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In recent years it has been argued that amortization funds set aside by firms are likely, in the macro context. to make a significant contribution to net investment. In this article the author investigates the sensitivity of the proportion of net investment which can be financed with unwanted amortization funds to changes in the linear amortization assumption. The author considers three models. A model with equal contributions per operation period but with positive interest earnings, a model with growing contributions as well as positive interest earnings and a model with growing contributions, interest earnings and inflation. It has been pointed out in the article that if firms are cautious and on average plan their amortization funds to mature before the death of the relevant machine, the proportion of investment which may be financed with unwanted amortization funds will rise. It has been shown in this paper that there has been a tendency to grossly exaggerate the possible role of unwanted amortization funds in financing net investment.

This paper employs demographically representative discrete choice experiments (DCEs) with owner occupiers in Poland, Sweden, and the United Kingdom (UK) to estimate the effects of subsidies, heating cost savings, installation time (reflecting 'hassle costs') and warranty length on owner occupiersʻ propensity to invest in a new heating system. In particular, the paper explores whether owner occupiers value subsidies received from public funding sources differently than subsidies received from private funding sources. The results from estimating mixed logit models suggest that respondents not only value subsidies for new heating systems because they decrease the net price, but they also value receiving a subsidy per se. For participants from Sweden (but not from Poland and the UK), this non-monetary value was found to be higher for subsidies offered by a public than by a private funding source. The results for heating cost savings in the three countries imply implicit discount rates between about 11 and 13%. We further find that respondents in Poland dislike longer installation times, and that respondents in all three countries value longer warranty times. [ABSTRACT FROM AUTHOR]

Exploiting the 2011 abolishment of the mandatory-retirement provision that had allowed employers to force retirement of their 65-or-older employees in the UK, this paper estimates the effect of outlawing mandatory retirement on public-pension benefit claim behaviour of the elderly through changing their employment and retirement rates. Abolishing mandatory retirement raises public-pension claim rate of non-household-head benefit-eligible individuals by making them retire more, while it lowers public-pension claim rate of household-head benefit-eligible individuals by lowering their retirement rate. On the other hand, the abolishment raises full-time employment rate of the elderly, regardless of household-head status or gender. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to examine the issue of omitted variables in testing the long run validity of Wagner's hypothesis. Using UK data for the period 1948 to 1997, this paper first investigates the secular relationship between public spending and economic development in a bivariate system. In all cases considered, our bivariate cointegration tests indicate the absence of a long run equilibrium condition. However, the introduction of a third variable (money supply) re-establishes a cointegrating relationship between public expenditure and economic development variables. In addition, the results of the Granger's multivariate causality test indicate a unidirectional causality from income and money supply to public spending in the long run, thus providing support for Wagner's hypothesis. [ABSTRACT FROM AUTHOR]

This paper examines the direction and magnitude of volatility transmissions between prices of petroleum and stock sector indices of the net petroleum exporter, Mexico, and the net petroleum importer, the United Kingdom. The sector indices are self-constructed utilizing daily data of 258 unique stocks listed in eight sectors from January 2005 to September 2018 that permits implementing the same methodological framework across two markets. The study applies the VAR-GARCH model that enables to study bidirectional spillover effects. The results provide evidence of volatility spillovers between petroleum prices and sector indices. The effects are more apparent in the case of the net exporter, where the bidirectional volatility transmissions were observed. The computed optimal portfolio weights and hedge ratios considerably vary among sectors of both countries. The findings emphasize the crucial role of comprehending the heterogeneity of sectors for the management of investment portfolios. [ABSTRACT FROM AUTHOR]

This paper extends Meenagh and Minford (2021) to the four waves of infection in the UK by end-2021, using the unique newly available sample-based estimates of infections created by the ONS. These allow us to estimate the effects on the Covid hospitalization and fatality rates of vaccination and population immunity due to past infection: the latter was the most significant factor driving both trends, while the vaccination rate also had a significant short-run effect on the fatality rate. We also updated our policy comparison with Sweden for the most recent data, with similar conclusions: lower Swedish lockdown intensity relative to personal response in waves 1 and 2 caused much lower economic costs with no discernible effect on infections. [ABSTRACT FROM AUTHOR]

