carbon dioxide emissions and governance a nonparametric analysis for the g 20 this paper applies nonparametric estimators to examine countries carbon dioxide co2 emissions and governance relationship by using data for the time period 1996 2010 of the twenty largest economies group of twenty g 20 the dynamics of the considered relationship are analyzed six governance measures are included in our analysis voice and accountability political stability and absence of violence government effectiveness regulatory quality rule of law and control of corruption as have been defined in world governance indicators from the world bank the empirical findings reveal a nonmonotonic relationship between countries co2 emissions and the examined governance measures in addition and with respect to the environmental policy makers a significant difference on the number of governance measures influencing countries carbon dioxide emissions which is subject to countries specific regional and development variations is recorded finally the carbon dioxide emissions governance relationship is highly nonlinear and appears that countries higher governance quality does not always result to lower carbon dioxide emission levels

the structure of unemployment we test for a unit root in postwar unemployment rates for sixteen oecd countries when a one time structural break is incorporated the unit root hypothesis can be rejected for most of the countries and the measured persistence of unemployment falls dramatically we then test for multiple structural changes and find evidence of one or two breaks for those countries for which the unit root hypothesis could be rejected almost all of the breaks are positive reflecting the sustained rise in european unemployment the major exception is the united states where long term unemployment rose in the 1970s and fell in the 1980s

the output composition puzzle a difference in the monetary transmission mechanism in the euro area and u s we revisit recent evidence on how monetary policy affects output and prices in the u s and in the euro area the response patterns to a shift in monetary policy are similar in most respects but differ noticeably as to the composition of output changes in the euro area investment is the predominant driver of output changes while in the u s consumption shifts are significantly more important we dub this difference the output composition puzzle and explore its implications and several potential explanations for it while the evidence seems to point at differences in consumption responses rather than investment as the proximate cause for this fact the source of the consumption difference remains a puzzle

a re evaluation of the relation between wages and unemployment in the united kingdom this paper examines the long run or equilibrium relationship between wages prices and the unemployment rate in the united kingdom using annual data covering the period 1860 1999 using johansen s maximum likelihood method of testing for cointegration two long run relations are found in a small system of four variables the first relation depicts the co movement of the level of real wages adjusted for productivity together with the unemployment rate and the rate of inflation the second relation shows the co movement between the rate of inflation and deviations of productivity from its trend growth

welfare reform and unemployment in new zealand in the early 1990s new zealand cut benefits and tightened eligibility criteria under its main social welfare programmes these benefit changes varied substantially across both time and demographic groups synthetic panel data are used econometrically to isolate the effects of these reforms on several dimensions of unemployment behaviour a simple theoretical model suggests that cutting benefits could either increase or decrease excess labour supply our results indicate that these reforms increased the official unemployment rate by nearly one quarter of a percentage point but significantly reduced broader measures of economic inactivity or the under utilization of labour in the new zealand economy

price and quantity adjustments in the austrian labour market austria is among the very few countries in the european union which have managed to maintain comparatively low unemployment rates and high employment rates this study looks at the price and quantity adjustment mechanisms in the austrian labour market which may have contributed to this favourable outcome after reviewing briefly the basic theoretical reasoning an empirical investigation is began into gross flow dynamics in the labour market and the cyclical volatility of employment and unemployment in austria in international comparison austrian unemployment is very stable over the business cycle this is due mainly to the high sensitivity of the labour force on cyclical conditions and partly also on the relatively weak responsiveness of employment to cyclical fluctuations in output the latter being possibly attributable to the high degree of real wage flexibility in austria the study proceeds to show that the long run elasticity of wages with respect to unemployment is indeed quite high in austria

asymmetric time series and temporal aggregation the detection of nonlinearities could depend on the sampling frequency asymmetric monthly series may become symmetric when aggregated to quarterly or annual frequencies we test against nonlinearity using the nonlinear autoregressive asymmetric moving average arasma model which nests the linear arma model as a special case using monthly quarterly and annual swedish unemployment series we find support for symmetry linearity in the annual series but not in the monthly and quarterly series

making sense of the competitiveness debate the debate over national competitiveness is marked by some basic misperceptions with few exceptions those who use the term have a crude essentially mercantilist view of world trade in which competition among nations is just like competition between corporations not only do the authors and readers of reports on national competitiveness usually not understand comparative advantage they are unaware of the most basic adding up constraints economists however find it hard to believe that seemingly well informed people can really be this naive and assume that there must be more sophisticated ideas lying behind what they say the rationales offered by economists in turn offer false comfort to the would be sophisticates who like the term competitiveness they believe that they have transcended conventional economic theory when the fact is that they have failed to comprehend it in short the actual level of discussion is lower than any of the participants imagines copyright 1996 by oxford university press

