wages and productivity growth in a dynamic monopoly abstract this paper studies the intertemporal problem of a monopolistic firm that engages in productivity enhancing innovations to reduce labor costs the optimal innovation policy is not monotone and the rate of productivity growth is the highest when the firm s size is in some intermediate range as long as its initial productivity is not too low the firm eventually reaches a steady state where the rate of productivity growth is identical to the rate of wage growth productivity dependent wage differentials do not affect productivity growth in the steady state they increase however the firm s long run equilibrium cost level

econometric estimation of foresight tax policy and investment in the united states we develop a method for measuring the foresight agents have we first dichotomize an agent s information at current date t into knowledge up to date t 1 f and expectations after t 1 f we then form a residual based test statistic that allows us to compare prediction errors for econometric models based on different values of f we illustrate the method examining investment around tax reforms to measure the foresight firms have about tax policy in this illustration current investment appears to reflect currently available information but little foresight other than foresight of enacted policy changes

the structure of canadian inter industry r d spillovers and the rates of return to r d this paper estimates the effects of interindustry r d spillovers on the production cost of nine major canadian industries production costs in all nine are affected by spillovers and six industries are influenced by at least two different source industries rates of return to r d capital for each industry are also estimated private rates of return on r d are at least two and a half times those on physical capital rates of return on r d inclusive of spillovers are also computed for industries that are major sources of spillover the spillover inclusive returns are at least twice the private returns copyright 1989 by blackwell publishing ltd

the north south divide questions of existence and stability this paper investigates the relationship between regional earnings and unemployment by use of information primarily from the general household surveys of 1975 and 1982 conventional earnings functions are augmented to capture the effects of the level and duration of unemployment and of regional differences in living costs in common with previous studies the authors find personal characteristics and the occupation or industry of employment to be important in earnings determination in this paper however they generally find that although higher unemployment is associated with reduced regional earnings ceteris paribus long term unemployment has little influence in regional earnings determination copyright 1990 by royal economic society

asymmetric adjustment costs in simple general equilibrium models abstract this paper demonstrates that the introduction of asymmetric adjustment costs in a simple general equilibrium framework establishes a meaningful link between factor price determination and output determination breaking the analytically convenient dichotomy of the heckscher ohlin samuelson model the possibility of trade between seemingly similar countries that differ in their adjustment technologies is visited

factor demand models with nonlinear short run fluctuations abstract this paper considers asymmetric costs of adjustment that propagate nonlinear shortrun fluctuations in stochastic factor demand systems the model endogenously generates asymmetric cyclical demand for capital and labour between peaks and troughs of the business cycle the empirical analysis of the model is based on quarterly time series data of the dutch manufacturing sector for the period 1971 i 1984 iv and annual time series data of the u k manufacturing sector for the period 1955 1986 i find important differences of adjustment speed of capital and labour inputs between expansionary and contractionary phases of the business cycle

econometric evaluation of consumers expenditure equations large errors in forecasting consumption in the late 1980s and early 1990s were a major contribution to the poor performance in economic forecasting overall these errors have been attributed to the inability of existing models to capture important influences on consumer behavior such as the effects of financial deregulation and shifts in expectations revisions to models followed their failure to predict the late 1980s boom an important question is whether these developments help to explain the unanticipated downturn in consumers expenditure in the early 1990s this article presents an appraisal of eight recent u k consumption functions it is found that these models can explain much of the rise in consumption in the late 1980s however forecast errors for the early 1990s while within the historical range are predominantly negative the nature of this overprediction suggests that further research on household finances including the role of housing as collateral is required copyright 1994 by oxford university press

annual consumption functions a scottish uk comparison 1971 1985 holden d r and mcgregor p g 1990 annual consumption functions a scottish uk comparison 1971 1985 reg studies 24 247 259 this paper investigates the performance of a number of recently proposed consumption functions using annual scottish and uk data for the period 1971 to 1985 whilst the exercise is atheoretical in the sense that no attempt is made to tie estimated models to specific theories the influences considered do reflect an underlying conviction that a full understanding of consumption functions ultimately necessitates an integrated framework for modelling household behaviour in this context a number of recent models may be treated as non competing and separate investigation of non durable and durable expenditures may be helpful in evaluating competing explanations of recent consumption behaviour data coherent models of non durable expenditures are obtained although such specifications proved elusive for durables overall there was some supporting evidence for the intuitive sy

