profit maximising goes global the race to the bottom we explore four decades of cyclical and long run dynamics in income distribution and economic activity for a panel of 13 oecd countries as measured by the wage share and output gap when modeled as predator prey dynamics economic activity in oecd countries is weakly profit led convergence to a long run equilibrium is relatively slow delaying the profit squeeze stage for many years our race to the bottom model suggests that the oecd countries have been engaged in undercutting each other s real unit labour costs an extension of the model shows that the long run equilibrium has been shifting south west towards a lower wage share it may even be that this race has the undesirable consequence of decreasing economic activity

sunk costs and the natural resource extraction sector analytical models and historical examples of hysteresis and strategic behavior in the americas sunk costs play a significant role in shaping industry conduct and development outcomes associated with the resource extraction sector their role is explored here by 1 developing analytical models that show specifically how sunk costs influence investment behavior and outcomes and 2 considering the historical experience during major epochs of two important extractive industries the models demonstrate how sunk costs in conjunction with uncertainty or strategic behavior can severely distort efficiency and equity outcomes the amazon rubber boom and bust and the pan american aluminum industry illustrate the significance of sunk costs in the extractive sector and beyond

economic growth income distribution and climate change we present a model based on keynesian aggregate demand and labor productivity growth to study how climate damage affects the long run evolution of the economy climate change induced by greenhouse gas lowers profitability reducing investment and cutting output in the short and long runs short run employment falls due to deficient demand in the long run productivity growth is slower lowering potential income levels climate policy can increase incomes and employment in the short and long runs while a continuation of business as usual leads to a dystopian income distribution with affluence for few and high levels of unemployment for the rest

changes in the probability of bankruptcy and equity value abstract work in finance suggests that changes in the probability of bankruptcy likely affect firm value by affecting perceptions of the cost of transacting with the firm in this paper accounting information from the balance sheet as well as the income statement is used in conjunction with ohlson s 1980 bankruptcy prediction model to calculate unexpected changes in the probability of bankruptcy for a sample of firms with a large estimated probability of bankruptcy sometime during the ten year study period unexpected changes in the probability of bankruptcy are useful in explaining security returns even after controlling for unexpected earnings

information effects and stock market response to signs of firm deterioration a recent issue of the journal of financial economics june september 1978 is devoted to reporting anomalous evidence regarding market efficiency this study may qualify under the same heading here we examine the market response to information about firms whose future is assessed as being extremely problematic

economics of farmer early retirement policy we estimate the structural effects costs and potential efficiency gains that might arise from the introduction of an early retirement scheme for farmers in northern ireland using data from the farm business survey and a separate survey of 350 farmers aged between 50 and 65 modelling results suggest that farm scale is a significant determinant of profit per hectare but that the age of the operator is not the economic gains from releasing land through a scheme were conditional on transfers bringing about significant farm expansion and changes in land use when these conditions were satisfied pensions payments of only about one third the statutory maximum could be justified survey responses indicated that participation in the scheme would bring forward farmers retirement age by an average of 4 years moreover deadweight payments would equate to about 23 of potential total expenditure overall the economic case for the introduction of an early retirement scheme to northern ireland is judged to be weak

why farmers quit a county level analysis we identify the effects of alternative explanatory variables on the propensity of u s farmers to cease farming with a particular emphasis on understanding the roles of off farm employment and federal farm program payments conventional ordinary least squares analysis using all counties suggests that off farm employment has no statistical effect on the net number of farmers quitting between 1987 and 1997 ceteris paribus a more refined analysis which separates counties losing farmers from those that gained farmers reveals subtle and less clear cut effects of off farm employment and federal program payments on farm exits copyright 2001 oxford university press

the impact of price floors on farmland investments a real options based experimental analysis price floors are a common instrument for market intervention to stimulate investments in some cases it can be observed that a price floor does not have the stimulating effect we experimentally analyse the investment behaviour of students who take the role of farmers the experiment considers an investment problem under uncertainty in a with price floor and a no price floor treatment stylizing a decision to take an ongoing farmland investment option we compare the actual investment behaviour with normative benchmarks of the net present value and the real options approach furthermore we look at order and learning effects the results show that the price floor has no significant impact on the willingness to invest whereas the effects of order were statistically significant the investment reluctance arising from an abolishment is stronger than the investment stimulation arising from the introduction of a price floor furthermore neither the net present value nor the real options approach is appr

