bluuebunny/crossref_metadata_2025 huggingface dataset:
Australia, Canada, and the International Economy in the Era of Postwar Reconstruction, 1945–50
Authors: Rooth Tim
Published: March 2003

Early hopes that a multilateral economy could be speedily restored after World War II were shattered by the sterling crisis of 1947. In the ensuing retreat to bilateralism, Canada acted vigorously to strengthen economic links with the Americans, and in the late 1940s its export dependence on the United States increased dramatically. The Australian response to the crisis was to tighten trading and financial connections with Britain and the rest of the sterling area. The limitations of UK supply capacity, however, eventually encouraged a reversal of policy after the fall of the Labor government, and Australia turned to the dollar area to tap additional resources for accelerated economic development.
The Old Commonwealth and Britain's First Application to Join the EEC, 1961–3
Authors: Robertson Paul , Singleton John
Published: March 2003

New Zealand, Canada, and Australia reacted in different ways to Britain's decision in 1961 to seek membership of the EEC. We show that the umbrage taken by the members of the old Commonwealth was in inverse proportion to the economic interests at stake. Canada, whose trade with Britain was relatively small, adopted a position of violent opposition to British policy. New Zealand, which was still heavily dependent on the UK as a market for staple commodities, was careful to avoid acting in a manner likely to alienate the British government. Australia, which was in an intermediate position as regards the importance of its trade with Britain, mounted a sturdy defence of its commercial interests, but did not indulge in the histrionics of the Canadians. All three of the old dominions were disappointed with the arrangements for Commonwealth trade towards which the UK and the Six were moving when de Gaulle vetoed British membership in January 1963, but at least New Zealand had obtained some special concessions. Whilst it is unlikely that a less combative attitude by Canada and Australia would have resulted in a better outcome for these countries, a more belligerent approach on the part of New Zealand would have put its economic future in even greater jeopardy.
Real Wages in Australia and Canada, 1870–1913: Globalization versus Productivity
Authors: Greasley David , Madsen Jakob B. , Oxley Les
Published: March 2003

Australia's and Canada's real wage experiences between 1870 and 1913 were distinctive. Faster productivity growth underpinned Canada's overtaking of Australia's wage levels. The globalization forces of migration and trade also shaped their comparative wages, principally by reducing wage growth in Canada. Immigration increased slightly Australia's real wages, but reduced wage levels in Canada, and tempered there the beneficial effects of rising productivity and improving terms of trade. In contrast, wage earners' share of national income rose after 1890 in Australia, with the productivity slowdown hitting chiefly rents and profits. Distributional shifts favouring wage earners in Australia, and the depressing effects of mass immigration on wages in Canada, limited Canada's wage lead before 1914, despite her faster productivity growth.
Accounting History in Australia: A Survey of Published Works, 1975–99
Authors: Carnegie Garry D. , Potter Brad N.
Published: March 2003

Research in accounting history has expanded significantly in recent years. This paper reviews the recent development of accounting history in Australia through an examination of the relevant literature while recognizing the wider influence of Australian scholars in the international community of accounting historians. The survey is confined to works on Australian accounting history published in the period of 25 years between 1975 and 1999. These works are discussed using the literature classification framework provided by Carnegie and Napier (1996). Reviewing the literature in this way is expected to be of benefit to historians in general, particularly economic and business historians, and also accounting historians, while future directions for accounting history research in Australia are outlined following a brief critique of the literature examined.
Australian Manufacturing Business: entrepreneurship or missed opportunities?
Authors: Hutchinson Diane
Published: March 2003

In the light of criticism of the performance of Australian business, this article surveys the mounting array of firm and industry evidence to assess the performance of Australian mass production manufacturers. The focus is on lower technology sectors of food and drink, packaging, rural and consumer chemicals, and building materials because these are sectors where Australian firms faced fewer constraints. The article evaluates whether the large firms that emerged in these industries demonstrated entrepreneurship by responding to opportunities, developing their technical capabilities and learning how to manage their growing businesses effectively.
Producers, Processors and Unions: The Meat Producers Board and Labour Relations in the New Zealand Meat Industry, 1952–1971
Authors: Curtis Bruce , Reveley James
Published: March 2003

In New Zealand, the historical trend towards the rational‐capitalistic transformation of agriculture was forestalled in part by producer boards, institutions that were intended to operate in the collective interests of farmers. Recently, there has been renewed interest both in the economic effects of the boards and in the role of farmers themselves within New Zealand's unique arbitral system of industrial relations. This paper bridges these areas of research by examining the influence of the Meat Producers Board on management–labour relations within the export meat industry. Whereas the Board is generally regarded as having empowered family‐labour farmers, we argue that its interventions also empowered meatworkers and simultaneously weakened meat‐processing companies as employers. The power resources indirectly supplied to meatworkers by the Board were an important external source of union power in the industry. By examining these resources, we identify the neglected effects of a key institution that shaped New Zealand's path of development by preventing the subsumption of ‘independent’ farming.
Weight and Welfare of Australians, 1890–1940
Authors: Whitwell Greg , Nicholas Stephen
Published: March 2003

