a new theoretical analysis of deindustrialisation the analysis of deindustrialisation has been led by heterodox economists especially those in the structuralist and kaldorian traditions based on a conception of sectoral specificity and the role of manufacturing in growth sectors are not the units of marxian economic analysis but thinking through the meaning of sectors in marxian terms allows for an analysis of the meaning and implications of a change in sectoral structure deindustrialisation is the sectoral shift that has been most prominent in recent decades and which is likely to have significant implications for the future of capitalism this article develops an original marxian theorisation of deindustrialisation this conceptualisation includes a distinction between two forms of deindustrialisation as well as taking into account changes in sectoral structure the proposed typology considers whether such changes are associated with a shift between those activities that produce surplus value and those that do not or only a shift in the composition of surplus value producing activities the distinction between different forms of deindustrialisation allows for an arguably richer analysis of this phenomenon than in more narrowly sector based approaches

blessing or curse impacts of the brazilian pre salt oil exploration abstract the discoveries of oil and gas in the so called pre salt layer have triggered a lot of discussions about their economic effect in this paper we discuss in detail a less discussed dimension the impact of pre salt layer in the structure of the brazilian economy especially the composition of the industry and exports similar consequences in the country of dutch disease and deindustrialization due to revenues from oil exports are evaluated the methodology used is a dynamic global general equilibrium model with specific features for the treatment of the issues raised

kaldor s growth analysis revisited kaldor s laws on manufacturing as the engine of growth have been tested using cross country data mainly from developing countries for the period 1960 1994 instrumental variable techniques were used to explore problems associated with simultaneity and spuriousness it has been found that manufacturing output growth rate is exogenous as kaldor envisaged and his laws are applicable to most of the developing world

computational suite of models with heterogeneous agents incomplete markets and aggregate uncertainty this paper describes the first model considered in the computational suite project that compares different numerical algorithms it is an incomplete markets economy with a continuum of agents and an inequality borrowing constraint

optimal storage operation under demand charge we study the optimal operation of energy storage operated by a consumer who owns intermittent renewable generation and faces possibly random fluctuating electricity prices and demand charge we formulate the optimal storage operation problem as a finite horizon dynamic program with an objective of minimizing the expected total cost the sum of energy cost and demand charge the incorporation of demand charge faces the consumer with more complicated trade offs on storage operation e g discharging the storage when the energy price is relatively low may not save energy cost but could help to save the demand charge if the net demand is high we establish an important threshold structure for an optimal storage operation policy which enables us to implement the optimal policy in realistic settings with random electricity prices numerical results demonstrate that the characterized optimal threshold policy significantly outperforms the policy that is shown to be optimal without demand charge in the literature even at a low demand charge rate 6 kw

characterising deindustrialisation an analysis of changes in manufacturing employment and output internationally deindustrialisation is typically conceptualised as a decline in manufacturing as a share of total employment from a kaldorian perspective deindustrialisation could have negative implications for long run growth given the special growth pulling properties of manufacturing however defining deindustrialisation purely in terms of employment share is conceptually limiting given that some of the kaldorian processes operate primarily through output rather than employment as well as blunting empirical analysis by not focussing enough on changes in manufacturing share of gross domestic product gdp this study develops a new method using decomposition techniques to analyse changes in manufacturing employment levels and shares in 48 countries over periods of deindustrialisation the analysis separates out changes in the levels and shares of employment manufacturing into components associated with changes in the share of manufacturing in gdp the growth of manufacturing value added the labour intensity of manufacturing production and economic growth the results indicate that in most cases the decline in manufacturing employment is associated primarily with falling labour intensity of manufacturing rather than an overall decline in the size or share of the manufacturing sector we suggest that deindustrialisation should appropriately be defined in terms of a sustained decline in both the share of manufacturing in total employment and the share of manufacturing in gdp copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

