money creation under full reserve banking a stock flow consistent model this paper presents a stock flow consistent model of full reserve banking it is found that in a steady state full reserve banking can accommodate a zero growth economy and provide both full employment and zero inflation furthermore a money creation experiment is conducted with the model an increase in central bank reserves translates into a two thirds increase in demand deposits money creation through government spending leads to a temporary increase in real gdp and inflation surprisingly it also leads to a permanent reduction in consolidated government debt the claims that full reserve banking would precipitate a credit crunch or excessively volatile interest rates are found to be baseless

excess returns and official intervention canada 1952 1960 research shows that filter rules in foreign exchange markets yield higher than normal profits other work indicates that central banks lean against the wind in those markets and some claim that this intervention generates profits for private speculators this study which uses daily data for exchange rates and official re serves indicates that excess profits from filter rules between the u s and canadian dollar during the 1950s are the result of intervention by the bank of canada

do doctors practice defensive medicine defensive medicine is a potentially serious social problem if fear of liability drives health care providers to administer treatments that do not have worthwhile medical benefits then the current liability system may generate inefficiencies much larger than the costs of compensating malpractice claimants to obtain direct empirical evidence on this question we analyze the effects of malpractice liability reforms using data on all elderly medicare beneficiaries treated for serious heart disease in 1984 1987 and 1990 we find that malpractice reforms that directly reduce provider liability pressure lead to reductions of 5 to 9 percent in medical expenditures without substantial effects on mortality or medical complications we conclude that liability reforms can reduce defensive medical practices

consistency and stability analysis of models of a monetary growth imperative ist das streben nach wirtschaftswachstum eine frage des politischen willens oder eine notwendige bedingung fur okonomische stabilitat es ist umstritten ob solche wachstumszwange im heutigen geldsystem bestehen und einen konflikt mit nachhaltigkeit hervorrufen zur untersuchung der ersten behauptung dass zinseszinsen einen wachstumszwang hervorrufen stellen wir funf post keynesianische modelle vor und fuhren eine stabilitatsanalyse im parameterraum durch eine stationare okonomie mit spar und investitionsquote von null kann bei positivem zinssatz erreicht werden wenn der parameter konsum aus dem bestand oberhalb eines schwellenwerts liegt der mit dem zinssatz ansteigt die andere behauptung dass die bildung von gewinnrucklagen aus den zinseinnahmen der banken zu einem wachstumszwang fuhrt basiert auf modellen des monetaren kreislaufs die wir fur widerlegbar halten ihre bilanzierung ist inkonsistent und eine zentrale modellannahme ist nicht theoretisch begrundet aber die hauptursache des wachstumszwangs das eigenkapital der bank muss gesteigert werden selbst wenn ihre verbindlichkeiten nicht wachsen was eine diskrepanz zwischen der intention der autoren und dem eigentlichen modell ist wir kommen zum schluss dass das heutige geldsystem auf der basis von zinstragendem kreditgeld mit privaten banken nicht zu einem inharenten wachstumszwang fuhrt falls der stationare zustand instabil ist liegt es an entscheidungen wirtschaftlicher agenten und nicht an struktureller unvermeidbarkeit

facilitating the transition to a steady state economy some macroeconomic fundamentals abstract central government policy is based on a misguided understanding of the macroeconomics of a modern fiat currency economy as the owner issuer of a nation s currency a central government has unlimited spending power moreover taxation exists as nothing more than a means by which a central government can destroy the spending power of the private sector in the process of outlining some of the policies required to facilitate the transition to a steady state economy this paper does not recommend that central governments should spend wildly and irresponsibly to the contrary this paper explains how a central government can use its unique spending and taxation powers in a disciplined and policy effective manner yet in a manner that is being largely overlooked

100 percent reserve banking a critical review of green perspectives abstract 100 percent reserve banking c perb is an enduring proposal for monetary reform that has been taken up by some ecological economists this paper identifies three groups of green arguments in favor of c perb and offers some criticism first the proposal could serve to constrain new investments by the availability of savings thereby checking economic growth however this would strongly increase interest rate volatility second it could potentially elevate environmental considerations in decisions about resource allocation by increasing the role of the democratic state as an economic actor this line of argument faces problems that require further detailed exploration and historical perspective third a transition to c perb would allow debt levels to be drastically cut this is technically possible but politically a tall order whether the existing system of debt based bank money generates a significant growth imperative is unclear and the importance of other driving forces behind perennial economic growth in modern societies which c perb does not address remains an issue of contention in general the adoption of c perb presupposes a tremendous reconfiguration of power relations between states and finance capital