an impossibility theorem for wealth in heterogeneous agent models with limited heterogeneity abstract it has been conjectured that canonical bewley huggett aiyagari heterogeneous agent models cannot explain the joint distribution of income and wealth the results stated below verify this conjecture and clarify its implications under very general conditions we show in particular that if i agents are infinitely lived ii saving is risk free and iii agents have constant discount factors then the wealth distribution inherits the tail behavior of income shocks e g light tailedness or the pareto exponent our restrictions on utility require only that relative risk aversion is bounded and a large variety of income processes are admitted our results show conclusively that it is necessary to go beyond standard models to explain the empirical fact that wealth is heavier tailed than income we demonstrate through examples that relaxing any of the above three conditions can generate pareto tails

a note on unemployment and capital tax competition abstract we introduce a labor market imperfection into the capital tax competition literature to study the equilibrium tax formulae and their efficiency in the presence of unemployment since we allow for labor market imperfection the standard conclusions of the tax competition literature would be generalized in the case of non full employment our first result shows that even when head taxes on immobile residents are available the optimal capital tax rate for jurisdictional governments is not zero our second finding is that decentralized equilibrium might be characterized by the overprovision of local public goods when the labor market is imperfect

punitive sanctions and the transition rate from welfare to work in the netherlands the average exit rate out of welfare is dramatically low most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency if they do not then a sanction in the form of a temporary benefit reduction can be imposed this article investigates the effect of such sanctions on the transition rate from welfare to work using a unique set of rich register data on welfare recipients we find that the imposition of sanctions substantially increases the individual transition rate from welfare to work

on some criticisms of critical realism in economics methodological comments on critical realism in economics have proliferated over the past decade typically focusing on tony lawson s economics and reality and reorienting economics which constitute the core of this project in the present paper we select a series of important mostly very recent arguments against critical realism in economics and assess their merits and demerits

what drives unemployment disparities in european regions a dynamic spatial panel approach abstractwhat drives unemployment disparities in european regions a dynamic spatial panel approach regional studies this study analyzes unemployment differentials in european regions during the period 2000 11 to that end a theoretical model with substantive spatial interactions among regions is developed the solution implies a dynamic spatial durbin model specification including regional and institutional level factors as explanatory variables in conjunction with dynamic spatial panel estimates relative importance metrics are used to quantify the effect of regional disequilibrium equilibrium and national level factors relative importance analysis suggests that during the pre crisis period unemployment disparities were mainly driven by regional level equilibrium factors nevertheless labour market institutions are of major importance to explain increasing disparities during 2009 11

carbon emission performance evaluation and allocation in chinese cities abstract this paper presents a dea approach with multiple abatement factors to evaluate co2 emission performance and allocate co2 emission quotas in chinese cities we first consider the difference of marginal abatement costs among cities and construct the non radial directional distance function with multiple abatement factors the total factor co2 emission performance index and its dynamic change index are then proposed to measure co2 emission performance considering equity and efficiency we develop a composite index by the hybrid method to allocate emissions quota which considers co2 emissions as well as co2 emission performance then we conduct an empirical study using inputs and outputs dataset of 71 chinese cities in 2005 2012 chinese cities have poor energy efficiency and still have high co2 emissions the eastern region outperforms the central region and the western region performs worst whereas the dynamic co2 emission performance of the central region has the largest increase the change of co2 emission performance is driven mainly by technological advances as for the co2 emission allocation the composite index method encourages cities to reduce emissions and enhance emission performance through carbon trading market it also motivates cities with high historical emissions to reduce their emissions by improving technology when they have poor co2 emission performance

portfolio choice in the presence of background risk in this paper we focus on how the presence of background risks from sources such as labour and entrepreneurial income influences portfolio allocations this interaction is explored in a theoretical model that is calibrated using cross sectional data from a variety of sources the model is shown to be consistent with some but not all aspects of cross sectional observations of portfolio holdings the paper also provides a survey of the extensive theoretical and empirical literature on portfolio choice

unemployment equilibria and input prices theory and evidence from the united states the paper develops an efficiency wage model where input prices affect the equlibrium rate of unemployment we show that a simple framework based on only two prices the real price of oil and the real rate of interest is able to explain the main post war movements in the rate of u s joblessnss the equations do well in forecasting unemployment many out of sample and provide evidence that the oil price spike associated with iraq s invasion of kuweit appears to be a component of the mystery recession which followed

complex business cycles and recurrent unemployment in a non walrasian macroeconomic model abstract in a dynamic non t tonnement macroeconomic model trades take place in each period even when prices are not walrasian prices are adjusted between trading periods according to the intensity of disequilibrium a reliable measure of which is obtained by means of stochastic rationing the degree of downward nominal wage stickiness as well as government policy parameters are decisive for the dynamics that emerge in particular it is possible for the economy to converge to quasi stationary states involving permanent unemployment and decreasing nominal wages or to produce complex business cycles with structural features recurrent over time but varying and unpredictable shape and size