One of the key issues surrounding geographical economics is whether the theory can be made operational, so that proper investigations can be made of the basic theoretical assumptions and practical use can be made of the model's predictions at a detailed spatial level. In this paper the model formalized by Fujita et al . (1999) is developed in the context of 36 regions of Great Britain, enabling direct comparisons with observed wage rate data that are used to calibrate the model. Iceberg transport costs are in the form of an exponential function and a power function. For the range of parameters considered, the power function gives a better fit between model and data, suggesting scale economies in transportation. The paper shows that, in spite of the assumptions that have to be made, quite realistic distributions of relative wages, income and prices are attainable. However, caution is required in the interpretation of these simulations, which in no way provide proof of New Economic Geography theory, which clearly has limitations. Nonetheless it is hoped that the work reported in this paper does help to advance the progress of geographical economics theory towards empirical verification. [ABSTRACT FROM AUTHOR]

This paper considers how technological change and globalization has influenced the return to education and occupation in Great Britain over the period 1973 to 1994. A number of papers in the literature have documented increasing demand for individuals who possess higher skill endowments than their peers. Both education and occupation can be interpreted as an individual's observable skills and how technology and trade have actually influenced returns to different educational and occupational levels is something that has not been investigated in Great Britain. For the empirical analysis estimates are based upon pooled cross sections over time and also pseudo panel techniques to control for unobservable heterogeneity. [ABSTRACT FROM AUTHOR]

The Fisher Effect is one of the most widely studied relationships in monetary economics. Previous studies have found little evidence of a Fisher effect in pre-World War I data for the United Kingdom. An explanation for this is the near white noise property of the inflation rate under the Classical Gold Standard. There is more evidence of a Fisher effect in the post-World War II years when the inflation rate showed more persistence. This paper studies the evidence on the Fisher effect over the time period 1844-2018. This period covers several distinct monetary regimes. The monetary regime is an important factor determining the time series behavior of the inflation rate which, in turn, has been shown to be crucial to the strength of the Fisher effect. Distinctive features of the study are the focus on the long-term interest rate and coverage of the current inflation targeting regime in the United Kingdom. [ABSTRACT FROM AUTHOR]

Over the past decade, the UK has witnessed significant booms in the real estate market, and housing prices have experienced increases. Since 1997, the housing price has almost tripled, which is far beyond the long-term trend. To identify the existence of housing bubbles is a crucial issue for any country to prevent possible damage to economies and outbreaks of financial crises. The objective of this paper is to examine the existence of a housing price bubble in the UK through employing a co-explosive vector autoregression (VAR) model, originally applied to stock markets. The results demonstrate that both housing price and rental price show explosive behaviour during their growth, which provides little evidence to support the presence of real estate bubbles in the UK. [ABSTRACT FROM AUTHOR]

UK policy concern about the value and funding of Higher Education has focussed on the intrinsic and instrumental impacts of education. Typically, returns to education are identified by narrow economic metrics, like earnings. However, policy makers recognize the need for wider measures of welfare. Consequently, contemporaneous relationships with subjective well-being (SWB) have been explored. In this paper the effects of higher education on SWB are mapped through time. The results show positive effects in the first year at university that dissipate afterwards. Intrinsic benefits from education remain but get eroded implying increased stress from loan financed education with transition to a more instrumental perspective on education. [ABSTRACT FROM AUTHOR]

The value of ability grouping is often debated despite being adopted in primary and secondary schools across the UK for the past 80 years. Setting is one form of ability grouping which is widely implemented in English schools; it involves dividing pupils from the same cohort into classes according to ability in a specific subject. While the existing evidence identifies a negative effect on cognitive outcomes, especially for low-ability pupils, little research has been undertaken to understand the impact of setting on non-cognitive outcomes. This paper provides the first evidence of the effect of setting on non-cognitive outcomes when utilizing a nationally representative sample of primary-aged pupils and adopting fixed effects and instrumental variable methodologies. For boys, setting in maths negatively impacts non-cognitive outcomes, driven by a worsening of internalizing behaviours. No evidence of a significant impact of lowest set placement on non-cognitive outcomes is identified. [ABSTRACT FROM AUTHOR]