common stock returns and rating changes a methodological comparison this paper examines the adjustments in a firm s common stock price during the eleven months before and during the month of announcement of a bond rating change based on several different measures of abnormal security return the findings are consistent with the proposition that bond downgradings convey information to common stockholders for bond upgradings the price adjustments were statistically insignificant in the month of announcement although in the eleven preceding months upgraded firms exhibited positive abnormal returns while the results do not fully support earlier research we stress that the main contribution of this article lies in the scrutiny it gives to issues of methodology in assessing the possible price effects of bond reclassifications several recent studies have investigated the effects of changes in company debt classifications by the major bond rating agencies 1 these include four studies of the impact of a rating change on bond prices katz 19 hettenhouse and sartoris 14 grier and katz 12 and weinstein 25 and one study of the impact on common stock prices pinches and singleton 22 the findings of the bond price studies differ widely thus while katz and grier and katz suggest that trading rules based on the announced downgradings of industrial bonds may be moderately profitable hettenhouse and sartoris and weinstein analyzing bond yields and returns respectively find that there is no apparent opportunity to profit abnormally subsequent to the announcement of the change weinstein attributes these differences in results largely to issues of methodology and proceeds to investigate the effects of rating changes on bond prices using more refined risk adjustment techniques and portfolio estimation procedures

international competition income distribution and economic growth this paper shows that the neo keynesian case for wage led growth does not generally hold in an open economy model wage increases cause a loss of competitiveness that reduces the trade balance if the economy is relatively open to trade and price elasticities satisfy certain restrictions the worsening of the trade balance more than outweighs the increase in workers consumption thus reducing the growth rate the main theoretical innovation is a flexible markup pricing rule that allows changes in unit labor costs and exchange rates to affect profit margins implications for international relations and class conflict are discussed copyright 1989 by oxford university press

production and investment decisions under sunk cost and temporal uncertainty building on glenn johnson s asset fixity theory this article introduces sunk cost and temporal uncertainty in jorgenson s neoclassical theory of investment under the assumption of risk neutrality we show sunk cost and temporal risk affect the implicit rental value of capital and investment and entry exit decisions results suggest there are important interactions between sunk cost and the effects of temporal uncertainty on production behavior

the effect of bond rating changes on common stock prices abstract the evidence in this paper suggests that downgrades by both moody s and standard and poor s are associated with negative abnormal stock returns in the two day window beginning the day of the press release by the rating agency significant negative abnormal performance can still be detected after eliminating observations containing obvious concurrent potentially contaminating news releases there is little evidence of abnormal performance on announcement of an upgrade significant abnormal returns are associated with announcements of additions to the standard and poor s credit watch list if either a potential downgrade or a potential upgrade is indicated

demand and distribution in integrated economies aggregate demand is influenced by the functional income distribution of an economy and that of its trading partners this relationship between income distribution and output is analyzed in a short run two country neo kaleckian model the effects of devaluation and redistribution are discussed in detail trade and redistribution within one country interact and output increases or decreases with changes in either depending on the specific distributional and exchange rate movements the marshall lerner condition is shown to be equivalent to the assumption of expansionary devaluation if devaluation increases output national redistribution policy toward wage earners is also more likely to be expansionary author s abstract

modeling structural breaks in economic relationships using large shocks abstract this paper introduces a new model of structural breaks in the coefficients of economic relationships which allows them to be driven by large past economic shocks the breaks generated by these shocks can be taken to reflect stochastic changes in agents decisions or beliefs triggered by extraordinary economic events our model specifies that both the timing and size of breaks are stochastic the last property of it enables us to investigate qualitative effects that large shocks can have on economic relationships as an empirical application of our model the paper investigates the stability the oil economy relationship since the early sixties from the six large oil shocks identified by our data the paper shows that only the first oil shock at the end of 1973 has caused a major long term adverse effect on economic activity all the large oil price shocks that have happened since then did not have any significant negative effects on the slope of the oil economy relationship

pareto optimality and competition there is a general consensus that u s financial markets are very competitive and efficient with prices quickly reflecting the available information there is also a widespread belief that these competitive and efficient markets enable the efficient allocation of scarce capital among alternative investment opportunities this belief is not based on direct observation it is virtually impossible to obtain the data concerning the joint probability distribution of returns to all possible projects which would be required for a direct assessment of the efficiency of the resource allocations to which the market gives rise rather it is based on the well known result that perfectly competitive markets generate pareto efficient resource allocations the object of this paper is to question that conclusion to show that even with apparently competitive and efficient markets resource allocations may not be pareto efficient

asymmetry and nonstationarity in the farm size distribution of wisconsin milk producers an aggregate analysis a markov model is developed to test the nonstationarity and asymmetry of factors affecting the evolution of wisconsin dairy farms using aggregate data the model is used to examine how prices interest rates debt drought and the dairy termination program affected farm growth and the entry and exit of wisconsin dairy farms by size categories during 1972 92

the swedish third way an assessment of the performance and validity of the rehn meidner model the swedish third way an assessment of the performance and validity of the rehn meidner model