carbon dioxide emissions allocation a review carbon dioxide co2 emissions allocation plays a fundamental role in determining reduction responsibility at economy level or emission permits at firm level past decades have seen the development and applications of various methods for co2 emissions allocation this paper provides a literature review of co2 emissions allocation with emphasis on the evolution of allocation methods used it begins with a summary of the most popular allocation principles and criteria that lay a foundation for the development of allocation methods we then classify the existing allocation methods into four groups namely indicator optimization game theoretic and hybrid approaches the main features and findings of past studies are identified and summarized while the fairness principle prevails in earlier studies the efficiency principle has been found to receive increasing attention recently we also present a comparison of the empirical results based on ten popular indicator methods to show how indicator choice affects the allocation results issues related to selecting appropriate methods in co2 emissions allocation are finally discussed further research may be carried out to strike a balance between fairness and efficiency so that the allocation results become more widely acceptable and economically feasible

the relationship between unemployment and vacancies in australia the paper addresses the existence of an equilibrium unemployment vacancies uv relationship in australia cointegration test results suggest that no bivariate long run uv relationship exists moreover this finding fails to support the basic model of labour job search however a modified beveridge curve is proposed where it is found that a number of trivariate equilibrium relationships exist between unemployment vacancies and one other variable the replacement ratio the proportion of long term unemployed or the real wage the existence of an equilibrium relationship in the multivariate framework is due to the endogenous modelling of the un employment flows which are assumed to be exogenous in the bivariate framework of the beveridge curve

inflation and employment is there a third way high post war inflation precipitated a counter reformation in theory from keynesianism and established the conventional wisdom that a level of unemployment existed at which prices stabilised the policy application of this notion failed to improve economic performance and although inflation fell mass unemployment and poverty returned the explanation for this from within the new orthodoxy was that demand and supply conditions in the labour market had changed and unemployability explained joblessness a study of the trend in import prices suggests however that the fall in inflation can be more readily explained by falls in import prices and other changes which redistributed resources from the periphery to the core this suggests that monetary control works indirectly on inflation by lowering economic activity and by reducing the bargaining power of the relatively weak the enormous economic and social costs of this suggest that institutional ways of controlling prices offer major benefits copyright 2000 by oxford university press

new directions in emissions trading the potential contribution of new institutional economics abstract once an arcane topic even among environmental economists emissions trading systems have substantially increased during this past decade in the usa moreover the implementation of these systems has necessitated increased involvement of professionals in many fields besides economics this paper reviews the practical experience of the six major types of emissions trading systems focusing on credit market development participation and results including transaction costs five more recent applications of emissions trading also are considered as well as the possibility of inter pollutant trading while inter pollutant trading has been successfully used for chlorofluorocarbons cfcs the applicability of this experience is probably very limited additionally it would be highly premature to attempt an evaluation of these newer emissions trading systems some of which have yet to be even partially implemented in order to improve these latter and future programs the paper considers the potential contribution of the new institutional economics nie to emissions trading the nie is used to develop theoretical insights and a series of predictions about the performance of a range of emissions trading systems

the political economy of the neoliberal transformation of french industrial relations the author advances the literature on the role of the state in the decentralization of industrial relations in france by providing a political economic analysis of right and left backed governments in recent decades while both have pursued reforms to reduce regulation and to increase labor market flexibility they have used the state apparatus in different ways to achieve these goals the right has reformed labor law by obtaining partial support from employers associations and unions the social partners the left by contrast has relied on decentralized bargaining with the social partners because its political base would not have accepted flexibility increasing legal reforms the author examines critical episodes of reform in collective bargaining unemployment insurance and employment protection laws to show how the state has intervened in different ways depending on the political identity of the governing coalition

prices productivity and wage bargaining in open economies according to the standard union bargaining model unemployment benefits should have big effects on wages but product market prices and productivity should play no role in the wage bargain we formulate an alternative strategic bargaining model where labour and product market conditions together determine wages a wage equation is derived and estimated on aggregate data for four nordic countries wages are found to depend not only on unemployment and the replacement ratio but also on productivity international prices and exchange rates there is evidence of considerable nominal wage rigidity exchange rate changes have large and persistent effects on competitiveness

unemployment wage bargaining and capital labour substitution many economists believe that capital accumulation technical progress and labour force expansion have no lasting effect on unemployment this view rests on the empirically doubtful assumption that the elasticity of substitution between labour and capital is equal to unity i e production is cobb douglas using a simple model based on the work of layard nickell and jackman this paper demonstrates that with a lower elasticity of substitution the equilibrium unemployment rate is affected by all of the above factors it considers briefly how capital accumulation may be endogenised and what long run implications this has for unemployment copyright 1999 by oxford university press