kaldor s laws and spatial dependence evidence for the european regions pons novell j and viladecans marsal e 1999 kaldor s laws and spatial dependence evidence for the european regions reg studies 33 443 451 in this paper we provide an outline of kaldor s growth model and test its relevance to the economic experience of european regions during the period 1984 92 kaldor s first law asserts that manufacturing is the engine of economic growth his second proposition also known as verdoorn s law states that there is a strong positive relation between manufacturing productivity growth and manufacturing output growth kaldor s third law holds that overall productivity growth is positively related to manufacturing output growth and negatively related to employment in non manufacturing sectors the empirical results corrected for the presence of spatial autocorrelation indicate that kaldor s second and third laws are compatible with the economic growth of european regions during the period 1984 92 pons novell j et viladecans marsal e 1999 les lois de kaldor et la

electricity trading and negative prices storage vs disposal electricity cannot yet be stored on a large scale but technological advances leading to cheaper and more efficient industrial batteries make grid level storage of electricity surpluses a natural choice because electricity prices can be negative it is unclear how the presence of negative prices might affect the storage policy structure known to be optimal when prices are only nonnegative or even how important it is to consider negative prices when managing an industrial battery for fast storage a storage facility that can both be fully emptied and filled up in one decision period we show analytically that negative prices can substantially alter the optimal storage policy structure e g all else being equal it can be optimal to empty an almost empty storage facility and fill up an almost full one for more typical slow grid level electricity storage we numerically establish that ignoring negative prices could result in a considerable loss of value when negative prices occur more than 5 of the t

solving consumption and portfolio choice problems the state variable decomposition method we develop a new solution method for a broad class of discrete time dynamic portfolio choice problems the method efficiently approximates conditional expectations of the value function by using i a decomposition of the state variables into a component observable by the investor and a stochastic deviation and ii a taylor expansion of the value function we illustrate the accuracy of the method in handling several realistic features of portfolio choice problems such as intermediate consumption multiple assets multiple state variables portfolio constraints non time separable preferences and nonredundantendogenous state variables we finally use the method to solve a realistic large scale life cycle portfolio choice and consumption problem with predictable expected returns and recursive preferences jel g11 g12

premature de industrialisation theory evidence and policy recommendations in the mexican case the main consequences of premature de industrialisation are a slowdown in the rate of economic growth and the deferral of economic development despite having adopted a successful export led growth strategy since the early 1980s these two phenomena have characterised the mexican economy during the past three decades in this article i investigate whether premature de industrialisation has been a major contributor to mexico s economic stagnation and attempt to identify which factors have been driving it the results confirm the hypothesis of premature de industrialisation and suggest that the evolution of income capital accumulation labour manufacturing productivity trade openness and the exchange rate provide an explanation for this process i also suggest a set of alternative policy measures aimed at returning the mexican economy to the path of growth and development

trade liberalisation in developing economies modest benefits but problems with productivity growth macro prices and income distribution microeconomically the case for liberalisation is dubious under increasing returns to scale and when firms can invest directly in productivity enhancement distributional effects of commercial policy changes can be regressive and large but the rents they generate can serve as a basis for effective policy intervention contingent on firms performance macroeconomically the case of liberalisation rests on say s law which is not always enforced recent combined current and capital market liberalisations have been associated with strong exchange rates and high interest rates and output and productivity growth have positive mutual feedbacks which liberalisation may well suppress

stochastic joint optimization of wind generation and pumped storage units in an electricity market one of the main characteristics of wind power is the inherent variability and unpredictability of the generation source even in the short term to cope with this drawback hydro pumped storage units have been proposed in the literature as a good complement to wind generation due to their ability to manage positive and negative energy imbalances over time this paper investigates the combined optimization of a wind farm and a pumped storage facility from the point of view of a generation company in a market environment the optimization model is formulated as a two stage stochastic programming problem with two random parameters market prices and wind generation the optimal bids for the day ahead spot market are the ldquohere and nowrdquo decisions while the optimal operation of the facilities are the recourse variables a joint configuration is modeled and compared with an uncoordinated operation a realistic example case is presented where the developed models are tested with satisfactory results

