thinking about need public spending on the regions mackay r r and williams j 2005 thinking about need public spending on the regions regional studies 39 815 828 the uk treasury accepts that need is the correct guide to spending on public services in different parts of the uk but the formula used to decide changes in devolved spending in scotland wales and northern ireland depends on the population it does not compensate for differences in need with devolved spending determined by need there would be consistency across 11 of the 12 uk regions london would be the sole exception the heavy cost of the capital s public services is part of the argument for a more even distribution of income wealth and employment

spatial divisions of welfare the geography of welfare benefit expenditure and of housing benefit in britain hamnett c spatial divisions of welfare the geography of welfare benefit expenditure and of housing benefit in britain regional studies this paper examines the structure of state welfare expenditure in britain it argues that the geography of state welfare expenditure and its impacts have been relatively neglected given their importance in terms of state expenditure regional distribution and spatial equality it shows that welfare spending is a key component of government expenditure and that it has a distinct regional and local geography the paper shows that there are distinct differences in the geographical incidence of different welfare benefits some of which function to redistribute income from the south to the north of britain and it focuses on the geography of housing benefit as an example of what has been termed spatial divisions of welfare hamnett c les ecarts geographiques de l aide sociale la geographie des prestations sociales et des allocations logement en grande bretagne regional

regional spending a comment on mackay mackay 2001 recently examined the regional pattern of taxation and spending in the uk concluding that for four regions london the south east scotland and northern ireland public expenditure was well above the level expected for their degree of prosperity mackay 2001 had a very approximate measure of the regional pattern of non identifiable government expenditure a major component of the latter is defence spending and a more precise allocation of this suggests that london and the south east get very preferential treatment moreover so does the south west which should be added to the list of well favoured regions this raises important issues of spatial balance and efficiency

policy debates government output and expenditure in uk regions and sub regions an analysis of the new experimental accounts data gripaios p and bishop p 2005 government output and expenditure in uk regions and sub regions an analysis of the new experimental accounts data regional studies 39 805 813 this paper examines the regional and sub regional distribution of uk state spending by analysing new data available from recently published regional government accounts the data indicate wide variations in public spending per head across regions with london being a particular beneficiary the results do not indicate any relationship between gross domestic product per head and public spending and they suggest that in total government spending is doing little to ameliorate regional inequality if the state wishes to pursue an active regional policy it hence needs to consider the regional dimension of all state functions not simply those associated with traditional regional policy

a pseudo criterion for security betas in the finnish stock market because of nonsynchronous trading the traditional estimates for systematic risk are biased especially in small security markets a pseudo criterion is applied to evaluate ten different systematic risk estimates beta coefficients in the thin finnish stock market

a lottery within a lottery an examination of the distribution of lottery funds in england the uk national lottery has been in operation since 1994 an examination of the regional distribution of awards per head of population suggests marked spatial disparities with london doing particularly well and scotland northern ireland wales and the north east faring much better than other regions such disparities also exist at english local authority level with london and some major provincial centres doing much better than more rural authorities such inequalities may give grounds for concern given that they appear to replicate those for other types of government spending the results of an empirical model designed to explain the spatial distribution of awards suggest that in addition to a london effect levels of deprivation have a positive impact another important explanatory variable which has a positive impact on lottery funding is the qualifications of residents which might plausibly reflect the quality of lottery bids received from an area however once these factors are taken account of

industry and firm specific factors of innovation novelty this article investigates the underlying factors that might shape the firm s choices with respect to degrees of innovation novelty using a sample of 2983 firms observed under the portuguese community innovation survey we assess the relative relevance of a set of firm and industry specific factors in explaining firms choices about incremental or radical innovation the results indicate that both the firm s idiosyncratic historical factors giving rise to heterogeneous r d capabilities and the industry context have power to shape the firm s innovation choices even though firm specific factors appear to be more powerful the estimated impacts on firm s innovation novelty are nonetheless significantly moderated by the type of firm and industry

time aggregation and the estimation of the market model empirical evidence data for heavily and lightly traded firms are used to evaluate the effects of temporal aggregation on beta estimates t values and r 2 estimates in addition to our analysis of the standard market model dynamic and random coefficient models are estimated this study evaluates differences in the short term and long term dynamic relationships between the market and each type of firm it is found that temporal aggregation has important effects on both the specification of a market model and the stability of beta estimates