existence of stationary equilibrium in an incomplete market model with endogenous labor supply in this article i first study an income fluctuation problem with endogenous labor supply let be the agent s time discount factor and r 0 be the constant gross rate of return on assets for r 1 i show that the agent s wealth either approaches infinity almost surely or converges to a finite level almost surely for r

revealing the political decision toward chinese carbon abatement based on equity and efficiency criteria abstract china s economic reform over the past 30 years has allowed the free market to drive economic development however government still plays a key role in the energy sector by allocating energy conservation and emissions abatement how does the government make an equity decision as a tradeoff to market efficiency this is an unanswered question the purpose of this paper is to illustrate the government s preference toward equity and efficiency using the provincial level co 2 intensity allocation data we investigate the political decision that the government made based on the equity and efficiency criteria we find that the equity index plays a more important role than the efficiency index in determining the co 2 intensity target in addition political factors such as social stability are found to be important factors

reducing conflicts between climate policy and energy policy in the us the important role of the states the absence of us national action on global climate change policy has prompted initiatives by the us congress cities states and regions toward what is likely to become a long term collaborative effort to harmonize national energy and climate policies this upward evolution in the face of a reluctant administration is historically consistent with the development of national legislation on other environmental and social issues in the us at the heart of this movement is the need to resolve conflicts between high intensity use of low cost fossil energy supplies and the dominating impact of carbon dioxide emissions on global climate change us states are among the largest carbon dioxide emitters in the world and play a critical role in supplying and transforming energy as well as consuming it for economic advantage state governments are also likely to have to shoulder some of the cost of potentially extensive climate damages and bear the brunt of the cost of implementing future federal mandates as a result many are taking proactive stances on the development of climate mitigation policy to prepare for accelerate and or guide national policy as us states show leadership on addressing greenhouse gas emissions they also play an important role in forging policies and measures that reduce economic conflict between energy and climate goals a number have launched or completed greenhouse gas mitigation plans and other major policies in the past few years that address these conflicts through 1 finding ways to reduce mitigation costs including the use of incentive based policy instruments 2 promoting an open and democratic policy process that includes major stakeholders 3 promoting equity across socioeconomic groups regions and generations and 4 promoting interregional cooperation the results are promising and suggest that the state arena for climate and energy policy is evolving quickly and constructively toward alternatives that reduce conflict regional efforts are also unfolding along with greater congressional attention to the lessons learned and commitments made by sub federal actions in the next few years many national energy and climate conflicts are likely to be tested and addressed by states among these pennsylvania is likely to be an important player due to its high profile of energy production and potential for leadership

unemployment dynamics across oecd countries abstract the european community and the us have experienced vastly different unemployment dynamics over the last two decades this paper investigates whether these differences are due to exposure to different shocks or reacting differently to the same shocks with the premise of a search theoretic framework and a structural var methodology the paper robustly identifies aggregate versus reallocative shocks with the exception of spain where most of the dynamics seem to be driven by reallocation it is found that most differences in unemployment dynamics arise because of differences in responses to shocks in particular the us labour market is quicker to adjust than the european community this implies that eec economies might be dynamically sclerotic even if the size of the steady state labour market flows give the impression that european labour markets are quite active various identifying assumptions additional labour supply shocks and different variables are used yet the results appear robust

unemployment dynamics in britain we examine the inter related dynamics of the unemployment flows and stock our model allows them to be linked through the standard accounting identity but also through behavioural relationships we find that for the uk the bulk of the correlation between duration and the unemployment stock arises from the dependence of duration on unemployment taking careful account of the inter temporal identity outflow shocks have contributed little to the evolution of unemployment since the late 1960s given that the correlation of duration and unemployment arises from the behavioural relationship we show that unemployment dynamics arise mostly from shocks to the inflow unemployment remains one of europe s more pressing economic and social problems as highlighted in the eu s lisbon declaration of 2000 a dynamic approach to unemployment starts from the recognition that unemployment is a stock and changes through shocks to the outflow and inflow the research and policy focus has generally been on the outflow process or equivalently unemployment duration a glance at figure 1 shows why this might be so it reveals a very strong co movement of the unemployment rate and the proportion of the unemployed out of work for a year or more analysts have used data like this to argue that the source of unemployment fluctuations has been changes in the outflow process 1 possibly as a consequence of this most policies directed at reducing unemployment focus on improving the search effectiveness and employability of the currently unemployed the unemployment flows and stock are related in quite complex ways and in this paper we focus on these inter related dynamics the model we use allows them to be linked in two ways first there is the simple accounting relationship whereby shocks to the flows accumulate in the stock second search and matching models suggest behavioural relationships of the flows depending on unemployment the presence of the nonlinear accounting identity in the model makes the analysis of the joint system problematic so we proceed sequentially investigating first one link and then the other we find that for the uk the bulk of the correlation between duration and the unemployment stock displayed in figure 1 arises from the dependence of the former on the latter we find a strong dependence of the outflow rate on unemployment taking careful account of the inter temporal identity on the other hand outflow shocks have contributed little to the evolution of unem