input output modelling of the urban and regional economy the importance of external trade harris r i d and liu a 1998 input output modelling of the urban and regional economy the importance of external trade reg studies 32 851 862 the modelling of regional and local economies especially through using the input output io approach is a standard practice for many economic consultants and yet quite often this is based on little if any primary data on interregional exports and imports this paper argues that the relative size of the trade sector in final demand and its importance in the literature on regional growth is such that current models are at best misspecified and are at worst likely to provide biased and possibly misleading results especially with regard to planning and policy at the local level on a more practical level this paper shows that with certain minimum information especially with regard to exports and imports a hybrid local io table can be constructed that provides reasonable accuracy in terms of estimates of io multipliers vis a vis a complete survey ta

how effective are fiscal incentives for r d a review of the evidence this paper surveys the econometric evidence on the effectiveness of fiscal incentives for r d we describe the effects of tax systems in oecd countries on the user cost of r d the current position changes over time and across different firms in different countries we describe and criticize the methodologies used to evaluate the effect of the tax system on

taxes incentives and production the case of turkey abstract this paper investigates the effectiveness of investment incentives and corporate income taxes in influencing production and investment decisions in the turkish electrical machinery non electrical machinery and transportation equipment industries three tax instruments are considered the corporate income tax cit the investment tax allowance ita and the capital cost allowance cca the results show that since there are significant capital adjustment costs it is important to distinguish between the short intermediate and long run effects associated with the tax instruments production decisions are relatively more responsive to changes in the ita rate compared to changes in either the cca or cit rates in each of the runs however the ita and cca rates are equally cost effective in stimulating investment and superior to the cit the cca and ita rates generate investment expenditures of 1 5 to 2 5 times the loss in government revenue thus targeted instruments outperform the general cit instrument in addition although the incentive to invest is enhanced there is little effect on output and employment therefore these tax incentives essentially after production techniques

decision making under uncertainty and the evolution of interdependent preferences abstract this paper finds support for the evolution of interdependent preferences under natural selection from a perhaps surprising source decision making under uncertainty individuals choose from sets of risky alternatives the lotteries may involve either idiosyncratic risk or aggregate uncertainty or both robson j econ theory 68 1996 397 424 gives the evaluation criterion for lotteries that maximizes reproductive value and shows that it does not satisfy the expected utility theorem cooper and kaplan j theoret biol 94 1982 135 151 have demonstrated that when lotteries are aggregate the optimal decision rule involves randomization this paper reexamines robson s evaluation criterion using it to solve for the optimal amount of randomization the solution is characterized and an interpretation is offered that links maximizing reproductive value to maximizing expected relative offspring it is shown that when agents preferences arise from their own offspring relative to the average within the population a game is constructed out of the choice of lotteries and that the unique nash equilibrium distribution of actions maximizes reproductive value journal of economic literature classification numbers c72 d71 d81

r d support programs in developing countries the turkish experience in this study the determinants of private r d investment are examined at the level of firms in the turkish manufacturing industry we focus our attention on the effect of public r d support programs our findings indicate that public r d support significantly and positively affects private r d investment there seems to be even an acceleration effect on firm financed r d expenditures smaller r d performers benefit more from r d support and perform more r d in addition technology transfer from abroad and domestic r d activity show up as complementary processes given the scarcity of studies on r d support in technologically weaker economies our hope is that the less developed countries can exploit these findings in constructing socially beneficial technology policies

the regional transmission of uk monetary policy dow s c and montagnoli a 2007 the regional transmission of uk monetary policy regional studies 41 797 808 concerns have been raised in the media about a one size fits all monetary policy for the uk if there are diverse economic conditions in different regions then a unitary monetary policy cannot suit all the purpose of this paper is to explore this issue further by breaking it down into two separate issues first there is the more conventional way of considering the question in terms of the effect of a particular interest rate change on regions experiencing different economic conditions this requires a consideration of the nature and causes of regional economic disparities in the uk and how these might be affected by particular interest rate changes but there is further the question of how monetary policy is transmitted to the different regions the possibility is considered that there may be regional differences in how a particular monetary policy is translated into different financial

