the effect of agglomeration economies on firm deaths a comparison of firm and regional based approaches this paper compares the merits of regional and firm based approaches for analysing the effect of agglomeration economies on firm deaths in ireland we aggregate a comprehensive data set on irish fi

the american business cycle continuity and change in recent decades the american economy has experienced the worst peace time inflation in its history and the highest unemployment rate since the great depression these circumstances have prompted renewed interest in the concept of business cycles which joseph schumpeter suggested are like the beat of the heart of the essence of the organism that displays them in the american business cycle some of the most prominent macroeconomics in the united states focuses on the questions to what extent are business cycles propelled by external shocks how have post 1946 cycles differed from earlier cycles and what are the major factors that contribute to business cycles they extend their investigation in some areas as far back as 1875 to afford a deeper understanding of both economic history and the most recent economic fluctuations seven papers address specific aspects of economic activity consumption investment inventory change fiscal policy monetary behavior open economy and the labor market five papers focus on aggregate economic activity in a number of cases the papers present findings that challenge widely accepted models and assumptions in addition to its substantive findings the american business cycle includes an appendix containing both the first published history of the nber business cycle dating chronology and many previously unpublished historical data series

urban spatial structure urban structure is increasingly characterized by decentralization dispersion and multiple employment centers much is known empirically about such patterns and about how the interplay between agglomerative and dispersive forces generates spatial structures that are complex and prone to multiple equilibria and dynamic path dependence these forces operate at different spatial scales many entail unpriced interaction and external scale economies deriving from product differentiation and endogenous technical change appear particularly important because these forces interact in complex ways inefficiencies in urban structure are resistant to simple policy interventions

did bank distress stifle innovation during the great depression we find a negative relationship between bank distress and the level quality and trajectory of firm level innovation during the great depression particularly for r d firms operating in capital intensive industries however we also show that because a sufficient number of r d intensive firms were located in counties with lower levels of bank distress or were operating in less capital intensive industries the negative effects were mitigated in aggregate although depression era bank distress was associated with the stifling of innovation our results also help to explain why technological development was still robust following one of the largest shocks in the history of the u s banking system

networking off madison avenue known for the key role that networking plays in the operation of agencies where interviews suggest that informal networking among close neighbors is critical to many agencies success networking involves the exchange of ideas and while there is no market place for these ideas exchanges may be more deliberate rather than just marshall s 1890 mysteries of the air type of information spillovers this paper examines the effect on productivity of having more near advertising agency neighborhoods and hence better opportunities for meetings and exchange within manhattan we will show that there is extremely rapid spatial decay in the benefits of having more near neighbors even in the close quarters of southern manhattan a finding that is new to the empirical literature and indicates our understanding of scale externalities is still very limited the finding indicates that having a high density of commercial establishments is important in enhancing local productivity an issue in lucas and rossi hansberg 2002 where within business district spatial decay of spillovers plays a key role we will argue also that in manhattan advertising agencies trade off the higher rent costs of being in bigger clusters nearer centers of action against the lower rent costs of operating on the fringes away from high concentrations of other agencies introducing the idea of trade offs immediately suggests heterogeneity is involved we will show that higher quality agencies are the ones willing to pay more rent to locate in greater size clusters specifically because they benefit more from networking while all 1 the research in this paper was conducted while the authors were census bureau research associates at the boston research data center research results and conclusions expressed are those of the authors and do not necessarily indicate concurrence by the census bureau the paper has been screened to ensure that no confidential data are revealed we acknowledge helpful comments from andrew foster on aspects of the paper and from participants in seminars at brown university lse and the university of toronto

