the role of price and nonprice factors in predicting australia s trade performance this article investigates the role of price and nonprice factors in predicting australia s trade performance results broadly suggest that australia s trade performance is largely explained by the

policy rivalry among industrial states what can we learn from models of strategic trade policy the economic theory of international trade has changed dramatically over the last decade by admitting into its mainstream a body of literature that focuses on the implications of monopolistic and oligopolistic elements in international markets by applying the tools of the new industrial organization in an international context two new classes of models have emerged models of intra industry trade and models of strategic trade policy the policy implications of models of strategic trade policy were quite disturbing for the economics profession since these models demonstrated that the classical harmony between national and cosmopolitan welfare maximization does not exist if one assumes opportunities for strategic manipulation of oligopolistic international industries this article reviews two prominent models of strategic trade policy the brander spencer model and the krugman model and relates them to more familiar earlier concepts such as stackelberg s asymmetrical duopoly solution and the venerable infant industry argument for government intervention the primary purpose of this article however is to provide a synopsis of the large literature addressing the question of whether models of strategic trade policy can give guidance for government policy

on the neutrality of fiscal policy abstract the paper explores the relationships between fiscal policy and real economic activity and prices for the six largest industrialized economies fiscal policy variables are shown to be consistent and rational functions of the behaviour of the economy it is also confirmed that fiscal policy seems to have a consistent impact on subsequent real economic activity and prices when multivariate time series analysis is used to breakdown overall fiscal policy into anticipated and unanticipated components the anticipated components are shown generally to have just as much forecasting ability for subsequently realized economic variables as the unanticipated components this does not appear to be consistent with the implications of pure rational expectations models

are developing countries really defying the embedded liberalism compact this study evaluates the embedded liberalism hypothesis in a broad swath of less developed countries ldc s the authors find that ldc governments pursue a distinct welfare state policy that protects citizens from economic insecurities associated with global market expansion specifically governments use public employment and particularly employment in civil services and administration to foster domestic stability alongside market expansion however such jobs are targeted to politically salient groups not poorer groups that might also face increased economic uncertainty postopenness in turn public employment shores up public support for openness the authors findings suggest that free traders have reasons both to celebrate and to bemoan this ldc embedded liberalism compact on the positive side ldc governments are working hard to maintain political support for free trade on the other hand the compromise of protecting privileged groups at the expense of others in society raises questions about the long term sustainability of their strategy

administrative cooperation and disease control in cross border pork production abstract in recent years the continuous structural change in the value chain of modern food production has been characterised by an increasing international division of labour among manufacturing companies a regional specialisation of primary agricultural production is especially apparent in meat production thus the german dutch border area has developed into a region of unprecedented intensive pork production while the netherlands specialises in piglet production the production of fattened pigs continues to grow in northwest germany as a result of this increasing transnational value chain development german imports of dutch piglets have risen continuously since 2000 however this structural interweaving of pork production between the netherlands and germany has resulted in many new challenges for the cooperation between the various participants and in particular for the administrative authorities in the field of food and feed safety as well as efficient animal disease control the motivation for this exploratory study stems from the lack of scientific work on this topic to date the aim of this research is to illustrate the relevance of functioning cross border cooperation in the food sector using commodity flow structures and disease spread analysis results indicate that cross border cooperation between authorities during a csf epidemic can reduce the risk of recurrence and the duration by 50

investment crowding out firm level evidence from northern germany michalek j ciaian p and kancs d a investment crowding out firm level evidence from northern germany regional studies the main objective of this paper is to estimate the extent to which firm investment is substituted crowded out by investment support policies granted under the european union rural development programme rdp the empirical analyses employed the difference in difference propensity score matching approach which allows several important sources of bias to be addressed such as selection bias simultaneity bias and functional form misspecification from which many previous studies suffer using panel data of 1333 firms from the schleswig holstein region in germany it is found that the crowding out effect of the rdp is close to 100 implying that firms use public support to substitute for private investments furthermore no evidence was found that due to the rdp programme support firms would have brought forward their investments planned originally for a later period rejecting t

