This paper uses time-varying parameter estimation techniques to discover whether the exchange-rate mechanism (ERM) member countries experienced a regime change to a lower degree of persistence for both wage inflation and unemployment in the 1980s. The results show that the persistence of wage inflation may have changed over the 1980s for some countries, but that this experience was not unique to ERM membership (although the time profile of the persistence parameter for some ERM member countries corresponds with policy shifts related to ERM membership). Furthermore, only a few countries show a decline in the persistence of unemployment in the 1980s. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
{"title":"Policy Regimes and the Persistence of Wage Inflation and Unemployment","authors":"R. Anderton","doi":"10.1111/1467-9957.00115","DOIUrl":"https://doi.org/10.1111/1467-9957.00115","url":null,"abstract":"This paper uses time-varying parameter estimation techniques to discover whether the exchange-rate mechanism (ERM) member countries experienced a regime change to a lower degree of persistence for both wage inflation and unemployment in the 1980s. The results show that the persistence of wage inflation may have changed over the 1980s for some countries, but that this experience was not unique to ERM membership (although the time profile of the persistence parameter for some ERM member countries corresponds with policy shifts related to ERM membership). Furthermore, only a few countries show a decline in the persistence of unemployment in the 1980s. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"42 1","pages":"418-438"},"PeriodicalIF":0.0,"publicationDate":"1998-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73396711","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Long-term prices depend on distribution in a complex way, especially when choice of technique is allowed. It is shown, however, that the movement of prices in terms of wage obeys certain laws. More precisely, the movement is characterized in terms of linear programming problems. Necessary or sufficient conditions connected with the convexity of the wage-profit curves are also obtained. But, with regard to the relative prices of commodities, they vary arbitrarily, so that the Wicksell price effects are not under control. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
{"title":"Laws on Long-term Prices","authors":"C. Bidard","doi":"10.1111/1467-9957.00117","DOIUrl":"https://doi.org/10.1111/1467-9957.00117","url":null,"abstract":"Long-term prices depend on distribution in a complex way, especially when choice of technique is allowed. It is shown, however, that the movement of prices in terms of wage obeys certain laws. More precisely, the movement is characterized in terms of linear programming problems. Necessary or sufficient conditions connected with the convexity of the wage-profit curves are also obtained. But, with regard to the relative prices of commodities, they vary arbitrarily, so that the Wicksell price effects are not under control. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"45 1","pages":"453-465"},"PeriodicalIF":0.0,"publicationDate":"1998-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80778482","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
John Elliot Cairnes is primarily remembered for his defence of the classical wage fund doctrine, and for his attempt to revive the classical system of economic thought in the mid-1870s. In contrast with this standard textbook appraisal of Cairnes, the Jevons–Marshall–Vint thesis contends that, in attempting to revitalize the doctrine, Cairnes in fact explained away so much of what characterized it that its final form bore little resemblance to the doctrine held by his classical predecessors. In this paper we dispute the Jevons–Marshall–Vint thesis and argue that Cairnes’s recasting of the doctrine did fit entirely within the classical framework. Why Cairnes should have rallied in support of a doctrine by then widely condemned, partly because of Mill’s alleged retraction of it and partly because of newly emerging ideas on wages and unions, is not difficult to explain. The recurring economic stagnation in Ireland, which acted as a bulwark against industrialization there, together with the social, moral and economic dilemma created by the growth of trade unionism in Britain, presented political economists with a particular set of problems. For these, as Cairnes saw it, classical political economy, as a coherent method of analysis, provided the best hope of showing the way towards possible remedies.