business political power the case of taxation we examine contending views about the forms and mechanisms of business power in u s politics by estimating time series models explaining taxation and redistribution taxation and redistribution constitute strong cases for theories about business and class power since all firms have an interest in reducing taxation we find that changes in corporate taxation and in redistribution between capital gains income and earned income and between corporate taxation and individual taxation are strongly influenced by political partisanship with democratic administrations increasing the tax burden on firms and their owners how far corporations engage in electoral financing measured through the establishment of corporate political action committees is also influential the models show some evidence consistent with the understanding of class power conceptualized by bowles gordon and weisskopf and the presence of election cycle effects but inconsistent with implications arising from the structural dependence of the state on capital and asset concentration in the largest corporations as a mechanism of class power

procyclical labor productivity and competing theories of the business cycle some evidence from interwar u s manufacturing industries we study the phenomenon of short run increasing returns to labor srirl in a sample of 10 interwar u s manufacturing industries our main findings are that srirl was common in the interwar period and that the pattern of srirl across industries was similar to that observed in the postwar period we argue that since presumably the depression was not caused by technical regress these findings are inconsistent with the claim of real business cycle theorists that srirl is in general due to procyclical technical shocks we propose tests for discriminating between two other leading explanations of srirl but find that our conclusions differ by industry

power and the control of capital this essay reviews three recent books on the political economy of finance in postcolonial asia and latin america and suggests a framework for examining the relationship between political power and varying patterns of control over investment resources the stress is on the constraints different controllers of capital can impose on state leaders the conditions under which policymakers can subvert these constraints and how conflicts within the state over the trajectory of policy are mediated by who or what supplies critical investment resources and the institutional channels through which the resources flow

limits on authoritarian imposition of policy failed ecuadoran military populism in comparative perspective does regime type affect policy outcomes do authoritarian regimes have greater policy discretion than democratic regimes the empirical evidence is ambiguous using two cases of failed military populism in ecuador the author argues that two authoritarian characteristics lack of participation in decision making and nonmobilization frustrated implementation of import substitution policies ironically groups expected to benefit most industrialists and urban workers provided the principal opposition although the regime needed their cooperation to implement policy neither group had assurance that its interests were protected thus political alliances require more than an exchange of policies for support regimes must make their commitments credible by permitting the participation in decision making and mobilization of groups whose cooperation is needed for policy implementation this conclusion is supported by a comparison to peru where a military regime encountered similar obstacles and argentina where

agglomeration accessibility and productivity evidence for large metropolitan areas in the us this paper estimates the productivity gains from agglomeration economies for a sample of the largest metropolitan areas in the united states using measures of urban agglomeration based on employment density and employment accessibility the latter is a more accurate measure of economic proximity and allows testing for the spatial decay of agglomeration effects with increasing travel time we find that the productivity gains from urban agglomeration are consistent between measures with elasticity values between 0 07 and 0 10 the large majority of the productivity gains occur within the first 20 minutes and do not appear to exhibit significant nonlinearities

the impact of constitutions on economic performance constitutions matter for economic performance to the extent that they promote stability accountability and credibility this article considers the nature of political constituions and their impact on economic efficiny and economic security wnder three aspects the basic righs laid down in the constitution the structure of government and the stringency of amedment procedures while emphasizing that constitutions can be usefid by serving as precommitment devices the analysis also emphasizes the dangers of rigidity and the need for flexibility t he relation between political institutions and economic performance is not well understood the causal link goes in both directions well designed insttutions can improve economic performance but some institutions may be feasible or effective only at specific levels of economic development here i consider only one aspect of the relationship the impact of institutions on economic performance however a full treatment of the subject would consider both aspects and the following discussion must be read with this important proviso in mind i further limit myself to the subset of political institutions that are embodied in constitutions the smdy of the impact of constitutions on economic performance is part of what is usually referred to as constitutional political economy a field that can be traced back to the caklcdus of consent by buchanan and tullock 1962 buchanan was also the founder of the journal constitutional political economy the public choice approach to constitutions has focused somewhat narrowly on fiscal and monetary constitutions although actual constitutions rarely stipulate tax systems or monetary institutions in any detail the ban on paper money in the u s constituton for instance has few analogues in modem constitutions moreover even that document is concerned mostly with other matters such as the organization of the executive and the legislature separation of powers and the relations between the federal government and the states constituitional political economy