Views differ on whether living standards in Australia improved between 1890 and 1940. The pessimists, relying principally on product and incomes measures, argue that living standards stagnated; the optimists, using augmented measures of well‐being, argue that living standards may have improved. This paper contributes to this debate between the pessimists and optimists by using alternative measures of living standards, namely the height and body mass index (BMI) of male Australian army recruits of World Wars I and II. The nature and usefulness of these measures is examined. The major findings are that the height data indicate an unequivocal improvement in living standards in the period under consideration. The BMI data tend to support a similar conclusion, but the results are ambiguous and there are difficulties in using them alone to determine exactly what happened to living standards.
The Commonwealth as an Economic Network
Authors: Robertson Paul L. , Singleton John
Published: March 2003

Research on the economics and sociology of business networks also sheds light on the development of networks of countries. The British Commonwealth was an important global network, or group of networks, in the mid‐twentieth century. Commonwealth members, including Australia and New Zealand, cooperated in the management of the Sterling Area and the Commonwealth Preference Area. Yet Commonwealth members also had links to other networks and other sources of influence including the USA, continental Europe and Japan. During the 1950s and 1960s, there was a gradual change in the network relations of Australia and New Zealand, involving a diminution in the importance of bilateral ties with Britain.
Commanding the Middle: The American Agenda at the Kennedy Round
Authors: Zeiler Thomas W.
Published: March 2003

The Kennedy Round of GATT was an opportunity for Australia and New Zealand to achieve their commercial interests of expanding agricultural exports and adjusting trade flows to the power of the United States, the loss of preferential markets in Britain and the new presence of the European Common Market. Both found commonalities with America, both managed to assert some of their concerns, but both also were decidedly junior and weaker partners to the free‐trading United States in the GATT regime. The issues explored in this article range from trade in commodities to the protests of the Third World.
The origins of formal collusion in Australian fire insurance 1870–1920
Authors: Keneley Monica
Published: March 2003

The market for insurance has become increasingly competitive in recent years. However, it has not always been so. At the end of the nineteenth century, it was characterized by a highly concentrated and tightly controlled oligopolistic market structure. As such, the history of the fire insurance industry provides an interesting case study in the development of collusive behaviour amongst firms. Up to 1897, pricing agreements among firms were generally short‐lived, and were followed by periods of intense competition. After this point, an agreement was forged, which proved very resilient to market pressures and formed the basis of premium rate setting until the 1970s. This paper investigates the difference between this agreement and previous efforts to set premium rates, and points to some of the common features of the later compact, which explain its longevity.
Managing Multinational Expansion and Related Diversification: The Case of Australian Consolidated Industries Ltd, 1939–72
Authors: Fountain Helen
Published: March 2003

This case study of Australian Consolidated Industries Ltd (ACI) adopts a Chandlerian framework to assess the management of its long‐term growth strategies. ACI’s multinational expansion in South–East Asia and its related diversification in the Australian packaging industry are examined. Contrary to established views regarding Australian manufacturers, management vigorously implemented Chandlerian growth strategies, but was less effective in developing managerial capabilities and implementing an appropriate organisational structure to support its strategies’ long run expansion. Management failed to anticipate the demand for managerial resources, encountered organisation design problems, and undermined design efficiency through interventionist procedures. These explanations may shed light on a problem common among some large Australian manufacturing firms.
Vampires to Skyhawks: Military Aircraft and Frigate Purchases by New Zealand, 1950–70
Authors: Singleton John
Published: March 2003

New Zealand’s relations with its main weapons suppliers, Britain and the United States of America, are analysed in this article. Until the 1960s, New Zealand’s armed services relied almost exclusively on British hardware. The Royal New Zealand Air Force and the army were converted to American equipment in the 1960s and early 1970s, but the Royal New Zealand Navy continued to purchase frigates from British yards. This article examines the interplay of financial, political, and operational considerations affecting major procurement decisions, like the acquisition of Skyhawk aircraft in the 1960s. Although the focus is policy, consideration is also given to relations between the New Zealand government and private defence contractors. New Zealand’s revealed objective was to maintain, at minimum possible cost, a force capable of taking part in joint operations with its principal allies.
Income Mobility, Temporary and Permanent Poverty
Authors: Borooah Vani K. , Creedy John
Published: March 2003