horizontalism a critique this article offers a critique of the horizontalist view of money that banks are passive in the face of credit demand it is argued that banks liquidity preference influences their responsiveness to the demand for credit their liquidity preference is expressed in risk assessment understood in terms of john maynard keynes s theory of uncertainty it is argued that rationing in the sense of adverse changes in risk assessment occurs systematically in the downturn of the business cycle systematic rationing also occurs with respect to particular classes of borrowers the focus here is on the case of small firms c 1996 academic press limited copyright 1996 by oxford university press

pricing and patents of hiv aids drugs in developing countries this article provides empirical evidence on the impact of patents on drug prices across developing countries it uses sales data on human immunodeficiency virus hiv acquired immuno deficiency syndrome aids drugs in a sample of 34 low and middle income countries between 1995 and mid 2000 the main findings are that patents do shift drug prices up drug prices are correlated to per capita income levels and drug firms follow a skimming strategy when pricing new hiv aids drugs that is there is across country and intertemporal price discrimination in the global drug markets

official intervention in the foreign exchange market or bet against the central bank evaluating official foreign exchange intervention during the 1970s using friedman s profit criterion shows that central banks have failed to stabilize the exchange markets and have lost billions of dollars the monetary authorities have resisted rate movements which results in a misallocation of resources when there is a shift in the equilibrium exchange rate counterspeculation by exchange traders reduces the destabilizing effect of central bank intervention and the consequent loss in economic welfare

hedonic price indexes for spreadsheets and an empirical test for network externalities in this article i first estimate hedonic price equations for computer spreadsheet programs and then use the analysis to empirically test whether network externalities exist in this industry the study shows that consumers are willing to pay a significant premium for spreadsheets that are compatible with the lotus platform and for spreadsheets that offer links to external databases and a similar premium for spreadsheets that offer local area network externalities finally the quality adjusted real price of computer spreadsheets declined by approximately 15 per year from 1986 to 1991

solvency rule versus taylor rule an alternative interpretation of the relation between monetary policy and the economic crisis one of the more debated interpretations of the economic crisis that started in 2007 08 is based on the taylor rule equation namely the idea that over the period 2002 05 the fed has implemented a low interest policy that has led to the housing bubble and finally to the great recession this paper shows that the taylor rule equation not only rests on the so called new consensus macroeconomics but also on the neoclassical theory of growth the various criticisms raised against these theoretical foundations suggest that interpretations of the great recession based on the taylor rule equation are building their arguments on shaky theoretical premises furthermore this paper shows that an equation formally similar but logically alternative to the taylor rule can be regarded as the expression of a general condition of solvency of firms and workers according to this solvency rule the prevailing outcome of monetary policy decisions is the regulation of insolvencies

keynesian macroeconomics without the lm curve the is lm model has been a central tool of macroeconomic teaching and practice for over half a century legions of earlier writers have offered criticisms of the model that have become familiar with the passage of time the model lacks microeconomic foundations assumes price stickiness has no role for expectations and simplifies the economy s complexities to a handful of crude aggregate relationships but countless teachers students and policymakers have found the model to be a powerful framework for understanding macroeconomic fluctuations recent developments have created new difficulties for the is lm model although the new difficulties are less profound than the traditional ones they are more likely to be fatal like all models the is lm model is not universal its assumptions and simplifications make it better suited to analyzing some issues than others and to describing some economic environments than others but neither the issues nor the environment of macroeconomic fluctuations are fixed in terms of issues one major change is that the debates between keynesians and monetarists about the relative effectiveness of monetary and fiscal policy that were central to macroeconomics in the 1960s and 1970s now play only a modest role in the analysis of short run fluctuations in terms of the environment one important change is that most central banks including the u s federal reserve now pay little attention to monetary aggregates in conducting policy but the is lm model is particularly well suited to presenting the debates between keynesians and monetarists and one of its basic assumptions is that the central bank targets the money supply in short recent developments work to the disadvantage of is lm this observation suggests that it is time to revisit the question of whether is lm is the best

the role of targeted communication and contagion in product adoption the two main influences leading to adoption at the individual consumer level are marketing communication and interpersonal communication although evidence of the effect of these two influences is abundant at the market level there is a paucity of research documenting the simultaneous effect of both influences at the individual consumer level thus the primary objective of this paper is to fill the gap in the literature by documenting the existence and magnitude of both influences at the individual customer level while controlling for unobserved temporal effects the pharmaceutical industry provides an appropriate context to study this problem it has been conjectured that adoption and usage patterns of a new drug by physicians contagion acts as a consumption externality as it allows a given physician to learn about the efficacy and use of the drug in addition pharmaceutical companies target individual physicians via marketing activities such as detailing sampling and direct to consumer adverti