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

small system modelling of real wages inflation unemployment and output per capita in italy 1970 1994 the relationships between real wages output per capita inflation and unemployment in italy between 1970 and 1994 are modelled using a cointegrated vector autoregression there is evidence of a change in the underlying equilibria and in the dynamic evolution of the variables probably associated with the substantial changes in many sectors of the italian economy after 1979 alternative ways to model structural change in the italian labour market are considered in adopting a split sample approach the results favour an hysteresis interpretation of unemployment

intertemporal labour supply with search frictions starting in the 1970 s wage inequality and the number of hours worked by employed u s prime age male workers have both increased we argue that these two facts are related we use a labour market model with on the job search where by working longer hours individuals acquire greater skills since job candidates are ranked by productivity greater skills not only increase worker s productivity in the current job but also help the worker to obtain better jobs when job offers become more dispersed wage inequality increases and workers work longer hours to obtain better jobs as a result average hours per worker in the economy increase this mechanism accounts for around two thirds of the increase in hours observed in data part of the increase is inefficient since workers obtain better jobs at the expense of other workers competing for the same jobs copyright oxford university press

on the existence and uniqueness of stationary equilibrium in bewley economies with production abstract i prove existence of stationary recursive competitive equilibrium in bewley economies with production under specifications in which i the utility function is allowed to be unbounded and ii the underlying discrete idiosyncratic productivity process can take any form aside from mild restrictions some of the intermediate results provide theoretical basis for assumptions often made in the quantitative macroeconomics literature by providing an example i illustrate that the equilibrium is not necessarily unique even under typical specifications of the model and discuss the underlying reasons for multiplicity

in search of economic well being worker power and the effects of productivity inflation unemployment and global trade on wages in ten wealthy countries theory the theory addresses the forces that determine the real wages which workers receive it is proposed that in the free market system worker power plays a crucial mediating role between economic considerations involving labor supply and productivity and the real wages available to workers in the economy hypotheses in moderate and weak worker power countries real wages will vary inversely with the labor supply in terms of domestic unemployment and international trade in strong worker power countries real wages will vary with changes in productivity and inflation methods separate regression analyses are developed for 10 countries varying in their level of worker power over a 30 year time frame results in moderate and weak worker power countries changes in real wages were best predicted by levels of unemployment and changes in global trading in strong worker power countries changes in real wages were best predicted by changes in productivity and inflation although in one case of a strong worker power country a significant positive association occurred between global trading and real wages

maximum likelihood estimation of the standard commodity storage model evidence from sugar prices we present a maximum likelihood estimator for the standard commodity storage model with stockouts based on prices only while it imposes no additional assumptions on the model the maximum likelihood estimator has small sample properties superior to those of the pseudo maximum likelihood approach we provide a proof that is crucial for applying our estimator to the model with normal harvests and possibly unbounded prices thereby eliminating an inconsistency in the empirical storage model literature applying our maximum likelihood estimator to a series of annual sugar prices from 1921 to 2009 provides new evidence for the empirical relevance of the standard storage model our results imply a cutoff price at which discretionary stocks go to zero which is higher than the price obtained by applying the pseudo maximum likelihood estimator to the same data the implied frequency of stockouts is lower and price correlations skewness and kurtosis implied by the model closely match those seen in the annual sugar price data we find the price of sugar to be highly responsive to small changes in consumption when inventories are not available to buffer the effects of negative supply shocks on consumption prices must increase sharply to induce the consumption changes needed to clear the market our results show why production shocks are not necessarily aligned with price spikes the same production shock can give rise to very different price responses depending on whether or not there are sufficient stocks to buffer its impact

international equity and differentiation in global warming policy ne of the major obstacles to reaching a comprehensive agreement on global warming is the setting of greenhouse gas emission reduction targets for individual countries long standing tensions between industrialized and developing countries have raised the issue of equity in burden sharing moreover individual industrialized nations have pleaded special circumstances and have sought differentiation in their obligations this paper analyzes alternative rules for distributing tradable carbon dioxide emissions permits a non linear programming model which distinguishes between allocation based and outcome based rules is used to analyze the relative welfare outcomes the model is applied to the world body of nations and yields several important policy implications

unemployment insurance and the business cycle an equilibrium model is developed to study the interaction of the business cycle unemployment insurance and the labor market for young men in canada the model combines optimal job oer layo and recall decisions within a numerically solved and restricted bayesian nash equilibrium we consider the long run implications of changes made to unemployment insurance in canada during the 1990s the changes lead to equilibrium increases in average rates of unemployment layos and recalls eliminating ui lowers the equilibrium unemployment