This paper incorporates poverty persistence in a measure of aggreg ate poverty over two‐periods by decomposing the Foster et al. (1984) class of poverty measures into those temporarily in poverty and those in poverty in both periods. An additional weight is added to the permanent component in forming an aggregate poverty measure over both periods; this weight reflects the degree of poverty‐persistence aversion. The effect on aggregate poverty of mobility between permanent and temporary poverty is found to be unambiguous only in the case of the headcount poverty measure. Simulations are used to investigate the relationship between poverty and mobility. The effects of two different types of mobility (random proportio nal income changes and a systematic regression towards or away from the median) are isolated
Income Tax Deductions for Work‐related Expenses: The Rationale Examined
Authors: Baldry Jonathan
Published: March 2003

The Australian income tax permits taxpayers receiving wages to claim work‐related expenses (WREs) as deductions against taxable income. The rationale for the provision has never been stated. This paper examines the rationale in terms of equity and efficiency considerations. The analy sis suggests that deductibility of WREs is likely, at best, to have a neutral equity impact; at worst it will have a random impact. WRE deductibi lity is also likely to lead to distortions in both production and consumption. Taken together with the high compliance costs associated with the provision, these arguments justify abolition of WRE deductibility
Exchange Rate Pass‐through: How Much do Exchange Rate Changes Affect the Prices of Australian Exports?
Authors: Swift Robyn
Published: March 2003

Australia is generally held to be a small open economy with a high proportion of commodity exports. It is therefore regarded as a ‘price taker’ in international markets, and pass‐through on exports is expected to be zero. This paper uses the Johansen Multivariate Cointegration technique to estimate the pass‐through of exchange rate changes to the destination‐currency prices of aggregate Australian exports. The results demonstrate a stable long‐run pass‐through level of 60 per cent, which refutes the ‘small‐country’ assumption of Australian exporters as price takers. These findings have important implications for Australia's terms of trade and current account deficit
The Socially Optimal Level of Saving in Australia, 1960‐61 to 1994‐95
Authors: Guest Ross , McDonald Ian
Published: March 2003

In this paper a model is developed which determines the socially optimal level of saving for a small open economy. The model also determines the socially optimal disposition of saving between domestic capital accumulation and overseas asset accumulation. The model is then applied to the Australian economy for the period 1960‐61 to 1994‐95. For each year of that period socially optimal levels of saving, investment and the current account of the balance of payments are determined. Two main conclusions emerge. Firstly, while Australia under‐saved by an average of 1.7 per cent of GDP from 1974‐75 to 1994‐95, it over‐saved by an average of 5.3 per cent of GDP in the earlier period from 1960‐61 to 1973‐74. Secondly, Australia did not make optimal use of world capital markets to smooth consumption in the period from 1960‐61 to 1994‐95; although there is less evidence for this since 1984‐85, suggesting that deregulation of capital markets may have facilitated the optimal smoothing of consumption.
The Duration of Industrial Disputes in Australian Mining and Manufacturing
Authors: McDonald James Ted
Published: March 2003

Using a unique dispute‐level database of industrial action in Australian mining and manufacturing industries, this paper investigates the determinants of the duration of industrial action. For the first time in the Australian literature, the duration of individual disputes is analysed within a hazard function framework that estimates conditional settlement probabilities over the duration of the dispute. Further, the analysis is conducted for both strikes and non‐strike forms of industrial action such as bans on working overtime. A range of parametric and semi‐parametric specifications are estimated in order to determine the sensitivity of the results to alternative econometric techniques. The duration of both strikes and work bans are found to be affected by a range of factors, including the state of the labour market, industry characteristics, past union experiences and the cause of the dispute. The conditional settlement rate of both strikes and bans are found to be upward sloping, implying that the longer that a dispute has already lasted, the more likely that it is to end. However, failing to control for unobserved heterogeneity results in bias toward declining conditional settlement rates.
Trust, Responsibility and the Interpretation of Contingent Valuation Results
Authors: Blamey Russell K.
Published: March 2003

Responses to contingent valuation questionnaires are contingent on respondent perceptions of trust and responsibility regarding aspects of the scenario presented to them. These issues can influence CV responses in several ways, with the net effect on WTP estimates depending on the relative prevalence of the different opposing effects in a given application. Whether such effects are to be considered biases, to be removed where possible, depends on the notion of validity one adopts. Whilst issues of trust and responsibility may pose little threat to predictive notions of validity, they are more problematic from a surplus validity, cost‐benefit, perspective. Further discussion of the pros and cons of different validity notions for contingent valuation is required.
Walras' Law and Keynesian Macroeconomics
Authors: Palley Thomas
Published: March 2003

This paper examines the claim that Keynesian models violate Walras' law. Walras' law is founded in the logic of exchange. Standard statements misrepresent it, as it pertains to a monetary economy. Keynesian models are consistent with Walras' law once this misrepresentation is corrected. The law holds for both notional and effective demands. It also holds in unconstrained Walrasian equilibria, constrained Walrasian equilibria, and constrained non‐Walrasian equilibria. The latter corresponds to a Keynesian conception of equilibrium: markets need not clear, but agents expectations must be fulfilled.
A Theoretical Analysis of Trade Union Membership Fees, Bargaining Power, Wage Rate and Unemployment
Authors: Levy Amnon
Published: March 2003

