnology it also compares the growth of incumbent firms in the two industries and asks whether growth is boosted by being within a cluster the paper finds that within computing there are some important cross sectoral effects on entry while in biotechnology these cross sectoral effects are more limited in biotechnology the science base plays an important role in promoting entry the growth of incumbent firms in both industries is promoted by strength in the company s own sector and cross sectoral effects and the role of the science base are negligible

the asymmetric impact of oil prices interest rates and oil price uncertainty on unemployment in the us abstract in this study we investigate the presence of asymmetric interactions between oil prices oil price uncertainty interest rates and unemployment in a cointegration framework utilizing the nonlinear auto regressive distributed lag nardl approach we show the asymmetric responses of unemployment to changes in oil prices oil price uncertainty and interest rates in the long run more specifically the results of our analyses suggest that an increase in oil price results in increased unemployment while there is no significant impact of reduced oil prices on the one hand reduced oil price uncertainty leads to a decrease in unemployment whereas an increase in oil price uncertainty does not have an impact we also observe increased unemployment in response to a decrease in interest rates as the impact of increased interest rates is not significant last but not least we find that option implied oil price volatility as a measure of oil price uncertainty outperforms the conditional volatility of crude oil prices in predicting unemployment this study provides valuable implications for policymakers to design sound economic policies

medical interventions among pregnant women in fee for service and managed care insurance a propensity score analysis this paper extends earlier research on the effect of managed care on the receipt of four medical interventions for pregnant women ultrasound induction stimulation of birth electronic fetal monitor and caesarean delivery propensity score methods are used to account for sample selection issues regarding insurance choice managed care enrollees are more likely to receive an ultrasound which may be indicative of receiving better prenatal care managed care plans reduce the rate of caesarean deliveries but such limitations may be beneficial given the substantial medical evidence that caesarean deliveries are over utilized the results indicate that insurance coverage does influence treatment intensity but that utilization controls and provider financial incentives do not adversely affect care for pregnant women

the effect of uncertainty on investment evidence from texas oil drilling this paper estimates the response of investment to changes in uncertainty using data on oil drilling in texas and the expected volatility of the future price of oil using a dynamic model of firms investment problem i find that i the response of drilling activity to changes in price volatility has a magnitude consistent with the optimal response prescribed by theory ii the cost of failing to respond to volatility shocks is economically significant and iii implied volatility data derived from futures options prices yields a better fit to firms investment behavior than backward looking volatility measures such as garch jel c58 d92 g13 g31 l71 q31 the real options literature beginning with marschak 1949 and arrow 1968 and developed in bernanke 1983 pindyck 1991 and dixit and pindyck 1994 explains how firms should make decisions about investments that involve sunk costs real options theory views such investments as options in that at any point in time a firm may choose to either invest immediately or delay and observe the evolution of the investment s payoff a key insight is that the option to delay has value when future states of the world with positive returns to investing and states with negative returns are both possible even holding the expected future return constant at its present level thus in the presence of irreversibility and uncertainty a naive investment timing rule proceed with an investment if its expected benefit even slightly exceeds its cost is suboptimal because it does not account for the value of continuing to hold the option instead firms should delay irreversible investments until a significant gap develops between the investments expected benefits and costs moreover as uncertainty increases real options theory tells us that the incentive to delay should grow stronger and the gap between the expected benefit and cost necessary to trigger investment should widen while real options theory therefore prescribes how firms should carry out irreversible investments in uncertain environments it is not empirically well known

oil price shocks and the dispersion hypothesis recent research by david lilien shows that a significant fraction of aggregate unemployment can be explained by the dispersion of employment growth across industries this paper presents two new results in this area first it is shown that a significant fraction of the variation in lilien s dispersion index is due to the differential impact of oil shocks across industries second and more important it is shown that once the dispersion in employment growth due to oil shocks is accounted for the residual dispersion has no explanatory power for unemployment

the relation between implied and realized volatility abstract previous research finds the volatility implied by s p 100 index option prices to be a biased and inefficient forecast of future volatility and to contain little or no incremental information beyond that in past realized volatility in contrast we find that implied volatility outperforms past volatility in forecasting future volatility and even subsumes the information content of past volatility in some of our specifications our results differ from previous studies because we use longer time series and nonoverlapping data a regime shift around the october 1987 crash explains why implied volatility is more biased in previous work

