economic growth and greenhouse gases in europe a non radial multi sector nonparametric production frontier analysis abstract energy use has become a topical issue when assessing the economic growth of countries indeed energy use gives rise to greenhouse gas emissions which are undesirable side products of economic growth in this paper we present a non radial multi sector nonparametric production frontier approach specially tailored for addressing this issue our approach is consistent with previous works and in line with recent policy and regulation implementations we also make use of second stage country and sector level regression analyses to investigate how the efficiency results are affected by exogenous factors we apply our method to the case of 10 sectors in 19 european countries our results highlight the need for policy and regulation implementations for each sector individually indeed our efficiency and regression results show that there exists a sector heterogeneity and that the room for increasing economic growth reducing greenhouse gas emissions is clearly different for each sector in every country finally our results highlight two sectors 1 agriculture and 2 electricity gas and water and that the europe 2020 objectives are well set since they target the most inefficient countries sectors

optimal tax transfer systems and redistributive policy in this paper we develop optimal yardsticks to gauge the effectiveness of given tax and benefit policies in reducing inequality we show that the conjunction of the optimal tax and optimal benefits policies constitutes the optimal tax and benefit policy given the tax and benefit budget sizes a decomposition formula enables trends in the inequality impact of taxes and benefits to be explained in terms of changing policy effectivess targeting and budget size effects the analysis incorporates a distributional judgement parameter for sensitivity analysis and concludes with an examination of the finnish case for the period 1971 1990

employment policies wage formation and trade union behavior in a small open economy a model of trade union determined wages is developed which provides an explanation of underemployment based on optimizing behavior it is shown that fiscal policy will in general affect employment under perfect foresight and immediate wage flexibility future consequences of short run stabilization policies are discussed ratchet effects with respect to government expenditure and game theoretic interdependence between government and trade union behavior are emphasized if the trade union takes short run policy measures in order to increase employment as an indication of an employment stabilization rule the future behavior of the trade union changes and the result may be a decrease in long run employment

ethical social index numbers and the measure ment of effective tax benefit progressivity in this paper we propose a general method for constructing measures both relative and absolute of effective tax benefit progressivity from social welfare functions relative measures compare the after tax or benefit distribution of income with the distribution that would result if the burden were imposed proportionally absolute measures use the equal taxation of individuals as a benchmark these indices are related to relative and absolute indices of inequality our relative indices are generalizations of the gini index based musgrave thin measure of effective progressivity we compare our general indices to the proposals of kakwani khetan and poddar and suits

wages and employment under trade unionism microeconomic models and macroeconomic applications the first part of this paper is a critical survey of microeconomic research into behavioural models of trade unionism although certain formulations of union objectives and models of wage and employment determination in unionized markets have found favor with economists unfortunately only a little is known about their empirical relevance the second part of this paper deals with the daunting problems of applying these models at the macroeconomic level one such model is estimated with data from sweden s mining and manufacturing sector from 1968 to 1982

technical efficiency of economic systems of eu 15 countries based on energy consumption in the present study data envelopment analysis is used to determine the technical efficiency index of eu 15 countries from 1980 to 2008 using cross country comparison technical efficiency index represents the capacity of an economy to produce a higher level of gross domestic product for a given level of total energy input the level of the technical efficiency index is determined from the energy mix fossil fuels non fossil fuels nuclear energy of each country and depends on the maximization level of the production of the gross domestic product of the economic system without waste of energy resources the current study is applied in the case of the eu15 countries its scope is to highlight the differentiations of country classifications before and after the integration of nuclear energy in the energy mix of each country the main result is that the integration of nuclear energy as an additional input in the energy mixture affects negatively the technical efficiency of countries also when an economy achieves a decrease of the energy consumption produced from fossil fuels and a better exploitation of renewable energy sources clearly improves its capacity to produce more output with the given levels of inputs