japan s different trade regime an analysis with particular reference to keiretsu many claim that although formal trade barriers have been removed at the border japanese markets remain unusually closed because of non tariff barriers after describing japan s development strategy and the debate over the sources of japanese growth we consider current trade barriers recent research has made some headway investigating the impact of one of the alleged invisible barriers in particular efforts have been made to test if the behavior of japanese corporate groups known as keiretsu creates a barrier to trade finally we consider whether private sector trade restrictions warrant a public response what if anything should be done about keiretsu

public subsidies tfp and efficiency a tale of complex relationships this paper evaluates the impact of subsidies on the different components of tfp for granted firms long term growth the impact of capital subsidies is captured by a quasi experimental method multiple rdd exploiting the conditions for a local random experiment created by an italian industrial policy results show that capital subsidies negatively affect tfp growth in the short term and signals of positive effects appear only after 3 4 years this positive medium long term impact comes especially through technological change and not through scale impact change as may have been expected

inflation and unemployment the world economy today is vastly different from the 1930s when seymour harris the chairman of this meeting infected me with his boundless enthusiasm for economics and his steadfast confidence in its capacity for good works economics is very different too both the science and its subject have changed and for the better since world war ii but there are some notable constants unemployment and inflation still preoccupy and perplex economists statesmen journalists housewives and everyone else the connection between them is the principal domestic economic burden of presidents and prime ministers and the major area of controversy and ignorance in macroeconomics i have chosen to review economic thought on this topic on this occasion partly because of its inevitable timeliness partly because of a personal interest reaching back to my first published work in 1941

money activity and prices abstract the paper explores the relationships between monetary variables and real economic activity and prices in the six largest industrialized economies univariate and multivariate time series forecasting models are used to break down monetary policy variables into anticipated and unanticipated components overall monetary policy variables particularly domestic credit expansion appear to be significant leading indicators for subsequent real economic activity and prices additionally anticipated components of monetary policy are shown to have as much forecasting ability for subsequently realized economic variables as unanticipated components this does not appear to be consistent with the implications of pure rational expectations models it was also noted that results differed significantly according to the choice of monetary variable and across individual countries in particular the results implied no contradiction with previous findings for the impact of unanticipated money supply in the u s though such contradictions would have appeared if dce had been used as the monetary variable

changes in the international distribution of resources and their impact on u s comparative advantage t he heckscher ohlin h o theory suggests international trade is determined by relative resource supplies among countries prior empirical research such as work on the determinants of u s comparative advantage in a single year has concentrated on the static predictions of h o theory however h o theory also suggests changes over time in resource supplies will alter trade structure the present paper investigates this aspect of h o theory particular emphasis is given to the role of world resource changes as an explanation of changes in u s trade and of the increased international competition in manufactured goods faced by the united states some recent studies have examined the relationship between changes in resource endowments and trade heller 1976 examined changes in the factor content of japan s trade between 1958 and 1968 and found the observed patterns consistent with changes in japan s physical and human capital endowments stern and maskus 1981 investigated changing factor input determinants of u s trade by estimating annual cross section regressions over 1958 77 they suggested u s net exports made less direct use of unskilled labor over time further analysis of the factor content of u s trade suggested increased u s abundance in physical capital relative to human capital between 1958 and 1971 balassa 1979 using a 1970 crosssection of countries concluded that physical and human capital accumulation largely explained changing patterns of comparative advantage in manufactures although these studies made important contributions a number of issues remain concerning the relationship between resources and trade stern and maskus in listing directions for further research cite first an examination of how and why endowments of physical capital human capital and labor have changed within the u s and our major trading partners this paper reports a substantial data effort which addresses this topic another important consideration is that the direct effect of resource endowment variation on trade has yet to be determined previously inferences about the effect of resource endowments on trade have been based primarily on results from industry cross section regressions authors of such work indirectly infer the effect of resource variation on trade by assuming the coefficients from such regressions reflect resource abundance however leamer and bowen 1981 recently demonstrated that signs of coefficients from such regressions need not reflect a country s true resource abundance thus the usual negative coefficient for the capital labor ratio in an analysis of u s trade cannot be used to infer the scarcity of capital and thus cannot be used to infer the effect of an increase in capital endowment on u s trade similarly balassa s procedure of first regressing for each of a sample of countries industry trade on input intensity and then using the estimated coefficients as the dependent variable in a cross country regression on resources is an inappropriate method for inferring the effect of resources on trade this paper advances consideration of these issues by investigating aspects of the relationship between resources and trade section ii examines changing patterns of resource supply among thirty four countries over 1963 75 section iii investigates whether these resource changes are associated with altered comparative advantage in manufactured goods section iv uses cross country regressions to estimate the resource endowment as opposed to factor input determinants of u s manufacturing trade and thereby the direct effect of resource variation on u s trade the received for publication april 23 1981 revision accepted for publication november 30 1982 new york university this paper is an outgrowth of research in bowen 1980a and of further work conducted at ucla under a ford foundation grant directed by edward e leamer an earlier version was presented at the 1980 southern economic association meetings in washington d c comments by c michael aho robert baldwin edward leamer joseph pelzman leo sveikauskas and an anonymous referee are gratefully acknowledged the author remains responsible for errors