Mortgage demand is a poorly understood and under-researched aspect of the financial behaviour of households. This paper tests empirically the basic results of Brueckner's model of mortgage demand on UK mortgage market data. The choice of mortgage instrument is used to identify impatient debt maximizers and patient borrowers who borrow at intermediate levels. Thus the research confirms the conditions under which households will use the largest possible mortgage and the circumstances under which savings are invested in the property. A unique contribution of the work is the estimation of mortgage demand equations corrected for endogenous housing demand, for a single housing finance system, where borrowers face different opportunity costs of equity in their owner occupied property, allowing a purer test of the theoretical model. [ABSTRACT FROM AUTHOR]

This paper examines the impact of productivity on pay within academia, drawing upon a detailed dataset of academics from five old established universities. Results outline the importance of publication; grant receipt and teaching quality in the determination of pay. A large financial penalty to time out of the profession is revealed, which, with productivity variables, explains away the gender salary gap. The relationship between teaching and research is investigated, and we find some evidence in support of the hypothesis that productive researchers are successful teachers. Results on reservation salary suggest that the best academics are willing to stay within the profession. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of computer usage at work and other job features on the changing skills required of workers. It compare skills utilization in Britain at three data points: 1986, 1992 and 1997, using proxies for the level of skills actually used in jobs. This study questions the validity of investigating the facts about, and the sources of, rising skills by using just educational attainment or occupational grouping data. This paper finds that: • Job skills have increased, more quickly for women than for men; these increases are more extensive than those captured by changes in the occupational class structure. • The spread of computer usage is very strongly associated with the process of upskilling, and accounts in part for narrowing of the gender skills gap; expanded use of quality circles is also linked to upskilling. • Evidence for any direct role of trade in inducing skills increases is weak. • Using the qualification held or occupation as a skills measure can lead to erroneous conclusions as to the origin of skills changes. [ABSTRACT FROM AUTHOR]

This paper empirically analyses the stability of the aggregate import demand function for G7 countries. The standard cointegration test and a test developed by Gregory and Hansen are performed. The results of standard cointegration tests suggest that there is no stable cointegrating relation between real import, real GDP and relative import price for all G7 countries. The cointegrating relation is empirically supported for France and Germany if structural change for cointegrating vector is explicitly taken into consideration. The cointegrating relation is empirically rejected for Canada, Italy, Japan, the UK and the USA. Thus, the stimulation of domestic business conditions will not necessarily link the quantity of imports for these five countries. [ABSTRACT FROM AUTHOR]

This paper uses a system of equations model to examine tourism demand during periods of destination country transition and integration into the wider international community. The Almost Ideal Demand System model is applied to the UK demand for tourism in the neighbouring destinations, France, Spain and Portugal. Spain and Portugal are interesting cases as, during the period under consideration, they experienced a process of transition from economies with characteristics typical of developing countries, only entering the World Bank's industrialized countries classification in the 1980s. The paper examines the evolution of tourism demand during these countries' transition from 'developing' to 'developed' status. Consideration of France as a neighbouring destination also allows the behaviour of tourism demand to be compared between relatively rich and poor countries. The results show the extent to which the cross-country behaviour of demand becomes more or less similar over time with respect to changes in expenditure and effective prices. The expenditure elasticities are greater for Spain than France during the initial period, indicating that tourism can assist countries to 'catch-up' with their richer neighbours. However, this outcome is not always the case and may not persist, as Portugal had a low initial expenditure elasticity and Spain's relatively high expenditure elasticity decreased over time. Destinations' sensitivity to changes in their own and competitors' prices can also change over time, as indicated by the increases in the own- and cross-price elasticities for Spain, compared with the decreases for France and Portugal. The cross-price elasticity estimates indicate substitutability between the immediate neighbours, Portugal and Spain, and France and Spain. [ABSTRACT FROM AUTHOR]

This paper uses cross-section data to examine the determinants of wages for agricultural craft workers over the period 1991–1994. Using limited dependent variable models to take account of the censoring in the data resulting from the minimum wage, we have investigated the degree to which agricultural and broader labour markets are integrated, the impact of tied housing on wages, and the extent to which the minimum wage truncates the wage distribution. [ABSTRACT FROM AUTHOR]