The positive effect of membership fees on trade unions' cohesion and commitment and the adverse effect of these fees on trade unions' density imply that the effects of membership fees on trade unions' bargaining power, wage rate and unemployment can be depicted by inverted U‐shaped curves whose upper bounds are reached when membership fees are set at half the ratio of the upper‐bound on members' level of satisfaction from the trade union services to their disposable income rate. The implications of these effects for membership fees are analysed for a trade union that sets its membership fee so as to minimise the loss stemming from missing wage rate and unemployment targets.
Pitfalls in Including Current Earnings in Labour Market Choice Estimating Equations
Authors: Le Anh T. , Miller Paul W.
Published: March 2003

This paper examines the conditions under which an empirical model of employment choice based on the differential in current earnings is an adequate specification when the theoretical model suggests the use of the difference in present values of the stream of lifetime earnings. The difference between the two approaches is shown to be variables for the growth rates of earnings in the employment states over which choice is being made.
Uncertainty, Patent Length and Firm R&D: a Comment
Authors: Denicolo Vincenzo
Published: March 2003

In a recent paper, Goel (1996) analyses the effect of patent length on firm’s R&D in a model where the timing of innovations is stochastic. He concludes that: ‘Higher patent length does not necessarily lead to more R&D spending’ (1996, p. 77). More precisely, ‘in projects with high probabilities of innovation success firms might actually reduce their R&D spending when the patent length increases’ (1996, p. 78). This conclusion, however, is flawed. The purpose of this note is to correct Goel's analysis, showing that in his model an increase in patent's length unambiguously leads to higher R&D investment.1
Retail and Wholesale Margins in Successive Cournot Oligopolies
Authors: Choe Chongwoo
Published: March 2003

This paper studies the determination of retail and wholesale prices in successive Cournot oligopolies. It is shown that (i) the ratio of retail to wholesale margins increases (decreases, resp.) as the retail part of the market becomes less (more, resp.) competitive; (ii) the ratio of margin in one part of the market to total margin increases (decreases, resp.) as that part of the market becomes less (more, resp.) competitive; (iii) the decline in final consumer price is larger (smaller, resp.) if the entry of additional firm occurs in less (more, resp.) competitive part of the market. The results of the paper are applied to the case of third degree price discrimination.
Casual Employment in Australia: A Further Analysis
Authors: Mangan John , Williams Christine
Published: March 2003

Casual employment is steadily increasing its share of total employment in Australia. This paper analyses some of the factors that have led to this situation by extending the work of Simpson, Dawkins and Madden (1997). The results, while confirming some of their research and clarifying the role of union membership in limiting the spread of casual employment, also show that the determinants of casual employment in Australia are sensitive to the period of estimation and the form of model used.
Vertical Product Differentiation When Quality is Scarce: The Case of n > 2 Firms
Authors: Frascatore Mark R.
Published: March 2003

This paper describes a model of vertical product differentiation in which more than two firms compete in quality and price. Quality is of fixed supply, so firms participate in an auction to attain it. Firms then simultaneously choose prices. The paper determines equilibrium bids in the quality auction and the Bertrand equilibrium prices. In equilibrium one firm attains all the units of quality, but pays a price such that it, like the minimum‐quality firms, earns zero profits. Aggregate welfare is computed, and is shown to decrease as competition increases.
Efficiency Wages and Taxes
Authors: Goerke Laszlo
Published: March 2003

Various taxes influence wage and employment outcomes in efficiency wage models. These findings are extended by incorporating more comprehensive tax functions and additional tax parameters. Moreover, the importance of different effort functions is evaluated. It is shown that higher marginal tax rates, holding the level of taxes constant, reduce wages and increase employment. Higher levels of taxes on income, labour costs and value‐added tend to raise unemployment.
Intra‐firm Branch Competition for a Monopolist
Authors: Cheng Wenli , Ng Yew‐Kwang
Published: March 2003

This paper studies the effect of intra‐firm branch competition in a monopoly setting. It demonstrates that intra‐firm branch competition has a significant impact on the firm's market decisions, and consequently on the market outcome. The paper has identified the sufficient conditions under which a branch‐competitive monopoly is superior to a pure monopoly from the consumer's viewpoint in that the former supplies more quantity and higher quality at the same price.
Durability in a Monopoly With a Small Number of Buyers
Authors: Colangelo Giuseppe
Published: March 2003

This paper shows that the number of buyers is a crucial demand characteristic for a monopolist's choice of durability. When he sells to a few large buyers, he offers a more durable good than when selling to many small buyers. By increasing durability of the good sold to large buyers, the monopolist encourages current purchasing and can thus engage in greater intertemporal price discrimination and make more profit. Therefore Bulow's proposition of minimal durability does not survive in the case of few buyers. This has not been pointed out thus far.
Countercyclical Unemployment Outflows and Labour Reallocation
Authors: Leeves Gareth
Published: March 2003