why u s wage and employment behavior differs from that in britain and japan if a poll were to be conducted among american academic economists to select the most mystifying economic phenomenon of our time surely the sticky nominal wage rate would emerge at or near the top of the list the slow and partial response of the nominal wage rate to changes in aggregate nominal spending has been a central postulate of macroeconomic theory for the past 45 years from keynes general theory down to the standard postwar textbook keynesian paradigm to the more modern fixed wage price models of robert barro and herschel grossman i976 and edmond malinvaud i977 unwilling passively to accept nominal wage rigidity as an unexplained assumption many labour market theorists have followed the lead of costas azariadis i975 and martin baily i974 in building models to explain rigid wages and layoff unemployment as the rational outcome of a profit maximising calculus as i pointed out in an early critique of the azariadis baily model i976a their assumptions cannot explain cycles in employment but rather why workers would want fixed incomes i e a fixed wage rate and fixed employment soon thereafter barro i977 went one step further and argued that contract theory is a facade which cannot explain why workers would choose a rigid wage and variable employment in preference to the classical equilibrium quantity of employment that equates the marginal product of labour with the marginal value of time now an examination of the evidence has led me to the realisation that rigid wages cannot provide the underpinnings for a universally valid theory of the business cycle simply because wages are not universally rigid i document below with postwar quarterly data that the share of fluctuations in the manufacturing wage bill taking the form of nominal wage changes as compared to changes in hours worked is five to ten times greater in britain and japan than in

the intertemporal dimension of neoclassical production theory abstract the aim of this survey paper is to provide a guide to the literature on optimal dynamic factor demands to the non specialist reader interested in applied work we start with the distinction between variable and quasi fixed factors of production and use these to characterize the firm s temporary equilibrium we then review the optimal intertemporal behaviour of the firm using the notion of adjustment costs as a means to solve the firm s optimization problem this process gives rise to a system of interrelated dynamic factor demands in a flexible accelerator format theoretical difficulties and empirical limitations of this model are discussed this fact leads us to review the theory of intertemporal duality we next analyze the issue of expectations in this class of dynamic models a section reviewing the empirical work on dynamic factor demands follows after which we offer some concluding remarks

r d production structure and rates of return in the u s japanese and german manufacturing sectors a non separable dynamic factor demand model abstract the focus of this paper is an analysis of the production structure the demand for factor inputs and the rates of return in the manufacturing sector of three major industrialized countries the united states japan and germany the analysis is based on a dynamic factor demand model with two variable inputs labor and materials and two quasi fixed inputs capital and rd also for all countries the speed of adjustment for capital is found to be higher than that for r d

energy efficiency rebound effects and the environmental kuznets curve technological change is one factor used to justify the existence of an environmental kuznets curve and technological improvements have been argued to be a key factor in mitigating the impacts of economic growth on environmental quality in this paper we use a cge model of the scottish economy to consider the factors influencing the impacts of one form of technological change improvements in energy efficiency on absolute levels of co2 emissions on the carbon intensity of the economy co2 emissions relative to real gdp and the per capita ekc relationship these factors include the elasticity of substitution between energy and non energy inputs responses in the labour market and the structure of the economy our results demonstrate the key role played by the general equilibrium price elasticity of demand for energy and the relative influence of different factors on this parameter

housing assets and consumer spending a regional analysis carruth a and henley a 1993 housing assets and consumer spending a regional analysis reg studies 27 611 621 this paper is concerned with the relationship between the housing market and consumer spending for the eleven standard regions of the uk pooled regional cross sectional and annual time series data are used to appraise the effect of housing assets on regional consumer spending in the 1980s a fixed effects estimator imposing common slope coefficients across the regions is employed and this assumption is tested using the sure estimator estimates of a dhsy specification of the consumption function and a model augmented with housing assets are compared the fixed effects models perform quite well indicating that the growth in regional housing equity has had a positive impact on regional consumer spending the sure results indicate that the assumption of common regional responses of consumer spending to the explanatory variables is not valid and that the housing wealth effect is strongest in