exchange rate policy and wage formation in an economy with many trade unions abstract exchange rate policy may confront governments with an important credibility problem while there is usually a long run gain from abstaining from devaluations there may also be a short run benefit from a devaluation this short run benefit may cause expectations of future devaluations resulting in wage and price rises that make the expectations self fulfilling this issue is analysed within a model with many trade unions if the government pursues a non devaluation policy the trade unions gain from voluntary wage restraint however if the non devaluation policy isn t credible the cooperation on wage restraint may break down

the swiss recipe conservative policies ain t enough the swiss case jean pierre danthine and jean christian lambelet the success of the swiss economy relies on a blend of conservative policies cooperative labour relations and a geographically diversified economic structure the lesson that switzerland offers other countries is a microeconomic supply side one with little evidence for any particular macroeconomic recipe is the swiss experience really an economic success in terms of growth the swiss record may look poor but inflation is very low the unemployment rate is and has always been at very low levels but there was a massive reduction of the foreign labour force in the early 1970s while the guest worker story is part of the explanation there is much more to it three key factors characterize switzerland first macroeconomic policies are not actively used fiscal policy focuses more on balancing the budget than on counteracting business cycles monetary policy is preoccupied with a stable growth path for its chosen target although short run policy is pragmatic rather than rigid second the labour market is best described as a vast number of bilateral monopolies mostly at the firm level bargaining is therefore cooperative and this is reinforced by the legal threat of binding arbitration finally the industrial structure is geographically well diversified this makes job search and mobility relatively costless it also means that local or regional pressures for subsidies or macroeconomic support are weak with little temptation to deviate from the principle of non intervention

organized labor and the political economy of product market distortions why are economic reforms reversed through strikes and demonstrations in some countries but backed by the labor movement in other countries why do product and labor market distortions differ so much across countries this article addresses these questions by means of a simple heuristic model of the economy that replicates in an integrated manner several independent results from the recent political economy literature unlike most of this literature however the model focuses on the role played by organized labor rather than by rent seeking firms and guilds a two stage game between the government and organized labor determines the level of product market distortions for example import tariffs in the first stage the players may undertake costly actions such as redistributing income or striking in order to increase their bargaining power in the second stage they negotiate over product market distortions and wages under very general assumptions several policy regimes exist changes in the key parameters of the economy may trigger a switch in the strategy of trade unions from confrontation to cooperation and hence change the policy regime cross country data highlight that in spite of its simplicity the model reproduces some observed empirical regularities

exchange rate policy wage formation and credibility abstract since the collapse of the bretton woods system some european countries have pursued discretionary exchange rate policies in order to maintain or enhance the international competitiveness of the traded goods sector these countries which typically feature centralized wage setting have also tended to experience high nominal wage increases the overall outcome may be described as a devaluation wage spiral this paper applies two models of repeated games to analyze the strategic interaction between an exchange rate setting policy maker and a wage setting trade union it is shown how a devaluation wage spiral may result from a conflict of interest over the real wage it is also shown how reputational forces may provide a way out of the devaluation wage spiral

the redistribution of income in canada this original study challenges the widely held belief that government policies to redistribute income have made canada a more egalitarian state the author bases his conclusions on extensive documentation of the real effect of changes in taxes transfers and government expenditures

pay and employment determination in britain what are labour contracts really like the recent growth of unemployment in western economies has prompted new research on the workings of the labour market there has been much interest in particular in the questions what determines the level of real pay and why is it apparently so insensitive to changes in aggregate demand and unemployment european economists now find it hard to take seriously the notion still taught to many undergraduate that wages are determined by the intersection of demand and supply curves roughly half of all british employees belong to trade unions a much higher percentage have their pay fixed by some kind of collective bargain in this country it is negotiations not impersonal com petitive markets which decide what most of us will be paid the difficult problem is that of how to understand this process or to put it differently of how to think up the right model of the world

classical unemployment accommodation policies and the adjustment of real wages a model of wage formation and stabilization policy in economies with strong trade unions is developed the analysis provides a theoretical underpinning for the assertion that accommodation policies may cause wage inflation and ultimately reduce employment various methods of accomplishing a real wage adjustment are discussed i a policy of complete nonaccommodation 2 continued accommodation policies but with lower employment targets 3 social contracts and 4 tax based incomes policies tip