contract and exit decisions in finisher hog production finisher hog production in north america has shifted toward larger units and contract format since 1990 exit among independent growers has been high we develop a model showing that growers with any of three efficiency attributes lower innate hazard of exit variable costs or contract adoption costs are more likely to contract produce more and expend more on business protection using 2004 agricultural resource management survey data a recursive bivariate probit model confirms that contracting producers are less likely to exit specialization increases the probability of contracting education nonfarm income and older production facilities are significant in increasing expected exit

wage dispersion and productive efficiency evidence for sweden the swedish record of enormous compression of relative wages under centralized solidarity bargaining followed by substantial decompression of wages after central bargaining broke down supplies observations well suited to empirical evaluation of arguments about the response of productive efficiency to shifts in wage distribution we obtain no results supporting fairness morale and cohesiveness theories implying that wage leveling within workplaces and industries may enhance productivity reduction of interindustry wage differentials evidently did however contribute positively to aggregate output and productivity growth most likely for the structural reasons first emphasized by swedish trade union economists almost a half century ago

entry exit and farm size assessing an experiment in dairy price policy this article models and estimates the forces behind farm exits and changes in herd size among connecticut dairy farms under the new england dairy compact a model of sunk costs and farm capital investment is used to specify two econometric estimations a random effects probit model of farm entry and exit and an autocorrelated generalized least squares panel data model of farm size the dairy compact s price strategy reduced farm exits and moderately increased cow numbers in contrast development pressures and historically low unemployment rates increased farm exits

reasons for insolvency amongst small firms a review and fresh evidence the growing and diverse literature on insolvency is comprehensively and critically reviewed the limited portfolio that small firms represent in particular as regards their managerial capabilities is suggested as an added reason for the strong inverse correlation of probability of insolvency with firm size the evidence from a hitherto largely untapped source of data the reports of the british official receiver is analysed using contingency tables the most important reason for their failure given by the owners of insolvent firms is weaknesses in operational management particularly in the adequacy of their capital marked inter temporal and interregional differences are evident within the data

stagnation income distribution and monopoly power the deceleration in the rate of industrial growth in the indian economy since the middlesixties initially interpreted by some as a temporary downward deviation from trend hasnow come to be generally accepted as reflecting long run tendencies towards stagnation several explanations for these tendencies have been offered bhagwati and desai 1970 and bhagwati and srinivasan 1975 have focused on inefficiencies and the misallocationof resources arising from industrial policies pursued by the government others chakravarty 1974 raj 1976 and vaidyanathan 1974 among them have emphasisedthe sluggishness of agricultural growth which is alleged to have retarded industrial growthby limiting markets and the supply of wage goods and raw materials a third view reflectedin srinivasan and narayana 1977 for example has put the blame on a slackening of invest ment demand due to lower public investment but does not explain why public investmentfell or why its fall restrained industrial growth finally there is the explanation put forthin bagchi 1970 1975 1982 in nayyar 1978 and in parts of mitra 1977 that inequali ties in income distribution have resulted in a limited demand for industrial goods reducedincentives for investment and therefore reduced growth this view seems to suggest apositive relation between growth and income equality which is opposed to the generallyaccepted idea derived from cambridge growth models that higher growth requires greaterinequality the purpose of this paper is to examine the last explanation by considering the inter action between growth and income distribution in an underdeveloped economy with thehelp of a simple macroeconomic model the model is a stylisation of the indian economy so that we will be able to use the model to assess the argument that a deceleration in therate of growth of the indian industrial economy could have been caused by an unequaldistribution of income the argument will not be made that this income distributional con straint is the binding constraint on industrial growth the model will merely examine theinternal consistency of the argument that a bad income distribution could explain stagnation in the sense of reduced growth and show that in the indian context as in other similarcontexts this argument can be put forward in explaining stagnation our argument is first presented with a highly simplified schematisation of the indianeconomy which we shall call the basic model the economy modelled produces only one

demand drives growth all the way goodwin kaldor pasinetti and the steady state a demand driven alternative to the conventional solow swan growth model is analysed its medium run is built around marx goodwin cycles of demand and distribution long run income and wealth distributions follow rules of accumulation stated by pasinetti in combination with a technical progress function for labour productivity growth incorporating a kaldor effect and induced innovation an explicit steady state solution is presented along with analysis of dynamics when wage income of capitalist households is introduced the samuelson modigliani steady state dual to pasinetti s cannot be stable numerical simulation loosely based on us data suggests that the long run growth rate is around 2 per year and that the capitalist share of wealth may rise from about 40 to 70 due to positive medium term feedback of higher wealth inequality into its own growth

a race to the bottom employment protection and foreign direct investment a common critique of globalization is that it leads to a race to the bottom specifically it is assumed that multinationals invest in countries with lower regulatory standards and that countries competitively undercut each other s standards in order to attract foreign capital this paper tests this hypothesis and finds robust empirical support for both predictions first a reduction in employment protection rules leads to an increase in foreign direct investment fdi furthermore changes in employment protection legislation have a larger impact on the relatively mobile types of fdi second there is evidence that countries are competitively undercutting each other s labor market standards