scotland the grey a linked demographic computable general equilibrium cge analysis of the impact of population ageing and decline lisenkova k mcgregor p g pappas n swales j k turner k and wright r e scotland the grey a linked demographic computable general equilibrium cge analysis of the impact of population ageing and decline regional studies this paper links a multi period economic computable general equilibrium cge modelling framework with a demographic model to analyse the economic impact on scotland of its projected ageing and declining population the model quantifies the effect on aggregate economic variables such as gross domestic product gdp employment and competitiveness and also on individual sectors with the principal demographic projections the fall in population and particularly working age population has a depressing impact on economic activity by changing the demographic parameters the impact of increasing net migration a policy actively being pursued by the scottish government is tracked however the required size of the annual net migration needed to neutralize the adverse natural

input measurement and productivity growth in japanese and u s manufacturing in their article in this review j r norsworthy and david h malmquist 1983 have presented interesting comparisons of productivity growth in the japanese and u s manufacturing sectors their paper starts with the discussion of whether the conventional value added or gnp measurement of output is an appropriate framework for productivity analysis some confusion frequently arises as to whether a production function should be structured on the basis of gross output or value added output separability is a pivotal concept in the analysis of production structures especially in relation to the existence of a real value added aggregate it is well known that there are two types of separability which pertain to the existence of a real value added function weak local separability and strong partial separability the practical advantage of distinguishing these two different forms of separability is that the double deflation method in conventional gnp accounting is justified only when strong partial separability holds using the approximate separability tests of michael denny and melvyn fuss 1977 norsworthy and malmquist have shown that a value added aggregate does not exist in either u s or japanese manufacturing and they conclude that the appropriate output measure for joint investigation of both countries for purposes of productivity analysis is gross output p 953 the purpose of this comment is to indicate some deficiencies in norsworthy and malmquist s analysis in particular it will be demonstrated that the conditions for weak local and strong partial separability in norsworthy and malmquist s paper are incorrectly formulated and as a consequence their findings may not be used as conclusive evidence that a gross output measure is an appropriate basis for the analysis of capital labor substitutability and productivity growth in japan and the united states

the evolution of attitudes to risk lottery tickets and relative wealth abstract individual attitudes to risk are examined in an evolutionary model males obtain more offspring as a consequence of greater wealth both directly and because this attracts more mates the second effect induces gambling driven by relative wealth and can create pareto inefficiency fair bets involving small losses and large gains are taken if any fair bets at all are taken altogether the model accords with observations concerning bets taken and declined by typical individuals despite settings of widely varying per capita wealth journal of economic literature classification numbers c72 d81

estimation of the depreciation rate of physical and r d capital in the u s total manufacturing sector i introduction numerous studies on production and cost the sources of productivity and endogenous growth have recognized the pivotal role of the physical capital stock studies at various levels of aggregation over assets and industries have emphasized the crucial role of investment in plant and equipment in the growth of demand and productive capacity it is clearly recognized by economists and policymakers that knowledge capital approximated by rd 1986 to measure the depreciation rates of the stock of rd 1980 in the literature on dynamic demand models such an approach was first adopted by epstein and denny 1980 and more recently by kollintzas and choi 1985 for a single capital good and on a theoretical level in bernstein and nadiri 1987a 1987b the paper is organized as follows the specification of the model is presented in section ii section iii is devoted to a discussion of the data and to the presentation of the parameter estimates of the model in section iv we present the empirical results for the depreciation rates for physical and r d capital and compare them with those reported in the literature we compare the physical capital stock estimates generated by our model with the official capital stock estimates produced by u s department of commerce bureau of economic analysis in this section we also present our estimates of the decomposition of gross investment into replacement and expansion investment for both physical and r d capital these decompositions are important from the vantage point of public policy analysis

finance capital in dynamic factor demand models the lagged partial adjusment money demand function has been studied theoretically and empirically for the aggregate economy this paper focuses on a sectoral analysis of two partial adjustment functions one for optimal money demand and another for optimal loans demand the two partial adjustment equations are derived employing a representive firm approach a dynamic factor demand model with internal costs of adjustment is utilized to generate euler equations for the demand for money and short term business loans these euler equations parallel the aggregate partial adjustment money demand equations typically employed in applied monetary research the significant difference between the ad hocderivation and the microtheoretic derivation employed here is that desired money and loan holdings are found by solving the euler equations these particular definition of desired money and loan holding are model consistent and depend upon the predetermined and exogeneous variables of the model empirical analysis ge