information marketing and pricing in the u s antiulcer drug market introduced into the united states in 1977 tagamet was the pioneer product in the class of antiulcer drugs known as h2antagonists by promoting ulcer healing through inhibiting acid secretion tagamet was able to heal ulcers and treat pre ulcer conditions pharmacologically on an outpatient basis thereby substituting for more costly hospital admissions and surgeries in 1983 another h2 antagonist called zantac entered and by early 1987 u s zantac sales surpassed those of the pioneering tagamet today there are four h2 antagonists sold in the united states tagamet zantac pepcid and axid zantac is now the world s largest selling prescription drug having estimated worldwide sales in 1994 of about 4 billion each of the four h2 antagonists is among the top 100 in world drug sales although tagamet lost u s patent protection on may 17 1994 in this paper we examine empirically the role of information in facilitating and explaining growth of the overall antiulcer drug market as well as in shaping the changing market shares of the four patented products the dissemination of information is due largely to the use of marketing channels such as visits by manufacturers representatives to physicians called detailing advertising in medical journals and most recently by direct to consumer advertising we examine these and also explore pricing policies product differentiation and orderof entry effects

learning and payoff externalities in an investment game abstract this paper examines the interplay of informational and payoff externalities in a two player irreversible investment game each player learns about the quality of his project by observing a private signal and the action of his opponent i characterize the unique symmetric equilibrium in a timing game that features a second mover advantage allowing for arbitrary correlation in project qualities despite private learning the game reduces to a stochastic war of attrition in contrast to the case of purely informational externalities all investments happen at the same real time instant irrespective of the sign of the correlation and beliefs never get trapped in a no learning region provided that the second mover advantage is sufficiently high

consumption externalities and diffusion in pharmaceutical markets antiulcer drugs we examine the role of consumption externalities in the demand for pharmaceuticals at both the brand level and over a therapeutic class of drugs externalities emerge when use of a drug by others affects its value and or conveys information about efficacy and safety to patients and physicians this can affect the rate of market diffusion for a new entrant and can lead to dominance of one drug despite the availability of close substitutes we use data for h2 antagonist antiulcer drugs to estimate a dynamic demand model and quantify these effects the model has three components an hedonic price equation that measures how the aggregate usage of a drug as well as conventional attributes affect brand valuation equations relating equilibrium market shares to quality adjusted prices and marketing levels and diffusion equations describing the dynamic adjustment process we find that consumption externalities influence both valuations and rates of diffusion and that they operate at the brand and not the therapeutic class level

learning about new products an empirical study of physicians behavior i introduction an important aspect of economic innovation is the development of new products thus firms often devote large amounts of resources to research and development the pharmaceutical industry in particular is characterized by a high degree of product innovation and significant investments in research and development 1 critical to the adoption of a new pharmaceutical however is the willingness of physicians to prescribe it although clinical trials and advertising convey information about the quality of a new pharmaceutical considerable uncertainty remains not only about its general quality but also about its effect on individual patients 2 because physicians ultimately resolve this uncertainty by prescribing the new drug 3 to their patients namely by experimentation the adoption of a new pharmaceutical is closely related to the experimentation process by which physicians gain information in this paper we focus on the entry of a new antiulcer drug omeprazole in the italian pharmaceutical market in june of 1990 4 our data consist of monthly prescriptions of antiulcer medications by physicians in the rome metropolitan area between june 1990 and december 1992 we develop and estimate a dynamic discrete choice model of physician bayesian learning about the quality of a new drug in our model physicians have initial beliefs about the new drug s efficacy and update them every time that they prescribe the new drug and observe the treatment outcome when choosing which drug to prescribe to a particular patient a forward looking physician considers not only the expected outcome for that patient but also the opportunity to learn about the new drug s quality and use the information on future patients our parameter estimates allow us to disentangle how uncertainty about the new drug s quality intertemporal preferences and prices affect the adoption of the new drug and the corresponding health outcomes a recent literature has explored the role of learning about pharmaceuticals 5 as noted by manchanda et al 2005 in their review of this literature some important aspects of the learning mechanism are the channels through which agents learn prescription detailing marketing meetings and events their preferences toward risk risk averse or risk neutral and whether they are short sighted myopic or forward looking myopic agents maximize their current expected utility while forward looking agents evaluate their current utility as well as the expected future value of the information they might gain through the current prescription 6 the studies also differ in whether they use physician level or aggregate data a central contribution of our paper is the prediction of market demand for the new drug through a parsimonious yet behaviorally rich model using the same physician level data used here coscelli and shum 2004 model the behavior of doctors who learn in a bayesian fashion yet are myopic we in contrast model the forward looking behavior of physicians and reject the null hypothesis that physicians are myopic according to our estimates myopic behavior significantly delays the adoption of the new drug and generates large losses to patients health crawford and shum 2005 use related patient level data and model how forward looking patients learn about their curative and symptomatic matches with respect to alternative medications in their model a patient s learning about a medication is not driven by the fact that the medication is new rather it is driven by her need to learn which medication suits her best hence she learns about her match to each medication not just the new one in our model however learning is driven by the market level uncertainty associated with omeprazole as a new product 7 while it would be of interest to study both doctors and patients learning our doctor level data motivate our focus on physician learning