asset price and wealth dynamics in a financial market with heterogeneous agents abstract this paper considers a discrete time model of a financial market with one risky asset and one risk free asset where the asset price and wealth dynamics are determined by the interaction of two groups of agents fundamentalists and chartists in each period each group allocates its wealth between the risky asset and the safe asset according to myopic expected utility maximization but the two groups have heterogeneous beliefs about the price change over the next period the chartists are trend extrapolators while the fundamentalists expect that the price will return to the fundamental we assume that investors optimal demand for the risky asset depends on wealth as a result of crra utility a market maker is assumed to adjust the market price at the end of each trading period based on excess demand and on changes of the underlying reference price the model results in a nonlinear discrete time dynamical system with growing price and wealth processes but it is reduced to a stationary system in terms of asset returns and wealth shares of the two groups it is shown that the long run market dynamics are highly dependent on the parameters which characterize agents behaviour as well as on the initial condition moreover for wide ranges of the parameters a locally stable fundamental steady state coexists with a stable non fundamental steady state or with a stable closed orbit where only chartists survive in the long run such cases require the numerical and graphical investigation of the basins of attraction other dynamic scenarios include periodic orbits and more complex attractors where in general both types of agents survive in the long run with time varying wealth fractions

comparing solution methods for dynamic equilibrium economies this paper compares solution methods for dynamic equilibrium economies the authors compute and simulate the stochastic neoclassical growth model with leisure choice using undetermined coefficients in levels and in logs finite elements chebyshev polynomials second and fifth order perturbations and value function iteration for several calibrations the authors document the performance of the methods in terms of computing time implementation complexity and accuracy and they present some conclusions about their preferred approaches based on the reported evidence

productivity and growth verdoorn s law revisited abstract this paper presents causality tests on manufacturing output and labour productivity to examine the so called verdoorn law the conclusion is that a modified granger test supports verdoorn s law

how significant is intersectoral outsourcing of employment in south africa south africa like many other middle income countries as well as most upper income countries has seen an increase in services and fall in manufacturing as shares of total employment there has been speculation about the extent to which these changes actually represent a genuine structural shift as opposed to a statistical artifact deriving from the domestic outsourcing of activities from manufacturing to services very limited evidence is available as to how much of the apparent changes in the sectoral composition of employment are explained by intersectoral outsourcing this article develops a methodology using household and labor survey data to analyze the extent of intersectoral outsourcing of specific labor intensive activities in south africa from 1997 2007 it is shown that the relatively high growth in services employment is driven by expansion of employment of cleaners and security guards and in particular by outsourcing type reallocation of these activities from manufacturing and the public sector toward private services once outsourcing is accounted for employment seems to have grown at similar rates in manufacturing and in private services the analysis has implications for understanding changes in the sectoral structure of middle income economies and whether services employment is as dynamic as it appears to be copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

optimal commodity trading with a capacitated storage asset this paper considers the so called warehouse problem with both space and injection withdrawal capacity limits this is a foundational problem in the merchant management of assets for the storage of commodities such as energy sources and natural resources when the commodity spot price evolves according to an exogenous markov process this work shows that the optimal inventory trading policy of a risk neutral merchant is characterized by two stage and spot price dependent basestock targets under some assumptions these targets are monotone in the spot price and partition the available inventory and spot price space in each stage into three regions where it is respectively optimal to buy and inject do nothing and withdraw and sell in some cases of practical importance one can easily compute the optimal basestock targets the structure of the optimal policy is nontrivial because in each stage the merchant s qualification of high selling and low buying commodity prices in general depends on the merchant s inventory availability this is a consequence of the interplay between the capacity and space limits of the storage asset and brings to light the nontrivial nature of the interface between trading and operations a computational analysis based on natural gas data shows that mismanaging this interface can yield significant value losses moreover adapting the merchant s optimal trading policy to the spot price stochastic evolution has substantial value this value can be almost entirely generated by reacting to the unfolding of price uncertainty that is by sequentially reoptimizing a model that ignores this source of uncertainty

asset prices and exchange rates in this paper we study the implications of introducing demand shocks and trade in goods into an otherwise standard international asset pricing model trade in goods gives rise to an additional channel of international propagation through the terms of trade absent in traditional single good asset pricing models the inclusion of demand shocks helps overturn many unrealistic implications of existing international flnance models in which productivity shocks are the sole source of uncertainty our model generates a rich set of implications on how stock bond and foreign exchange markets co move we solve the model in closed form which yields a system of equations that can be readily estimated empirically our estimation validates the main predictions of the theory