The distinction between job and excess worker reallocation in a model proposed by Burda and Wyplosz (1994) offers a possible explanation for the observed empirical regularity of countercyclical gross flows of workers from unemployment to employment. Previous descriptions of gross flow cyclical adjustment have not adequately accounted for the role of excess worker reallocation in labour market adjustment. This paper investigates the characteristics of Australian gross flow relationships between unemployment and employment, using a structural VAR methodology, for evidence of patterns consistent with the dynamic behaviour of labour reallocation proposed by the Burda and Wyplosz model. The results provide support for a description of labour market adjustment in the last Australian recession as a combination of job and excess worker reallocation effects, as implied by the model, and highlight the role played by excess worker reallocation in generating countercyclical UE flows. The paper also considers the interrelationship between labour reallocation and long‐term unemployment and the flow adjustment patterns of males and females.
On the Regulation of a Vertically Differentiated Market
Authors: Lambertini Luca , Mosca Manuela
Published: March 2003

The aim of this paper is to investigate a vertically differentiated market served either by a multiproduct monopolist or by duopolists, in which a public authority aiming at increasing the welfare level can choose among two instruments, namely, quality taxation/subsidisation, and minimum quality standard. In the monopoly case they are equivalent as to the social welfare level, in that both allow the regulator to achieve the second best level of social welfare he would attain if he were to set qualities under the monopoly pricing rule, while they are not equivalent in terms of the distribution of surplus. In the duopoly regime, we show that there exists a taxation/subsidisation scheme inducing firms to produce the socially optimal qualites.
Indirect Tax Reform in Australia: The Welfare Effects on Different Demographic Groups
Authors: Creedy John
Published: March 2003

The welfare effects of several indirect tax reforms in Australia are examined for a number of types of household in a range of income groups. The welfare changes, measured using equivalent variations, are based on the use of the linear expenditure system, where parameters are different in each of the income groups. The effects of the current system and of several reforms are found to differ significantly among the household types. However, the results suggest that the extent of vertical redistribution involved in the current indirect tax structure, and possible reforms to it, are small. The role of exemptions are examined in the case of food, for which the budget shares are systematically higher in lower income households, and health services. In view of the strong assumptions used at each stage, the results must be regarded as tentative.
Asymmetric Conditional Volatility and Firm Size: Evidence from Australian Equity Portfolios
Authors: Henry Ólan T. , Sharma John
Published: March 2003

This paper examines the relationship between firm size and equity volatility for two portfolios of Australian equities. Univariate and Multivariate GARCH models are used to demonstrate that conditional variance is related to firm size. There is strong evidence to suggest that the variance‐covariance matrix of returns is time varying and asymmetric. A negative innovation to the return of the large firm portfolio results in higher levels of conditional volatility in the small firm portfolio than would be the case for a positive innovation of equal magnitude. News about own returns appears to determine the conditional variance of the portfolio of large firms. The conditional covariance between the two portfolios also displays evidence of asymmetry.
Non‐storables, Simultaneity and Price Determination: The Australian (Finished) Live Cattle Market
Authors: Goss Barry A. , Avsar S. Gulay
Published: March 2003

Empirical studies of simultaneous rational expectations (RE) models of spot and futures markets for non‐storable commodities, such as finished live cattle, are rare. Indeed, only two countries, the US and Australia, have produced data sets for the study of such markets. This paper develops, and presents estimates of a simultaneous RE model of the live cattle market in Australia, the world's leading beef exporting country. The model contains functional relationships for short hedgers and short speculators, long hedgers and long speculators, and consumers, and is completed with a spot price equation and market clearing identity. Augmented Dickey‐Fuller and Phillips‐Perron tests for unit roots are executed, and Johansen cointegration tests are employed to investigate whether the I(1) variables are cointegrated. Structural equations are estimated by maximum likelihood when ARCH effects are present, by instrumental variables in the absence of serial correlation, and by non‐linear least squares when a correction for autocorrelation is required. The estimates of all structural parameters are significant at the five per cent level. Post‐sample, the model forecasts spot and futures prices with per cent RMSE's of 4.4 per cent and 2.5 per cent, respectively. In forecasting the spot price, the model outperforms but not significantly, a random walk, an ARIMA model, and a lagged futures price as a predictor of the spot price. The outcome of this last comparison implies that the efficient markets hypothesis cannot be rejected.
The Natural Rate of Unemployment in Australia: Estimates From a Structural Var
Authors: Groenewold Nicolaas , Hagger A J
Published: March 2003