wages and productivity growth in a competitive industry abstract we describe the evolution of productivity growth in a competitive industry with free entry and exit the exogenous wage rate determines the firms engagement in labor productivity enhancing process innovation there is a unique steady state of the industry dynamics which is globally asymptotically stable in the steady state the number of active firms their unit labor cost and supply depend on the growth rate but not on the level of the wage rate in addition to providing comparative statics of the steady state the paper characterizes the industry s adjustment path

econometric estimation of foresight tax policy and investment in the u s we develop a method for measuring the foresight agents have we first dichotomize an agent s information at current date t into knowledge up to date t 1 f and expectations after t 1 f we then form a residual based test statistic that allows us to compare prediction errors for econometric models based on different values of f we illustrate the method examining investment around tax reforms to measure the foresight firms have about tax policy in this illustration current investment appears to reflect currently available information but little foresight other than foresight of enacted policy changes

modelling a regional economic system the case of lombardy baussola m 2007 modelling a regional economic system the case of lombardy regional studies 41 19 38 during recent years the demand for quantitative economic investigation to be used for policy analysis has grown rapidly in addition the european economic and monetary integration process has increased the economic impact of regional economies thus calling for analytical instruments aimed at supporting the decision making process a regional econometric model of lombardy s labour market was set up in which both labour demand and supply are endogenously determined and thus unemployment is determined by their interaction therefore labour demand in both the industrial sector and in private services is modelled while labour supply is split into two components that define respectively the participation rate and self employment the model simulations evaluate the response of the regional labour market in comparison with the national one to exogenous shocks depending on shocks in either demand or

the regional implications of macroeconomic policy this article examines the relative impact of changes in uk fiscal and monetary policy on the economies of the uk regions this is done by first considering the relative importance of fiscal flows and balances to the uk regions and then assessing their sensitivity to fiscal policy changes second the impact of monetary policy on the regions is considered in four cases these are direct effects on spending exchange rate effects income effects and asset price effects the conclusions are that different policy levers have markedly different regional implications with southern regions being more sensitive to changes in income taxes and government consumption and investment while northern regions are more sensitive to changes in national insurance and transfer payments all regions have become more sensitive to interest rate changes over the past decade but regions in the south are considerably more vulnerable particularly to any knock on effect on house prices copyright 1995 by oxford university press

do increases in energy efficiency improve environmental quality and sustainability governments world wide increasingly see energy efficiency as an important aspect of sustainability however there is a debate in the literature as to whether the impact of improved energy efficiency on reducing energy use might be partially or more than wholly offset through rebound and backfire effects this paper clarifies the theoretical conditions under which such effects would occur and explores their likely significance using a computable general equilibrium cge model of the scottish economy we find that for scotland a general improvement in energy efficiency in the production sectors of the economy initially produces rebound effects that eventually grow into backfire energy use ultimately increases in response to an efficiency gain and the ratio of gdp to co2 emissions falls the economic factors underpinning rebound effects are straightforward energy efficiency improvements result in an effective cut in energy prices which produces output substitution competitiveness and income effects that stimulate energy demands however the presence of strong rebound or even backfire does not mean that efficiency enhancing policies are irrelevant rather it suggests that such policies operating alone are insufficient to generate environmental improvements the implication is that a co ordinated portfolio of energy policies is required