semi autonomous household expenditures as the causa causans of postwar us business cycles the stability and instability of luxemburg type external markets similar patterns can be observed in post wwii us business cycles the initial upswings tend to be led by household investment and debt financed personal consumption expenditures which then wane in relative importance and lead downswings as those expenditures are financed in significant part by money creation they function as an external market driving accumulation by enabling monetary profit realisation in a way analogous to rosa luxemburg s treatment of the public and foreign sectors empirical studies on wage led profit led demand regimes typically exclude household investment or include it in with business investment this paper argues that it is vital to distinguish an independent role for semi autonomous household expenditures as a driver of effective demand and cyclical dynamics the failure to do so in empirical studies sustains misleading conclusions such as the perceived relevance of goodwin type profit squeeze cycles

globalization and taxation challenges to the swedish welfare state many have argued that the increased international mobility of both capital and labor witnessed in recent years will force advanced capitalist democracies to cut taxes and thus ultimately roll bac

financialisation and the new swedish model most studies of swedish political economy are too optimistic about the condition and prospects of the reformed swedish model e g bergh 2014 steinmo 2010 indeed the swedish economy has responded to the global financial crisis gfc in what appears to be a successful manner this comparativist literature nevertheless omits in depth analysis of the impact of financialisation partly due to its neglect of long term dialectical processes of change cf ogden et al 2014 there is a small literature on financialisation in sweden e g belfrage 2008 forslund 2008 kallifatides et al 2010 ryner 2013 belfrage 2015 andersson and jonung 2015 kallifatides 2016 however it has not clarified what the dynamics contradictions and crisis tendencies of the resulting finance dominated accumulation regime in sweden are drawing on document analysis and statistics and based on regulation theory e g aglietta 1979 this paper does just that it thus corrects an overly idealised picture of swedish economy and society as well as more broadly holding the swedish case up as a critical case study for the sustainability of the finance dominated growth regime in europe we argue that there is a looming crisis in the swedish economy today as the acceleration of financialisation following the gfc is shifting the economy away from being export led to becoming debt led and asset based and thus moving the economy closer to the uk and us economies as such the swedish case suggests that the finance dominated growth regime may be unsustainable in europe more generally

pseudo goodwin cycles in a minsky model goodwin cycles result from the dynamic interaction between a profit led demand regime and a reserve army effect in income distribution the paper proposes the concept of a pseudo goodwin cycle we define this as a counter clockwise movement in output and wage share space which is not generated by the usual goodwin mechanism in particular it does not depend on a profit led demand regime to illustrate this a simple minsky type model is extended by a reserve army distribution adjustment in this model the cycle is generated by the interaction of financial fragility and demand the wage share rises at higher levels of output but this generates no feedback so that by design demand does not react to changes in income distribution but the model does exhibit a pseudo goodwin cycle in the output wage share space this holds true even if we introduce a wage led demand regime this demonstrates that the existence of a counter clockwise movement of output and the wage share cannot be regarded as proof of the existence of a goodwin cycle and a profit led demand regime

the costs of inefficient bargaining and financial distress abstract this study provides the first large sample analysis of the stock market reactions to interfirm litigation when a suit is filed the common stock of the typical defendant declines by about 1 while the plaintiff experiences no significant gains for the average pair of firms the combined drop in value upon filing is 21 million much of the loss is regained if the suit is settled the findings suggest that bargaining among firm claimants sometimes leads to very inefficient outcomes part of the leakage is explained by the costs of increased financial distress imposed on the defendant

technology demand and distribution a cumulative growth model with an application to the dutch productivity growth slowdown this paper argues that the case for real wage growth restraint and the consequent restoration of profitability which the mainstream consensus regards as a necessary condition for sustained output and productivity growth is based on weak foundations because it neglects the negative impact of wage moderation on productivity growth using a general keynesian growth model which integrates a wage led or profit led demand regime and a productivity regime incorporating the productivity growth enhancing effects of higher demand and higher real wages the conditions are identified under which real wage restraint fails to raise output and productivity growth the model is applied empirically to the netherlands 1960 2000 copyright 2006 oxford university press