growth economies of scale and targeting in japan 1955 1990 this paper explores the usage of various industrial policy tools in japan contrary to the conventional wisdom the authors find that a disproportionate amount of japanese targeting occurred in low growth sectors and sectors with decreasing returns to scale in addition they find no evidence that productivity was enhanced as a result of industrial policy measures copyright 1996 by mit press

the impact of industrial policy on japan s trade specialization recent research has demonstrated the possibility of welfare enhancing industrial policy this paper analyzes the impact of industrial policy on japan s trade pattern and explores the possibility that it has been welfare enhancing econometric results indicate that industrial policies have had an impact on japan s trade specialization these results are obtained contemporaneously and when the explanatory variables are lagged suggesting either that policymakers have been forward looking or that policy interventions have had persistent long lasting effects although some cases of successful targeting are uncovered welfare enhancing interventions appear to have been the exception not the rule copyright 1993 by mit press

what does japanese trade structure tell us about japanese trade policy some argue foreign access to japanese markets remains tightly controlled and that if japan is to be a member in good standing of the international economic system japan must do more than just adhere to the formal rules of the gatt japan must show by the results of its international economic transactions that foreign access to its market is not tightly controlled as this point of view is increasingly dominating american economic diplomacy with japan it is particularly important that its premise be examined first i examine japan s growth record and trade record to the extent that japan s trade performance is different i explore whether the difference can legitimately be attributed to japanese policies this paper finds that neither the price behavior of japanese firms nor the pattern and volume of what japan imports or exports suggests that japan s trade regime is different some of japan s economic institutions may be distinctive but there is little evidence they produce outcomes which distort the international economic system what remains to be explained is the conviction of so many that japan is more a parasite than a pillar of the international economic system the record of economic research directly and indirectly bearing on this issue does not support such a conclusion at all

new theories of trade among industrial countries most students of international trade have long had at least a sneaking suspicion that conventional models of comparative advantage do not give an adequate account of world trade this is especially true of trade in manufactured goods both at the macro level of aggregate trade flows and at the micro level of market structure and technology it is hard to reconcile what we see in manufactures trade with the assumptions of standard trade theory in particular much of the world s trade in manufactures is trade between industrial countries with similar relative factor endowments furthermore much of the trade between these countries involves two way exchanges of goods produced with similar factor proportions where is the source of comparative advantage furthermore most manufacturing industries are characterized by at least some degree of increasing returns especially if we include dynamic scale economies associated with rd the arguments of many observers that much trade among industrial countries is based on scale economies rather than comparative advantage and the common argument that a protected home market can promote exports until recently however none of these alternatives was presented in a form which economists would properly call a model that is a formal structure in which macro behavior is derived from micro motives this lack of formalization essentially barred alternatives to comparative advantage however plausible from the mainstream of international economics in the last five years or so however there has been a significant change a number of theorists have begun to apply methods drawn from the theory of industrial organization to international trade to produce a new genre of trade models these models offer a new way of looking at tradeand particularly at manufactures trade among the industrial countries a characteristic feature of the new models is that they often rely on very special assumptions this is probably inevitable given the inherent complexity of the world once the great simplifying device of constant returns is dropped only special assumptions will yield tractable analysis in spite of the specialness of individual models however the new literature on trade is starting to give rise to concepts which look more general than the particular models used to illustrate them the purpose of this paper is to sketch out two such concepts which i believe are important and more general in application than the particular models in which they have been expressed the first is the theory of intraindustry trade a view which incorporates scale economies as well as comparative advantage as major causes of trade and gains from trade the second is the less well developed theory of technological competition which may begin to shed some light on the dynamics of international competition in research intensive industries