credit market imperfections and persistent unemployment abstract this paper develops the thesis that credit market frictions may be an important contributor to high unemployment in europe when a change in the technological regime necessitates the creation of new firms this can happen relatively rapidly in the u s where credit markets function efficiently in contrast in europe job creation is constrained by credit market imperfections so unemployment rises and remains high for an extended period the data show that there has not been slower growth in the most credit dependent industries in europe relative to the u s but the share of employment in these industries is lower than in the u s this suggests that although credit market imperfections are unlikely to have been the major cause of the increase in european unemployment they may have played some role in limiting european employment growth

exploring the political economy of labour market institutions labour markets how reforms took place many economists argue that the european unemployment problem relates to large labour market rigidities this paper argues that many of those inflexibilities and the underlying institutional regulations can be understood as the outcome of political influence by incumbent employees this is because many policies that increase unemployment actually benefit these insiders an empirical investigation of the determinants of labour market institutions demonstrates that the observations are consistent with this view the findings imply 1 higher exposure of the employed to unemployment facilitates a reduction in the level of employment protection 2 unemployment benefits are lower the more employment reacts to wages 3 a higher level of unemployment and the existence of a right wing government slow down the growth rate of the minimum wage giles saint paul

hysteresis in unemployment unemployment has risen sharply in a number of countries and it appears to be becoming more persistent the experience of the 1970s and 1980s showed that adverse unemployment shocks could have long lasting effects with very serious economic and social consequences a key mechanism producing these adverse consequences was hysteresis in unemployment whereby temporary rises in unemployment generated by supply and or demand shocks had permanent or at least very persistent effects clearly it is important to understand how hysteresis mechanisms might operate in order to avoid such adverse outcomes on the other hand experience during the subsequent two decades showed that under more favourable macroeconomic conditions it is possible to observe good hysteresis effects now is a very appropriate time to re visit the issue of hysteresis in unemployment in order to avoid the errors of the 1970s and 1980s and if possible to get hysteresis effects working in a positive direction copyright 2011 oxford university press

estimating unemployment inflows outflows and long term unemployment in britain using the cointegration approach a model is estimated of flows into and out of unemployment using the johansen multivariate cointegration approach and uk data for the period 1974q4 to 1993q3 two long run equilibrium relationships are obtained covering the outflow rate and unemployment duration which include variables such as the replacement ratio structural change and output a unique feature of the model is that it allows the inflow rate to determine the outflow rate and vice versa this is argued to be important given the common european stylized fact that inflows and outflows are both countercyclical and strongly correlated thus if firms and workers are heterogeneous hiring and firing is contemporaneous necessitating the type of model estimated here some interesting results include the finding that output is not important in determining the outflow rate and that the speed of adjustment of the outflow rate to changes in its underlying equilibrium is slow in contrast the proportion of long term unemployed is positively re

restructuring for shareholder value and its implications for labour this paper provides an accounting analysis of the implications for labour of restructuring for shareholder value it presents argument and evidence from the uk that suggests that activity specific limits on cost recovery constrain returns on capital these constraints encourage restructuring which aims to improve returns on capital through the reduction of labour costs if labour loses directly longer term outcomes are more complex as some workers who retain jobs may gain and much depends on the macro context overall in the context of present day capitalism serial restructuring is likely to be a negative process for labour that generates transitory benefits for capital copyright 2000 by oxford university press

capital formation and unemployment this paper criticizes the current enthusiasm for labour market policies as the main route to employment creation in oecd countries such policies are normally seen as a means of encouraging more employment on existing capital stock this approach is one sided and downplays the equally important task of increasing productive capacity with more investment in productive capacity conventional labour market policies for increasing employment would be more effective and some might be unnecessary the paper analyses the role of capital stock within the framework of a simple nairu model based on previous work by the author it also presents some empirical evidence copyright 1995 by oxford university press

the assessment international competitiveness the concept of international competitiveness as applied to national economies is a popular one politicians businessmen and economists alike re fer to it in day to day discussion when looking at the external export import market share or trade balance performance of different countries indi cators are produced showing changes in or levels of various countries competitiveness e g the relative price or cost indices regularly published by the imf and the oecd or the absolute measures produced by organizations such as the geneva world economic forum and the lausanne institute for management development governments of ten instigate research on the matter as for instance in the case of the 1993 us competitiveness policy council orthe 1995 eu competitiveness advisory group yet it has recently been argued by paul krugman that competitiveness is a meaningless word when applied to national economies and the obsession with competitiveness is both wrong and dangerous krugman 1994 p 44 apositionkrugman forcefully reaffirms in his contribution to this issue of the oxford review of economic policy