{"title":"John Elliot Cairnes and the ‘Rehabilitation’ of the Classical Wage Fund Doctrine","authors":"M. Donoghue","doi":"10.1111/1467-9957.00114","DOIUrl":"https://doi.org/10.1111/1467-9957.00114","url":null,"abstract":"John Elliot Cairnes is primarily remembered for his defence of the classical wage fund doctrine, and for his attempt to revive the classical system of economic thought in the mid-1870s. In contrast with this standard textbook appraisal of Cairnes, the Jevons–Marshall–Vint thesis contends that, in attempting to revitalize the doctrine, Cairnes in fact explained away so much of what characterized it that its final form bore little resemblance to the doctrine held by his classical predecessors. In this paper we dispute the Jevons–Marshall–Vint thesis and argue that Cairnes’s recasting of the doctrine did fit entirely within the classical framework. Why Cairnes should have rallied in support of a doctrine by then widely condemned, partly because of Mill’s alleged retraction of it and partly because of newly emerging ideas on wages and unions, is not difficult to explain. The recurring economic stagnation in Ireland, which acted as a bulwark against industrialization there, together with the social, moral and economic dilemma created by the growth of trade unionism in Britain, presented political economists with a particular set of problems. For these, as Cairnes saw it, classical political economy, as a coherent method of analysis, provided the best hope of showing the way towards possible remedies.","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"37 1","pages":"396-417"},"PeriodicalIF":0.0,"publicationDate":"1998-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75335442","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the dynamic implications of a shift in relative prices between traded and nontraded goods. In accordance with empirical evidence the authors allow for sluggish wage adjustment and increasing returns to scale in the traded goods sector. The presence of increasing returns to scale gives rise to multiple equilibria, and trade liberalization and the associated short run changes in relative prices may leave the economy outside a 'corridor of stability' and lead to a cumulative process of contraction of the capital stock. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
{"title":"Dynamic effects of trade liberalization and currency overvaluation under conditions of increasing returns","authors":"J. Ros, Peter Skott","doi":"10.1111/1467-9957.00118","DOIUrl":"https://doi.org/10.1111/1467-9957.00118","url":null,"abstract":"This paper examines the dynamic implications of a shift in relative prices between traded and nontraded goods. In accordance with empirical evidence the authors allow for sluggish wage adjustment and increasing returns to scale in the traded goods sector. The presence of increasing returns to scale gives rise to multiple equilibria, and trade liberalization and the associated short run changes in relative prices may leave the economy outside a 'corridor of stability' and lead to a cumulative process of contraction of the capital stock. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"16 1","pages":"466-489"},"PeriodicalIF":0.0,"publicationDate":"1998-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73890644","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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 J. Tobin and J. R. 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. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
本文从宏观经济角度分析了金融体系与经济活动水平之间的相互作用，重点研究了流动性偏好、投资和信心的作用之间的关系。分析建立在投资组合决策与生产和支出决策之间的区别之上。本文评估了托宾(J. Tobin)和希克斯(J. R. Hicks)两个著名的凯恩斯主义流动性偏好理论。有人认为，虽然这两种理论都为凯恩斯货币思想的特定方面提供了启发性的见解，但它们在流动性偏好理论方面必须是合格的。版权归布莱克威尔出版社有限公司和曼彻斯特维多利亚大学所有
{"title":"On Keynesian Theories of Liquidity Preference","authors":"Joerg Bibow","doi":"10.1111/1467-9957.00099","DOIUrl":"https://doi.org/10.1111/1467-9957.00099","url":null,"abstract":"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 J. Tobin and J. R. 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. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"41 1","pages":"238-273"},"PeriodicalIF":0.0,"publicationDate":"1998-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83637341","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Single equation error correction models (ECMs) are widely used in the analysis of cointegrated variables. It is important to check the specification of ECMs using diagnostic tests. Monte Carlo evidence is reported that shows that the finite sample significance levels of such tests can be sensitive to the method used to estimate long-run coefficients that yield the error-correction term of the ECM. Estimates of long-run coefficients based upon autoregressive-distributed lag (ADL) models are recommended. The applicability of diagnostic checks to ADL models for integrated variables is examined. An indirect approach to obtaining asymptotically valid checks is proposed. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
{"title":"Diagnostic Checks for Single-Equation Error-Correction and Autoregressive Distributed Lag Models","authors":"W. Gerrard, L. Godfrey","doi":"10.1111/1467-9957.00098","DOIUrl":"https://doi.org/10.1111/1467-9957.00098","url":null,"abstract":"Single equation error correction models (ECMs) are widely used in the analysis of cointegrated variables. It is important to check the specification of ECMs using diagnostic tests. Monte Carlo evidence is reported that shows that the finite sample significance levels of such tests can be sensitive to the method used to estimate long-run coefficients that yield the error-correction term of the ECM. Estimates of long-run coefficients based upon autoregressive-distributed lag (ADL) models are recommended. The applicability of diagnostic checks to ADL models for integrated variables is examined. An indirect approach to obtaining asymptotically valid checks is proposed. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"1 1","pages":"222-237"},"PeriodicalIF":0.0,"publicationDate":"1998-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77393344","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, the authors set out a new empirical model of pricing, market share, and market conduct for a differentiated products industry. The model exhibits the property of a variable elasticity of firm demand: as a firm's market share increases, it faces increasingly inelastic demand. Price/cost margins therefore increase as market share rises. Market conduct is described using conjectural variations. The model has a flexible functional formulation and is particularly suitable for time-series estimation. The authors illustrate its use by investigating the structure of market competition in pricing strategies between domestic and importing firms in different sectors of U.S. industry during the 1980s. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