constellations of firms and new ventures abstract firm growth is typically described as from the inside out an integrated process of resource capture supplementing the traditional view of growth from within this article focuses on how small firms come into being and grow resorting to cooperative relationships with external organizations through such a process new firms come into being without notable direct investments and grow without significant employment increases the emerging organizational design stresses the importance of constellations constellational structures suggest that organizations do not survive as isolated and self sufficient entities rather they are strongly tied to supportive quasi infrastructural collectives firms grow through various and changing interorganizational relationships we suggest that a growth path of firm disintegration is positively associated with flexibility cost reductions and more favorable competitive position that the success of this path in different industries and countries makes a venturing without investing process more than a small is beautiful fad we find regularities in growth patterns at the beginning an unplanned constellation of firms each geared to solving short term contingent problems planned interfirm linkages and partnerships geared to greater effectiveness arise in more advanced stages in this manner the competitive position of the constellation is improved this article suggests underlying conditions facilitating the growth of organizations that use synergies and the constellations resources effectively

knowledge innovation and institutions global and local dimensions of the ict cluster in waterloo canada bramwell a nelles j and wolfe d a knowledge innovation and institutions global and local dimensions of the ict cluster in waterloo canada regional studies this paper presents research findings on the information and communication technology ict cluster in waterloo ontario cluster dynamics in canada do not conform to some of the key assumptions in the literature on clusters that emphasize the importance of local intra cluster dynamics based on inter firm linkages at the local level the results of this case study indicate that many inter firm linkages in the waterloo ict cluster are non local and that extra firm institutional supports such as the local university and industry association are critical in sustaining and strengthening the cluster knowledge based cluster theories that emphasize the role of local and global knowledge flows and learning processes and the interaction effect of civic capital and local institutions in supporting the development of a local learning economy prov

monetary policy as a process of search monetary policymakers are uncertain about the state of the economy and learn from the economy s reaction to policy private agents however anticipate any systematic attempt to incorporate this information into future policy the authors analyze this feedback in the context of a monetary authority s attempt to stimulate an economy in recession they show that modest stimuli may prove ineffectual if small reductions in interest rates are unlikely to promote a response then they may be followed by further cuts a vicious circle develops in which the expectation that the policy could fail leads investors to delay investment thereby promoting failure copyright 1996 by american economic association

income taxes and entrepreneurs use of labor we investigate the effect of entrepreneurs personal taxes on their use of labor analyze the tax returns of sole proprietors before and after the tax reform act of 1986 and determine how the substantial reductions in marginal tax rates affected their hiring decisions and wage bills individual income taxes exert a statistically and quantitatively significant influence on the probability of hiring workers raising the entrepreneur s tax price by 10 raises the mean probability of hiring by about 12 further taxes influence total wage payments to workers the tax price elasticity of the median wage bill is about 37

the national system of innovation in historical perspective contrary to some recent work on so called globalisation this paper argues that national and regional systems of innovation remain an essential domain of economic analysis their importance derives from the networks of relationships which are necessary for any firm to innovate whilst external international connections are certainly of growing importance the influence of the national education system industrial relations technical and scientific institutions government policies cul tural traditions and many other national institutions is fundamental the historical examples of germany japan and the former ussr illustrate this point as well as the more recent contrast between east asian and latin american countries introduction the national system of friedrich list according to this author s recollections the first person to use the expression national system of innovation was bengt ake lundvall and he is also the editor of a highly original and thought provoking book 1992 on this subject however as he and his colleagues would be the first to agree and as lundvall himself points out the idea actually goes back at least to friedrich list s conception of the national system of political economy 1841 which might just as well have been called the national system of innovation the main concern of list was with the problem of germany overtaking england and for underdeveloped countries as germany then was in relation to england he advocated not only protection of infant industries but a broad range of policies designed to accelerate or to make possible industrialisation and economic growth most of these policies were concerned with learning about new technology and applying it the racialist and colonialist overtones of the book were in strong contrast to the inter nationalist cosmopolitan approach of the classical free trade economists and list s belief that holland and denmark should join the german bund and acquire german nationality because of their descent and whole character reads somewhat strangely in the european community of today nevertheless despite these unattractive features of his outlook he clearly anticipated many contemporary theories after reviewing the changing ideas of economists about development in the years since the second world war the world bank 1991 concludes that it is intangible investment in knowledge accumulation which is decisive rather than physical capital investment as was at one time believed pages 33 35 the report cites the new growth theory