The concept of the natural rate of unemployment is widely used in the analysis and discussion of macroeconomic policy. It is, however, unobservable so that estimates of the natural rate are necessarily based on a particular theory of unemployment. Hence, measures of the natural rate, whether constant or time‐varying, are necessarily model‐dependent. Various series based on specific models have recently become available for Australia. We set out to compute a series for the natural rate based on a minimal theoretical structure captured by a two‐variable structural vector‐autoregressive (SVAR) model estimated using quarterly Australian data for the period 1978–1997. We assess the robustness of our estimates by varying both the theoretical restriction imposed on the model and the two variables included in the model. We find that the computed natural rate is quite sensitive to model specification, both in terms of the level and of the cyclical behaviour of the natural rate. We argue, however, that a particular variant of our model is strongly preferred to the others investigated. It produces an estimates natural rate series the behaviour of which is broadly consistent with that of series produced by others from more restrictive models.
Import Quotas and Entry Deterrence
Authors: Campbell Neil
Published: March 2003

Using a simple version of the Milgrom and Roberts entry deterrence model, it is shown that adjusting a quota so that a greater volume of imports is allowed, can facilitate entry into the domestic industry. That is, the easing of a quota, can cause the domestic incumbent to shift from deterring entry to accommodating entry.
A Two‐stage Price‐setting Equilibrium Designed in Consideration of Goods Relevance and Strategic Relevance
Authors: Ohnishi Kazuhiro
Published: March 2003

This paper analyses the subgame perfect Nash equilibrium of a two‐stage price‐setting duopoly. The demand functions are classified into four cases in terms of the goods' relevance and strategic relevance between two firms. All four cases are correlated with two opposite prior commitments that generate kinks in the reaction curve. This paper assumes that only one firm can execute the prior commitments. In the model, we find that the firm can increase its payoff with one of the prior commitments in each of the four cases. We also find that our equilibrium outcomes are different from those of Matsumura (1998) in this Journal, and that they occur at the Stackelberg point in all four cases if, and only if, the firm's reaction curves shift to the Stackelberg point as a result of the prior commitments. As a consequence, the effectiveness of strategic commitments is proved.
A Regional Analysis of Technical Change in Australian Manufacturing
Authors: Doucouliagos Hristos , Parikh Ashok
Published: March 2003

Manufacturing is an important sector to many Australian regional areas. Technical change is important to the economic performance of manufacturing and improvements in competitive advantage. In this paper, technical change in manufacturing is estimated for each of the Australian States using a cointegration framework, for the period 1954–55 to 1995–96. Regional differences in technical change are identified.
A Semi‐parametric Estimator of Willingness‐to‐pay Applied to Dichotomous Choice Contingent Valuation Data
Authors: Burton Michael
Published: March 2003

The use of dichotomous choice questions (Are you willing to pay $x?) has been advocated as superior to open ended questions (What would you be willing to pay?) in contingent valuation studies of non‐market goods. A supplementary dichotomous choice question, raising or lowering the bid price depending on the initial response, gives increased precision. However, a problem with these methods is that identifying the mean willingness to pay (WTP) is more complex, and often conditional on making a distributional assumption. This paper will present a semi‐parametric method for estimating WTP without invoking any such assumptions, using the interval inherent in the double bounded format, and based on estimating the underlying hazard function for the distribution of WTP. An advantage of the approach over other non‐parametric methods is that it allows one to include respondent characteristics as determinants of the individual decisions, and does so within a computationally straightforward framework.
An Empirical Note on the Influence of the US Stock Market on Australian Economic Activity
Authors: De Roos Nicolas , Russell Bill
Published: March 2003

This paper empirically examines the impact of the US stock market on Australian economic activity as one explanation of the strong correlation in the Australian and US business cycles. It is found that both the US and Australian share markets appear to have a significant impact on Australian activity.
When Competition is Not Enough: Consumer Protection
Authors: Smith Rhonda L.
Published: March 2003

Rather than market structure, it is the nature of the goods and services and the cost of obtaining and processing information that may place consumers in a poor bargaining position. The article outlines the key provisions for consumer protection in Australia, Part V of the Trade Practices Act. It discusses search costs, and the factors that limit search, and explains how the conduct of suppliers (or others) may reduce search costs. Asymmetry of information is identified as a necessary (but not sufficient) condition for misleading consumers. When products are sub standard or are used incorrectly, they may harm consumers or cause property damage and in some circumstances this may be best addressed via product liability laws. The article concludes by considering how firms or industries can be more pro‐active in relation to consumer protection.
Product Liability: Beyond Class Action
Authors: Sasaki Dan
Published: March 2003