an experimental analysis of the effectiveness of an environmental assurance bonding system on player behavior in a simulated firm it has long been recognized that the present command and control methods for pollution abatement are inefficient using market mechanisms for environmental management is a promising alternative to the direct regulatory approach market mechanisms are just beginning to appear in u s environmental policy for example tradable permit schemes are being developed and implemented for some air pollutants under the amended clean air act various other forms of taxes and tradable permits have been proposed however these systems do not address the large uncertainty inherent in most environmental problems one mechanism currently being studied to address uncertainty more effectively is a flexible environmental assurance bonding system designed to incorporate environmental criteria and uncertainty into market incentives this study uses an experimental approach employing an interactive computer game simulation model with human players to examine the effectiveness of the assurance bonding system under varying degrees of uncertainty an environmental cost efficiency index ecei or profit per unit waste is used to measure player performance preliminary results indicate that players are more successful under the assurance bonding system in terms of ecei than under the simulated current system

returns to scale concept estimation and analysis of japan s turbulent 1964 88 economy there is policy interest in factoring productivity growth into technical progress and returns to scale components our approach uses exact index number methods to reduce the parameters that must be estimated and allows us to exploit the cross sectional dimension of plant level panel data we show that the same equation can also be used to estimate harberger scale economies and technical progress indicators that require fewer assumptions estimates of the elasticity of scale for japanese establishments in three major industries over 1964 88 are presented our study spans the high growth era of the 1960s two oil shocks and other exogenous shocks il y a interet en politique publique a identifier les composantes de la croissance de la productivite attribuables au progres technique et aux rendements a l echelle l approche utilise les methodes des nombres indices exacts pour reduire les parametres qui doivent etres estimes et pouvoir exploiter la dimension transversale des donnees de panel au niveau de l etablissement on montre que la meme equation peut etre utilisee pour estimer les indicateurs d economies d echelle et de progres technique a la harberger lesquels necessitent un plus petit nombre de postulats on presente des evaluations de l elasticite d echelle pour des etablissements japonais dans trois industries importantes entre 1964 et 1988 l etude couvre la periode de forte croissance des annees 1960 celle des deux chocs petroliers et d autres chocs exogenes

uk competitiveness policy vs japanese industrial policy it is often claimed that japanese industrial policy targeted high growth or high productivity growth sectors see inter alia johnson i982 carliner i986 nester i99i tyson 1992 it is then argued that because both the targeted industries and the japanese economy have prospered it follows that japanese industrial policy must have been successful hence britain and other advanced nations either are justified in emulating or should hasten to follow the japanese example this raises the question of whether the united kingdom s competitiveness policy is the appropriate response or is a completely different animal the purpose of this paper is to explore the main areas in contention but before doing so it is important to be clear about what one means by industrial and competitiveness policies

optimal trade and technology policies dynamic linkages this paper examines the dynamic linkages between technology policy on the one hand and tra de and industrial policies on the other when any of the latter polic ies affects the incentives of firms to innovate there is an independ ent argument for or against such a policy in addition to those obtain ed from the usual analysis of international oligopoly the adoption o f an r d policy involves a dynamic tradeoff in welfare the pattern o f which depends on whether an r d subsidy or tax is optimal noncoope rative r d subsidies may lead to pareto superior outcomes in the pres ence of international technological diffusion copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

rent seeking with pollution taxation an extension in a recent issue of this journal dwight lee analyzes pollution taxation in a rent seeking environment the purpose of this paper is to extend lee s basic framework to a second best environment in doing so it will be shown that a pigovian tax may be the preferred rate even if rent seeking costs are included the paper is organized as follows in section ii we present a slightly modified version of lee s analysis of the optimal pollution tax in a rent seeking environment having done so it is shown that lee s specification of the optimal pollution tax must be modified in a second best environment some general results that emerge from our analysis are summarized in a proposition in section iii we offer some concluding remarks from authors