state revenue extraction from different income groups variations in tax progressivity in the united states 1916 to 1986 we examine the conditions that affected the progressivity of the individual income tax in the united states between 1916 and 1986 a multivariate time series analysis shows how macroeconomic conditions state imperatives the organizational capacities of social classes and political conditions have affected the progressivity and the symbolic component of the income tax progressivity is measured by the difference between the effective tax rates paid by moderate income and very high income families the symbolic component of this tax is measured by the difference between the nominal tax rate and effective income tax rate paid by very high income families the results reveal that changes in tax progressivity are due largely to macroeconomic and state fiscal conditions such as unemployment economic development and budget deficits although the organizational capacities of social classes and political conditions such as labor organization and political participation also have effects changes in progressivity are due primarily to adjustments in the rates paid by very high income families however the impacts of these conditions on tax progressivity changed somewhat when the federal income tax was transformed into a mass tax during world war il finally political conditions have a relatively greater effect on the symbolic component of the income tax than on progressivity overall this analysis supports a structural theory of the state in which the influences of politics and social classes on revenue extraction are circumscribed by macroeconomic and state fiscal conditions

commuting congestion and employment dispersal in cities with mixed land use abstract for centuries cities have been modeled as having centered employment scarce access to which generates land rent this paper first presents some new empirical evidence that in us cities actual employment turns out to be almost as dispersed as residences this range of urban forms is generated with analytic ease in a model that assumes land can have mixed rather than exclusive use at any location the model has firms trading off a central agglomeration force against the lower wages that accompany shorter commuting distances in peripheral locations at one extreme with very high agglomerative forces employment is approximately centered with long commute distances and high congestion levels at the other extreme lower agglomerative forces lead to employment that is completely dispersed commute distances of zero and the absence of congestion maximizing output minus congestion never leads to a pattern of land mixing where employment is fully dispersed a market model however often does if the mix at each location is based on the relative magnitude of the land rent offered from residential as opposed to commercial uses

does the organization of capital matter employers and active labor market policy at the national and firm levels does the organization of business matter for social policy development in the advanced capitalist democracies conventional welfare state analysis has given this significant question scant attention we argue however that the representational power of business coordination across business interest units and integration of associations in corporatist policy making forums or what we call the social corporatist organization of business should result in greater support and participation by employers in social policy formation and implementation we test our arguments with models both of 1980 98 pooled time series data on withinand across country variation in spending on active labor market programs and of extensive firm level survey data from denmark and the united kingdom we find that the centralization and coordination of employers as well as the integration of employer organizations in corporatist policy making forums are strongly associated with shares of national income devoted to active labor market policy we find moreover that the degree of employer organization conditions active labor market policy responses to de industrialization and increases in general unemployment at the firm level membership in an employer association has a significant positive effect on employer participation in active labor market programs in corporatist denmark but not in the pluralist united kingdom

concrete agglomeration benefits do roads improve urban connections or just attract more people cities with more roads are more productive however it can be unclear whether roads increase productivity directly through improved intra urban connections or indirectly by attracting more people our theory suggests that population responses may obscure the direct connectivity effects of roads indeed conditional on population size highway density does not affect productivity in a sample of us metropolitan areas however when exploiting exogenous variation in urban populations we find that highway density improves agglomeration benefits moving from the 50th to the 75th percentile of highway density increases the productivity to population elasticity from 2 to 4 moreover travel based measures outperform population size as a measure of agglomeration externalities

cooperation and political economic performance in affluent democratic capitalism research on comparative political economic performance has traditionally followed two separate tracks one concerned with collective economic gain growth and efficiency and the other focused on distribution and redistribution cooperative institutions offer a key to understanding cross national variation among the affluent capitalist democracies in both facets of political economic performance these institutions cluster along two dimensions neocorporatism and firm level cooperation pooled time series analysis for 18 nations over 1960 89 suggests that 1 neocorporatism is a major source of distributive redistributive policies and outcomes and of several sources of collective gain 2 firm level cooperation is a key contributor to economic growth

