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This paper compares the effects of taxes and pollution permits when a pollution-reducing innovations in prospect. When the government is the pre-committed into a fixed environmental policy but can freely adjust the level of taxes and permits after the innovation has been obtained, taxes and permits are fully equivalent. The equivalence breaks down, however, when the government can pre-commit. In this case, taxes give a higher incentive to invest in R&D than permits when the post-innovation output level is sufficiently high. The welfare ranking of taxes and permits is then analyzed. Loosely speaking, taxes are superior when the social damage associated with pollution is not too high.

trum, contrary to the thrust of the US evidence. There is generally less evidence on the structure of interest rates for short-term instruments in the UK, with the exception of Cuthbertson (1993), whose results for the UK also indicate an important role for expectations, but where the application of formal tests using VAR methodology leads to a formal rejection of the expectations hypothesis.1 In this paper we test the expectations hypothesis of the term structure of interest rates in the London interbank market using monthly data for 1-, 3-, 6-, and 12-month deposit interest rates over the period 1975:1 to 1991:12.2 The London interbank market is a market in sterling term deposits of various maturities ranging from overnight to one year. The main participants are banks, who deal as both borrowers and lenders, but very large corporations may also be able to place deposits at or near interbank rates. The market in interbank deposits is closely integrated with other money markets such as those in certificates of deposits, local authorities' deposits, Treasury Bills, and commercial paper and is thus highly competitive, as indicated by the narrow spreads

This short paper models physical content policies in a bilateral monopoly setting using a cooperative game approach. For just binding or nonbinding content requirements, the policy does not induce any deadweight loss but alters the profit distribution in favor of the domestic supplier. This result holds as long as the inputs concerned by the policy are good substitutes in production, and when the disagreement point corresponds to low content requirements and low marginal cost for the domestic input. Copyright 1992 by Royal Economic Society.

traditionally placed particular emphasis on market concentration. The level of concentration has often been regarded as an important preliminary indicator of the kind of competitive environment in which the firms have to work. Persistently high levels of concentration are likely to attract the attention of the antitrust authorities. It is well known, however, that the available statistical series published in the various Censuses of Production and more recently by the Business Statistics Office (BSO) [13] and used in these studies do not incorporate imports. Thus although the student of market structure may ideally wish to know the share of, say, the five largest sellers-whatever their location-in the UK market, he has had to be content with series which recorded the share of the largest five domestic producers in total sales. The latter includes sales made both in the UK and abroad but does not include imports. In view of the recent growth of world trade and in particular the increased importance of imports in UK markets, studies of market structure and performance which do not explicitly take account of both imports and exports may seem to an outside observer like playing Hamlet without the Prince of Denmark. Recently there have been signs of change. A number of studies which have attempted to measure market structure-performance relationships have incorporated concentration adjusted for imports or a separate import penetration variable in their models.2 Similarly there have been two recent attempts to adjust the published concentration series for international trade. First, the Green Paper entitled A Review of Monopolies and Mergers Policy [11] contained a summary of 'revised concentration ratios (adjusted for Exported and Imported Sales)' (Annex A, table 8) for 144 manufacturing industries for 1972. Secondly, in an article published in the same year as the Green Paper, [2] Cannon gave estimates of product concentration ratios l This paper forms part of a National Institute of Economic and Social Research study of British Industrial Structure and Foreign Trade assisted by a grant from the Office of Fair Trading. I am grateful to Sig Prais and Peter Hart for many helpful comments made on an earlier draft and to the Business Statistics Office in Newport which supplied the information discussed in Section II. Naturally I alone am responsible for the interpretation of the data and any errors that remain. 2 On the whole the studies for the UK have not demonstrated a very significant role for

This article offers a meta-regression analysis of the literature on the drivers of financial development (FD). Our results based on 1,900 estimates suggest that institutional quality is positively correlated to both private sector credit and stock market capitalization (both as share of Gross Domestic Product). Domestic financial openness has a positive effect on both proxies for FD, while trade openness seems only important for stock market capitalization. Inflation has an adverse effect on FD, which is larger for stock market capitalization. Finally, we conclude that the literature has not yet robustly established that remittances matter for FD., Oxford Economic Papers, 74 (3), ISSN:0030-7653, ISSN:1464-3812