the effects of government grants on plant survival a micro econometric analysis abstract in this paper we analyse the impact of government grant provision on plant survival to this end we utilise rich information derived from three data sources for the manufacturing sector in ireland where grant provision has been an important part of industrial policy our empirical analysis is based on estimating a hazard model of plant exit on a matched sample of plants in order to provide a valid counterfactual our results indicate that grants can in some cases provide an important impetus to plant survival

macro determinants of fdi inflows to japan an analysis of source country characteristics this paper examines the source country determinants of fdi into japan the paper highlights certain methodological and theoretical weaknesses in the previous literature and offers some explanations for hitherto ambiguous results specifically the paper highlights the importance of panel data analysis and the identification of fixed effects in the analysis rather than simply pooling the data indeed we argue that many of the results reported elsewhere are a feature of this mis specification to this end pooled fixed effects and random effects estimates are compared the results suggest that fdi into japan is inversely related to trade flows such that trade and fdi are substitutes moreover the results also suggest that fdi increases with home country political and economic stability the paper also shows that previously reported results regarding the importance of exchange rates relative borrowing costs and labour costs in explaining fdi flows are sensitive to the econometric specification and estimation approach the paper also discusses the importance of these results within a policy context in recent years japan has sought to attract fdi though many firms still complain of barriers to inward investment penetration in japan the results show that cultural and geographic distance are only of marginal importance in explaining fdi and that the results are consistent with the market seeking explanation of fdi as such the attitude to risk in the source country is strongly related to the size of fdi flows to japan 2007 the authors journal compilation 2007 blackwell publishing ltd

market structure and u s trade flows abstract using samples of input output table detailed industries we test the impact of various elements of market structure on u s trade flows at the industry level holding factor proportions constant industry demand characteristics and the extent of scale economies have significant impacts on trade flows labor intensity at the industry level has the effects on trade flows which are predicted by the factor proportions theory capital intensity increases both import and export flows this result together with certain others suggests the importance of trade among industrialized countries in producer goods

an evaluation of factor endowments and protection as determinants of japanese and american foreign trade we consider the relationship between the factor content of japanese and american foreign trade and examine empirically whether discrepancies between the heckscher ohlin theoretical predictions and the observed patterns of trade can be attributed to protection the michigan model of world production and trade is used for computational purposes we find some evidence of discrepancies between predicted and observed trade patterns but removal of protection either worsens these discrepancies or reduces them by only a small amount some possible reasons for the empirical shortcomings of the heckscher ohlin theory are offered in conclusion

the effects of protection on the factor content of japanese and american foreign trade data on pre tokyo round tariffs and ad valorem approximations of nontariff barriers are used in the michigan computational model of world production and trade to calculate changes in commodity trade attributable to protection in japan and the united states data on factor requirements in production are then used to calculate the factor contents of these computed changes in trade results indicate that japanese protection is more distortionary of factor markets in japan and the united states than is american protection and that u s manufacturing labor would be the least likely to gain from trade liberalization in japan and or the united states copyright 1988 by mit press

structure of agricultural protection in industrial countries abstract the nominal rates of agricultural protection in ten industrial countries from 1955 to 1980 are estimated with the same commodity coverage and data definitions a regression analysis is conducted to explain variations in the measured level of agricultural protection in terms of political as well as economic factors nearly 80 percent of the variations is accounted for by differences in agriculture s comparative advantage agriculture s share in total economy the international terms of trade between agricultural and manufactured commodities regionalism eec and food security consideration associated with non military alliance

welfare enhancing export subsidies this paper shows that export subsidies on marginal goods and those on nonmarginal goods have opposite welfare effects for the country imposing these subsidies where marginal goods are the ones that would be exported by only a small amount or not at all under free trade but whose export can be promoted considerably by export subsidies the former enhances the imposing country s welfare while the latter worsens it the paper also throws light on related issues such as industrial targeting policy