the recent slowdown of productivity growth the slowdown of productivity growth in the developed countries during the seventies will in this paper be viewed as a combined effect of three closely interacting forces i a long term deterioration in the efficiency and flexibility of some basic mechanisms of the economic and political systems of these countries ii the fading away of a number of uniquely favourable circumstances for productivity growth during the fifties and sixties and iii the exposure of these economies to unusually severe macroeconomic disturbances in the seventies careful inspection of time series with attempted modifications for cyclical factors suggests that there was hardly any general slowdown of productivity growth among developed countries before approximately i972 4 1 as we know the situation is radically different since then labour productivity growth per year for the entire national economy gdp per man hour seems to have fallen between the periods i960 73 and i973 9 by about i 2 percentage points in the united states 45 by about 24 percentage points in western europe2 45 and by about 5 9 percentage points in japan 6o table i see also fig i the slowdown was of about the same size in the business and manufacturing sectors see table i to calculate the extent of the slowdown of total factor productivity growth is of course a much more hazardous matter to which i will return later if just the various system changes and the fading away of the uniquely favourable factors had been the dominating forces behind the productivity growth slowdown we would expect the slowdown to have been gradual rather than abrupt as it turned out to be this abruptness as well as its timing makes the dramatic macroeconomic disturbances around i972 4 a prime suspect when looking for the villain behind the productivity growth slowdown indeed it is a basic hypothesis of the paper that these macroeconomic disturbances were not only by themselves strongly unfavourable for productivity growth but that they also revealed and accentuated the gradual deterioration of the

the equal absolute sacrifice principle revisited abstract we summarize the literature on equal absolute sacrifice income taxes and make some extensions we adapt the utilitarian equal sacrifice criterion to a wide class of rank dependent social welfare functions and find that liabilities depend on both income and position in the distribution we investigate whether such taxes need be progressive using a combination of analytics and simulation and in the process uncover tax functions not previously recognized as equating sacrifices finally out of horizontal equity considerations a new concept of the equal treatment of equals by an income tax emerges with implications for future work whose significance is discussed

sources of production inefficiency and productivity growth in china a global data envelopment analysis abstract the current mode of production in china is extensive and inefficient and has caused great stress on both resources and the environment this paper focuses on analyzing the sources of production inefficiency and productivity growth in china here a developed slacks based measure is utilized to decompose production inefficiency into three components input inefficiency economic output inefficiency and environmental inefficiency furthermore by applying a method based on global data envelopment analysis we take a further step to analyze the key factors responsible for the change of environmental productivity during 2003 2011 from the point of view of technical progress productive scale and management level the results show that redundancy in energy and labor inputs and excessive emission of sulfur dioxide chemical oxygen demand and ammonia nitrogen are the main sources of production inefficiency in china during the sample period the efficiency in all inputs and environmental emissions has improved except for capital input efficiency which had a decreasing trend further analysis shows that the overall environmental productivity in china has begun to follow an ascending path technical progress is the most powerful contributor to china s productivity growth while the decreases in scale and management efficiency are the two main obstacles preventing productivity improvement

the political economy of central bank intervention this paper analyzes an exchange rate policy game between a central bank and rational speculators under symmetric information the central bank tries to counteract shocks to the exchange rate by means of sterilized intervention working through the expectations channel private speculators resist being fooled they anticipate the interventions an intervention bias results with an inefficiently high equilibrium volume of intervention which does not reduce the impact of shocks to the exchange rate the model implies that the more independent the central bank the smaller and the more consistent the intervention efforts an empirical illustration lends some support to the model

technological change technological catch up and capital deepening relative contributions to growth and convergence we decompose labor productivity growth into components attributable to 1 technological change shifts in the world production frontier 2 technological catch up movements toward or away from the frontier and 3 capital accumulation movement along the frontier the world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections we analyze the evolution of the cross country distribution of labor productivity in terms of the tripartite decomposition finding that technological change is decidedly nonneutral and that both growth and bipolar international divergence are driven primarily by capital deepening jel o30 o47 d24