how do flexible labour markets really work the role of profitability in influencing unemployment this paper assesses the theoretical justifications available for policies of flexible labour markets flms in reducing the level of unemployment in developed economies it empirically assesses the oecd s rationalisation of policy linking profitability to investment and job creation in four country cases new capital investment is found to be significant for unemployment in all cases but it is not found to be a consequence of the mechanistic achievement of normal profits without an empirically supported mechanism for how flms reduce unemployment the policy is open to the accusation of being no more than a political tool for altering distribution without concern for the wider socio economic consequences copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

consumption liquidity constraints and asset accumulation in the presence of random income fluctuations recent empirical research flavin 1981 hagashi 1982 has rejected the certainty equivalent formulation of permanent income hypothesis hall 1978 these findings are often attributed to households inability to borrow completely against expected future labor income this paper is a theoretical investigation of optimal consumption behavior under risk aversion random income fluctuations and borrowing restrictions our principle objective is to establish the existence and to investigate the properties of the stationary probability distribution which characterizes the asymptotic behavior of consumption under these conditions this abstract was borrowed from another version of this item

equilibrium in a production economy with an income tax this paper develops a method to study an infinite horizon production economy distorted by a state dependent income tax this setting permits taxes to depend on the capital stock an endogenous state variable and thus captures situations where the evolution for capital and taxes is jointly determined to solve this model the consumption function is represented as a fixed point of a nonlinear monotone operator that is defined such that its nth iteration computes the consumption function n steps away from the horizon for a corresponding finite horizon economy the oparator s monotonicity is exploited in proving the existence of and constructing an equilibrium copyright 1991 by the econometric society

a theory of commodity price fluctuations this paper studies the price fluctuations of storable commodities that are traded in open markets and are subject to random shocks to demand or more particularly to supply it relaxes the common assumption that the shocks are identically and independently distributed in favor of temporally dependent and periodic disturbances the existence of a unique stationary rational expectations equilibrium is demonstrated for each of the models analyzed and testable implications of the models are derived an illustrative empirical investigation is then undertaken for the model with periodic disturbances using monthly time series observations for seven commodities over the period 1960 93

the allocation of co2 emissions as a claims problem abstract in the context of multilateral negotiations on climate change this paper proposes to use the claims approach as a reasonable and practicable alternative in order to allocate the admissible co2 emissions per region the proposed methodology entails analyze the application of a broad group of theoretical solutions through the establishment of equity and stability criteria to this regard the empirical analyzing combines several co2 world endowments from meinshausen et al 2009 together with claims forecasts associated with the rcp representative concentration pathways scenarios the results obtained indicate that the constrained equal awards and minimal solutions are clearly equity sensitive given that the co2 emission reduction imposed by the constrained equal awards solution on asia and the oecd are very important and considering the better balance between equity and proportionality associated with the min solution it could be that this latter solution would be the most practicable and acceptable

equity efficiency trade off in china s energy capping policy abstract as a part of the transition to a sustainable economy china has set a cap on primary energy consumption for the first time of 5 0 billion tonnes of standard coal equivalent by 2020 however there is a debate on the cap feasibility and failure to adequately address the underlying equity efficiency trade off which hampers achievement this paper identifies some key challenges ahead including the coal dominant energy mix declining financial support inconsistent central local goals rising costs of energy saving measures and quality of energy statistical data by quantifying the preference of each providence toward equity based or efficiency based allocation schemes the great disparity among provinces is revealed and the equity efficiency trade off relationship is confirmed developing regions primarily located in central and western areas tend to favor equity based disaggregating schemes contrarily developed coastal provinces strongly favor efficiency based schemes the present national disaggregation schemes are mainly based on historical energy consumption but disregard the provincial development gap and efficiency factors we conclude that this ambitious goal is likely within reach but increased efforts and flexible instruments are needed

the effects of financial development in the short and long run theory and evidence from india abstract although many view financial access as a means of reducing poverty or increasing growth empirical studies have produced contradictory results one problem is that most studies cover only a short time frame and do not consider dynamic effects i show that introducing credit in a general model of intertemporal consumption creates a boom in consumption and reduces poverty initially but eventually reduces mean consumption because credit substitutes for precautionary wealth using new consistent consumption data that cover a much longer time period than most studies my empirical findings show that increased access to bank branches in rural india increased consumption initially and reduced poverty but consumption later fell and poverty rose the long term effect is still positive however suggesting that credit may have a beneficial role beyond consumption smoothing

the wealth distribution in bewley economies with capital income risk abstract we study the wealth distribution in bewley economies with idiosyncratic capital income risk we show analytically that under rather general conditions on the stochastic structure of the economy a unique ergodic distribution of wealth displays a fat tail