{"title":"An Empirical Model of Pricing, Market Share and Market Conduct: An Application to Import Competition in US Manufacturing","authors":"C. Allen","doi":"10.1111/1467-9957.00097","DOIUrl":"https://doi.org/10.1111/1467-9957.00097","url":null,"abstract":"In this paper, the authors set out a new empirical model of pricing, market share, and market conduct for a differentiated products industry. The model exhibits the property of a variable elasticity of firm demand: as a firm's market share increases, it faces increasingly inelastic demand. Price/cost margins therefore increase as market share rises. Market conduct is described using conjectural variations. The model has a flexible functional formulation and is particularly suitable for time-series estimation. The authors illustrate its use by investigating the structure of market competition in pricing strategies between domestic and importing firms in different sectors of U.S. industry during the 1980s. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"12 1","pages":"196-221"},"PeriodicalIF":0.0,"publicationDate":"1998-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77036197","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies partisan business and budget cycles in a setup 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 tax and spend 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. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
{"title":"Partisan Business and Budget Cycles with Separate Fiscal and Monetary Authorities","authors":"F. Ozkan","doi":"10.1111/1467-9957.00096","DOIUrl":"https://doi.org/10.1111/1467-9957.00096","url":null,"abstract":"This paper studies partisan business and budget cycles in a setup 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 tax and spend 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. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"23 1","pages":"178-195"},"PeriodicalIF":0.0,"publicationDate":"1998-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74058663","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper illustrates that, when good 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. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
{"title":"Intertemporal Preferences, Imperfect Competition and Effective Fiscal Intervention","authors":"H. Molana","doi":"10.1111/1467-9957.00095","DOIUrl":"https://doi.org/10.1111/1467-9957.00095","url":null,"abstract":"This paper illustrates that, when good 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. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"17 1","pages":"159-177"},"PeriodicalIF":0.0,"publicationDate":"1998-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86205869","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The authors test the expectations hypothesis (EH) of the term structure using U.K. and German weekly data on short dated instruments with maturities up to one year. For both data sets comprising k interest rates the authors find that the rank of the cointegrating space is (k - 1); but they can only accept that the cointegrating parameter estimates are of the form (-1, 1, 0,...) etc. when considering bilateral combinations of interest rates. When the authors test the joint null that the set of (k - 1) spreads forms a basis for the cointegration space, this is rejected. However, the point estimates of the cointegration parameters are close to unity and there is no diminution in outside sample forecasting performance of the ECM equations when the spread restrictions are imposed. On balance, one might conclude that the EH is not grossly at variance with the data. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester
{"title":"Interest Rates in Germany and the UK: Cointegration and Error Correction Models","authors":"K. Cuthbertson, S. Hayes, D. Nitzsche","doi":"10.1111/1467-9957.00087","DOIUrl":"https://doi.org/10.1111/1467-9957.00087","url":null,"abstract":"The authors test the expectations hypothesis (EH) of the term structure using U.K. and German weekly data on short dated instruments with maturities up to one year. For both data sets comprising k interest rates the authors find that the rank of the cointegrating space is (k - 1); but they can only accept that the cointegrating parameter estimates are of the form (-1, 1, 0,...) etc. when considering bilateral combinations of interest rates. When the authors test the joint null that the set of (k - 1) spreads forms a basis for the cointegration space, this is rejected. However, the point estimates of the cointegration parameters are close to unity and there is no diminution in outside sample forecasting performance of the ECM equations when the spread restrictions are imposed. On balance, one might conclude that the EH is not grossly at variance with the data. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester","PeriodicalId":83172,"journal":{"name":"The Manchester school of economic and social studies","volume":"19 1","pages":"27-43"},"PeriodicalIF":0.0,"publicationDate":"1998-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80251318","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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