energy efficiency of selected oecd countries a slacks based model with undesirable outputs this paper presents an efficiency assessment of selected oecd countries using a slacks based model with undesirable or bad outputs sbm undesirable in this research sbm undesirable is used first in a two stage approach to assess the relative efficiency of oecd countries using the most frequent indicators adopted by the literature on energy efficiency besides in the second stage glmm mcmc methods are combined with sbm undesirable results as part of an attempt to produce a model for energy performance with effective predictive ability the results reveal different impacts of contextual variables such as economic blocks and capital labor ratio on energy efficiency levels

wage formation and macroeconomic policy in the nordic countries this study examines labour markets in scandinavia scandinavian labour market policies have always represented one of the strongest alternatives to those adopted by recent governments in the uk and usa and the ability of these countries to maintain such low unemployment is currently of great interest to the economists the key issue in the book concerns the possibilities of combining wage moderation with active employment policies other central issues concern the impact on wages of productivity changes tax policies devaluations and working time development as well as of changing institutional conditions the book analyzes both wage formation in the individual nordic economies and general aspects of nordic wage setting institutions in particular the relation between centralized bargaining and wage drift the aim has been to apply modern union and bargaining theories of wage formation

total factor energy efficiency in developing countries this paper uses a total factor framework to investigate energy efficiency in 23 developing countries during the period of 1980 2005 we explore the total factor energy efficiency and change trends by applying data envelopment analysis dea window which is capable of measuring efficiency in cross sectional and time varying data the empirical results indicate that botswana mexico and panama perform the best in terms of energy efficiency whereas kenya sri lanka syria and the philippines perform the worst during the entire research period seven countries show little change in energy efficiency over time eleven countries experienced continuous decreases in energy efficiency among five countries witnessing continuous increase in total factor energy efficiency china experienced the most rapid rise practice in china indicates that effective energy policies play a crucial role in improving energy efficiency tobit regression analysis indicates that a u shaped relationship exists between total factor energy efficiency and income per capita

multi output efficiency with good and bad outputs abstract cherchye de rock dierynck roodhooft and sabbe 2013 introduced a dea methodology that is specially tailored for multi output efficiency measurement the methodology accounts for jointly used inputs and incorporates information on how inputs are allocated to outputs in this paper we present extensions that render the methodology useful to deal with undesirable or bad outputs in addition to desirable or good outputs interestingly these extensions deal in a natural way with several limitations of existing dea approaches to treat undesirable outputs we also demonstrate the practical usefulness of our methodological extensions through an application to us electric utilities

human capital and convergence a production frontier approach using nonparametric production frontier methods we decompose labor productivity growth into components attributable to technological change shifts in the world production frontier technological catch up movements toward or away from the frontier and physical and human capital accumulation movements along the frontier we find that 1 technological change is decidedly nonneutral 2 productivity growth is driven primarily by physical and human capital accumulation 3 the increased international dispersion of productivity is explained primarily by physical capital accumulation and 4 international polarization the shift from a unimodal to a bimodal distribution is brought about primarily by efficiency changes technological catch up

monetary regimes and the co ordination of wage setting abstract a recent literature argues that a strict monetary regime may reduce equilibrium unemployment by disciplining wage setters as wage setters abstain from raising wages to avoid a monetary contraction however in this literature the wage setters are assumed not to co ordinate their wage setting the present paper argues that precisely because a strict monetary regime may discipline the unco ordinated wage setting thus lowering unemployment in the unco ordinated outcome it also reduces wage setters incentives to co ordinate it is shown that an accommodating monetary regime may reduce equilibrium unemployment via the strengthening of the wage setters incentives to co ordinate