central banks at war war is expensive troops must be equipped and weapons must be procured when the enormous borrowing requirements of war make the sovereigns credibility problem more difficult central banks enhance a government s ability to borrow by being the sole direct purchaser of government debt the central bank increases the effective punishment that can be imposed on the government for defaulting on the marginal lender this increases lenders confidence that the government will be punished in case of default making lenders willing to purchase the debt at a lower rate of interest the sovereign dependent on the low borrowing costs offered by the central bank has an incentive to retain the bank data covering the nineteenth and early twentieth centuries reveal that possessing a central bank lowers the sovereign s borrowing costs particularly during times of war

labor productivity during the great depression abstract during the 1929 1933 contraction labor productivity was countercyclical in several manufacturing sectors evidence consistent with the view that large negative demand shocks pushed the economy down a static neoclassical production function this evidence does not readily square with explanations for the contraction emphasizing labor hoarding and increasing returns

political regimes and economic growth arguments that relate regimes to growth focus on property rights pressures for immediate consumption and the autonomy of dictators while everyone seems to agree that secure property rights foster growth it is controversial whether democracies or dictatorships better secure these rights the main mechanism by which democracy is thought to hinder growth is pressure for immediate consumption which reduces investment only states that are institutionally insulated from such pressures can resist them and democratic states are not the main argument against dictatorships is that authoritarian rulers have no interest in maximizing total output these views are summarized in turn

explaining capital account liberalization in latin america a transitional cost approach in the past three decades governments around the world have lowered barriers to international capital flows this movement is widely attributed to the forces of globalization as developed nations moved toward relative convergence on international financial openness yet developing nations with much to gain from openness to foreign investment moved only hesitantly and inconsistently in this direction analysis of two decades of capital account liberalization in latin america and the oecd reveals that nations in latin america with weaker domestic financial sectors face higher risks of transitional dislocations following liberalization and move less aggressively toward openness in the oecd by contrast financial weakness is associated with greater movements toward capital account opening as transitional costs are lower and governments are better equipped to ameliorate them examination of the transitional costs of liberalization thus helps to explain how market pressures may impede rather than promote market oriented reform in latin america

employment and unemployment in the 1930s the great depression is to economics what the big bang is to physics as an event the depression is largely synonymous with the birth of modern macroeconomics and it continues to haunt successive generations of economists with respect to labor and labor markets these facts evidently include wage rigidity persistently high unemployment rates and long term joblessness traditionally aggregate time series have provided the econometric grist for distinguishing explanations of the great depression recent research on labor markets in the 1930s however has shifted attention from aggregate to disaggregate time series and towards microeconomic evidence this shift in focus is motivated by two factors first disaggregated data provide many more degrees of freedom than the decade or so of annual observations associated with the depression and thus may prove helpful in distinguishin g macroeconomic explanations second disaggregation has revealed aspects of economic behavior hidden in the time series that may be essential to their proper interpretation and in any case are worthy of study in their own right although the substantive findings of recent research are too new to judge their permanent significance i believe that the shift towards disaggregated analysis is an important contribution the paper begins by reviewing the conventional statistics of the united states labor market during the great depression and the paradigms to explain them it then turns to recent studies of employment and unemployment using disaggregated data of various types the paper concludes with discussions of

is democracy more expropriative than dictatorship tocquevillian wisdom revisited abstract we reexamine the incentive effect of political democracy on the tax rate by defining a political regime over two dimensions the extent of the franchise and the extent that the redistribution of tax revenues is biased towards the rich standard tocquevillian models assume that even if there is limited franchise there is no redistribution bias from this it follows that democracy is more expropriative than oligarchy because a poorer median voter opts for higher taxes introducing the realistic assumption of a redistribution bias we find a countervailing effect democratization decreases exploitation by the rich on the disenfranchised poor since tax revenues are redistributed over a larger base the median voter may gain less from redistributive taxation we call this the olson effect