why sweden s welfare state needed reform according to professor walter korpi the swedish economy would be in better shape if leading politicians had paid less attention to the advice from an influential group of swedish academic economists allegedly hostile to the welfare state their claim that high taxes and extensive social security programmes have strong adverse effects on aggregate economic performance rested on a politically biased reading of comparative international data in purporting to show that sweden had fallen behind other comparable countries the sclerosis diagnosis they set the stage for cutbacks in the welfare state and a major tax reform involving substantially lower marginal tax rates apart from creating inequality at a negligible gain in efficiency the very same reforms may also explain why sweden ran into a macroeconomic tailspin in the early i 990s rather than an instructive case study of the ultimate consequences of a long term obsession with income equality and social protection the exceptional economic crisis can be traced to severe macroeconomic policy blunders the views of professor korpi are quite familiar for anyone that has followed the swedish debate over the last decade supporters of the welfare state applaud professor korpi for revealing the ideological bias underlying the evidence presented in support of the sclerosis diagnosis some swedish economists rather thank of him as a modern day don quixote eager to pick a fight with imaginary villains being a swede and a professor of economics i can hardly claim the status of an impartial observer i certainly believe that harberger triangles convey information and i am convinced that most of the recently implemented reforms make sense nevertheless i believe that professor korpi raises important issues many of the accusations made against the welfare state in sweden and elsewhere rest on evidence which does not survive normal academic scrutiny in their capacity as policy advisors academic economists far from always live up to the standards of the seminar room speculation and sweeping generalisations are poor substitutes for facts and empirical investigations like professor korpi i doubt that very important insights on the harmfulness of the welfare state can be gained from comparative aggregate data over the period i970 90 swedish economic growth was below the oecd average at the same time the public sector was very large however

forecasting losses on a liquidating long term loan portfolio abstract assessing the condition of financial institutions and valuation of loan portfolios in secondary markets require the estimation of exposure to losses on existing portfolios of long term loans data from a major u s financial institution were used to construct a forecasting model with markovian structure and nonstationary transition probabilities the model proved to be effective in representing changes in probability of default that occur as individual loans mature and accurate in forecasting aggregate defaults and losses on a nationwide portfolio of long term loans

trends and cycles in macroeconomic time series two structural time series models for annual observations are constructed in terms of trend cycle and irregular components the models are then estimated via the kalman filter using data on five u s macroeconomic time series the results provide some interesting insights into the dynamic structure of the series particularly with respect to cyclical behavior at the same time they illustrate the development of a model selection strategy for structural time series models

functional income distribution and aggregate demand in the euro area an increase in the wage share has contradictory effects on the subaggregates of aggregate demand private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes investment expenditures ought to be negatively affected because investment will positively depend on profits net exports will be negatively affected because an increase in the wage share corresponds to an increase in unit labour costs and thus a loss in competitiveness therefore theoretically aggregate demand can be either wage led or profit led depending on how these effects add up the results will crucially depend on how open the economy is internationally the paper estimates a post kaleckian macro model incorporating these effects for the euro area and finds that the euro area is presently in a wage led demand regime implications for wage policies are discussed

the kaleckian model of growth and distribution and its neo ricardian and neo marxian critiques this paper analyzes the newer kaleckian models of growth and distribution and the criticisms that have been addressed to them by neo marxian and neo ricardian authors the models discussed assume overhead labor costs and target return pricing the main issues are the form of the investment function and the notions of normal rates of profit and of normal rates of capacity utilization despite the relevance of and often the similarity between the neo marxian and neo ricardian critiques it is shown that the main features of the kaleckian growth model may still be preserved c 1995 academic press limited copyright 1995 by oxford university press

the information value of failure predictions in credit assessment abstract this paper is concerned with the information value of failure prediction in the context of bank lending decisions it argues that earlier concerns about the methodology and robustness of classificatory models are given the volume of confirmatory studies no longer of practical significance instead the problem is whether reported classificatory performance provides information of value new information in a plausible ex ante decision situation in interpreting ex post evidence it appears that claimed information value is directly dependent on assumptions about factors which are neither specified nor testable within the conventional ex post experiment past claims for information value have used extreme values for these assumptions but it is argued that with plausible alternative assumptions the ex post evidence is also consistent with negative information value

determinants differentiation and development of short term marginal costs in dairy production an empirical analysis for selected regions of the eu this work provides evidence on the determinants cost differentiation and development of short term marginal costs of dairy farms in important production regions of the european union the empirical study is based on the estimation of multi input multi output symmetric generalized mcfadden cost functions using an unbalanced panel data set of the european farm accountancy data network the results show considerable regional differences in the impact of the outputs input prices and fixed factors on marginal costs strong evidence can be found that marginal costs decrease over time and is further underlined by the development of derived regional aggregated short term supply curves marginal cost elasticities and correlation coefficients validate the hypotheses that a high degree of farm specialization large milk output and low milk prices are associated with lower marginal costs furthermore the marginal cost spread in the data sample is analyzed we show that milk output milk yield herd size labor input and fodder production can be attributed to significant marginal cost differentiation of farms whereas for crop and animal output grassland stock of other animals and depreciation only minor differentiation can be found