regional taxing and spending the search for balance the financial settlement has been described as the key to devolution public spending above tax in scotland and wales has been criticized public spending is above tax in seven uk regions including four english regions if we treat equal citizens equally public spending will be above tax in poorer regions there is nothing extraordinary about spending above tax but there are important questions with regard to regional levels of expenditure in four regions london south east scotland and northern ireland public expenditure is well above the level expected for their degree of prosperity this article provides possible explanations

friction in the trading process and the estimation of systematic risk abstract this paper considers how estimates of the market model beta parameter can be biased by friction in the trading process information decision and transaction costs that a leads to a distinction between observed and true returns b causes observed returns to be generated asynchronously for a set of interdependent securities and c thereby introduces serial cross correlation into security returns several propositions are derived from which consistent estimators of beta are obtained and the effect of differencing interval length on beta estimates is specified the formulation is contrasted with the related analyses of scholes williams 1977 and dimson 1979

innovation and industry evolution the theoretical literature on innovation has been concerned with a single innovation produced by a number of identical agents by contrast we consider a market in which one firm is the current incumbent while the remaining firms are challengers moreover we consider a sequence of innovations so that success does not imply that the successful firm reaps monopoly profits forever after but only until the next better innovation is developed we begin with a fully optimizing behavioral model and derive the equivalent of the schumpeterian process of creative destruction that is a firm enjoys temporary monopoly power but is soon overthrown by a more inventive challenger the essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process the fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers goods the new methods of production or transportation the new markets the new forms of industrial organization that capitalist enterprise creates schumpeter 1942 pp 82 83

the regional dimension of taxes and public expenditure in ireland morgenroth e regional dimension of taxes and public expenditure in ireland regional studies in ireland as in many other countries there has been an ongoing debate on the nature degree and trends of regional imbalance however relatively little is known about the effects of policies at the regional level in ireland this paper considers two aspects of public policy namely the fiscal system and public expenditure in particular regional government accounts are constructed that identify the level of taxation subsidization and public expenditure at the regional level the analysis of these data confirms that the fiscal system does reduce relative income differences in ireland furthermore there are substantial resource transfers across regions morgenroth e les impots et les depenses publiques en irlande le point de vue regional regional studies en irlande comme dans la plupart des pays on discute du desequilibre regional de sa nature son importance et ses tendances cependant on sait tres

an econometric model of serial correlation and illiquidity in hedge fund returns the returns to hedge funds and other alternative investments are often highly serially correlated in sharp contrast to the returns of more traditional investment vehicles such as long only equity portfolios and mutual funds in this paper we explore several sources of such serial correlation and show that the most likely explanation is illiquidity exposure i e investments in securities that are not actively traded and for which market prices are not always readily available for portfolios of illiquid securities reported returns will tend to be smoother than true economic returns which will understate volatility and increase risk adjusted performance measures such as the sharpe ratio we propose an econometric model of illiquidity exposure and develop estimators for the smoothing prole as well as a smoothing adjusted sharpe ratio for a sample of 908 hedge funds drawn from the tass database we show that our estimated smoothing coecien ts vary considerably across hedge fund style categories and may be a useful proxy for quantifying illiquidity exposure

estimating and adjusting for the intervalling effect bias in beta the concept of beta as the measure of systematic risk has been widely accepted in the academic and financial community increasingly betas are being used to estimate the cost of capital for corporations despite this however biases are generally present in ordinary least squares ols estimates of beta in particular empirical estimates of beta are affected by friction in the trading process which delays the adjustment of a security s price to informational change and hence leads to an intervalling effect bias in this paper we present and empirically test two procedures for correcting this bias the first is to estimate the asymptotic value that ols beta approaches as the differencing interval is lengthened without bound the second procedure is to infer the value of beta by adjusting ols beta for cross sectional differences in the intervalling effect as a function of the depth of the market for a security as measured by its value of shares outstanding our results suggest that a substantial correction is needed to get true beta estimates from short differencing interval data

handling missing prices in a thinly traded stock market implications for the specification of event study methods this paper employs a simulation approach to provide new evidence on how thin trading affects the specification of the event study methods in a thinly traded environment we examine the properties of the returns computed with alternative procedures for handling missing prices as well as their impact on the specification of the event study methods we use the simulation approach to asses the specification of different methods the results indicate that the way missing prices are approximated clearly affects the estimated abnormal returns and the consequent test statistics the increase of variance in the event period needs to be taken into account when estimating standard deviations