an application of a kaldorian export led model of growth to the united states a kaldorian export led model of growth is analysed using post second world war united states data the structural parameter restrictions of the model are confirmed by the estimates kaldor s model which was originally conceived to be illuminating for describing a region or a small open economy is able to describe the annual fluctuations in the growth rate of a large open economy like that of the united states with only minor adjustments

manufacturing and economic growth in the united states kaldor s growth laws are applied to the post world war ii united states each variable employed in the time series analysis is smoothed with a moving average this procedure successfully mitigates the effects of short term cyclical changes and emphasizes long term economic growth indicate that kaldor s laws are compatible with the economic growth of united states

comparison of solutions to the incomplete markets model with aggregate uncertainty abstract this paper compares numerical solutions to the model of krusell and smith 1998 income and wealth heterogeneity in the macroeconomy journal of political economy 106 867 896 generated by different algorithms the algorithms have very similar implications for the correlations between different variables larger differences are observed for i the unconditional means and standard deviations of individual variables ii the behavior of individual agents during particularly bad times iii the volatility of the per capita capital stock and iv the behavior of the higher order moments of the cross sectional distribution for example the two algorithms that differ the most from each other generate individual consumption series that have an average maximum difference of 1 63 11 4

income and wealth heterogeneity in the macroeconomy how do movements in the distribution of income and wealth affect the macroeconomy we analyze this question using a calibrated version of the stochastic growth model with partially uninsurable idiosyncratic risk and movements in aggregate productivity our main finding is that in the stationary stochastic equilibrium the behavior of the macroeconomic aggregates can be almost perfectly described using only the mean of the wealth distribution this result is robust to substantial changes in both parameter values and model specification our benchmark model whose only difference from the representative agent framework is the existence of uninsurable idiosyncratic risk displays far less cross sectional dispersion and skewness in wealth than u s data however an extension that relies on a small amount of heterogeneity in thrift does succeed in replicating the key features of the wealth data furthermore this extension features aggregate time series that depart significantly from permanent income behavior

economic growth and kaldor s law the case of turkey 1925 78 in this paper kaldor s enine of growth hypothesis is examined and its validity is tested forr the turkish economy the results obtained regardless of the specification and estimation techniques used consistently support the hypothesis

growth and productivity a model of cumulative growth and catching up individually neither the cumulative growth approach of the post keynesian tradition nor the catching up theory of neoclassical derivation are able to account for the chief stylized facts of comparative economic growth a pooled cross section econometric model that integrates these two approaches is developed and tested by the authors over the period 1950 88 for a group of nine oecd countries for a group of nine latin american countries and for a group of seven east asian countries purchasing power parities for 1985 are employed to measure productivity levels the growth record of the oecd countries is satisfactorily assessed by the model the catching up effect is found to be relevant in explaining productivity growth in the oecd area and in east asia but not in latin america this differential outcome finds explanation in terms of the relative strength of dynamic increasing returns copyright 1997 by oxford university press

soviet postwar industrial growth and capital labour substitution an empirical note abstract this note tests an aggregate transcendental production function for soviet industry the estimated equation shows the elasticity of substitution in aggregate soviet industry in less than unity and it is decreasing quite rapidly

sectoral regularities of productivity growth in developing countries a kaldorian interpretation this paper provides a kaldorian interpretation for empirical regularities of product ivity growth at the sectoral level of the economy the statistical evidence is based on a dataset drawn from internationally compatible time series for employment and value added in 30 developing countries based on novel non linear statistical techniques the findings show i a regular pattern of positive sectoral employment elasticities with respect to output growth ii robust differences across sectors in the magnitude of the employment elasticities and iii employment elasticities for all sectors that are signifi cantly less than unity suggesting strong evidence for increasing returns at the sector level of the economy