internationalization and the social democratic model crisis and future prospects this article examines the crisis of the social democratic model in the four countries austria norway finland and sweden in which social democracy was most successful in maintaining and even extending its two central achievements full employment and the institutional welfare state through the end of the 1980s four major conclusions emerge from the analysis first supply side measures more so than demand management were central to the employment and growth models pursued by social democracy prior to the early 1970s second the increasing trade openness contributed little to the recent problems of social democracy by contrast financial internationalization and deregulation and the multinationalization of capital undermined important features of the supply and demand sides of the models third changes in the international and domestic economies have weakened centralized bargaining fourth governments in the three nordic countries made serious mistakes in economic policy which greatly aggravated

the evolution of top incomes in an egalitarian society sweden 1903 2004 this study presents new homogenous series of top income shares in sweden over the period 1903 2004 we find that starting from levels of inequality approximately equal to those in other western countries at the time the income share of the swedish top decile drops sharply over the first eighty years of the twentieth century most of the decrease takes place before the expansion of the welfare state and by 1950 swedish top income shares were already lower than in other countries the fall is almost entirely due to a dramatic drop in the top percentile explained mostly by decreases in capital income while the lower half of the top decile consisting mainly of wage earners experiences virtually no change over this period in the past decades top income shares evolve very differently depending on whether capital gains are included or not when included sweden s experience resembles that in the u s and the u k with sharp increases in top incomes excluding capital gains sweden looks more like the continental european countries where top income shares have remained relatively constant a possible interpretation of our results is that sweden over the past 20 years has become a country where it is more important to make the right financial investments than to earn a lot to become rich

swedish economic performance and swedish economic debate a view from outside the papers by korpi henrekson and agell raise important questions both about the swedish economy and about the way in which evidence on economic growth should be handled in debate on economic policy i want to comment in particular on the fundamental question of whether the international evidence allows us to judge that swedish growth has been below par the papers raise two further questions on the first whether growth is inhibited by high taxation and a large welfare state the hallmarks of the post war swedish economy agell provides as good an assessment of the cross country macroeconomic evidence as we can probably hope to get at the moment unproven on the final vexed question of whether the structure of the economics profession has been inimical to open debate i have only a few comments to make let me start with the criteria and method by which we should attempt to assess relative economic performance this is a methodological minefield there are numerous paths leading to divergent conclusions the least we can do is to be explicit about our choices and subject our provisional conclusions to some checks for robustness what performance measure is relevant we could look at gdp or consumption scaled per head of population or per member of the workforce or per hour worked what deflators do we use we can reduce measures denominated in local currency to a common unit using exchange rates or using fixed international prices or using utility based indexes which derivative of the performance measure do we use we might want to compare levels or rankings or we might choose to assess relative rates of growth or even relative changes in growth rates which time period is relevant in particular comparisons of growth rates are often very sensitive to choice of start and end years when business cycle fluctuations are asynchronous what is the reference pointfor assessing underor overachievement the definition of par might be either the best performance or average performance for some group of countries for some period of time finally what exogenousfactors are to be taken into account we might wish to control for the influence on our preferred performance measure of a wide range of factors which are extraneous to the policy question under examination i will take a brisk jog through this minefield explaining briefly some of the choices which seem most relevant to the problem in hand but without attempting a full exposition of the problems the most usual starting place is to choose real gdp per capita as a measure of aggregate performance this

distribution and growth reconsidered empirical results for six oecd countries we analyse the relationship between functional income distribution and economic growth in austria france germany the netherlands the uk and the usa from 1960 until 2005 the analysis is based on a demand driven distribution and growth model for an open economy inspired by bhaduri and marglin which allows for either profit or wage led growth we find that growth in france germany the uk and the usa has been wage led whereas austria and the netherlands have been profit led in the case of austria a domestically wage led economy changes to profit led when including the effect of distribution on external trade the netherlands however are already profit led without external trade our results so far only partially confirm bhaduri and marglin s theoretical conclusion that wage led growth becomes less feasible when the effects of distribution on foreign trade are taken into account

wage led growth in the eu15 member states the effects of income distribution on growth investment trade balance and inflation this paper estimates a multi country demand led growth model for eu15 countries a decrease in the share of wages in national income in isolation leads to lower growth in finland france germany greece italy luxembourg netherlands portugal spain sweden and the united kingdom whereas it stimulates growth in austria belgium denmark and ireland however a simultaneous decline in the wage share leads to an overall decline in eu15 gdp hence eu15 as a whole is a wage led economy furthermore austria and ireland also experience negative effects on growth when they decrease their wage share along with their trading partners the results indicate that a decline in the wage share has had significant negative effects on growth in the eu15 countries and supports the case of wage coordination we present different wage led recovery scenarios taking into account further effects of a change in the wage share on prices nominal unit labour costs investment and net exports