return intervals systematic risk estimates and firm size abstract prior empirical evidence indicates that the size effect in stock returns is sensitive to the return interval used in estimating systematic risk recently handa kothari and wasley 1989 showed that the size effect is decreased when return interval is lengthened on u s data in this paper we demonstrate that on a thin european security market i e in the finnish stock market the case is just the opposite

the stability of uk risk measures and the problem of thin trading this paper examines the problems of estimating risk measures and their stability in thin markets it shows analytically that conventional approaches used in previous studies can lead to serious overestimates of the stability of risk measures when shares are subject to thin trading it then demonstrates using uk data that this is in fact a serious practical problem and that the resultant biases are of precisely the form predicted finally the paper presents reliable evidence on the stability of uk risk measures by using an estimation method designed to avoid thin trading bias using this approach risk measures are found to be as stable in the uk as they are in the usa this paper examines the stability of risk measures in the uk the focus is on providing reliable evidence in a market where many of the shares suffer from thin trading this is important because thin trading can seriously distort stability measures leading to incorrect conclusions indeed this is a problem which has almost certainly afflicted many previous studies of stability the paper makes four main contributions first it shows analytically that thin trading can lead to serious overstatements about stability second it uses uk data to illustrate that this is in fact a serious practical problem and that the biases are of precisely the form predicted this is important for anyone who wishes to interpret previous claims on beta stability in thin markets third the paper presents reliable evidence on the stability of uk betas by using an estimation method designed to avoid thin trading bias besides avoiding bias our

the intervalling effect bias in beta a note abstract based on a comprehensive sample of domestic securities traded on the brussels stock exchange this paper points out the intervalling effect in the estimated betas and examines the speed of convergence of these the results reveal that the estimated betas seem to converge to their asymptotic values and that their value depends on what day the differencing interval starts it also appears that the magnitude of the intervalling effect is inversely related to the market value of the firms

the size of firms and r d investment we construct an industry equilibrium model in which it is costly for consumers who have previously purchased from one firm to switch to competitors this gives firms a certain degree of market power over their established customers the equilibria we identify under these conditions have the following properties 1 there is a nontrivial size distribution of firms although firms are intrinsically identical 2 larger firms make higher profits 3 larger firms spend more on r d 4 larger firms charge on average lower prices and 5 profits are positively correlated over time these properties match empirical regularities concerning the manufacturing and retail sectors in the u s economy

subsidies entry and the distribution of r d investment abstract we analyze the link between entry and r d spending distribution we consider a monopolistic competitive market with free entry in which firms can invest in cost cutting r d by paying a fixed cost first for an intermediate level of fixed cost there is a unique equilibrium in which the market segments into investing and non investing firms we show that the measure of r d investing firms decreases as entry occurs using this result we show how alternative government policies affect the r d spending distribution in particular we characterize the cases in which incentives to promote r d spending can result in exit we show that while subsidy to entry may be welfare neutral from the consumers point of view r d subsidies despite promoting exit sometimes are always welfare improving data motivating these results are drawn from the taiwanese and korean semiconductor industries

monetary and fiscal policy under deep habits allowing habits to be formed at the level of individual goods deep habits can radically alter the fiscal policy transmission mechanism as the counter cyclicality of mark ups this implies can result in government spending crowding in rather than crowding out private consumption in the short run we explore the robustness of this mechanism to the existence of price discrimination in the supply of goods to the public and private sectors we then describe optimal monetary and fiscal policy in our new keynesian economy subject to the additional externality of deep habits and explore the ability of simple policy rules to mimic fully optimal policy we find that the presence of deep habits at empirically estimated levels can imply large externalities that significantly affect the conduct of monetary and tax policy however despite the rise in government spending multipliers implied by deep habits government spending is barely used as a stabilisation tool under the optimal policy

automatic stabilisers european union and national unity tradition seems to require that economists argue forever about the question whether in any disequilibrium situation market forces acting alone are likely to restore equilibrium now this is certainly an interesting question but as social scientists we surely must address ourselves to the broader question is the disequilibrium situation likely to be corrected at all by market or nonmarket forces or by both acting jointly it is our contention that nonmarket forces are not necessarily less automatic than market forces hirschman 1958 p 63 emphasis in the original hirschman and myrdal 1957 consistently insist that the image of a relentlessly taut economy can be a check to curiosity and a bar to true enquiry a proper search for understanding hirschman and myrdal h and m suggest must relax the assumptions which ensure fully informed price signals and reactions that are automatic elastic responsive only then can one approach an economy which is consistent with reality an economic system where bargains and contracts are made at prices which do not clear markets where resources remain unemployed underemployed unrecognised and where there are problems in encouraging adjustment to constantly changing opportuni ties in such an imperfect but realistic economy there may be a role for nonmarket forces h and m make stronger claims given particular emphasis by hirschman is the idea that non market forces emerge naturally inevitably even without conscious volition when the market fails to discover reasonable balance society will recognise will sense the gap and state policies and social institutions will emerge in an attempt to bridge it the argument applies to different forms of balance and has links to myrdal s claim