full reserve banking more cranks than brave heretics this paper analyses the main features and policy implications of full reserve banking frb proposals it argues that whilst frb advocates recognize the essential endogeneity of the money creation process they have failed to understand the post keynesian and monetary circuitist analyses of endogenous money which leads them to analytical errors including lending activity creates seigniorage privilege for commercial banks inflation is always and everywhere a monetary phenomenon the inability of distinguishing the actual from the planned supply of bank loans and money to be spent from money hoarded and the debt free money proposition the paper also argues that an frb system is likely to exacerbate financial instability for several reasons including the obsessive focus on commercial banks while ignoring non bank financial intermediaries and shadow banking a blind fascination for the safety and security of the payment system with little consideration for the financing needs of capitalist economies and an inherent deflationary bias furthermore frb arrangements would soon be undermined by the development of alternative near moneys finally frb will nullify the automatic stabilisers of fiscal policy and lead to a de facto dominance of monetary policy and unelected central bankers over fiscal policy and democratic decision making

overcoming accumulation is a capitalist steady state economy possible abstract this article critically reviews the case for a steady state zero growth economy posing the question whether such an economy can be stable and socially just given that in the current global economy lack of growth is synonymous with crisis the sse thesis is analysed within a framework of marxian political economy concluding that a stable and just sse is possible but not feasible within the social relations of capitalism using the marxian analysis of capital accumulation the article then considers whether the reforms proposed by ecological economists can form an effective countervailing force to the drive for accumulation the conclusion is that such reforms can be successful but only in so far as they are complemented and brought to their logical conclusion by a wider attempt to transcend the capitalist relations of production

towards post keynesian ecological macroeconomics the paper starts with a brief criticism of macroeconomic analyses of different schools of thought for their focus on economic growth and maximisation of output this applies to the traditional keynesian approach which has focused on the achievement of sufficient aggregate demand to underpin full employment and full capacity utilisation down playing aggregate supply constraints this also applies to the neoclassical approach including the current new consensus macroeconomics approach which asserts the dominant role of aggregate supply in the long run and where growth is set by the so called natural rate of growth with no concerns over environmental and ecological issues the paper then proposes a different approach to macroeconomic analysis it explicitly acknowledges that economic growth is a double edged sword growth can help to alleviate persistent levels of high unemployment but it can also lead to potentially catastrophic environmental problems building on the monetary circuit theory and the demand led growth theory the paper offers an analysis of the interconnections and interdependence of the economic biophysical and social worlds and by doing it hopes to provide the building blocks for the establishment of post keynesian ecological macroeconomics

degrowth and the supply of money in an energy scarce world abstract degrowth is going to happen whether governments want it or not because as fossil fuels run out incomes will shrink along with the energy supply this degrowth can either be unplanned and catastrophic or managed and relatively benign this paper argues that three tools are essential to avoid degrowth becoming a catastrophic collapse these are i a system to share the benefits from using increasingly scarce fossil fuels ii new ways of financing businesses and iii the introduction of debt free regional and local currencies

characteristics of demand for pharmaceutical products an examination of four cephalosporins we model demand for four cephalosporins and compute own and cross price elasticities between branded and generic versions of the four drugs we model demand as a multistage budgeting problem and we argue that such a model is appropriate to the multistage nature of the purchase of pharmaceutical products in particular the prescribing and dispensing stages we find quite high elasticities between generic substitutes and also significant elasticities between some therapeutic substitutes