Can punitive product liability enhance economic efficiency? A very simple economic theory, assuming that the probability and the degree of product dissatisfaction are functions only of the producer's not of the consumer's effort, is modelled and analysed in this paper. The qualitative conclusion hinges critically upon whether the legal liability is reflected on price determination. If the price of the product is insensitive to product liability legislation, then punitive liability beyond the class action (i.e., compensatory payments more than proportional representation of potentially dissatisfied consumers) can induce socially desirable levels of effort exerted by the producer firm. This affirmative effect disappears if the price fully reflects all the expected legal liabilities, whereby punitive liability tends to reduce economic efficiency by encouraging costly lawsuit.
Environment and Food Safety in Agriculture: Are Labels Efficient?
Authors: Ibanez Lisette , Stenger Anne
Published: March 2003

In this article, we try to elicit whether an information on food safety is consistent with a more environmental‐friendly agriculture. As the policy makers generally intervene to limit negative externalities in agriculture on the supply side, is a labelling policy an efficient way to reduce pollution levels in this sector? The intuitive reason of a food safety label rests on the fact that consumers seem to be more concerned with information on food safety aspects than on environmental ones. In a vertical differentiation model, we analyse the impacts of labels mentioning food safety and environmental aspects, on firms' profits, consumers' surplus and pollution levels. Given our main assumption that food safety and environmental consequences are directly linked, our principal results show that a labelling policy on food safety can be efficient from an environmental point of view, depending on the initial healthy products proportion in the market. Another result is based on the fact that a label policy can reduce consumer's surplus.
Investment Choice with Polluted Capital
Authors: Etner Johanna , Jouvet Pierre A.
Published: March 2003

This paper develops a two‐sector overlapping generations model in which one sector produces an externality on the environmental quality and the other has no effect. We assume that environmental quality degradation results from production activity of one sector. Then, we characterise the dynamical system globally and establish sufficient conditions for the global uniqueness of a perfect‐foresight equilibrium path in the case of a Cobb‐Douglas production function and a CES utility function. We show that the existence and the stability of the steady state depend on substitution and income effect and on the degree of pollution.
A Tractable Alternative to Cobb‐Douglas Utility for Imperfect Competition
Authors: Yin Xiangkang
Published: March 2003

This paper proposes a tractable alternative to Cobb‐Douglas utility to resolve the problems of lack of reservation price and income effects in demand functions derived from Cobb‐Douglas utility or quasilinear utility. Another advantage of this althernative is that it provides a closed‐form general equilibrium in the case where some industries are monopoly while others are imperfectly competitive.
Oligopolistic Competition and Intra‐industry Trade: Evidence From the OECD
Authors: Bernhofen Daniel M. , Hafeez Zahid
Published: March 2003

This paper develops a general reciprocal‐markets model of intra‐industry trade in oligopolistic industries. It shows that the effects of industry characteristics on the extent of bilateral intra‐industry trade, as measured by the Grubel‐Lloyd index, are invariant to whether firms compete over homogeneous or differentiated products. Based on this model, we investigate industry determinants of bilateral intra‐industry trade, using internationally comparable industry data for 22 manufacturing industries in 12 OECD countries during 1970–1985. Our estimates indicate that, even after controlling for idiosyncratic industry and country‐pair effects, our measures of the industry determinants explain variations in the intensity of bilateral intra‐industry trade, for the most part, in accord with what the theory predicts.
The Role of Openness in the Debate on Rules vs. Discretion: A Simple Exposition
Authors: Guender Alfred V. , McCaw Sharon
Published: March 2003

In this paper, we examine to what extent the degree of openness matters for the conduct of monetary policy. Our findings suggest that the stabilising properties of nominal income and price level targeting often reported in the literature on monetary policy in closed economies do not carry over to an economy that imports an intermediate input. We also show that the inverse link between openness and average inflation reported by Romer (1993) obtains under discretion. Finally, we compare and contrast discretion to the various rule‐based strategies of monetary policy using policy frontiers. In all but one comparison greater openness makes discretion more attractive relative to the rule‐based strategies of monetary policy. Nevertheless, in light of empirical estimates for the size of the variances of demand and supply shocks, the case for rule‐based monetary policy strategies cannot be dismissed. Rule‐based strategies perform better against discretion in the face of supply disturbances rather than demand disturbances.
Stock Returns and Inflation
Authors: Crosby Mark
Published: March 2003

In this paper the relationship between inflation and stock returns in Australia is examined. It is found that increases in the price level reduce the real level of the stock price index. However, it is also found that the question of whether persistent increases in inflation affect real returns cannot be addressed using the Australian data.
Decomposing Redistributive Effects of Taxes and Transfers in Australia: Annual and Lifetime Measures
Authors: Creedy John , Van De Ven Justin
Published: March 2003

This paper decomposes the redistributive effect on annual and lifetime inquality of a range of taxes and transfers in Australia, using a dynamic cohort lifetime simulation model. The redistributive effect is decomposed into vertical, horizontal and reranking effects. Horizontal inequities in the tax and transfer system are found to be negligible. The extent of reranking is greater in the lifetime than in the annual context and is affected by the equivalence scales used to adjust household incomes. If no adjustment is made to household incomes, reranking is about nine per cent of the reduction in lifetime inequality. However, if each child is counted as equivalent to one‐third of an adult, reranking is found to be less than one per cent.
Aging and Productivity Among Judges: Some Empirical Evidence from the High Court of Australia
Authors: Bhattacharya Mita , Smyth Russell
Published: March 2003

A number of studies have shown that productivity declines with age in a wide range of activities. Based on United States experience, it has been argued that one profession that might be an exception to this phenomenon is the judiciary. This study explores the relationship between aging and productivity for a sample of retired judges of the High Court of Australia. The High Court provides a useful test for the hypothesis that older judges are more productive because, in contrast to the United States, most, if not all, judges write their own judgments. Thus, ghostwriting does not cloud the issue of judicial productivity. The findings support the life‐cycle hypothesis, which suggests the age‐citation profile should increase, reach a peak and then decline as judges get closer to retirement. Thus, the results are consistent with the view that the productivity of judges over their working lives follows a similar pattern to other professions such as academia.
Estimating Scale and Scope Economies with Fourier Flexible Functional Form – Evidence from Taiwan's Banking Industry
Authors: Huang Tai‐Hsin , Wang Mei‐Hui
Published: March 2003

In this study the scale and scope economies for Taiwan's banking sector using panel data from 22 domestic banks for the period 1981–1997 is investigated quantitatively using both a Fourier flexible functional form, first proposed by Gallant (1981, 1982), and a translog function. This study's results favour the use of the former, based on tests of regression coefficients and on estimates of various economy measures. The Fourier evidence shows that only smaller banks exhibit increasing returns to scale, while larger banks exhibit decreasing returns to scale. Conversely, the translog indicates that all the sample groups continue to enjoy economies of scale. Banks in Taiwan exhibit scope diseconomies, which suggest that sample banks should continue efforts to diversify their financial products, which in turn could substantially reduce their average costs.
Can Human Capital Theory Explain why Nurses are so Poorly Paid?
Authors: Nowak Margaret J. , Preston Alison C.
Published: March 2003

This paper uses Australian Census data to examine the earnings of female professionals. Comparisons are made between Registered Nurses (RNs), Teachers, Social Professionals, Health Professionals and Business Professionals. Wage decompositions show that RNs earn significantly less than other female Professionals and that the observed differentials can not be explained by differences in human capital endowments. The evidence presented is strongly suggestive of monopsonist or oligopsonist power in the setting of nurse wages – with a manifestation being persistent labour market disequilibrium. Changing the relative reward structure for nurses may help address the on‐going nursing ‘shortage’ in Australia, although further research in this area is called for.
An Australian Model: Nontraded Goods, Real Exchange Rates and Unemployment
Authors: Oslington Paul
Published: March 2003

A popular model for considering many international trade and macroeconomic questions is the ‘Australian model’ of Wilson, Swan and Salter. This paper develops a general equilibrium trade version of the ‘Australian model’ where unemployment comes from a specified factor market distortion, and considers the effects of immigration, transfers, changes in wage fixing arrangements, terms of trade shocks, tariffs and devaluations. Debates over policies for external and internal balance are revisited, with the advantage that the general equilibrium specification allows welfare consequences of various alternatives to be explicitly considered. In the model external balance is achieved through a flexible exchange rate and the most attractive policies for achieving internal balance are encouraging skilled immigration and skill augmenting technical change, training, and unskilled wage cuts (accompanied by redistribution to affected workers). Foreign borrowing, import tariffs and currency devaluation are problematic policies from a welfare point of view.
Occupational Status: Why do some Workers Miss Out?
Authors: Le Anh T. , Miller Paul W.
Published: March 2003

The difference in socioeconomic status between the ‘haves’ and ‘have‐nots’ is widening in the Australian labour market. This is reflected in the data on both earnings and occupational status. This paper assesses the factors contributing to differences in the occupational attainment of workers with a marginal attachment to the labour market and workers who are part of mainstream Australia. Overall, 94 per cent of the occupational status differential is attributable to the inferior endowments possessed by workers with a marginal attachment to the labour market. Until the disadvantaged workers improve their skills they will not be able to gain access to high status occupations.
Earnings Distributions and Means‐tested Benefits
Authors: Creedy John , Scutella Rosanna
Published: March 2003

This paper considers the question of whether it is possible to identify labour supply incentive effects of a tax and transfer system using information on only the distribution of earnings. The major characteristics of earnings distributions arising from a simple labour supply model are examined. These characteristics include the existence of modes and antimodes caused by kinks where effective marginal tax rates increase and non‐convexities in budget constraints arising from means‐testing. Actual earnings distributions, concentrating on unemployment benefit recipients, are then examined. It is suggested that the use of such an approach must be severely limited, in view of the fact that there is no one‐to‐one correspondence between the form of the earnings distribution and the parameters of a tax and transfer system.