Dynamic monopsony suggests that, due to labour market frictions, workers will be paid below their productivity. This paper uses the stochastic frontier technique to estimate the degree of this underpayment for UK employees. It finds evidence of significant underpayment. The estimates are used to examine whether the predictions of dynamic monopsony are empirically accurate. No conclusive evidence against this theoretical framework is found. The paper also investigates whether payment according to productivity is a sufficient condition for the elimination of the 'working poor' problem. Due to the existence of an unemployment barrier, it finds that the minimum wage is not an effective anti-poverty policy. [ABSTRACT FROM AUTHOR]

This paper examines the effect of changes in the Punt/Sterling exchange rate on exports from Ireland to Britain. The approach used here differs significantly from that used in most other studies in that the long-run neutrality of the Punt/Sterling exchange rate with regard to exports from Ireland to Britain is tested using a recently developed technique. There is strong evidence that the exchange rate is neutral in the long run. [ABSTRACT FROM AUTHOR]

Previous research that assessed the impact of exchange rate changes on the trade balance between the U.S. and U.K. assumed the effects are symmetric. In this paper, we add to the literature on the asymmetric J-curve phenomenon by considering the trade balance of 68 two-digit industries that trade between the two countries. We find short-run asymmetric effects of the real dollar-pound rate in almost all industries. However, short-run asymmetric effects were translated into significant long-run asymmetric effects in 25 industries. Indeed, the asymmetric J-curve hypothesis was supported in 18 industries. [ABSTRACT FROM AUTHOR]

This paper investigates the public-sector wage premium (PSWP) in the UK using a microfounded economic model and indirect inference (II). To answer the question whether there is public-sector wage premium, we ask an equivalent question – whether a model assuming perfect competition can explain the data. The neoclassical labour economic model is tested and estimated without introducing any ad hoc gap between the theoretical and empirical models. Popular econometric models are used as auxiliary models to summarise the data features, based on which we evaluate the distance between the observed data and the model-simulated data. We show that it is not the non-market factors, but the total costs and benefits of working in different sectors and so simple market forces, that create the public-sector wage premium. In other words, there is no inefficiency or unfairness in the labour market to justify government intervention. In addition, selection bias test can be incorporated into the indirect inference procedures in a straightforward way, and we find no evidence for it in the data. [ABSTRACT FROM AUTHOR]

This paper models logistic and exponential smooth transition adjustments of real exchange rates for six major oil-exporting countries in response to different shocks affecting oil prices. The logistic form captures asymmetric and the exponential form symmetric adjustments in regards to positive and negative oil price shocks. We chose oil-exporting countries that do not peg their exchange rates. For most countries, we detect no statistically significant non-linearities for the adjustment process of real exchange rate returns, be they asymmetric or symmetric, in response to oil supply shocks, idiosyncratic oil-market-specific shocks, and speculative oil-market shocks. Exceptions are oil supply shocks in the UK and possibly Brazil, where exchange rates respond nonlinearly, though the effects are symmetric for both countries. On the other hand, global aggregate demand shocks, which are shocks not originating directly in the oil market, have nonlinear asymmetric effects on real exchange rate returns for Canada, Mexico, Norway and Russia, and nonlinear symmetric effects for Brazil and the UK. [ABSTRACT FROM AUTHOR]

The reforms in the regulation of the UK's nationalised industries over the last decade are examined and the extent to which they have been successful in achieving one of their declared aims -- that of increasing the efficiency of the enterprises' operations -- is considered. To achieve this the productivity performance of nine of the largest enterprises over the last twenty years was analysed. The results show that the rate of productivity growth has been significantly higher during the 1980s, compared with the preceding decade. It is concluded that a large part of the observed upturn in productivity is a result of changes in efficiency.
The aim of the present paper is to make an (interim) assessment of how far that objective is being achieved in relation to those enterprises which have continued to hold significant market power (for discussion of policy changes in more competitive sectors see, for example, Vickers and Yarrow, 1988). The productivity record over the last 20 years of the nine largest nationalized industries, as they existed at the beginning of the 1980s, has been examined. The plan of the paper is as follows. Following this introduction, Section II outlines the main features of the successive control regimes which have been used to regulate the UK's nationalized industries over the period of the study. A model drawn from recent developments in the theory of public enterprise behaviour to yield some predictions on the incentives associated with different control regimes is used. [ABSTRACT FROM AUTHOR]