the industrial policy of competitiveness a review of recent developments in the uk the article reviews the recent developments in uk competitiveness policy and explores its relationship with industrial policy including regional industrial policy it argues that competitiveness is virtually synonymous with productivity growth but that while four competitiveness white papers of the 1990s potentially broadened the scope of uk industrial policy the shift from sectoral to horizontal measures has in fact helped much reduce the content of this policy the article reviews current industrial policy and expenditure distinguishing between the areas of science and technology small firms and regional policy it argues that industrial policy is now a part of competitiveness policy being closely aligned to the efficiency role of government it finds that while policy has converged on a narrower set of measures the traditional boundaries between the science and technology small firm and regional policy components have become much less clear cut

import quotas and vers a comparative analysis in a three country framework abstract because a ver is inherently discriminatory the traditional two country analysis comparing it to a quota is inadequate this paper adopts a general equilibrium three country approach to compare tariffs quotas and vers a quota equivalent ver is defined alternatively in terms of quantity or price the welfare of the importing country is higher under a quota and that of the non restricted exporter is higher under a ver the welfare comparison for the ver restricted country is ambiguous a result which is at variance with conventional wisdom

symposium on keynesian economics today no book in economics has been more praised more vilified or more discussed than the general theory of employment interest and money by john maynard keynes keynes wrote the book in the midst of a depression so great that it was clear to all observers that the economy was not working well in the united states the unemployment rate reached a peak of 25 percent in 1933 and it remained above 14 percent for the rest of the decade indeed the severity and persistence of the depression threatened the very existence of free market economies in the general theory keynes offered a diagnosis and treatment of this malady the book sparked a revolution in economics what is left of the keynesian revolution today the 1970s were a hard time for keynesians as the phillips curve seemed to disappear so did the burgeoning consensus in macroeconomics keynes had emphasized how shifts in aggregate demand cause economic fluctuations but in the 1970s shifts in aggregate supply seemed at least as important critics questioned whether keynesian macroeconomics could be built on solid microeconomic foundations and new classical macroeconomics took a turn on center stage but intellectual ideas ebb and flow most economists were not willing to embrace theories of the business cycle based on continuous market clearing it is therefore not surprising that keynesian ideas surged again to prominence in the 1980s the first two papers in this symposium discuss two strands of new keynesian economics like keynes new keynesians begin with the premise that persistent unemployment and economic fluctuations are central and continuing problems recessions and depressions represent market failure on a grand scale coming in the wake of the new classical revolution new

competition in japan japan registered a remarkable 6 5 percent rate of economic growth from 1955 to 1990 catching up with high income western countries in its level of economic development during the 1950s 1960s 1970s and into the 1980s japan s share of world exports rose dramatically from 2 9 percent in 1960 to 6 1 percent in 1970 8 2 percent in 1980 and a peak of 9 8 percent in 1985 porter takeuchi and sakakibara 2000 japanese firms were increasingly successful internationally in large visible industries such as automobiles semiconductors and consumer electronics the striking economic success of japan was widely attributed to a set of economic institutions and policies that encouraged collaboration and limited competition the japanese case then called into question many of the bedrock assumptions of competition thinking it seemed to show that there was a different path to economic prosperity this article begins by examining competition in japan and the supporting policies and institutions during the twentieth century many factors seem to suggest that competition in japan has been less intense but there is an awkward complication the empirical evidence about the intensity of competition in japanese industry does not support the conclusion the story clearly is more complicated we seek to reconcile the apparent differences between policy and institutional circumstances and the empirical evidence by examining the types of competition that prevail across japanese industries and the underlying causes japan indeed pursued an array of policies that limited competition but these policies were not applied throughout the economy in fact those industries in which competition

rent seeking and its implications for pollution taxation one of the fundamental insights gained from the study of economics comes from an understanding of how market prices arising from private property and exchange can motivate efficient responses to the problem of scarcity not surprisingly when private property rights and market exchange are deemed not to be feasible for either technological or political reasons economists have overwhelmingly recommended that politically imposed prices be employed as surrogates for market prices the most extensively discussed example of this in the literature is the use of pollution taxation as a means of motivating polluters to take the full cost of their polluting activities into account 1