the making of policy institutionalized or not this paper develops a framework for analyzing different policymaking styles their causes and their consequences in latin america finding that lower institutionalization and greater use of alternative political technologies apts are more likely the lower the cost of using these technologies the higher the potential damage they can cause the lower the wealth of the economy and the more asymmetric the distribution of de jure political power moreover strategic complementarity exists in the use of alternative political technologies for instance bribes by the rich and protests by the poor are likely to be countervailing forces and will both occur in polities with weaker political institutions

transaction cost economics and cross national patterns of industrial conflict a comparative institutional analysis at the core of a capitalist system is an implied coalition between labor and capital built upon a system of exchange and compromise without capital the material condition upon which labor s interests are realized would be impossible likewise without labor s consent to exchange wages for future investment capital could not procure the profits and savings necessary for its reproduction and transformation organizing stable and cost efficient class coalitions has long been recognized as not merely an economic priority but a political challenge yet some democracies have met this challenge more successfully than others for the student of comparative political economy an enduring question remains why the present study is an attempt to provide an answer that complements and integrates the more common macroand microanalytic studies of industrial conflict it is argued here that a useful approach is to explicate some of the major microeconomic dynamics that condition exchanges between labor and capital and to demonstrate how institutional devices designed to accommodate political representation and conflict resolution facilitate or impede the process of class compromise by employing the logic of transaction cost economics the analysis highlights the comparative institutional elements fundamental to economizing on the costs of exchange shaping consensus within a political economy s industrial relations system the resulting transaction cost efficiency model of industrial conflict specifies the ex ante cost factors price margin of transaction and the institutional control of bounded rationality and the ex post cost factors legislative polarized pluralism executive hegemony and the frequency of general elections central to the process of building and sustaining class coalitions the model is tested on data drawn from 19 democracies covering the years 1965 83 use of simulation models reveals the relative trade offs associated with different patterns of ex ante and ex post cost structures

campaign contributions as a commitment device we explore the idea that the influence of interest groups in elections may have positive economic effects since the investment decisions of firms determine economic growth and employment voters have a common interest in making their governments commit to policies that encourage private investments however governments may renege on promises for economic stability and choose excessively leftist policies campaign contributions by firms tend to restrain the scope for such opportunism and provide a commitment device this is achieved if firms after the policy is chosen contribute to the governing party or to its rivals

the structure of class conflict in democratic capitalist societies the article presents a theory of class conflict between workers and capitalists who pursue their material interests under a form of societal organization that combines private ownership of instruments of production with representative political institutions there exist economic and political conditions under which both classes would simultaneously choose courses of action that constitute a class compromise workers consent to the institution of profit and capitalists to democratic institutions through which workers can effectively press claims for material gains when these conditions hold and a compromise is in force the role of the state consists in institutionalizing coordinating and enforcing the terms of a compromise that represents the preferences of workers as well as capitalists the combination of private ownership of the instruments of production with representative political institutions based on widespread suffrage constitutes a compromise between workers who consent to the private appropriation of profit by owners of capital and capitalists who accept the democratic institutions through which workers can make effective claims for an improvement of their material conditions this form of societal organization was con

taxation corporate financial policy and the cost of capital the cost of capital plays an important role in the allocation of resources among competing uses in a decentralized market system the purpose of this paper is to organize and present what is known and what is hypothesized about the effects of taxation on the incentive to invest via the cost of capital taking full account of important issues that arise independently from the question of taxation included in the analysis is a discussion of empirical findings about the interaction of inflation and taxation in influencing the incentive to invest and a treatment of taxation and uncertainty this abstract was borrowed from another version of this item

on 64 majority rule introduction d une definition de consensus social base sur deux restrictions une sur les preferences individuelles et l autre sur la distribution des preferences dans ce cas de consensus une regle de majorite a 64 presente de nombreuses proprietes interessantes par opposition aux regles de super majorite possedant des proprietes paradoxales comme les regles electorales americaines