does child labour displace schooling evidence on behavioral responses to an enrollment subsidy this brief summarizes the results of a gender impact evaluation study entitled does child labour displace schooling evidence on behavioral responses to an enrollment subsidy conducted between 1995 and 1996 in bangladesh the study observed that the subsidy increases schooling but its effect on child labour is ambiguous the subsidy increased schooling by far more than it reduced child labour substitution effects helped protect current incomes from the higher school attendance induced by the subsidy substitution effects helped protect current incomes from the higher school attendance induced by the subsidy the reduction in the incidence of child labour by boys girls represents about one quarter eighth of the increase in their school enrollment rate

capital accumulation and unemployment a tale of two continents in contrast to much recent work regarding the causes of european unemployment in this paper we emphasize the importance of capital accumulation but unlike the few previous studies which have examined the relationship between capital accumulation and unemployment we argue that what matters for the evolution of employment and the unemployment rate is not the absolute growth rate of a country s capital stock but its evolution relative to other countries capital stock the empirical validity of the above statement is demonstrated for almost all oecd countries using quarterly time series data for the period 1961 1995 more detailed evidence is also presented for germany japan and the united kingdom

the surprisingly low importance of income uncertainty for precaution abstract while it is common to use income uncertainty to explain household saving decisions there is much disagreement about the importance of precautionary saving this paper suggests that income uncertainty is not an important motive for saving although households do have other precautionary reasons to save using a question from the survey of consumer finances that asks how much households want for precautionary purposes this paper shows that expressed household preferences and liquid savings are much lower than predicted by standard modeling assumptions households rarely list unemployment as a reason to save perceived income uncertainty does not affect liquid savings or precautionary preferences neither does being in an occupation with higher income volatility instead households seem very concerned with expenditure shocks

the role of selective job search in uk unemployment selective search where unemployed job losers confine their job seeking efforts to matches in the pre separation sector has attracted consid erable attention as a possible source of high and persistent unemployment however this idea is questionable those opting for selection may do so because this strategy is more effective at gener ating an acceptable offer using uk microdata i find evidence in support of the latter view selective searchers cannot account for the persistence of high unemployment since the early 1980s

unemployment in regional labor markets using structural theories to understand local jobless rates in west virginia the author uses a range of structural labor market models to understand differing regional jobless rates in a state affected by pockets of structural unemployment four theories of regional structural unemployment are presented and their hypotheses are statistically evaluated using west virginia county panel data the author then presents case study evidence to compare these statistical results with the realities of the county labor markets both types of empirical evidence suggest that a segmented non market clearing model in which structural unemployment stems from queuing for above market clearing wages in both a high wage primary sector and a lower wage secondary sector can shed the most light on regional unemployment rates in west virginia

reducing conflict in global warming policy the potential of equity as a unifying principle abstract international agreement on global warming mitigation is likely to prove difficult efficiency based policies will result in disparate costs and benefits among nations and thus hinder cooperation this paper suggests that consideration be given to an equitable sharing of the economic impacts of global warming policy acknowledging that there is no universally held concept of equity the policy implications of several alternatives are explored because there is considerable variation in these implications it will be important for decision makers to clarify their preferred concepts of equity during the course of their negotiations on policies to address global warming

when do borrowing constraints bind some new results on the income fluctuation problem abstract the empirical failure of the permanent income hypothesis has prompted researchers to investigate models in which consumers are liquidity constrained as shown in deaton econometrica 59 5 1991 1221 liquidity constrained consumers might choose to exhaust their borrowing capacity from time to time yet due to technical limitations the conditions under which this behavior arises have not been investigated the present paper extends the class of solvable models in a way that allows this issue to be dealt with it turns out that under the loosest sustainable borrowing constraint the agent might systematically avoid exhausting his borrowing capacity

recursive equilibria in an aiyagari style economy with permanent income shocks in this paper we prove the existence of a recursive competitive equilibrium rce for an aiyagari style economy with permanent income shocks and perpetual youth structure we show that there exist equilibria where borrowing constraints are never binding this allows us to establish a non trivial lower bound on the equilibrium interest rate to solve the individual s problem we present a new approach that uses lattices of consumption functions to deal with the non compact state space and the unbounded utility function the approach uses only the first order conditions of the problem euler equations the proof is constructive and it serves as a theoretical foundation for the convergence of a policy function iteration procedure

the existence uniqueness and optimality of the terminal wealth depletion time in life cycle models of saving under uncertain lifetime and borrowing constraint abstract in life cycle models of saving under uncertain lifetime and borrowing constraint the consumer s wealth must be depleted before the maximum lifetime this paper investigates the existence uniqueness and optimality of the terminal wealth depletion time it is proved that the optimal terminal wealth depletion time if such exists must be unique if the equation that determines the optimal terminal wealth depletion has multiple solutions then the location of the optimal solution will depend on the configuration of the solutions an optimality test is developed to verify whether a candidate solution for the terminal wealth depletion time is indeed optimal the paper introduces a method new to economics the dubovitskii milyutin adjoint equation to analyze the properties of the optimal control problem