strategic pricing of new pharmaceuticals this paper provides empirical evidence on the leading factors affecting the prices of new pharmaceuticals both at introduction and after 4 6 and 8 years most important is the extent of therapeutic advance embodied in a new product for drugs which represent important therapeutic gains launch prices can be two or three times those of existing drugs used for the same purposes while drugs that largely duplicate the actions of currently available products are typically priced at comparable levels in addition the number of branded substitutes has a substantial negative effect on launch prices which reflects the importance of competitive pressures duplicate products thereby play an important economic role in pharmaceutical markets

a response to critiques of full reserve banking in this response to critiques of full reserve banking or sovereign money proposals we challenge four of the main criticisms made by fontana and sawyer this issue i the impact of the proposal on government finances and fiscal policy ii the impact of the proposal on the supply of credit to the real economy iii the danger of private money creation re emerging in the shadow banking sector and iv the argument that shadow banking not commercial banking is the real source of financial instability

monetary and exchange rate policies for international financial stability a proposal w v ithout a common monetary standard the remarkable integration of western european north american and the industrialized asian economies in both commodity trade and financial flows is less efficient and becoming untenable dissatisfaction with wildly fluctuating relative currency values euphemistically called floating or flexible exchange rates is a prime cause of the resurgence in protectionism in 1986 87 the overvalued yen forced japanese industrialists to close factories retire workers and write off once valuable investments in plant and equipment this parallels what their american counterparts were forced to do between 1981 and 1985 when the dollar suddenly became overvalued similarly the paring down of the british manufacturing base was precipitated when the pound unexpectedly became a strong petrocurrency in 1979 81 in agriculture japan and european countries are determined to insulate their domestic prices of farm products from unsettling international influences including volatile fluctuations in the yen dollar or mark dollar exchange rates thus unless exchange stability is first achieved the american government s attempt to broaden the general agreement on tariffs and trade to encompass agriculture and services is likely to fail but what keeps the three major industrial blocs from developing a common monetary standard to prevent exchange rate fluctuations although many people

beating the foreign exchange market filter rule profits found in foreign exchange markets in the early days of the current managed float persist in later periods as shown by statistical tests developed and implemented here the test is consistent with but independent of a wide variety of asset pricing models the profits found cannot be explained by risk if risk premia are constant over time inclusion of the home foreign interest rate differential in computing profits has little effect on the comparison of filter returns to those of buy and hold in the early years of the generalized managed floating that began in march 1973 filter rule profits in excess of buy and hold were found for many countries logue sweeney and willett 18 dooley and shafer 6 cornell and dietrich 5 it was unclear however whether such profits indicated inefficiencies first it was not clear that risk was adequately handled in such tests and often risk was ignored second there was no evidence such profits would be available postsample and third there was no statistical test of the significance of these profits this paper uses the logic of risk return tradeoffs to analyze the role of risk in such tests and illustrates the logic in a discussion using the sharpe lintner capital asset pricing model capm although a breeden consumption based capm a merton intertemporal capm or an arbitrage pricing model apm could easily be used the paper develops a test of statistical significance appropriate to foreign exchange markets section i analyzing the rate of return on foreign exchange speculation less the foreign domestic interest rate differential the test explicitly assumes that risk premia are constant over the sample the excess rates of return observable in using filters in going from a risk free dollar asset to a risk free deutsche mark dm asset persist into the 1980 s section ii and this is true even when taking account of transactions costs it turns out that these results for the dm case do not depend very much on the interestrate differential but primarily on exchange rate behavior this is useful to know because it is often quite difficult to find matching interest rate data of high quality for a sample of nine other currencies using only exchange rates section iii shows that the excess returns made in the first 610 days of the float persist in the next 1 220 days into the 1980 s dooley and shafer 7 find similar persistence in experiments that do not use buy and hold and have no significance tests when filter rule profits have been found in spot exchange markets it has often been argued that the profits are due to risk this paper uses the capm to analyze rates of return both to buy and hold and to filter strategies it turns out that the claremont mckenna college and claremont graduate school arthur d warga douglas joines and thomas d willett offered helpful comments and ning ning koo provided research assistance

learning from the behavior of others conformity fads and informational cascades learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior for example why do people tend to converge on similar behavior why is mass behavior prone to error and fads the authors argue that the theory of observational learning and particularly of informational cascades has much to offer economics business strategy political science and the study of criminal behavior

allocation distribution and scale towards an economics that is efficient just and sustainable abstract the practical policy of issuing tradeable permits for depletion and pollution requires for its implementation the clear separation of the three basic economic goals of efficient allocation equitable distribution and sustainable scale economic theory needs to catch up with policy in recognizing that scale issues cannot be reduced to either allocation or distribution