consumption and labor supply with partial insurance an analytical framework we develop a model with partial insurance against idiosyncratic wage shocks to quantify risk sharing closed form solutions are obtained for equilibrium allocations and for moments of the joint distribution of consumption hours and wages we prove identification and demonstrate how labor supply data are informative about risk sharing the model estimated with us data over the period 1967 2006 implies that i 39 percent of permanent wage shocks pass through to consumption ii the share of wage risk insured increased until the early 1980s and iii preference heterogeneity is important in accounting for observed dispersion in consumption and hours jel e21 e23 e31 e52

optimal management and sizing of energy storage under dynamic pricing for the efficient integration of renewable energy we address the optimal energy storage management and sizing problem in the presence of renewable energy and dynamic pricing associated with electricity from the grid we formulate the problem as a stochastic dynamic program that aims to minimize the long run average cost of electricity used and investment in storage if any while satisfying all the demand we model storage with ramp constraints conversion losses dissipation losses and an investment cost we prove the existence of an optimal storage management policy under mild assumptions and show that it has a dual threshold structure under this policy we derive structural results which indicate that the marginal value from storage decreases with its size and that the optimal storage size can be computed efficiently we prove a rather surprising result as we characterize the maximum value of storage under constant prices and i i d net demand processes if the storage is a profitable investment then the ratio of the amortized cost of storage to the constant price is less than 1 4 we further perform sensitivity analysis on the size of optimal storage and its gain via a case study finally with a computational study on real data we demonstrate significant savings with energy storage

accumulation innovation and catching up an extended cumulative growth model this paper presents an extended model of cumulative growth in which the effects of innovation and catching up are considered innovation adds another source of cumulative growth to that of traditional models and allows a consideration of the importance of non price determinants of international competitiveness catching up is the major force leading to convergence in productivity owing to the effect of the diffusion of technology the model allows one to analyse whether cumulative forces may lead to stable growth and whether this solution generates convergence in productivity levels the structural model is tested for a set of oecd countries over the period 1965 94

solving heterogeneous agent models by projection and perturbation the paper proposes a numerical solution method for general equilibrium models with a continuum of heterogeneous agents that combines elements of projection and of perturbation methods the basic idea is to solve first for the stationary solution of the model without aggregate shocks but with fully specified idiosyncratic shocks afterwards one computes a first order perturbation of the solution in the aggregate shocks this approach allows to include a high dimensional representation of the cross sectional distribution in the state vector the method is applied to a model of household saving with uninsurable income risk and liquidity constraints techniques are discussed to reduce the dimension of the state space such that higher order perturbations are feasible

kaldorian approach to greek economic growth in the last 30 years greece has experienced a rapid rate of economic growth which has transformed the economy and enabled it to become a member of the eec specifically greece transformed itself from an agricultural economy with virtually no industrial base to an economy with a significant industrial sector and consequently a relatively high income per capita one can explain this on the lines of a kaldorian framework in this paper we provide an outline of kaldor s growth model and test its relevance to the economic experience of greece during the 1967 1988 period the empirical results suggest that the model can adequately explain the developments in the economy to a considerable degree

asset pricing with limited risk sharing and heterogeneous agents we develop a model with incomplete markets and heterogeneous agents that generates a large equity premium while simultaneously matching stock market participation and individual asset holdings the high risk premium is driven by incomplete risk sharing among stockholders which results from the combination of aggregate uncertainty borrowing constraints and a realistically calibrated life cycle earnings profile subject to idiosyncratic shocks we show that it is challenging to simultaneously match asset pricing moments and individual portfolio decisions while limited participation has a negligible impact on the risk premium contrary to the results of models where it is imposed exogenously

critical survey the new geographical turn in economics some critical reflections over the past few years a new geographical economics has emerged focused on the spatial agglomeration of industry and the long run convergence of regional incomes several leading names are associated with this geographical turn including paul krugman michael porter robert barro and w brian arthur this new economic geography it is argued here is neither that new nor is it geography instead it is a reworking or re invention using recent developments in formal mathematical mainstream economics of traditional location theory and regional science as such it is quite opposed to and difficult to reconcile with the work on regional development and industrial agglomeration being carried out in economic geography proper

the social cost of near rational investment abstract we show that the stock market may fail to aggregate information even if it appears to be efficient and that the resulting decrease in the information content of prices may drastically red