This paper examines firstly the appropriate measure of risk which determines the competitive rate of return on capital: the approach taken is to identify a firm's competitive rate of return on capital with its cost of capital, the relevant risk is therefore the risk on all the firm's securities; this is measured by the risk of the return on the firm's equities adjusted to take account of the risk arising from financial leverage. Secondly, the extent to which differences in the rate of return on capital for 88 UK firms in 12 broadly competitive industries can be attributed to differences in levels of risk: the data show a strong positive relationship between risk and return on capital at both firm and industry level. [ABSTRACT FROM AUTHOR]

This paper examines the extent to which foreign direct investment (FDI) in selected UK manufacturing sectors has an impact on reported profits in domestic firms. Foreign manufacturing firms are characterized by relatively high labour productivity and low wage shares. Entry by foreign firms not only impacts on domestic market shares, but also on domestic cost conditions. As a result, profitability in the indigenous sector may be reduced. There are a number of policy implications of this analysis which are explored. [ABSTRACT FROM AUTHOR]

The paper investigates which factors determine the expected real long-term interest rates of the G7-countries as a whole within a single equation error correction model. Inflationary expectations are generated using the low frequency component of inflation provided by the Hodrick-Prescott filter. A comparison of the calculated expected inflation rates with those resulting from index-linked and conventional UK bonds suggests this approach to be appropriate. Expected real long-term interest rates turn out to be influenced positively by real short-term interest rates, capacity utilization and structural public borrowing. [ABSTRACT FROM AUTHOR]

This paper examines the a-convergence of regional household incomes in the UK and finds support for the idea that regions in the UK have, in the recent past, tended to diverge during booms and converge during slumps. A new way of presenting the change in the distribution of regional incomes is offered. The results are extended to the consideration of movements in the higher moments of the underlying distributions. [ABSTRACT FROM AUTHOR]

This paper proffers the first formal econometric analysis into the privatization of public housing under the Conservative Government's "Right to Buy" (RTB) legislation. British housing policy since the mid-1970s and especially since the election of the British government in 1979, has been dominated by two factors: first, the need to reduce public expenditure and second, the ideological desire to expand home ownership. The Housing Act, which introduced a statutory obligation on local authorities to administer a RTB for sitting tenants, was envisaged as an efficient means of achieving both objectives. Under the terms of the Act, public sector tenants were given the right to purchase their homes at a discount relating to the total length of time they had been tenants plus the right to a mortgage from their local authority landlord. The RTB represented a sea-change, if not in the direction, then certainly in the speed of development and implementation of British housing policy. Although traditionally supportive of council housing, the 1974-79 Labor Government had failed to sustain a public expenditure commitment towards council housing and its 1977 Green paper was heavily weighted towards home ownership.

This paper employs four cointegration test approaches, PO, HI, JJ and KSS, to test for pairwise long-run equilibrium relationships between Taiwan's stock price index and each of the stock price indexes of four European markets – French, German, Dutch, and British stock markets. The results from these four tests are robust and clearly consistent in suggesting that the Taiwan stock market is not pairwise cointegrated with the four European stock markets. This provides strong evidence that there exist long-run benefits for Taiwan investors diversifying in the equity markets of Taiwan's major European trading partners, France, Germany, Holland, and the UK, over the sample period considered from 6 January 1998 to 30 May 2002. These findings could be valuable to Taiwan individual investors and financial institutions holding long-run investment portfolios in the equity markets of France, Germany, Holland, and the UK. [ABSTRACT FROM AUTHOR]