solvency rule and capital centralisation in a monetary union brancaccio and fontana 2013 have suggested that the central bank influences the solvency conditions of firms and households in the economic system this solvency rule is examined here within a stylised model of a monetary union characterised by different rates of accumulation and inflation across its two member countries the rule highlights the existence of a relationship between the interest rate set by the central monetary authority and the allocation of ownership of existing physical capital among the member countries of the monetary union i e the rates of capital centralisation the paper also shows the nexus between solvency and government debt sustainability and examines the implications of deflationary or currency devaluation policies for the solvency conditions

an ecological monetary theory abstract while money is critical to the modern world ecological economics does not have a theory of money that is applicable to its theoretical framework and policy prescriptions accordingly the field often defers to an orthodox conception of money that is historically inaccurate and ontologically inconsistent the dualized nature of western philosophy informs orthodoxy by defining money according its function as a medium of exchange this conceptualization creates logical and historical problems that can be addressed by exploring an interdisciplinary literature that defines money according to its nature as a social relation expressed in a unit of account this paper develops an ecological monetary theory that is simultaneously rooted in a socio historical understanding of money s nature and in an ontology of social and ecological embeddedness such a theory provides ecological economists and others concerned with social and ecological equity with a framework from which to address monetary systems and policy

excess returns and official intervention some cross country evidence this paper presents a simple model of foreign exchange market intervention which shows that such intervention introduces positive structure into exchange rate changes evidence linking this structure to observable filter rule profits is also provided

degrowth taking stock and reviewing an emerging academic paradigm degrowth has evolved within a decade from an activist movement into a multi disciplinary academic paradigm however an overview taking stock of the peer refereed degrowth literature is yet missing here we review 91 articles that were published between 2006 and 2015 we find that the academic degrowth discourse occupies a small but expanding niche at the intersection of social and applied environmental sciences the discourse is shaped by authors from high income mainly mediterranean countries until 2012 articles largely constitute conceptual essays endorsed by normative claims more recently degrowth has branched out into modelling empirical assessments and the study of concrete implementations authors tend to agree in that economic growth cannot be sustained ad infinitum on a resource constraint planet and that degrowth requires far reaching societal change whether degrowth should be considered as a collectively consented choice or an environmentally imposed inevitability constitutes a major debate among degrowth thinkers we argue that the academic discourse could benefit from rigid hypotheses testing through input output modelling material flow analysis life cycle assessments or social surveys by analyzing the potentials for non market value creation and identifying concrete well being benefits the degrowth discourse could receive wider public support and contribute to a paradigmatic change in the social sciences

identifying industry margins with price constraints structural estimation on pharmaceuticals we develop a structural model to investigate the effects of pharmaceutical price regulation on demand and on manufacturers price setting behavior in france we estimate price cost margins in a regulated market with price constraints and infer whether these constraints are binding exploiting cost restrictions across drugs which come from observing the same drugs in potentially price constrained markets france and in markets where prices are unregulated us and germany our counterfactual simulations suggest that price constraints generated modest savings for anti ulcer drugs in 2003 2013 2 percent of total expenses relative to a free pricing scenario and shifted consumption from generic to branded drugs

the economics of networks a survey of the empirical literature network effects the increase in value of consuming a product if many other consumers use the same product are a feature of many markets and in particular of many high technology products this paper surveys the burgeoning empirical literature that has developed especially during the last years after theoretical work dominated the earlier years of research in this area newer research has combined theoretical models with empirical studies and applied work with direct implications for public policy marketing and company strategies furthermore insights from the study of social networks have been applied to analyse how consumers interact with each other the paper argues that a closer analysis of the network structure of consumer interaction promises fruitful future research avenues and advances in our understanding of how network effects operate copyright 2009 blackwell publishing ltd

reconsidering monetary policy an empirical examination of the relationship between interest rates and nominal gdp growth in the u s u k germany and japan abstract the rate of interest the price of money is said to be a key policy tool economics has in general emphasised prices this theoretical bias results from the axiomatic deductive methodology centring on equilibrium without equilibrium quantity constraints are more important than prices in determining market outcomes in disequilibrium interest rates should be far less useful as policy variable and economics should be more concerned with quantities including resource constraints to investigate we test the received belief that lower interest rates result in higher growth and higher rates result in lower growth examining the relationship between 3 month and 10 year benchmark rates and nominal gdp growth over half a century in four of the five largest economies we find that interest rates follow gdp growth and are consistently positively correlated with growth if policy makers really aimed at setting rates consistent with a recovery they would need to raise them we conclude that conventional monetary policy as operated by central banks for the past half century is fundamentally flawed policy makers had better focus on the quantity variables that cause growth

