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Data from 19 African nations is used to investigate the hypothesis that monetary union—represented in this case by the CFA Franc Zone—augments the extent of macroeconomic integration. The paper covers two key dimensions of integration: the volume of bilateral trade, and the magnitude of cross-country business cycle correlation. Restricting our attention to a part of the world in which (for historical reasons) monetary union membership is exogenous to economic characteristics, we can test whether the large single-currency effects claimed by A. Rose apply within a sample of less developed countries. [ABSTRACT FROM AUTHOR]

Much of the change in individual earnings has occurred at the top. This paper provides new evidence about the earnings distribution in the UK. The evidence is new in that it provides detail about what has happened within the top 10%, covering groups such as the top 1% and the top 0.5%. The aim is to set the recent rise in top earnings in historical perspective, and to make international comparisons. The evidence is new in that it covers the whole of the postwar period, allowing a contrast to be drawn with the 'golden age' of the 1950s. [ABSTRACT FROM AUTHOR]

This paper examines Lionel Robbins' critical attitude towards formal empirical work from the standpoint of modern econometrics. It argues that his attitude towards empirical work rested on indefensible assumptions and that he failed to realise that the role he saw for empirical work undermined his belief in the primacy of economic theory. This matters because Robbins' attitudes are echoed in modern economics, best exemplified by the calibration methodology of Kydland and Prescott, which is vulnerable to similar criticisms. [ABSTRACT FROM AUTHOR]

We use two variants of Markov switching models to assess changes in output synchronization since the creation of the euro. Out of eight eurozone countries investigated, only one—the Netherlands—has synchronization increased since euro adoption, supporting the ‘endogenous optimal currency area’ argument of Frankel and Rose. However, in three other cases, business cycle synchronization actually fell since the euro's creation. Thus the ‘endogeneity’ of the optimal currency area criteria can go both ways—adopting a common currency may increase synchronization for nations ready for a common currency, but it can lower synchronization for nations that are far from synchronized before monetary unification. [ABSTRACT FROM AUTHOR]

This paper studies the interaction between cyclical uncertainty, precautionary saving and economic growth in a stochastic endogenous growth model. The analysis provides insight into the potential connection between technological uncertainty of the sort popularized in teal business cycle models and the determinants of economic growth in a stochastic version of a popular model of endogenously determined economic growth. The magnitude of the link between cyclical uncertainty and growth is quantified and found to be small in terms of its effect on the growth rate, but possibly large in terms of its effect on levels of macroeconomic variables. Moreover, the welfare costs of reduced cyclical uncertainty can be substantial, owing to the lower historical rate of capital accumulation induced by a decrease in precautionary saving. The chief implications of the model are found to he roughly consistent with the post-war experience of several countries, although the predictions of the model with regard to growth rates are too small to explain much of the variation in growth rates across time or across countries.

This article presents information on a study which examined the dynamics of business cycles in the G7 countries. To study growth over the cycle, researchers estimate single-country equations and then a pooled regression that takes into account the important interactions of international business cycles. The results confirm the steepness asymmetry of the growth cycles and show that growth varies systematically within upturns and downturns. These are consistent with the notion of deepness asymmetry which implies that contractions are more pronounced in the later stages of a downturn whereas expansions are stronger immediately after troughs. There are several explanations as to why business cycles may be asymmetric. Recent theories from the industrial organization literature have shown how exit from an industry is less costly than entry and as a result production can fall rapidly and expand only slowly. In addition, the relative ease with which a firm may cut production below full capacity when orders decline, compared with the difficulty of increasing production when capacity constraints are present, will also result in asymmetric cycles.