economic growth and welfare state a case study of sweden in this article we analyse the relation between the dynamics of economic growth and the welfare state using the swedish experience as a case study we defend three theses concerning the swedish experience that the deep economic crisis of 1990 93 constituted the definite breaking point for the accumulation pattern in force since the 1950s and in crisis since the mid 1970s that the new accumulation pattern eroded the long standing symbiotic relationships between economic growth and the welfare state and that the welfare state has suffered retrenchments and qualitative changes of great importance which can be fundamentally explained by the transformations in the accumulation pattern we conclude that the changes introduced in sweden have continued to subordinate the welfare state s main goals giving priority to the new accumulation pattern

the information content of non earnings accounting numbers as earnings predictors this paper provides empirical evidence on the predictive ability and information content of nonearnings annual report numbers beyond that contained in earnings i take an earnings prediction approach to address the incremental information content issue 2 under this approach nonearnings accounting numbers jointly play the role of predictors of future earnings changes specifically i investigate whether nonearnings accounting numbers convey information about future earnings that is not reflected in current earnings and if they do whether this incremental predictive content is reflected in stock prices

personal income inequality and aggregate demand this paper presents a theoretical and empirical investigation of how changes in the size distribution of income can aect aggregate demand and the demand regime of an economy after presenting empirical evidence for the us economy that the propensity to save increases signicantly from the bottom to the top quintile of wage earners we demonstrate that more equal distributions always lead to higher output in the traditional neo kaleckian macroeconomic model we also present conditions under which a reduction of income inequality among workers turns demand more wage led this view is supported by the results of an econometric study for the united states 1967 2010 which show that the rise after 1980 in income inequality has made the us economy more prot led

the probability of bankruptcy a comparison of empirical predictions and theoretical models abstract the last decade has witnessed the development of many empirical models to predict corporate bankruptcy and of several bankruptcy theories this paper reviews and integrates these two strands of research and finds a substantial amount of overlap however the overlap is not perfect the paper presents a new theory of bankruptcy that appears to fit the data better the paper also suggests directions for future empirical and theoretical research

the swedish experiment the deterioration of the economic performance in sweden from about 1970 was to some extent the result of a number of exogenous shocks and unnecessary policy mistakes it was however also related to basic changes in the economic and social system in sweden in the late 1960s and early 1970 when government spending taxes and regulations started to expand dramatically it is also argued in the paper that problematic political economic and social mechanisms had become embedded in the long term dynamics of the system itself these various experiences are the background for recent reforms and retreats of the swedish experiment

growth of milk production in german dairy farms an empirical study based on event history analysis this article investigates determinants of growth of milk production in german dairy farms with the use of event history analysis this methodology enables the analysts to consider time as a proxy for not measurable effects on growth the likelihood of a farm s moving from a nongrowth episode into a growth episode is estimated and the impact of various covariates on that likelihood is assessed the analysis is based upon a balanced panel of annual farm accounts from 616 specialized dairy farms in germany covering the financial years 1995 1996 2008 2009 the results from event history analyses are presented for low and high growth rates for both groups it was found that the probability of entering a growth episode defined as the event to be analyzed increases over time e g as a consequence of an increasing need to improve competitiveness moreover several covariates such as the share of subsidies in returns farmer s age and milk price had a significant impact on growth in a farm s milk production the analysis revealed however that the effect direction of some explanatory variables differed between the two groups

structural change in the west german agricultural sector this article explains regionally differentiated patterns of structural change based on a theoretical framework dealing with strategic interaction of farms on the land market the main research question focuses on the causes of regionally persistent structures an empirical markov chain model is defined for the west german agricultural sector the model is used to explain the probabilities of farm growth decline or exit in terms of the current and former regional farm size structure further the impact of variables describing the regional farm structure thereby indicating market power of the large the potential of high competition for land within a region and possibly high rents of the status quo in combination with sunk costs is quantified the results confirm the relevance of strategic interaction as a crucial determinant of persistent regional differences in the farm size structure over time

unemployment and the real wage the economic basis for contesting political ideologies using the keynesian theory of effective demand this paper demonstrates how particular models such as that of cooperative capitalism enunciated by the left keynesian social democrats the marxian model of profit squeeze emphasizing distributive conflict and even the conservative model relying on supply side stimulus fit in as particular variants of a more general theoretical scheme through a reconstruction of the familiar is schedule the argument is weaved around the theme of the relations between unemployment and real wage in the context of both a closed and an open economy to explain the common macroeconomic basis of contesting ideologies copyright 1990 by oxford university press

goodwin cycles and the bopc growth paradigm a macrodynamic model of growth and fluctuations abstract the paper builds a non linear macrodynamic model to study the relation between the functional distribution of income technological progress and economic growth in the short term the interaction between the productivity regime the demand regime and the distributive conflict generates cyclical paths a la goodwin in the long term output growth rate is constrained by the balance of payments a la thirlwall in which the elasticities of foreign trade are modeled as a function of the complex relation between the wage share and the innovation capabilities of theeconomy