labour market segmentation and workers careers the case of the italian knitwear industry this paper reports on empirical research into the labour market in the knitwear and ready to wear industry in the province of jvjodena emilia in particular it looks at the careers of three categories of workers homeworkers those employed on the production lines of larger firms and artisans 1 italy in common with many other industrialised capitalist countries has witnessed a growing decentralisation of production this tendency has been differently interpreted but a consensus is emerging that such developments are not evidence of economic backward ness 2 on the contrary an industrial structure consisting of firms of different size but with a large number of small and even microscopic enterprises is increasingly being recog nised as one possible avenue of economic development taking this for granted the aim of these notes is to investigate the structure of the labour market in a prosperous area typified by economic growth which has the small firm as its base element

physician behavioural responses to variation in marginal income tax rates longitudinal evidence the longitudinal component of the young physicians surveys 1987 1991 is used to examine the impact of changes in marginal tax rates on key indicators of physician behaviour following the federal tax reform act of 1986 many states marginal income tax rates changed this variation is used to estimate the responsiveness of work hours hmo contracting and practice size to changes in taxes

agglomeration economies among high technology firms in advanced production areas the case of denver boulder lyons d 1995 agglomeration economies among high technology firms in advanced production areas the case of denver boulder reg studies 29 265 278 research on the agglomeration economies generated by high technology industry has tended to focus on either core high technology areas or fabrication clusters this paper directs attention to intermediate or advanced production areas through an investigation of the agglomeration advantages generated by high technology firms in the denver boulder region the results suggest that advanced production areas are characterized by relatively robust and innovative high technology sectors with significant agglomeration advantages derived from the division of labour new firm formation and to a lesser extent local forward and backward linkages although small firms account for the majority of firms in the denver boulder area a small number of large firms are crucial to the future economic health of the area lyons d 1995 les economies d agglomeration des entre

optimal local taxation and french municipal tax distortions this article presents both theoretical and empirical findings in the field of optimal local taxation i e neutral in locational decision this topic should throw light on the question of tax policy and tax reform we extend wildasin s 1987 model including mobile capital in this way we include his marginal cost of congestion taxation rule relating to mobile households proposition 1 this extension provides us with a new rule proposition 2 the optimal share out of taxes among household residents and firms in municipalities to illustrate these results we discuss the french municipal tax system properties and we pick out its main distortions

oil prices and economic activity an asymmetric cointegration approach the aim of this paper is to study the long term relationship between oil prices and economic activity proxied by gdp to account for asymmetries existing in the links between the two variables we propose an approach based on asymmetric cointegration our empirical analysis concerns the u s economy but also the g7 europe and euro area economies results indicate that while standard cointegration is rejected there is evidence for asymmetric cointegration between oil prices and gdp

factors governing the development of high tech industry agglomerations a tale of three cities glasmeier a 1988 factors governing the development of high tech industry agglomerations a tale of three cities reg studies 22 287 301 high tech industries are thought to precipitate structural change in local economies through the creation of backward and forward linkages and new firm spinoffs case studies of high tech firms and products indicate interindustry linkage development is closely associated with product type and organizational structure of firms three product configurations one of a kind customized and standardized generate differing levels of linkage and spinoff potential firms producing customized products with highly variable input structures and established subcontracting relationships are more amenable to linkage and spinoff creation than firms producing one of a kind or standardized products the potential for linked industry development is further diluted because the spatial expansion path of high tech firms has been through the creation of technical branch plants which a

regional clustering of high technology based firms opto electronics in three countries hendry c brown j and defillippi r 2000 regional clustering of high technology based firms opto electronics in three countries reg studies 34 129 144 industrial districts are seen as generating significant advantages in production and innovation however the way concentrations of firms actually relate to one another is often assumed this paper draws on an international study into the opto electronics industry to examine the extent and significance of localized inter company trading and network relationships in six regions national and international relationships are found to be much stronger than local ones this is a function of customer and supplier markets which derive from the technological characteristics of the industry and the way its markets have been created such factors are important for understanding the potential for the development of industrial districts in high technology sectors hendry c brown j et defillippi r 2000 grappes regionales d entreprises a la pointe de la