This paper develops a two-country model of a monetary union to evaluate the interaction between housing and unconventional monetary policies. The model is calibrated for the Euro Area and assesses the ECB’s Asset Purchase Programmes (APP) from 2015 until the Pandemic Emergency Purchase Programme (PEPP) in 2020. The model incorporates heterogeneous households, portfolio balance effects, a credit market susceptible to default, and nominal and real rigidities. In this paper the 2020 lockdown is studied as a negative signal from macroeconomic fundamentals which causes labor to grind to a halt. The model features the housing accelerator and the post-crisis house price double-dip. The findings illustrate the way in which macro-housing channels lead to self-reinforcing loops, affecting the portfolio rebalancing channel as the main way for asset purchases to influence the economy. The results show that asset purchasing performs better during a crisis, particularly if it is conducted for an appropriate extent of time. The findings illustrate that the PEPP should be extended until the covid-19 crisis phase is over and that it alone is not sufficient to accelerate the recovery; more actions, namely targeted fiscal policy, are required. Finally, the APP, PEPP and lockdown are assessed through a welfare analysis.

This paper examines whether the modern phase of globalization that started in the mid-1980s altered the canonical result which emphasizes that macroeconomic volatility declines with development. The application of a framework that gives due consideration to comovements and structural transformation to a near-universe sample of economies at different stages of economic development suggests the following set of results. First, with an explicit account for the roles of structural transformation and comovements, macroeconomic volatility declines during the modern phase of globalization for the Centre while it increases for the Periphery. Second, macroeconomic volatility of the Periphery declines with development only where structural transformation is ruled out—an unrealistic situation. Third, comovements are found to be quantitatively important, albeit without altering the fact that structural transformation constitutes the primary vehicle of transmissions of volatility from the Centre to the Periphery, where China emerges as the epicentre.

This paper analyses returns to task specialization using a unique panel data set of professional football players in the German Bundesliga. Based on accumulated task-specific human capital, I measure whether a player is rather a specialist in one task or a generalist able to perform several tasks. Using OLS, fixed effects, and quantile regression methods (with individual fixed effects), I analyse the impact of specialization on remuneration. Differentiating by player role in team production, I find that core team members, i.e. starting players, exhibit positive returns to specialization, which increase at higher salary quantiles. In contrast, substitutes, in particular those in the lower half of the conditional salary distribution, seem to benefit from being generalists, which renders them more attractive as substitute players for their teams. The paper discusses implications of the findings for other labour market contexts.

A recent theoretical and empirical literature has recognized the importance of growth-promoting policies that not only take into account the level but also the distribution of human capital. This paper studies the link between public spending on education and human capital inequality. I build a model of human capital formation where government intervention in education is justi…ed by the existence of credit market imperfections. The framework provides conditions on the level of development of an economy under which the educational policies are elitist, that is increase the spread between the educational achievement of the bright and less bright individuals. The theoretical predictions of the model are tested using the measures of educational inequality recently constructed for both developed and developing countries by Castello and Domenech (2002). The paper also presents estimates of

Works councils are the most important pillar of workplace industrial relations in Germany but little is known of their economic effects. The paper uses a modern, large-scale dataset to examine this issue. Consonant with recent applied theoretical conjectures, it is found that works councils are associated with reduced labour fluctuation, higher productivity (in larger establishments only), and no reduction in innnovative activity... Works councils are the most important pillar of workplace industrial relations in Germany but little is known of their economic effects. The paper uses a modern, large‐scale dataset to examine this issue. Consonant with recent applied theoretical conjectures, it is found that works councils are associated with reduced labour fluctuation, higher productivity (in larger establishments only), and no reduction in innovative activity. Yet they are also associated with lower profitability and higher wages. This concatenation of results, although not inconsistent with efficiency, underscores the need for closer investigation of the institution given actual and prospective EU works council mandates.

In this paper, we focus on the years before the Great Recession (1960–2007) and, after addressing possible issues of endogeneity, we study the effects of economic fluctuations on political stability. We find that when the economy is not in turmoil, there is a strong positive relationship between unemployment (i.e the major macroeconomic determinant of economic insecurity) and electoral support for systemic parties (i.e. parties with a serious aspiration to governing). That is, democratic politics respond to increasing economic insecurity by enhancing the prospects of political stability and, consequently, economic prosperity and growth.