relative valuation roles of equity book value and net income as a function of financial health abstract this study tests predictions that pricing multiples on and incremental explanatory power of equity book value net income increase decrease as financial health decreases tests using a sample of 396 bankrupt firms and tests using a larger pooled sample both yield inferences consistent with predictions findings are robust to inclusion of controls for industry size return on equity and volatility of equity returns equity book value and net income multiples and incremental explanatory power vary predictably across three illustrative industries selected based on the likely extent of unrecognized intangible assets

debt driven growth wealth distribution and demand in oecd countries the paper investigates the effects of changes in the distribution of income and in wealth on aggregate demand and its components we extend the bhaduri and marglin 1990 model to include personal income inequality as well as asset prices and debt this allows for an evaluation of the wage or profit led nature of demand regimes of the expenditure cascade argument frank et al 2010 and several hypotheses regarding the effects of wealth and debt our estimates are based on a panel of 18 oecd countries covering the period 1980 2013 for the full panel the average demand regime is found to be wage led we fail to find effects of personal inequality but do find strong effects of debt and property prices which have been the major drivers of aggregate demand in the decade prior to the 2007 crisis

promoting structural adjustment in agriculture the economics of new entrant schemes for farmers we examine the efficacy of incentives for new entrants to farming as an alternative to early retirement schemes for farmers we briefly review previous studies on the effectiveness of farmer early retirement schemes in promoting structural adjustment in agriculture and conclude that the economic case for these schemes seems weak we then employ a dynamic farm optimisation model incorporating a realistic specification of farmer decision making on an original northern irish dataset to analyse ex ante the possible impacts of new entrant schemes we find a more positive potential impact from these schemes particularly the option of an interest rate subsidy on farm development loans this is attributed to the dynamic effects of the farm investments associated with such schemes a likely reflection of the long term effects of differences in age related lifecycle goals younger farmers have a longer planning horizon and tend to invest more heavily in business growth than comparable older age groups

after the waste land a democratic economics for the year 2000 this critique of reaganomics attempts to provide alternatives to both the supply experiments of the 1980s and neoliberal strategies of austerity it presents arguments for economic democracy with a worker oriented blueprint for improving productivity growth employment and economic justice

the economic aftermath of resource booms evidence from boomtowns in the american west the current us oil and gas boom is injecting labour capital and revenue into communities near reserves will these communities be cursed with lower long run incomes in the wake of the boom we study the oil boom and bust cycle of the 1970s and 1980s to gain insights using annual data on drilling to identify western boom and bust counties we find substantial positive local employment and income effects during the boom in the aftermath of the bust however we find that incomes per capita decreased and unemployment compensation payments increased relative to what they would have been if the boom had not occurred

bank strategies toward firms in decline abstract small firms are usually in constant need of funds in addition when they are in decline it puts them in a weak and dependent relationship with a commercial bank the strategy followed by the bank toward these firms is a powerful influence on their success in turnaround and their very existence in order to identify generic strategies followed by banks this exploratory study analyzed data on bank responses to 192 client firms these firms have been classified as problem loans i e there is an actual default or the bank perceives a potential default on their loans as this problem in the firm arises largely out of weakness in its primary sources of payment which is operations problem loans are firms in the early stages of decline using factor analysis four distinct strategies toward these firms were identified 1 managerial involving efforts to influence strategy and operations of the firm through suggestions and recommendations 2 financial involving efforts to safeguard the security interests of the bank by seeking additional collateral and guarantees 3 legal involving recovery of funds through courts and 4 restructuring including efforts to improve capitalization the firms were clustered into six groups using factor scores thumbnail profiles of each cluster showed the groups to be distinct finally three sets of contextual variables representing firm loan characteristics event triggers and the bank client relationship were used to discriminate among the clusters of firms the variables found to be significant in discriminating among the groups and thus impacting the strategies followed toward them included firm size the secured status of the loan the bank s perception of whether the decline was due to internal or external reasons severity of the problems facing the firm and cooperation of the client significantly the extent of loss incurred by the firm and years as a client did not make a difference to the strategy used where reasons for decline were largely external to the firm financial and merger strategies were preferred when the causes were internal managerial and legal strategies were important firm size was significant banks were less inclined to adopt managerial and financial strategies toward small as against medium sized firms these findings point to important lessons for managers in their dealings with banks banks generally prefer to work with clients toward a turnaround rather than resorting to legal means of recovery to take advantage of this attitude firms need to demonstrate cooperation to secure favorable terms as long as the bank s funds are fully secured moreover because bank strategies are dependent on their perceptions of the causes of the problems managers need to recognize the importance of providing appropriate information to create the right perception