Currency depreciation is said to worsen the trade balance first before resulting in an improvement, yielding a short-run pattern labelled the J-curve phenomenon. While early studies tested the J-curve by using aggregate trade data, a few recent studies have employed bilateral data, mostly between the US and her major trading partners. In this paper we extend the literature by considering the experience of the UK. We test the phenomenon between the UK and her twenty major trading partners by employing data over 1973Q1–2001Q3 period. In most instances, we find no support for the J-curve in the short-run. In the long run, only in five cases has the exchange rate had significant impact on the bilateral trade balance. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of individual heterogeneity and regional influences on unemployment duration utilizing cross-section microeconomic data drawn from a representative random survey of individual job seekers for the English county of Kent. These individual-level data are unique in that they provide information concerning the personal characteristics of job seekers, alongside direct observations of both their reservation wages and job search behaviour. Such data are rare and, to the authors' knowledge, have never before been utilized in a regional context. Thus, the paper contributes to the empirical literature by analysing the extent to which individual heterogeneity and intra-regional variation in labour market opportunities impact upon the observed distribution of unemployment duration(s). In particular, the paper analyses the extent to which the duration of unemployment is determined by individual choice. This is an important issue for the formation and evaluation of policy. These results provide new insights into the long-term efficacy of current microeconomic supply-side initiatives such as 'The New Deal' and related welfare to work policies. They also advocate a more active role for macroeconomic demand-led management and provide support for a more integrated strategy for policy implementation at the urban and regional level. [ABSTRACT FROM AUTHOR]

This paper employs data for a panel of firms from France, Italy and the UK to study the effect of the recession of the early 1990s on inventory investment, controlling for cyclical fluctuations at the firm level. The results clearly show some common patterns across countries, pointing to the relevance of financial factors (namely, the level of leverage) in propagating initial recessionary shocks. Moreover, Italian firms, especially if 'small and young', seem more likely to suffer from a reduction in the value of collateralizable assets possibly originated by restrictive policy actions. [ABSTRACT FROM AUTHOR]

This paper presents estimates of price functions for beef, lamb and pork for the UK economy which allow for the effects of the 1996 BSE crisis. The estimates illustrate the importance of allowing for the joint endogeneity of prices in these markets. This shows that the effects of this crisis had a significant negative effect on the price of beef and a positive and significant effect on the price of lamb. However, there appears to have been little effect on the price of pork. [ABSTRACT FROM AUTHOR]

This paper tracks levels of Euro preparations by UK SMEs with trade links with the Euro currency area using two surveys of the same cross-sectional dataset. The first study was conducted soon after the initial launch of the Euro in 1999. The second study, using the same SMEs, sought to see how Euro preparations had changed by 2002 following the introduction of Euro notes and coins. At the univariate level, the results showed that the proportion of SMEs that were totally prepared increased from 31% to 44.3% whilst the proportion not prepared has also increased from 8.9% to 12.2%. The multivariate results show that directly trading manufacturers with a parent in the Euro area or who are seeking to acquire another company are more likely to have partially prepared for the Euro, which suggests a compliant ('just another foreign currency') rather than a strategic approach to the Euro. Trade links do not explain all the differences: incorporated manufacturing firms are significantly more likely to be partially prepared and less likely to be completely unprepared, indicating a possible impact of firm capabilities and sectoral differences. Firms looking to acquire others was the only significant business strategy variable. [ABSTRACT FROM AUTHOR]

Most empirical studies of foreign direct investment (FDI) typically use either a cross-sectional (capturing ownership-specific and industry determinants) or time-series (capturing the determinants of FDI over time) approach. Panel data techniques, however, have the advantage of combining both aspects of the data. Using disaggregated panel data for the UK food sector--a leading recipient of FDI in the UK--the results in this paper highlight the predominance of ownership-specific and industry characteristics in determining the presence of foreign-owned firms in this sector while macro-economic factors have a more marginal effect. [ABSTRACT FROM AUTHOR]

This paper seeks to examine what factors are associated with student labour force participation in Northern Ireland in both term-time and vacation making use of Quarterly Labour Force Survey data for the period March 1998-February 1999. The results suggest female students are more likely to work than male students, mature students are less likely to work than non-mature students, Roman Catholic students are less likely to work than non-Roman Catholic students, students living at home are more likely to work than student living away from home and an increase in the actual or predicted wage increases the probability of labour force participation. The author suggests that some of these results are due to the particular nature of the Northern Ireland socio-economic situation while others are likely to be true for the rest of the United Kingdom. [ABSTRACT FROM AUTHOR]