politics and the structural dependence of the state in democratic capitalist nations i explore empirically a central claim of the structural dependence thesis namely that capitalists ability to disinvest fundamentally conditions policy choices in democratic capitalist systems utilizing time series data for 16 affluent democracies from 1965 to 1984 i find that indeed low rates of business investment are associated with reductions in corporate tax burdens and that these reductions are more pronounced in periods of economic crisis moreover low rates of capital formation engender cuts in personal income taxes during periods of economic stress however i also find that the magnitude of responsiveness of taxation to low rates of investment is relatively small and that analyses of the political context of investment and taxation indicate that governments have choices the responsiveness of corporate tax burdens to capital formation may under some governments be part of a policy mix designed to maintain adequate investment and to address the demands of core constituencies

a political agency theory of central bank independence we propose a theory to explain why and under what circumstances a politician endogenously gives up rent and delegates policy tasks to an independent agency we apply this theory to mon etary policy by extending a stochastic general equilibrium model this model provides a theory of central bank independence that is unrelated to the standard time inconsistency problem which underlies all formalized theories of central bank independence we derive five key predictions of the model and show that they are broadly consistent with the data finally we show that while instrument independence of the central bank is desirable goal independence is not

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

structural dependence of the state on capital a central claim of both marxist and neoclassical political theory is that under capitalism all governments must respect and protect the essential claims of those who own the productive wealth of society this is the theory of structural dependence of the state on capital using a formal model the internal logic and the robustness of the theory is examined we conclude that in a static sense the theory is false virtually any distribution of consumption between wage earners and owners of capital is compatible with continual private investment once an appropriate set of taxes and transfers is in place yet the state may be structurally dependent in a dynamic sense policies that once in place redistribute income without reducing investment do reduce investment during the period in which they are anticipated but not yet implemented

transit service physical agglomeration and productivity in us metropolitan areas public transit improvements could cause more clustered and higher density employment and enable urban growth giving rise to agglomeration economies by improving labour market accessibility increasing information exchange and facilitating industrial specialisation using data on us metropolitan areas this paper traces the links from transit service to central city employment density urbanised area employment density and population and from these physical agglomeration measures to average wages and per capita gmp significant indirect productivity effects of transit service are found for example in the case of central city employment density estimated wage increases range between 1 5 million and 1 8 billion per metropolitan area yearly for a 10 per cent increase in transit seats or rail service miles per capita firms and households likely receive unanticipated agglomeration benefits from transit induced densification and growth and current benefit cost evaluations may therefore underestimate the

globalization taxation and burden shifting in latin america most researchers interested in the relationship between global markets and public policy focus on advanced industrial democracies in contrast we examine competing hypotheses as to globalization s effect on governments by expanding the scope of the discussion to include developing nations more specifically we investigate the relationship between international market integration and the evolving burden of taxation on capital as well as the subsequent response of markets to shifts in tax policy in latin america since the late 1970s consistent with our theoretical expectations we find that global market forces are more constraining vis a vis tax policy in latin america than in the world s wealthiest nations despite these market based pressures however national politics continue to influence tax policy in latin america in a manner consistent with findings on advanced industrial democracies as such developing nations continue to have some room to manipulate policy though within the context of a more strictly neoliberal context than their counterparts in advanced industrial democracies

the origins of financial openness a study of current and capital account liberalization theory we assess the determinants of the national regulation of international finance or the comparative degree of national financial openness or closure hypotheses partisanship interacts with a nation s factor endowments to account in part for different international financial policies by governments of the same partisan hue methods we offer a quantitative measure of international financial openness or current and capital account regulation for 21 member countries of the organization for economic cooperation and development for 1950 88 we use regression analysis employing panel corrected standard errors to discover the determinants of financial openness results our main finding is that political partisanship substantially explains openness but does so in complex ways differences in both political institutional arrangements and types of political economy also account for part of the differences in international financial regulation