personal selling elasticities a meta analysis abstract this article presents a meta analysis of prior econometric estimates of personal selling elasticity that is the ratio of the percentage change in an objective ratio scaled measure of sales output e g dollar or unit purchases to the corresponding percentage change in an objective ratio scaled measure of personal selling input e g dollar expenditures the authors conduct a meta analysis of 506 personal selling elasticity estimates drawn from analyses of 88 empirical data sets across 75 previous articles they find a mean estimate of current period personal selling elasticity of 34 they also find that elasticity estimates are higher for early life cycle stage offerings higher from studies set in europe than from those set in the united states and smaller in more recent years in addition elasticity estimates are affected significantly by analysts use of relative rather than absolute sales output measures by cross sectional rather than panel data by omission of promotions by lagge

stabilization of the canadian dollar 1975 1986 the authors extend their earlier work on canadian intervention in the foreign exchange market in three ways 1 use daily data from 1975 to 1986 to see if results for the 1950s hold during the current float 2 extend their original model to include both stock and flow versions of the foreign exchange market and 3 compare estimates using published canadian holdings of u s dollars to estimates using actual intervention which is confidential canadian authorities continue to lean against the wind but their lagged response is longer and more variable published data effectively reflect intervention

adoption curves and social interactions this paper considers the observational implications of social influences on adoption decisions for an environment of perfect foresight adopters we argue that social influences can produce two observable effects 1 discontinuities in unconditional adoption curves and 2 pattern reversals in conditional adoption curves in which earlier adoption is found for one group of actors versus another when fundamentals suggest the reverse ordering should occur in turn the presence of either of these features can under weak assumptions be interpreted as evidence of social influences as such these properties are robust implications of social effects jel c40 d01 o33

competing technologies and market dominance standard battles in the local area networking industry the rise of fast ethernet as the dominant standard for high speed connection in the local area networking industry is chosen to study the interaction between increasing returns to adoption and technical change in innovation diffusion contrary to most of the empirical papers on diffusion with increasing returns which study competition between an entrenched technology and a new competitor the focus is on the case in which several and different versions of a new technology are competing at the same time for market dominance within this context this article studies under which conditions an early technology may fail to capitalise on its initial time advantage and a new version without a clear early lead may become dominant in particular we will consider a case in which the initial time advantage is made ineffective by consistently adverse technological expectations then we analyse how the arrival on the market of different categories of buyers sensitive to specific applications further contribute to weaken the early leader and strengthen a competing version this is more likely to occur when buyers are highly familiar with the characteristics of that specific version copyright 2008 oxford university press

the euthanasia of the rentier a way toward a steady state economy abstract a positive interest rate has many impacts on ecology one of them is the pushing of economic growth in the present economy accumulation of capital is an end in itself according to the golden rule of accumulation the extension rate of the capital stock is equal to the interest rate however in the present economic conditions the interest rate is always significantly higher than zero due to the liquidity premium of money keynes in this context old proposals such as the free money approach of silvio gesell could provide interesting solutions gesell wanted to neutralize the liquidity premium by putting artificial carrying costs on money by increasing the stock of capital assets without being interrupted by economic crises the interest and profitability level should be reduced down to zero because in this situation every marginal saving and marginal investment would cause a negative interest or profitability rate they would be stopped though keynes was very excited by the proposals of gesell he criticized the fact that gesell did not see many of the further obstacles however these obstacles could be overcome by means of further institutional reforms

models of technology diffusion abstract the literature on new technology diffusion is vast and it spills over many conventional disciplinary boundaries this paper surveys the literature by focusing on alternative explanations of the dominant stylized fact that the usage of new technologies over time typically follows an s curve the most commonly found model which is used to account for this model is the so called epidemic model which builds on the premise that what limits the speed of usage is the lack of information available about the new technology how to use it and what it does the leading alternate model is often called the probit model which follows from the premise that different firms with different goals and abilities are likely to want to adopt the new technology at different times in this model diffusion occurs as firms of different types gradually adopt it there are actually many ways to generate an s curve and the third class of models which we examine are models of density dependence popularized by population ecologists in these models the twin forces of legitimation and competition help to establish new technologies and then ultimately limit their take up finally we look at models in which the initial choice between different variants of the new technology affect the subsequent diffusion speed of the chosen technology such models often rely on information cascades which drive herd like adoption behaviour when a particular variant is finally selected