This paper is an application of Identity Economics. Since the literature in this field is recent, the paper begins with an extensive review of the key contributions. The current paper analyses the process and psychological costs of social polarization arising from economic inequalities. It may have some application to the current social divisions evident in the votes for Brexit and Donald Trump, and protest movements such as the gilets jaunes. In a simple model, people rationally maximize their utility from esteem, by selecting a subjective salient identity from two objective identities: nationality and job. The model shows how an increase in wages for the upper half of the population can lead those with high incomes to drop nationality as their salient identity, forming a new ‘elite’ class. This rational switch in the identity of high-income workers has efficiency and redistributive effects, reducing aggregate utility and generating regressive transfers.

In this paper, we revisit the inequality–growth relationship using an enhanced panel data set with improved inequality data. We explicitly take into account the special role of transition (post-Soviet) countries and add an instrumental variable (IV) estimation to add a causal interpretation to our findings. Our analysis is based on the specification used by Forbes in her 2000 paper, but we also address functional form concerns raised by Banerjee and Duflo three years later. We arrive at three main findings: First, the significant positive association between inequality and economic growth in the full sample is entirely driven by transition countries. Second, this relationship in transition countries is not robust to the inclusion of separate time effects. Lastly, it appears that this association is not causal but rather driven by the particular timing of the transition. Results from IV estimation confirm our interpretation of the observed positive relationship in the overall sample as non-causal.

Over two decades ago, Jenkins and Lambert demonstrated that alternative measures of poverty could be combined using the ‘Three Is of Poverty’ (TIP) curve; the ‘three Is’ being the incidence, intensity and inequality of poverty. This paper first takes these TIP curve insights and applies them to income growth based measures of mobility, proposing a new ‘Three Is of Mobility’ (TIM) curve. Secondly, the paper proposes new illustrative devices for income mobility measured as positional change, or re-ranking, within the income distribution: labelled ‘re-ranking curves’. Illustrations use data from random samples of New Zealand income taxpayers between 1998 and 2010. These mobility curves represent simple graphical devices that conveniently illustrate the ‘three Is’ properties of income mobility.

Transferring low tech manufacturing jobs to cheap labour countries is often seen by part of the general public and policy makers as a step into the de-industrialisation of the European economies. However, recent contributions have shown that the effects on home economies are rarely negative. Our paper contributes to this literature by examining how outward investments to developing and less developed countries (LDCs) affect home activities of French and Italian firms that turn multinational in the period analysed. The effects of these investments are also compared to the effects of investments to developed economies(DCs). The analysis is carried out by using propensity score matching. We find no evidence of a negative effect of outward investments to LDCs. In Italy they have a positive long term effect on value added and employment. For France we find a positive effect on the size of domestic output and employment.; Le transfert des emplois peu qualifiés vers les pays à faible coût du travail est souvent perçu par une partie de l'opinion publique et des décideurs politiques comme une étape vers la désindustrialisation des économies européennes. Cependant, des recherches récentes ont montré que les effets sur les économies d'origine sont rarement négatifs. Cet article s'inscrit dans cette littérature et examine comment les investissements en direction des pays en développement et des pays les moins avancés affectent les activités des entreprises dans leur pays d'origine. Les auteurs s'intéressent aux entreprises françaises et italiennes qui investissent pour la première fois à l'étranger au cours de la période d'analyse retenue. Les effets de ces investissements sont également comparés aux effets des investissements effectués dans des pays développés. Les auteurs utilisent la méthode du score de propension (propensity score matching). Les résultats suggèrent que les investissements menés dans les pays en développement et dans les pays les moins avancés ne pèsent pas sur les performances des entreprises en France et en Italie. En Italie, ils ont un effet positif à long terme sur la valeur ajoutée et sur l'emploi. Pour la France, Les auteurs obtiennent un effet positif sur la production domestique et l'emploi.

Oxford Economic Papers, 61 (4), ISSN:0030-7653, ISSN:1464-3812