This paper augments the Granger and Lee (Journal of Applied Econometrics 4 , 1989) non-symmetric error (equilibrium) correction model to assess the possibility that, in the aggregate, consumers respond differently to different types of disequilibrium error. This idea is illustrated using an Engle-Granger implementation of the Davidson, Hendry, Srba and Yeo (DHSY, Economic Journal , 80, 1978) model. The disequilibrium error is endogenously determined by the long-run, empirical model and a binary dummy variable captures two alternative states, above and below equilibrium spending. Interaction of the dummy variable with key variables in a short-run dynamic model of UK consumer spending augments the dynamics of the DHSY model. Income elasticities, inflation elasticities and speeds of adjustment are all seen to change significantly depending on whether the disequilibrium error is positive or negative, and is suggestive of asymmetric behaviour on the part of consumers. Moreover, the asymmetrically augmented model substantially outperforms a symmetric model with standard error improvements in excess of 50%. [ABSTRACT FROM AUTHOR]

We apply Thirlwall's law (Thirlwall 1979) to estimate long run growth in the UK. In particular, we develop a new test allowing for potential structural breaks based on 2SLS to remedy potential weaknesses that existed in previous methods. Our results show the UK had different balance of payments positions over different time periods, and its growth has been constrained over the past two decades. We further elaborate on the pound's changing role as a reserve currency and how this has affected the UK's external constraint and growth. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between wages and prices in the UK using a VECM formulation and generalized impulse response functions and persistence profiles. Because of significant feedbacks, it finds that fluctuations in wage growth cannot be used directly to predict fluctuations in inflation. [ABSTRACT FROM AUTHOR]

This paper compares the economic performance of UK and foreign-owned firms in UK manufacturing industry. A panel data set covering 14 233 firms for the period 1992–1996 is used and the influences of firm-, industry- and country-specific advantages on productivity are examined. The results of the study show that labour productivity is higher in foreign subsidiaries than in UK firms and that foreign subsidiaries as a whole employ higher levels of human capital and enjoy greater economies of scale. A further source of productivity advantage for US subsidiaries is their higher level of intangible assets, and for European and Japanese subsidiaries their higher level of capital intensity. The results have policy implications for the targeting of promotion activities to attract FDI. [ABSTRACT FROM AUTHOR]

Oliver Williamson argues that the attributes of the employment contract, like intermediate transactions in general, are essentially driven by the specificity of assets. In the case of the organization of work it is the particular attributes of labour that determines the transaction costs of any given governance structure. The paper presents a stylized account of the transaction cost model of the efficient organization of work, stressing an underlying tension and ambiguity in the transaction cost framework. The paper exploits a unique dataset to test, for the first time with British data, Williamson's transaction cost predictions concerning the nature of employment contracts. Williamson tacitly assumes that asset specificity is exogenous in general. However, there is evidence in the literature that labour specificity is endogenous to employment contracts. The paper endeavours to demonstrate that there is empirical evidence to suggest that specialized labour is indeed endogenous in the transaction cost model. The major implication is that the organization of work cannot be considered as an example of the efficient organization of intermediate transactions. [ABSTRACT FROM AUTHOR]

The demand literature is concerned with the optimal allocation of expenditure at varied but usually high levels of commodity aggregation. Much less aggregation however is required for business applications. In applied business settings, interest centres upon the different brands of the same commodity because policy formulation takes place at the level of the individual brand. This paper considers application of formal demand analysis to brand demand data. A theoretically plausible demand system is invoked to describe inter-brand allocation of expenditure, test restrictions imposed by economic theory and yield empirically determined insights into brand demand structure. [ABSTRACT FROM AUTHOR]

This paper tests a discrete choice model on the mix of franchised and companyowned outlets (contractual heterogeneity) within the firm. This is often explained by the existing literature as due to heterogeneous characteristics of the outlets. However, correspondence between outlets and contracts characteristics is not often observed in reality. An explanation is proposed which suggests that contract mixing is driven by the contractual choice of both principal and agents, and that heterogeneous agents will choose contracts that match their characteristics. This hypothesis is supported by econometric results, based on outlet level microdata collected by means of a survey of UK firms. [ABSTRACT FROM AUTHOR]