a fiscal stimulus and jobless recovery we analyze the effects of a government spending expansion in a dynamic stochastic general equilibrium model with mortensen pissarides labor market frictions deep habits in private and public consumption investment adjustment costs a constant elasticity of substitution ces production function and adjustments in employment at both intensive and extensive margins the combination of deep habits and ces technology is crucial the presence of deep habits magnifies the responses of macroeconomic variables to a fiscal stimulus while an elasticity of substitution between capital and labor in the range of available estimates allows the model to produce a scenario compatible with the observed jobless recovery

a closing call s impact on market quality at euronext paris abstract the paris bourse currently euronext paris refined its trading system to include electronic call auctions at market closings in 1996 for its less liquid continuous b stocks and in 1998 for its more actively traded continuous a stocks this paper analyzes the effects of the innovation on market quality our empirical analysis of price behavior for two samples of firms 50 b stocks and 50 a stocks for two different calendar dates 1996 and 1998 indicates that introduction of the closing calls has lowered execution costs for individual participants and sharpened price discovery for the broad market we further observe that market quality is improved at market openings albeit to a lesser extent we suggest that a positive spillover effect explains the closing call s more pervasive impact

autocorrelation of daily index returns intraday to intraday versus close to close intervals abstract first order autocorrelation coefficients of 1 daily equally weighted open to open returns 2 daily equally weighted intraday to intraday returns terminating at each of 23 successive 15 minute intervals of the trading day beginning at 10 15 a m and 3 daily equally weighted and value weighted close to close returns interval 24 are examined a number of findings concerning the behavior of these autocorrelations are reported first order autocorrelation is shown to follow a crude u shaped pattern when plotted against the time of the trading day but there is no significant difference in the behavior of autocorrelations based on open to open returns and 24 hour returns terminating at 10 15 a m evidence that intraday patterns in autocorrelation cannot be explained fully by trading delays also is presented

a dynamic game of r and d patent protection and competitive behavior a theory of dynamic optimal resource allocation to r and d in an n firm industry is developed using differential games this technique represents a synthesis of the analytic methods previously applied to the problem static game theory and optimal control the use of particular functional forms allows the computation and detailed discussion of the nash equilibrium in investment rules this paper addresses the problem of resource allocation to research and development among the important issues that a firm engaging in r and d must evaluate are uncertainty regarding the feasibility and profitability of a particular innovation the possibility of a protracted development period the possibility that a rival firm may innovate first capturing either a patent or a significant share of the new market the possibility that a rival firm may imitate the innovation and appropriate some of the profits in the new market in what follows we will develop a theory of optimal resource allocation to research and development which incorporates the aspects of r and d enumerated above we will use a dynamic game theoretic analysis determining the nash equilibrium strategies for n identical firms the availability of perfect patent protection is shown to accelerate development of the innovation and the effect of increasing rivalry is addressed the impact of increasing rivalry on nash equilibrium investment in r and d depends upon the degree of appropriability of rewards if patent protection is perfect then increasing the number of nash rivals results in increased r and d effort however when imitation is rewarded the opposite may be true finally some notions of competitive and perfectly competitive equilibrium are examined in the context of the model developed below

economics of devolution decentralization in the uk some questions and answers mcgregor p g and swales k 2005 economics of devolution decentralization in the uk some questions and answers regional studies 39 477 494 the paper explores the economic implications of the radical process of devolution decentralization and delegation of decision making and policy delivery initiated by the post 1997 uk labour government it is argued that the economies of all the presently devolved regions ultimately suffer if the barnett formula is rigorously imposed it is shown that the efficiency of devolving fiscal authority involves a balance of positive and negative elements depending on wage bargaining and migration responses it is then argued that delegation devolution of regional economic development policies while exploiting regional information advantages neglects regional economic interdependence so there are potential gains from greater cooperation coordination