rules discretion and reality both with respect to inflation and productivity macroeconomic performance in the last decade or so has been disappointing promises of policymakers to improve things have been frequently thwarted not only in terms of inflation and growth but also in terms of achieving targets for such summary measures of policy as the budget deficit or the money supply moreover critics have charged that policy failures are to blame for many of our economic difficulties the net effect has been to raise the practical question of whether the political process as now constituted can produce good economic policies the last decade or so has also been marked more than coincidentally by substantial professional criticism of conventional neokeynesian macro models and the theory of policy associated with them one of the major punch lines of this research is that activist macroeconomic policy is misguided indeed at best it is seen as ineffective and at worst highly counterproductive as a consequence the so called new classical economists argue that policymakers should avoid activism or discretion and instead be guided by simple rules the issue of rules vs discretion has of course been a source of long standing professional debate and while the new classical economists have provided some additional intellectual ammunition for rules this hardly serves to explain the apparent popular resurgence in advocacy of rules recent interest in rules is reflected in the emphasis on monetary targeting in proposed legislation even constitutional amendments for controlling the federal budget and in attempts to untarnish the gold standard this paper reviews the current state of the rules vs discretion debate i the nature of policy some preliminaries

union wages temporary lay offs and seniority it is widely believed that the seniority system in conjunction with the collective bargaining process contributes significantly to the determination of the unemployment level in unionized sectors causa i empiricism suggests that real wage demands often remain buoyant in these sectors in the face of seemingly high rates of unemployment among union members james medoff 1979 p 380 convincingly documents the evidence that adjustment through lay offs is substantially greater in unionized firms than in comparable non unionized firms the usual but somewhat informal explanation is that the outcome of union voting is greatly influenced by senior workers who are fairly certain that they will not be laid off when normal shifts in the industry s demand for labour occur 2 these inframarginal workers are believed to vote for higher wage settlements than they would if their own jobs were not so secure

wage setting under different monetary regimes in an economy with large wage setters like industry unions the monetary regime affects the trade off between consumer real wages and employment and profits faced by the wage setters this paper shows that an exchange rate target including participation in a monetary union is likely to involve lower wages in the traded sector and higher wages in the non traded sector than does a price target an exchange rate target also involves higher prices on non traded goods relative to on traded goods overall welfare is likely to be higher under a price target

equity and policy effectiveness with imperfect targeting abstract we propose a general approach that jointly integrates horizontal and vertical equity criteria in the assessment of poverty alleviation programs with the strength of each criterion being captured through its own inequity aversion parameter this contrasts with the assessment of poverty alleviation programs done with simple under coverage and leakage ratios or with other methods that do not take into account the heterogeneity of the poor and that do not address directly the social benefits of achieving normative criteria our methodology is illustrated using tunisian data and two alternative poverty alleviation policies we find inter alia that the social ranking of commodity and socio demographic targeting in tunisia depends on the policymaker s comparative preference for vertical and horizontal equity

does energy efficiency improve technological change and economic growth in developing countries abstract does a trade off exist between energy efficiency and economic growth this question underlies some of the tensions between economic and environmental policies especially in developing countries that often need to expand their industrial base to grow this paper contributes to the debate by analyzing the relationship between energy efficiency and economic performance at the micro total factor productivity and macro level countries economic growth it uses data on a large sample of manufacturing firms across 29 developing countries to find that lower levels of energy intensity are associated with higher total factor productivity for the majority of these countries the results are robust to a variety of checks suggestive cross country evidence points towards the same relation measured at the macro level as well

growth and convergence of the oecd countries a multi sector production frontier approach abstract kumar and russell 2002 henderson and russell 2005 and badunenko henderson and russell 2013 have proposed a production frontier methodology to analyze the economic growth and the convergence of growth rates across countries they see two main advantages to this methodology 1 it reconstructs the world production frontier without relying on any particular typically unverifiable assumptions on any aspects of the growth process and 2 it allows to decompose labor productivity growth into several parts in this paper i extend the previous approach by considering a multi sector setting this setting allows to propose a more realistic and complete country level analysis while keeping the same advantages as with the previous methodology i also tackle the criticism of less reliable data at the sector level than at the country level by showing how the multi sector approach can easily be adapted i apply it to the oecd countries from 1995 to 2008 the results confirm the non neutrality of technological change i also find that capital accumulation plays the biggest role in the increase of output labor productivity while technological change and human capital accumulation also play an important role but it is twice as small as capital accumulation interestingly these results suggest the emergence of two groups eastern and central european countries and the eu15 and korea the two groups seem to diverge over time

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded