bluuebunny/crossref_metadata_2025 huggingface dataset:
Skill Complementarities and Migration Decisions
Authors: Giannetti Mariassunta
Published: March 2003

This paper offers an explanation of the high mobility of skilled workers based on human capital complementarities. If the skill premium is increasing in the average level of human capital of a location, and there exist fixed migration costs, in equilibrium the more skilled the workers are, the stronger the economic incentives to migrate towards the richest regions will be. Moreover, endogenously generated differences in productivity due to migration affect occupational choices and regional specialization. Empirical evidence consistent with the proposed explanation is provided using data on Italian regions. It emerges that, even after controlling for economic conditions, a high population share of individuals who completed college or high‐school in a region seems to be a relevant pull factor for the most educated migrants. In contrast, the importance of this variable, which measures the average level of human capital of a location, drops when unskilled migrants are considered. Finally, the effects of migration on the evolution of regional disparities are taken into account.
Knowledge Spillovers and Wage Inequality: An Empirical Analysis of Dutch Manufacturing
Authors: Bruinshoofd Allard , Hollanders Hugo , Weel Bas ter
Published: March 2003

The introduction of new technologies and technical change is associated mainly with high‐skilled and high‐wage workers. In addition, many studies have found a positive correlation between the introduction of new technologies and technical change and skill upgrading. In these studies no attention has been paid to spillovers from one sector to the other. In this paper we not only use measures of technical change but also knowledge spillovers to explain wage inequality in Dutch manufacturing in the period 1986–95. Using this more elaborate measure of technical change, our findings are twofold. First, we confirm that workers employed in knowledge‐intensive manufacturing sectors receive a higher wage than workers in less knowledge‐intensive sectors. Secondly, the wages paid to high‐skilled workers relative to low‐skilled workers in knowledge‐intensive sectors are higher than those in less knowledge‐intensive sectors. However, the coefficients using the elaborate measure of technological advancement are much lower and sometimes even insignificant. This suggests a premium for high‐skilled labour in sectors both applying and developing technology. But the wage premium is highest in technology‐developing sectors, as suggested by the measures used in previous studies.
Male–Female Labour Market Participation and Wage Differentials in Greece
Authors: Kanellopoulos C. N. , Mavromaras K. G.
Published: March 2003

This paper is an empirical study of the development of labour market participation and wage differentials between males and females in Greece between 1988 and 1994. There is little known about the position of women in the Greek labour market. This paper uses survey data generated by the Greek National Statistical Service. The decision to engage in paid employment and the resulting remuneration are studied using selectivity–corrected earnings estimations. Oaxaca and Ransom decompositions and counterfactual analysis show that the adverse treatment of female labour market participation is the largest identifiable reason why the wage gap is there and why it increased between 1988 and 1994.
Firing Costs, Efficiency Wages and Unemployment
Authors: Staffolani Stefano
Published: March 2003

This paper uses a Shapiro–Stiglitz efficiency wage model to analyse the effects of firing costs on wages, employment, expected utility and profits. It considers that the probability of a non–shirker being fired depends on an exogenous shock which follows a two–state Markov process. It finds that higher severance payments give rise to lower wages, a lower unemployment rate, an increase in firms’ profits and a decrease in the utility of both workers and the unemployed. These conclusions derive from the finding that a greater probability of keeping one’s job, because of higher firing costs, raises the value of the job and reduces the worker’s incentives to behave opportunistically; this enables firms to reduce wages. Hence, if firms pay efficiency wages, a higher degree of labour market flexibility increases unemployment.
The Influence of the Social Use and the History of Acquisition of Euskera on Comprehension and Recall of Scientific Texts in Euskera and Castilian
Authors: Gorostiaga Arantxa , Balluerka Nekane
Published: March 2003

This study examined the influence of the social use and the history of acquisition of Euskera (the Basque language) on comprehension and recall of two versions (Euskera –Castilian) of a scientific text read by bilingual high school and college students. Comprehension was measured by performance on an inferential task and recall by efficiency on a test that assessed recognition of essential and supplementary information in the text. Results suggested that both extensive social use and an active history of acquisition of a language improve the level of comprehension of a text written in that language. However, neither factor facilitated the recognition of essential information in the text. The possible implications of these results for education are discussed.
The Evolution of the Determinate Ideal of Sentencing: An Illinois Case Study
Authors: Griset Pamela L.
Published: March 2003

The past two decades have witnessed enormous changes in state sentencing structures. While many of the fundamental tenets of the determinate sentencing reform movement have changed since the 1970s, one bedrock principle has remained constant: the belief that the sentencing power of post‐conviction administrators must be curbed. Yet, in many jurisdictions, the goal of the reform movement has been frustrated as sentencing discretion has merely shifted from parole boards to prison officials. This article presents a case study from Illinois to illustrate how institutions' adaptive responses to externally imposed reforms can enlarge the gap between the rhetoric and the reality of public policy.
The Loosening of Professional Boundaries and Restructuring: The Implications for Nursing and Medicine in Ontario, Canada
Authors: Beardwood Barbara
Published: March 2003

This paper suggests that the combination of health care restructuring, legislation expanding, and redefining a regulated health profession in Ontario, Canada, has reduced medical dominance and increased managerial dominance of health care professionals. The paper focuses on nurses and doctors, and examines the effects of the Regulated Health Professions Act and the changes occurring within the health care system on their political, clinical, and economic autonomy. It argues that there has been a redistribution of power in the health care sector and suggests that the present autonomy of health care professionals is limited, and may be limited even further as the technical side of health care is prioritized over the indeterminate side.
Managing the HIV/AIDS Pandemic: Paving a Path into the Future of International Law and Organization
Authors: Mameli Peter
Published: March 2003

Complex global interdependence continues to influence international legal and political affairs at the close of the twentieth century. As interdependence has tightened, non‐state actors have emerged in many policy areas as key political and service delivery players; often supporting increasingly prioritized human‐centered issues. Analysis of the global management of the HIV/AIDS pandemic suggests that use of international quasi‐legislation can be employed in order to create space within which to manage these changes, thus opening room for discussion about new approaches to meeting the challenges of a changing world.
National Styles of Worker Protection in the United States and Japan: The Case of the Automotive Industry
Authors: Wokutch Richard , VanSandt Craig
Published: March 2003

This paper compares and contrasts the national styles or approaches to the regulation and management of occupational safety and health distinctive of the United States and Japan within the context of the automotive industries of these two countries. Referring to comparative workplace injury and illness experience and data on safety and health regulatory activities, strengths and weaknesses of the two approaches are considered. It is suggested that an optimal strategy would contain elements of both approaches. Elements of the two approaches that might be adapted cross‐nationally are identified and discussed.
The Extent of Departures from Debt Neutrality When Future Income is Uncertain
Authors: Pemberton James
Published: March 2003

A model of stochastic consumption behaviour over the life cycle is used to reconsider earlier conclusions by Barsky, Mankiw and Zeldes (“Ricardian Consumers with Keynesian Propensities”, American Economic Review, Vol. 76, No. 4 (1986), pp. 676–691) and Barro (“The Ricardian Approach to Budget Deficits”, Journal of Economic Perspectives, Vol. 3, No. 2 (1989), pp. 37–54) about the extent to which income uncertainty can induce departures from pure debt neutrality. The results suggest that Barro understates, and Barsky et al. overstate, the importance of income uncertainty in this context.
The Essence of the Modern Corporation: Markets, Strategic Decision‐Making and the Theory of the Firm
Authors: Cowling Keith , Sugden Roger
Published: March 2003

Following Coase’s fundamental concern with planning, in this paper we highlight strategic decision‐making as important for distinguishing the essence of the modern large corporation. It is consistent with industrial organization analysis of industries yet provides a novel starting point for the theory of the firm. We suggest different boundaries to the organization compared with those identified elsewhere, and whereas others peering into the black box of Walrasian theory merely see more of what is on the outside, we see transactions within and without the firm as fundamentally different. The analysis recognizes Pareto inefficiencies but concludes with an optimistic vision for economic policy.
Effects of Futures Trading on the Spot Market Bid–Ask Spread
Authors: Gerber Silvia , Simmons Peter
Published: March 2003

We analyse how the presence of a futures market gives risk‐averse dealers in the spot asset opportunities for arbitrage that reduce the spot market bid–ask spread through reducing the dealers’ risk exposure. In particular if the spot and futures risks are perfectly correlated then the spot bid–ask spread is zero in equilibrium and all spot dealer risk can be diversified away. We also analyse the equilibrium futures price in this two‐market scenario.
Linear–quadratic Solution Methods to Non‐linear Stochastic Models: A Note
Authors: Roche Maurice J.
Published: March 2003

Linear–quadratic solution methods to non‐linear stochastic rational expectations models are described and compared. A closed economy real business cycle model is used as an illustration. Our results show that all methods yield identical coefficients in the optimal decision rules. However, when solving other models some methods require only a few modifications to existing computer programs.
Intertemporal Preferences, Imperfect Competition and Effective Fiscal Intervention
Authors: Molana Hassan
Published: March 2003

This paper illustrates that, when goods market imperfections cause the equilibrium level of output to be below its corresponding Walrasian level, an exogenous demand stimulus can raise employment and output if households’ preferences exhibit some substitution between current leisure and future consumption. The elasticity of substitution is shown to provide a channel for an effective and stable fiscal intervention, enabling the government to formulate a combined tax‐ and borrowing‐based fiscal policy which can raise the level of output without having any crowding‐out consequences for the private sector.
Partisan Business and Budget Cycles with Separate Fiscal and Monetary Authorities
Authors: Ozkan F. Gulcin
Published: March 2003

We study partisan business and budget cycles in a set‐up where only fiscal policy is under the full control of the elected government, while an independent central bank makes monetary policy decisions. The government and the central bank are therefore engaged in a non‐cooperative game. It is shown that a leftist government produces higher inflation but, contrary to the earlier results, lower output than a rightist government in all election and non‐election periods. A leftist government also taxes and spends more than a rightist government. The model produces both partisan business and budget cycles due to the timing of elections. Partisan budget cycles are a novel concept and are analyses of post‐election fiscal movements as opposed to the pre‐election analyses in political budget cycles literature.
On Keynesian Theories of Liquidity Preference
Authors: Bibow Jörg
Published: March 2003

This essay offers a macroeconomic perspective on the interaction between the financial system and the level of economic activity, focusing on the relationship between liquidity preference, investment and the role of confidence. The analysis builds on the distinction between portfolio decisions on the one hand, and production and spending decisions on the other. Two prominent Keynesian theories of liquidity preference, those of Tobin and Hicks, are assessed. It is argued that while both of these theories offer illuminating insights into particular aspects of Keynes’s monetary thought, they must be qualified in respect of their bearing on the theory of liquidity preference.
Adjustment Asymmetries and Hysteresis in Simple Dynamic Models
Authors: Setterfield Mark
Published: March 2003

We consider the formal modelling of hysteresis in the light of the notion that this process is a special case, contingent on the existence of unit roots in first‐order difference equations. It is argued that variables displaying adjustment asymmetries along disequilibrium time paths can generate hysteresis, irrespective of the existence of unit roots. Examples of adjustment asymmetries and hysteresis in investment and in the Phillips curve are provided.
On the Role of Sector Size in Determining the Transition Path
Authors: Femminis Gianluca , Ruggerone Luigi
Published: March 2003

This paper is an attempt to capture the relevance of the relative magnitude of the state and the private sectors in making the transition from central planning more likely to succeed. The basic idea that we introduce is that the growth of the new private sector, in an environment characterized by a severe form of credit constraint, depends on its relative magnitude in the economy. We also propose an extension of the model which examines the issue of full privatization versus restructuring in a credit‐constrained environment.
The Covariance Structure of Italian Male Wages
Authors: Cappellari Lorenzo
Published: March 2003

Using an unbalanced panel of Italian male wages covering the 1974–88 interval, in this study we estimate the parameters of the wage covariance structure by minimum distance. Estimated variance components models allow for a linear trend in permanent wages, so that wage profile convergence can be assessed by considering the covariance between intercepts and slopes of such individual trends. Evidence of permanent wage convergence is found in the overall wage distribution, but not within white collar workers data; this contrasts with human capital interpretations of wage dynamics and suggests that other factors, such as the egalitarian wage‐setting framework fully effective until the mid‐1980s, could have played a major role in shaping the wage distribution.
A New Congruence Axiom and Transitive Rational Choice
Authors: Lahiri Somdeb
Published: March 2003

Rationality in choice theory has been an abiding concern of decision theorists. A rationality postulate of considerable significance in the literature is the weak congruence axiom of Richter and Sen. It is well known that in discrete choice contexts of the classical type (i.e. all non‐empty finite subsets of a given set comprise the set of choice problems) this axiom is equivalent to full rationality. The question is: will a weakening of the weak congruence axiom suffice to imply full rationality? This is the question we take up in this paper. We propose a weaker new congruence axiom which along with the Chernoff axiom implies full rationality. The two axioms are independent. We also study interesting properties of these axioms and their interconnections through examples.
A Production Function with an Inferior Input: Comment
Authors: Weber Christian E.
Published: March 2003

Epstein and Spiegel (The Manchester School, Vol. 68 (2000), No. 5, pp. 503–515) have discussed a production function in which one input is inferior: an increase in the target level of output reduces the quantity of the input demanded. This paper provides a more straightforward proof that the input in question is inferior. This proof has the added advantage that, unlike the proof of Epstein and Spiegel, it is based on the firm’s cost minimization problem. It thus emphasizes the connection between the firm’s cost minimization problem and the issue of input inferiority. It is also shown that, if we treat the Epstein–Spiegel functional form as a utility function rather than a production function, then the inferior good can exhibit Giffen behavior.
Competing Head‐to‐head or Selling to a Fringe
Authors: Peitz Martin
Published: March 2003

Consider a price‐setting duopoly with differentiated goods and heterogeneous consumers. When consumer tastes are identical, all firms choose the same variant in equilibrium and prices are equal to marginal costs. For a more concentrated consumer density, firms provide (weakly) closer substitutes and prices are closer to marginal costs of production in certain symmetric markets. That is, firms tend to compete head‐to‐head and price equal to marginal costs is a good approximation when most consumers are more or less the same. In contrast, one firm sells to fringe consumers and maintains its product differentiated from its competitor in certain asymmetric markets. The competitor’s price does not converge to marginal costs.
Pure Component Pricing in a Duopoly
Authors: Liao Chun‐Hsiung , Urbano Amparo
Published: March 2003

In this paper, we focus on price competition between several multiproduct firms which produce differentiated systems, each consisting of two complementary products. It is shown here that if firms are restricted to pure component pricing (bundling is not allowed) whenever components produced are compatible, pure strategy equilibrium may not exist. With the use of bundling strategies, pure strategy equilibrium always exists. For the pure component pricing case we provide a full characterization for the existence of a pure strategy equilibrium.
A Two‐factor Model of the U.K. Yield Curve
Authors: Steeley James. M.
Published: March 2003

I model the forward premium in the U.K. gilt‐edged market over the period 1982–96 using a two‐factor general equilibrium model of the term structure of interest rates. The model permits the decomposition of the forward premium into separate components representing interest rate expectations, the risk premia associated with each of the underlying factors, and terms capturing the direct impact of the variances of the factors on the shape of the forward curve.
Stock Return Volatility on Emerging Eastern European Markets
Authors: Shields Kalvinder K.
Published: March 2003

A common finding for developed stock markets is that negative shocks entering the market lead to a larger return volatility than positive shocks of a similar magnitude. We consider two emerging Eastern European markets where the first point of investigation is whether an analogous asymmetric characteristic is reflected in emerging markets. The second point of investigation is whether the findings differ depending on the institutional microstructure of the exchange being examined. Hence, econometric techniques are adjusted and a “double‐censored Tobit GARCH” model is developed. We find that no asymmetry exists on either emerging market but asymmetry does exist for a stock return series on the developed market; possible reasons for this are proposed.
The Impact of Information and Communications Technology Investment on UK Productive Potential 1986–2000: New Statistical Methods and Tests
Authors: Spencer Peter
Published: March 2003

The effect of information and communications technology (ICT) and other investment on the UK’s GDP potential is analysed and tests of the standard assumptions are provided. It is found that, in the absence of hedonic price series for the UK ICT sector, it is acceptable to use surrogates based on the law of one price. The investment data are consistent with the assumptions of optimality and homotheticity. So, in the absence of quality–adjusted measures of labour supply, it is legitimate to assess the contribution of investment to GDP potential independently. Capital investment increased UK GDP potential by about 1½ per cent per annum during 1985–2000.
A Discrete Time Equivalent Martingale Measure
Authors: Elliott Robert J. , Madan Dilip B.
Published: March 2003

An equivalent martingale measure selection strategy for discrete time, continuous state, asset price evolution models is proposed. The minimal martingale law is shown to generally fail to produce a probability law in this context. The proposed strategy, termed the extended Girsanov principle, performs a multiplicative decomposition of asset price movements into a predictable and martingale component with the measure change identifying the discounted asset price process to the martingale component. However, unlike the minimal martingale law, the resulting martingale law of the extended Girsanov principle leads to weak form efficient price processes. It is shown that the proposed measure change is relevant for economies in which investors adopt hedging strategies that minimize the variance of a risk adjusted discounted cost of hedging that uses risk adjusted asset prices in calculating hedging returns. Risk adjusted prices deflate asset prices by the asset's excess return. The explicit form of the change of measure density leads to tractable econometric strategies for testing the validity of the extended Girsanov principle. A number of interesting applications of the extended Girsanov principle are also developed.
Finding Generators for Markov Chains via Empirical Transition Matrices, with Applications to Credit Ratings
Authors: Israel Robert B. , Rosenthal Jeffrey S. , Wei Jason Z.
Published: March 2003

In this paper we identify conditions under which a true generator does or does not exist for an empirically observed Markov transition matrix. We show how to search for valid generators and choose the “correct” one that is the most compatible with bond rating behaviors. We also show how to obtain an approximate generator when a true generator does not exist. We give illustrations using credit rating transition matrices published by Moody's and by Standard and Poor's.
Pragmatism, Relativism, and the Critique of Philosophy
Authors: Forster Paul D.
Published: March 2003

The relativist strain in Rorty’s work should be distinguished from the Davidsonian strain. The latter may be exploited in support of Rorty’s critique of philosophy but it is at odds with his use of “solidarity” and “ethnocentrism”as explanatory concepts. Once this is recognized, there remains in Rorty’s work a consistent challenge to the search for general philosophical theories of truth, objectivity, and rationality (of which relativism itself is an example). On this reading, however, Rorty’s pragmatism is not a theory that offers answers to questions about the authority of beliefs and practices but rather a critical tool used to open detailed, concrete, and critical investigation into particular questions about the establishment and viability of the beliefs and practices we have.
The Virtue of Nussbaum's Essentialism
Authors: Moody‐Adams Michele M.
Published: March 2003

This paper shows that Nussbaum's Aristotelian essentialism effectively combines resources for constructive social criticism (even in “traditional” societies) with concern for the concrete particulars of realized ways of life. Many critics of Nussbaum’s views have failed to appreciate its many virtues in this regard. Yet Nussbaum's confidence in the broad possibilities of internal social criticism demands a better account of the moral openness of human cultures than anything Nussbaum has herself provided. Even Nussbaum's reading of Aristotle – as well as the ethical antirelativism on which it depends – demands a richer account than Nussbaum has so far offered of the essential openness of human world interpretations.
Interpretation as Historical, Constructivism, and History
Authors: Rockmore Tom
Published: March 2003

Interpretation is construed, here, as synonymous with hermeneutics: understood as a source of knowledge – perhaps, after the apparently irremediable decline of epistemological foundationalism, the main modern epistemological strategy. In this sense, there is no difference in principle between epistemology and interpretation; the first is a form of the second.
Freedom as Justice: Hegel's Interpretation of Plato's Republic
Authors: Ware Robert Bruce
Published: March 2003

Hegel's interpretation of Plato's political thought provides the principal illustration of his metaphilosophy. However, Hegel has been criticized for imposing his own metaphilosophical agenda upon Plato's work, and for consequently overestimating its descriptive content while underestimating its prescriptively normative features. A reexamination of Hegel's metaphilosophy nevertheless reveals that he appreciated the broader significance of Plato's political philosophy within a conceptual framework that transcends the traditional dichotomy of description and prescription and that explores issues concerning the relation of theory and practice.
Global Justice: Is Interventionalism Desirable?
Authors: Zanetti Véronique
Published: March 2003

In 1994, the European Parliament published a resolution on the right of humanitarian intervention. Interestingly, the declaration maintains that such intervention is not in contradiction with international law, although it formulates the concept of right in a way that is translatable into the vocabulary of individual rights. I analyze some implications of the resolution for the mutual duties of states. I thereby focus my attention on two possible applications: by way of Rawls's duty of assistance and by way of the cosmopolitan theory of global distributive justice. I conclude that the latter theory promises better results for protecting individuals' basic rights, but I also show that it is at the cost of a strongly interventionist structure requiring a powerful supranational institution. Finally, I envision the conditions under which such an increase of interventionism in favor of human rights can be acceptable.
Federal Inequality Among Equals: A Contractualist Defense
Authors: Føllesdal Andreas
Published: March 2003

Federal political orders often exhibit a conflict between the ideals of equality and political autonomy, since individuals in different subunits often enjoy systematically different standards of living conditions. While federal arrangements may be theoretically attractive to avoid despotism, such federal inequality would appear to conflict with the principles of egalitarian cosmopolitanism. The paper argues that individuals' interest in equal shares of income and wealth may legitimately be weighed against their interest in political control enjoyed by their subunit, as long as the inequalities do not engender misery, domination, or unfair procedures. The reasons for subunit autonomy include reducing the risk of domination, increasing the responsiveness to local preferences, and reducing the burdens of decision making. These arguments also suggest that states may not always be the appropriate subunits in legitimate federal orders.
Philosophy in Mediis Rebus
Authors: Rudder Baker Lynne
Published: March 2003

Philosophy should begin in the middle of things. I distinguish two ways in which I think that philosophy should begin in the middle of things, and then I describe the two dominant approaches to analytic philosophy today: scientific pragmatism and conceptual analysis (or, more broadly, “a priorism”). After giving reasons for dissatisfaction with both of these dominant approaches, I set out my own view – Practical Realism – and argue for the merits of its methodological and metaphysical components.
The Pursuit of Epistemic Good
Authors: Percival Philip
Published: March 2003

PaceZagzebski, there is no route from the value of knowledge to a non–reliabilist virtue–theoretic epistemology. Her discussion of the value problem is marred by an uncritical and confused employment of the notion of a “state” of knowledge, an uncritical acceptance of a “knowledge–belief” identity thesis, and an incoherent presumption that the widely held thought that knowledge is more valuable than true belief amounts to the view that knowledge is a state of true belief having an intrinsic property which a state of ‘mere” true belief lacks. Her arguments against a “machine–product” conception of knowledge are undermined by these flaws, while the alternative “agent–act” model she recommends is unattractive, at odds with the knowledge–belief identity thesis she favours, and no solution to the problem of the value of knowledge she poses. I end with the observation that her version of virtue–theoretic epistemology points in the direction of cognitive decision–theoretic norms, and I briefly discuss the bearing of this fact upon her viewpoint.
Reply to Hookway
Authors: McGinn Marie
Published: March 2003

Frege takes the view that “like ethics, logic can also be called a normative science.” The parallel that he detects depends upon his commitment to the idea of objective constraints on thought and action, against which particular acts or particular pieces of reasoning can be judged. The point of the comparison is to get us to see that logic is not an empirical science, concerned with laws of thought in a psychological sense; rather, the laws of logic are ‘prescriptions for making judgement’. Hookway also detects a parallel, but it prompts him to move in the opposite direction: the point of the parallel is to bring us to appreciate the role of human emotional responses in our ordinary cognitive assessments of the truth of propositions, the soundness of inferences, the relevance of doubts, the appropriateness of questions, and so on. He argues that appreciation of this point enables us to solve some central epistemological problems, in particular, the problem of epistemological scepticism. I argue that Hookway shows, at best, that without our emotional convictions, our ordinary practices could not get off the ground, but that this, on its own, does not amount to a satisfying reply to the sceptic.
The Limits of Virtue Jurisprudence
Authors: Duff R.A.
Published: March 2003

In response to Lawrence Solum's advocacy of a ‘virtue–centred theory of judging’, I argue that there is indeed important work to be done in identifying and characterising those qualities of character that constitute judicial virtues – those qualities that a person needs if she is to judge well (though I criticise Solum's account of one of the five pairs of judicial vices and virtues that he identifies – avarice and temperance). However, Solum's more ambitious claims – that a judge's vice necessarily corrupts her decisions, and that in at least some contexts we must define a legally correct decision as one that would be reached by a virtuous judge – should be rejected: we can undermine the former by attending to the requirements of due process, and the latter by attending to the ways in which a judge would try to justify her decision.
A Simple Endogenous Model of Economic Activity and Climate Change
Authors: Gottinger Hans
Published: March 2003

The greenhouse effect is considered as an externality generated by production and manufacturing activities. A two‐sector general equilibrium model is constructed to study the characteristics of the time paths of the world economy and the global average temperatures under the competitive equilibrium
Technical Change and a Falling Wage Share if Profits are Maintained
Authors: Franke Reiner
Published: March 2003

In the framework of a multi‐sectoral and fixed‐coefficients Leontief model with capital stock matrix B, the paper addresses the issue of the impact of technical change on income distribution. Comparing two steady‐state positions, it is shown that with cost‐reducing, capital‐using and (uniformly) labour‐saving technical change the equilibrium rate of profit will fall, if it is the aggregate wage share which remains fixed, not the absolute level of the real wage. Conversely, the wage share falls if the profit rate does not change. The reactions are ambiguous if, instead of the coefficients of the matrix B, the coefficients of the input–output matrix A increase.
On the Feasibility of Interest Rate Control: The Role of Disequilibrium and Adaptive Learning
Authors: Ganguli Partha (Gangopadhyay)
Published: March 2003

A model is constructed which derives an inverse relationship between real rate of interest and inflation rate following a disproportionate change in money supply. It is argued that such an inverse relationship paves the way for successful control of the nominal interest rate. It is analytically demonstrated that the state space is divided by a separatrix containing a stable zone and an unstable zone. If the initial inflation and the dynamics of inflationary expectations lie in the stable zone, then the monetary authority can peg the nominal interest rate without risking runaway inflation or deflation. The unstable zone, however, keeps the possibility of the cumulative process alive.
The Division of Labor, Investment and Capital
Authors: Yang Xiaokai
Published: March 2003

A dynamic general equilibrium model based on corner solutions is used to formalize the classical theory of investment and capital which considers investment to be a vehicle for developing a high level of division of labor in roundabout productive activities. If it takes time for a specialist producer of tractors to learn the right method to produce commercially viable tractors, specialization in producing tractors is infeasible in the absence of investment in terms of consumption goods which are consumed by the specialist producer of tractors before he can sell tractors. If specialized learning by doing can speed up accumulation of professional knowledge so that roundabout productive machines become cheap, such investment for increasing the level of division of labor in roundabout productive activities will speed up economic growth. Because of the trade‐off between economies of specialized learning by doing and transaction costs, the model can be used to investigate the effects of a change in the transaction cost coefficient, which can be affected by policy, the legal system and urbanization, on the evolution of the division of labor, on real interest rates and on the saving rate.
An Econometric Model of the Circuit of Capital
Authors: Matthews Peter Hans
Published: March 2003

The circuit of value outlined in the second volume of Marx's Capital provides a coherent framework for the characterization of macroeconomic phenomena from a classical perspective. This paper builds on Foley's (Journal of Economic Theory, 28 (1982), pp. 300–319) formal reconstruction of the circuit to derive estimable forms for its three critical mechanisms: the production, realization and recommittal lags. The entire model is then estimated for the United States over the period 1948–89 on the basis of the Shaikh and Tonak (Measuring the Wealth of Nations: The Political Economy of National Accounts, Cambridge University Press, New York, 1995) data set, and the results are used to explore a number of current controversies, including (on the basis of simulation exercises) the consequence of various deficit reduction proposals.
Optimal Utilization of Capital and a Financial Sector in a Classical Gravitation Process
Authors: Franke Reiner
Published: March 2003

In a production price framework, a two‐sectoral gravitation process with cross‐over adjustments of prices and quantities is advanced. To overcome an inconsistency in the treatment of fixed capital in disequilibrium, the socio‐technological input coefficients are assumed to vary with the sectoral output–capital ratio, such that for each relative price there exists an optimal degree of capital utilization which maximizes the sectoral rate of profit. Production prices prevail if these maximizing rates of profit are equalized. In addition, a financial sector determining the rate of interest is incorporated into the model. The mathematical analysis establishes a broad scope for local stability of the long‐run equilibrium position once a condition applies that ensures stability of the output adjustments in the short period.
Consumption Externalities, Production Externalities and Indeterminacy
Authors: Weder Mark
Published: March 2003

In this paper we show that consumption externalities reduce the degree of increasing returns needed to generate indeterminacy in a two‐sector optimal growth model. In equilibrium, consumption externalities operate as if the utility function is (close to) linear. If these externalities are strong, the minimum necessary increasing returns approach zero. Therefore, this paper—in a stylized fashion—provides an example of how microbehavior, i.e. interactions at the household level, can generate aggregate instability. Consumption externalities also help to eliminate the counterfactual cyclical behavior of consumption in the two‐sector model.
The Corn–Guano Model
Authors: Bidard Christian , Erreygers Guido
Published: March 2003

The model presented here can be seen as an extension, specifically designed to deal with the issue of exhaustible resources, of the well‐known ‘corn model’. We believe that useful insights are obtained by concentrating on a benchmark case, that of an economy with only one reproducible ‘good’, corn, and only one ‘resource’, guano. The corn–guano model aims at delineating some major issues related to the introduction of exhaustible resources within a post‐Sraffian model. In this paper we concentrate on the dynamics of the price variables. The ultimate goal concerns more generally the treatment of intertemporal economies outside a regular growth path, i.e. it concerns the degree of generality of the post‐Sraffian theory itself.
Preemption in Capacity and Price Determination: A Study of Endogenous Timing of Decisions for Homogeneous Markets
Authors: Guth Sandra , Guth Werner
Published: March 2003

Endogenous timing can help in deriving the time structure of decision making instead of assuming it as exogenously given. In our study we consider a homogeneous market where, as in the model of Kreps and Scheinkman (Bell Journal of Economics, 14 (1983), pp. 326–37), sellers determine ‘sales capacities’ before prices. Sellers must serve customers, but at higher costs when demand exceeds ‘capacity’. Our model allows for preemption in ‘capacity’ as well as in price determination. Since preemption means to decide before the random choice of cost parameters reflecting the stochastic nature of (excess) ‘capacity’ costs, preemptive commitments are not obviously better timing dispositions.
Non‐monotonic c(r) Relations in the Absence of Complementarity
Authors: Steedman Ian
Published: March 2003

In both 1976 and 1987 Tatsuo Hatta showed that consumption reversal (dc/dr > 0) can occur in a three‐period Wicksellian model of production only if the first and the third labour inputs are Hicksian complements. (This was also generalized to n labour inputs.) Unfortunately, he drew the bold conclusion that consumption reversal is merely one more complication introduced by input complementarity. It is shown here that the specific formal result does not generalize and that the bold claim cannot be sustained.
Classical and Neoclassical Indeterminacy in One‐shot Versus Ongoing Equilibria
Authors: Mandler Michael
Published: March 2003

I analyze two connections between neoclassical and classical economics. First, I consider the indeterminacy that arises for both schools: in the neoclassical theories of overlapping generations and of factor pricing and in Sraffa's price theory. Neoclassical indeterminacy occurs only in environments where relative prices can change through time; otherwise, determinacy obtains. Although these results challenge the Sraffian position on indeterminacy, the classical principle that current economic activity is embedded in the past proves to be a powerful insight: it establishes the robustness of factor‐price indeterminacy and casts doubt on the importance of overlapping‐generations indeterminacy. Second, I argue that recent claims that capital‐theoretic paradoxes arise in intertemporal general equilibrium modes, not just in aggregative theory, cannot be validated.
Distributive Policies and Economic Growth: An Optimal Taxation Approach
Authors: Rehme Gunther
Published: March 2003

In an infinite‐horizon endogenous growth model a capital income cum investment subsidy tax is considered to investigate if distribution of income towards the non‐accumulated factor of production (labour) retards growth and if capital income taxes are bad instruments to finance investment subsidies. The paper identifies conditions under which the tax scheme is better for growth than other distorting tax schemes. In the model a pro‐labour government acts growth maximizing and distributing income towards labour raises growth. A pro‐capital government's preferred policy is not growth maximizing under the tax scheme, but may generate higher growth than its optimal policy under other tax schemes.
Countervailing Agency: A Strategy of Principaled Regulation under Managed Competition
Authors: Schlesinger Mark
Published: March 2003

Despite the failure of recent attempts to reform health care, strategies of managed competition remain the dominant prescription for government oversight of managed care. A number of assumptions and prescriptions in the conventional managed competition model are challenged. More specifically, externalities in the costs and benefits associated with health care and asymmetric information between providers and patients make it unlikely that a managed care system designed to be responsive to consumers will, in practice, produce socially desirable outcomes. An alternative approach for the regulation of managed care more explicitly protects the role of health care professionals as agents for their patients while defining the appropriate role of managed care as the agent for broader societal interests. This strategy of “countervailing agency”acknowledges that oversight of managed care inevitably involves value‐laden choices. It is based on institutional arrangements and regulatory strategies that are intended to balance competing interests and values.
The Reforming States Group and the Promotion of Federalism
Authors: Andersen Kathleen S.
Published: March 2003

Since 1991, leaders in health policy from the legislative and executive branches of state government have come together, with financial support and staff collaboration from the Milbank Memorial Fund, to share their experiences and to work on practical solutions to pressing health care problems. What began with a handful of states at the forefront of health reform is now the Reforming States Group (RSG), a bipartisan, voluntary association that includes leaders from over 40 states. This article describes the origins, history, and future prospects of the RSG.
The Role of Regulation in Quality Improvement
Authors: Brennan Troyen A.
Published: March 2003

Many new methods for measuring the quality of health care have been devised since 1970. For the past ten years, the health care field has been struggling to integrate industrial models into its quality improvement systems. In order to judge whether regulation has evolved in tandem with these developments, three critical questions are examined: Is regulation improving the quality of health care? Are regulators integrating the tools of quality research into their oversight activities? Is there a way to combine continuous quality improvement (CQI) and modern methods of quality measurement into a new regulatory format? An exploration of these questions produces relatively little evidence that regulation has moved in the recommended direction, although there are some encouraging signs that regulators are becoming more responsive to the issues.
Competition, Quality of Care, and the Role of the Consumer
Authors: McLaughlin Catherine G. , Ginsburg Paul B.
Published: March 2003

Two researchers in the field of health care financing discuss how the establishment of standards might encourage consumers to participate more actively in choosing their health care providers.
Five Laws for Integrating Medical and Social Services: Lessons from the United States and the United Kingdom
Authors: Leutz Walter N.
Published: March 2003

Because persons with disabilities (PWDs) use health and social services extensively, both the United States and the United Kingdom have begun to integrate care across systems. Initiatives in these two countries are examined within the context of the reality that personal needs and use of systems differ by age and by type and severity of disability. The lessons derived from this scrutiny are presented in the form of five “laws” of integration. These laws identify three levels of integration, point to alternative roles for physicians, outline resource requirements, highlight friction from differing medical and social paradigms, and urge policy makers and administrators to consider carefully who would be most appropriately selected to design, oversee, and administer integration initiatives. Both users and caregivers must be involved in planning to ensure that all three levels of integration are attended to and that the borders between medical and other systems are clarified.
Meanings Are Syntactically Individuated and Found in the Head
Authors: Mcgilvray James
Published: March 2003

Expanding on some of Chomsky’s recently expressed views of meaning in a way that is consistent with his long‐held rationalist conception of mind, I show how syntax, broadly conceived, could individuate meanings and provide a science of meanings inside the head. Interpretation becomes a pragmatic matter, although a rationalist account of mind shows how internal meanings guide interpretation and, more generally, language use. In this view of meanings, interpretation, and mind, semantics as usually understood disappears.
The Road to Hell: Intentions and Propositional Attitude Ascription
Authors: Saul Jennifer M.
Published: March 2003

Accounts of propositional attitude reporting which invoke contextual variation in semantic content have become increasingly popular, with good reason: our intuitions about the truth conditions of such reports vary with context. This paper poses a problem for such accounts, arguing that any reasonable candidate source for this contextual variation will yield very counterintuitive results. The accounts, then, cannot achieve their goal of accommodating our truth conditional intuitions. This leaves us with a serious puzzle. Theorists must either give up on the goal of agreement with our truth conditional intuitions, or find a different source for contextual variation.
A Statistical Referential Theory of Content: Using Information Theory to Account for Misrepresentation
Authors: Usher Marius
Published: March 2003

A naturalistic scheme of primitive conceptual representations is proposed using the statistical measure of mutual information. It is argued that a concept represents, not the class of objects that caused its tokening, but the class of objects that is most likely to have caused it (had it been tokened), as specified by the statistical measure of mutual information. This solves the problem of misrepresentation which plagues causal accounts, by taking the representation relation to be determined via ordinal relationships between conditional probabilities. The scheme can deal with statistical biases and does not rely on arbitrary criteria. Implications for the theory of meaning and semantic content are addressed.