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

price margins and capital adjustment canadian mill products and pulp and paper industries abstract the purpose of this paper is to estimate a model incorporating non competitive behaviour in product and factor markets in addition capital accumulation is subject to adjustment costs so that firms are not constrained to be in long run equilibrium the model is applied to two major canadian manufacturing industries pulp and paper and mill products the results show for both industries in each of three product markets and the wood input market that there is competitive behaviour in addition the industries are not in long run equilibrium as marginal adjustment costs cause marginal profit to exceed the rental rate on capital with the industries exhibiting short run competitive behaviour in product and factor markets new estimates are derived for scale economies and rates of technological change unlike the results from other studies both industries exhibit small scale economies and positive rates of technological change

an assessment of the regional impact of the introduction of a community charge or poll tax in england barnett r r levaggi r and smith p 1990 an assessment of the regional impact of the introduction of a community charge or poll tax in england reg studies 24 289 297 in 1990 the system of local government finance in england will be changed dramatically with the reforms including the introduction of a community charge or poll tax to replace the existing system of domestic property taxation the reforms will result in major changes to the financial incentives operating on local government this paper concentrates on the regional implications using models of local government behaviour under the existing system to predict the likely expenditure responses to the reforms of the major local authorities estimates of regional welfare gains and losses for the domestic sector are also computed the findings indicate large disparities between regions in the consequences of the reforms drawing particularly strong distinctions between northern regions and the rest of the country barnett r r levaggi

rebound and disinvestment effects in refined oil consumption and supply resulting from an increase in energy efficiency in the scottish commercial transport sector in this paper we use an energy economy environment computable general equilibrium cge model of the scottish economy to examine the impacts of an exogenous increase in energy augmenting technological progress in the domestic commercial transport sector on the supply and use of energy we focus our analysis on scottish refined oil as the main type of energy input used in commercial transport activity we find that a 5 increase in energy efficiency in the commercial transport sector leads to rebound effects in the use of oil based energy commodities in all time periods in the target sector and at the economy wide level however our results also suggest that such an efficiency improvement may cause a contraction in capacity in the scottish refined oil supply sector this disinvestment effect acts as a constraint on the size of rebound effects however the magnitude of rebound effects and presence of the disinvestment effect in the simulations conducted here are sensitive to the specification of key elasticities of substitution in the nested production function for the target sector particularly the substitutability of energy for non energy intermediate inputs to production

the displacement and multiplier effects of regional selective assistance a computable general equilibrium analysis this paper uses a hybrid approach to simulate the effects of regional selective assistance rsa for scotland this combines industrial survey estimation of the direct impacts and computable general equilibrium cge modelling of the system wide effects the results are compared to those derived using the method currently adopted in official evaluation studies of rsa and other regional regeneration policy instruments the cge approach captures capacity labour market displacement and migration effects ignored in existing studies simulation identifies the conditions under which these effects are likely to be quantitatively important a partir d une facon hybride cet article cherche a simuler pour l ecosse l impact des primes regionales une estimation des effets directs a partir d une enquete aupres de l industrie se voit allier a la modelisation des effets generalises par une analyse d equilibre general sur ordinateur on compare les resultats a ceux qui proviennent des methodes employees actuellement

an econometric model of merseyside validation and policy simulations minford p stoney p riley j and webb b 1994 an econometric model of merseyside validation and policy simulations reg studies 28 563 576 the paper estimates an econometric model of merseyside on annual data the model is derived from a heckscher ohlin framework for the traded sector set beside a non traded sector and facing a positively sloped supply curve of manual labour whose reservation wage is set by unemployment benefits with all other factor prices being set exogenously to the region through elastic supply the supply of manual labour responding to traded sector wages set by world market conditions determines the size of the region s output the model s fit over the past is acceptable though data is limited its simulation properties contrasting with those of previous demand driven models imply high returns to policies that reduce local costs such as taxes union mark ups and transport charges minford p stoney p riley j et webb b 1994 un modele econometrique de merseyside

fiscal devolution and dependency public spending devolution in practice is widely seen as more appropriate for addressing varied political aspirations within state boundaries than is tax devolution a drawback is that devolved public spending may be subject to irresistible upward pressure as illustrated by formula drift of the united kingdom devolved administrations by crowding out the private sector such public spending can exacerbate the problem it was originally intended to alleviate when taxpayers do not value increases in government output at least as highly as the private goods and services they must forgo to finance them then the public sector is too large this article estimates a three sector hecksher ohlin model of the economy with the greatest relative rise of the public spending ratio in the united kingdom wales simulation of the model shows a net gain in employment from a 1 cut in income tax matched by a corresponding reduction in government spending this result is consistent with the current level of intergovernme

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