innovation and recurring shifts in industrial leadership three phases of change and persistence in the camera industry abstract this study examines factors underlying three phases of change or persistence in industrial leadership in the sector of interchangeable lens cameras over the past century during this period there were two major phases of leadership change both associated with the emergence of innovations involving major discontinuities in the industry s core technologies first japan won market leadership from germany in the mid 1960s after commercializing the single lens reflex slr camera that replaced the previously dominant german rangefinder camera second in the late 2000s japanese latecomer firms and a korean firm developed mirrorless cameras which allowed them to capture the majority of market share from the incumbent japanese leaders we also examine the long period about 60 years between these two phases of change during which leading japanese firms were able to sustain their market leadership despite the digital revolution from the 1980s to 1990s this paper explores the factors influencing these contrasting experiences of change and persistence in industry leadership the analysis integrates several aspects of sectoral innovation systems i e windows of opportunity associated with technology demand and institution as well as the strategies of incumbents and latecomer firms the conclusions highlight the complex and diverse combinations and importance of the factors that help explain the patterns of shifts in leadership

information and diffusion of new prescription drugs this article examines the role of different product information flows on the diffusion of new pharmaceuticals given the innovative nature of pharmaceutical drugs and their impact on health care expenditure there is a surprisingly small literature devoted to this topic some information flow mechanisms have been examined individually in the literature but very few have captured the simultaneous impact of these mechanisms on up take and diffusion this article uses the up take of statins as an example diffusion of this therapeutical group is expressed as a function of four specific informational channels self experience consumption externalities scientific evidence and marketing in addition to this the influence of economic factors is tested to examine whether they have any role in drug diffusion prescription data from over 130 general practitioners gp practices in the uk during 1991 2004 are used to test the econometric specification applying dynamic panel data methods results suggest individual self experience and clinical evidence are major factors promoting diffusion while there is an inverse relationship with gp practice size and diffusion having controlled for these factors financial incentives and marketing appear to play little role

hawtrey harvard and the origins of the chicago tradition milton friedman has claimed that his monetary economics derives from a chicago tradition that in the 1930s offered a monetary explanation of cyclical fluctuations in general and the great depression in particular an optimistic view of the power of monetary policy and a case for governing it by rules rather than discretion it is argued that all the elements of this tradition except the last are to be found in earlier writings of ralph hawtrey allyn young and lauchlin currie and that there is much evidence to point to a direct influence running from hawtrey through harvard to chicago

small scale cooperative banking and the production of capital reflecting on the role of institutional agreements in supporting rural livelihood in kampot cambodia this paper explores the ecological economics of small scale cooperative banking sscb through reference to the empirical case of a rice farming village in kampot cambodia it combines georgescu roegen s discussion of an economy s capacity to produce economic processes with ostrom s concept of institutional performance in order to address the implications and functioning of sscb within a small farmer economy the local collective action situation of maintaining and making use of a sscb system a specific finance model provides the studied community with access to a pooled capital fund that may play an important role in ensuring its capacity to produce and reproduce economic processes according to its own specifications the coordinated action among the villagers which matches up well with ostrom s criteria for effective institutional performance of common pool resource use governance is found to include social and environmental dimensions which we understand to be necessary for achieving transformations toward more sustainable economic activity while we do not wish to suggest that the adoption of sscb guarantees either improved ecological or social impacts our results suggest that this finance model could play a supporting role in enhancing the potential of small farming communities to improve both should they wish to do so

does credit create a growth imperative a quasi stationary economy with interest bearing debt abstract this paper addresses the question of whether a capitalist economy can ever sustain a stationary or non growing state or whether as often claimed capitalism has an inherent growth imperative arising from the charging of interest on debt we outline the development of a dedicated system dynamics macro economic model for describing financial assets and liabilities in a stock flow consistent framework falstaff and use this model to explore the potential for stationary state outcomes in an economy with balanced trade credit creation by banks and private equity contrary to claims in the literature we find that neither credit creation nor the charging of interest on debt creates a growth imperative in and of themselves this finding remains true even when capital adequacy and liquidity requirements are imposed on banks we test the robustness of our results in the face of random variations and one off shocks we show further that it is possible to move from a growth path towards a stationary state without either crashing the economy or dismantling the system nonetheless there remain several good reasons to support the reform of the monetary system our model also supports critiques of austerity and underlines the value of countercyclical spending by government