history versus equilibrium and the theory of economic growth a model of cumulative causation is developed and the limits of this model as a characterization of historical rather than equilibrium long run growth outcomes are discussed an extension of the model which postulates that cumulative causation occurs in the context of technological and institutional regimes is proposed outcomes in the extended model are shown to be more influenced by history than those in the original model the extended model also addresses a number of recent criticisms of cumulative causation copyright 1997 by oxford university press

a synoptic view of regional growth and unemployment ii the post keynesian theory this paper discusses the post keynesian explanation of the causes of disparities in regional growth and unemployment rates it begins by examining the relationship between the real wage rate the level of demand and regional unemployment next it shows how regional growth is primarily determined by the rate of growth of exports a two region model is outlined which demonstrates how regional growth rates are interrelated through interregional trade flows and the regional balance of payments constraint the paper concludes with a discussion of the cumulative causation theory of regional growth

a kaldorian approach to regional economic growth in china kaldor s engine of growth hypothesis is examined in the case of the chinese economy china has in the last decade experienced a rapid industrialization and very strong economic growth using regional data of this growth process the three kaldorian laws of economic growth are tested the empirical results support the hypothesis there seems to be an especially strong relation between productivity and industrial growth

the impact of surges in net private capital inflows on manufacturing investment and unemployment abstract we use local projection methods to examine the dynamic response of surges in net private capital inflows on the output and employment shares of manufacturing the investment output ratio and the unemployment rate high income countries are studied separately from emerging economies both from asia and latin america our sample covers the years from 1970 to 2010 we find that surges in high income countries do not magnify the trend toward deindustrialization however the persistent decline in the investment to gdp ratio and the rise in the overall unemployment rate suggest that surges may negatively affect longer run growth prospects and employment opportunities in these countries in middle income asian countries surges tend to induce deindustrialization in both output and employment in the medium run but they do not lower the investment to gdp ratio in middle income latin america surges speed up deindustrialization lower investment and raise economy wide unemployment

is cumulative growth in manufacturing productivity slowing down in the eu12 regions the cumulative causation in the relation between labour productivity and output growth known as verdoorn s law is empirically tested using data from 109 eu12 regions during the period 1977 2005 several specifications of verdoorn s law are put forward in this paper which attribute the process of cumulative causation to a series of factors including manufacturing agglomeration spatial interaction and responses to the problems of growth the findings suggest that although cumulative causation holds over this period the slowdown of its pace is nonetheless apparent post 1992 revisions in responses e g policy along with further research are thus recommended the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved

capabilities and habitat in industrial renewal the case of uk textiles the paper develops an ecological approach to explore conditions for industrial renewal in the uk textiles and apparel sector and the possibilities for policy the authors argue that the material legacy of deindustrialisation conditions the opportunities for survivor firms and creates specific sub sectoral industrial ecologies literature from economics business studies development and ecological studies is used to outline a framework that allows different possible relations between firm capability and local habitat two subsectors carpets and apparel are used to explore the notion of interaction between firm capability and ecology though the context of deindustrialisation is similar in some respects the specific conditions provide quite distinctive opportunities for renewal in carpets relatively larger firms have more successfully co evolved with retailers through various kinds of mutuality in apparel a workshop sector of mainly small and micro firms frequently struggles with predatory behaviour by much larger retailers the implication of this analysis is that industrial policy needs to be grounded in analysis of the capabilities habitat interplay focusing on areas where conditions are favourable or can be improved through supporting firm capabilities and modifying supply chain behaviours the concepts and analysis are relevant for considering other industries and contexts where industrial renewal depends on producer firms and the ecology in which they operate

solving an incomplete markets model with a large cross section of agents abstract this paper shows that perturbation methods can be applied to a dsge model with incomplete markets and a finite but arbitrarily large number of heterogeneous agents we develop a simple but general solution technique that handles many state and choice variables for each agent and thus has an extremely high dimensional state space the method is based on perturbations around a point at which the solution is known the novel idea is to exploit the symmetry of the problem to overcome the curse of dimensionality we use the analysis to demonstrate the impact of heterogeneity on macroeconomic quantities and the pricing of risk furthermore we set our technique apart from standard methods used in the literature