Using ordered probit estimation technique this paper examines the job satisfaction of recent UK graduates. Focussing primarily on explaining job satisfaction in terms of individuals matching to jobs, with the match depending on reservation returns, information sets and job offer rates. Only limited support can be found for the argument that job matching explains higher job satisfaction. In addition, stylizing graduates as a peer group, who form satisfaction levels based on their rankings relative to each other we examine whether or not education quality, which raises peer group status and increases the job offer rate, is systematically related to job satisfaction. The results broadly support the hypothesis that job satisfaction is neutral across graduates of different education qualities. However, our specification tests indicate that ordered probit estimation may not be fully appropriate for identifying the characteristics of those with high job satisfaction. [ABSTRACT FROM AUTHOR]

Recent research suggests that the economic benefits to the UK economy from arms exports might not be that great. Surveys suggest that almost two-thirds of those that lose their job in the defence industry either retire or find new work within one year and arms exports are heavily subsidized by the UK government. Thus any cut in such exports would reduce the annual subsidy payable by the British taxpayer. However, in addition to the direct economic benefits from defence exports there might be indirect effects. Hartley and Hooper (Does trade follow the flag? A study of the UK trade and security policy, Centre for Defence Economics, University of York, 1998) considered whether UK arms exports might lead to higher civil exports. This paper examines this hypothesis. It estimates import demand functions for three countries (Indonesia, Saudi Arabia and South Korea) and for the world as a whole over the period 1970-1997. The results suggest that UK arms exports do not stimulate UK civil exports. [ABSTRACT FROM AUTHOR]

This paper continues the development of a theoretical foundation for measuring 'altruistic' behaviour with respect to tax versus expenditure preferences in three specific spheres: health, education and welfare payments. Particular emphasis is placed on analysing the choice theoretic calculus that underlies individual preferences. Using this theoretical foundation, econometric techniques allow progress to be made in measuring the characteristics of the underlying utility function. The empirical work relates to the UK and confirms that both self-interest and public interest (with a slight emphasis on the latter) determine overall preferences. The implications of this for the public choice school are then examined. [ABSTRACT FROM AUTHOR]

A large number of empirical studies have tested for the presence of convergence for a variety of economic variables. This paper examines the evolution of labour's reward across regions of the EU to identify whether factor price convergence has occurred. Density diagrams are used to illustrate static distributions while transitional matrices are employed to identify movements of the distribution over time. The results presented suggest that the evolutionary paths of average regional pay are fairly stable with stratification and persistence identified as important characteristics. There was uninterrupted convergence of average regional pay between 1980–1992. However, between 1992–1994 this process reversed. [ABSTRACT FROM AUTHOR]

This paper addresses two problems faced by many forecasters in the transport sector, namely how to use a relatively small sample to forecast car ownership over a long period of time and avoid the difficulties caused by spurious or nonsense regressions. Five alternative estimation methods are used to test for cointegrating relationships between per capita car ownership (and use) and real per capita personable disposable income, real motoring costs and real bus fares. These are the Engle–Granger twostage, the Phillips-Hansen fully modified, the Wickens–Breusch one-stage, the autoregressive distributed lag, and the Johansen maximum likelihood methods. The corresponding error correction models are estimated, and a comparison made between the derived short- and long-run demand elasticities for car ownership and use. The ex-post forecasting performance of the error correction models, together with an ARIMA model specification, is evaluated using a number of performance criteria. The long-range time series forecasts obtained from the cointegrating regressions are compared with those from the cross-sectional approach used by the UK Department of the Environment, Transport and the Regions, and the policy implications discussed. [ABSTRACT FROM AUTHOR]

The debate that expenditure on new or existing roads induces more traffic has intensified during the 1990s in most developed countries. In this paper the controversy is readdressed from a UK perspective, using the method of Granger noncausality. Results indicate that aggregate expenditure on new and existing roads does not induce additional traffic in the Granger sense. Conversely, the results found that traffic Granger causes road expenditure. The importance of these results, along with issues concerning the selection and specification of dynamic models, are discussed. [ABSTRACT FROM AUTHOR]