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Gerald Holtham argues for a national community fund to help pay for Britain's prized public services and ease the ‘triple-whammy’ of rising demand, sluggish productivity gains and highly mobile capital that has eroded the social democratic programme.

The orthodox theory of economic growth has long been unable to explain some real world "stylized.facts" such as the reasons for continued long-run expansion, the absence of convergence in per capita incomes across rich and poor countries and the frequent presence of medium-term changes in growth rates. Recently, new approaches to economic growth, often borrowing from earlier, non-orthodox, interpretations, have underlined the importance of investment in both physical and human capital, of scale economies or of learning by doing. These "endogenous growth" theories, however, are as yet largely untested, and hence unable to provide clear lessons for policy-making. Copyright 1992 by Oxford University Press.

This article presents a modest version of James Meade’s vision of a community fund, to be managed by commercial fund managers, with the aim of filling the hole in the public finances which can arise because the ned for critical healthcare and education grows faster than GDP. The author argues that, with profits representing and increasing share of GDP, it is essential for government revenues to have some relationship with increases in the value of capital. He suggests tightening up loopholes in inheritance tax and hypothecating the proceeds to a community fund so that wealth would “cascade down the generations” in the name of the community. He also suggests levying a variety of small-scale taxes in the form of scrip, with the shares being held by the community fund. The income of the fund would then be directed to education and healthcare.

Financial market crises with the threat of a subsequent debt-deflation depression have occurred with increasing regularity in the United States from 1980 through the present. Almost reflexively, when confronted with such circumstances, US institutions and the policymakers that run them have responded in a fashion that has consistently thwarted debt-deflation-depression dynamics. It is true that these "remedies," as they succeeded, increasingly contributed to a moral hazard in US and global financial markets that culminated with the crisis that began in 2007. Nonetheless, the straightforward steps taken by established institutions enabled the United States to derail depression dynamics, while European 1930s-style austerity proved as ineffective as it was almost a century ago. Europe's, and specifically Germany's, steadfast refusal to embrace the US recipe has fostered mushrooming economic hardship on the continent. The situation is gruesome, and any serious student of economic history had to have known, given European policy commitments, that it was destined to turn out this way. It is easy to understand why misguided policies drove initial European responses. Economic theory has frowned on Keynes. Economic successes, especially in Germany, offered up the wrong lessons, and enduring angst about inflation was a major distraction. At the outset, the wrong medicine for the wrong disease was to be expected. What is much harder to fathom is why such a poisonous elixir continues to be proffered amid widespread evidence that the patient is dying. Deconstructing cognitive dissonance in other spheres provides an explanation. Not surprisingly, knowing what one wants to happen at home completely informs one’s claims concerning what will be good for one’s neighbors. In such a construct, the last best hope for Europe is ECB President Mario Draghi. He seems to be able to speak German and yet act European.

This article reviews changes in thinking about the scope and design of government institutions. It looks at the rationales for privatization of state-owned utilities and the recent reforms in the U.K., New Zealand, and elsewhere to social service agencies and the institutions of economic policy making. After examining the role of public choice and principal-agent theories in shaping current attitudes, it notes the impossibility of complete contracting for the provision of many public services and emphasizes the importance of relational contracts in institutions where objectives are inevitably complex and many dimensions of performance difficult to verify. It concludes that commercial models are often inappropriate replacements for centralized political control. Many public service functions are best carried out by intermediate institutions. Management of these institutions should operate on franchises giving a renewable lease on assets held in trust. Accountability to stakeholders and the political authority should be periodic rather than continuous. Copyright 1994 by Oxford University Press.

The 1983 Fall Meeting of the Project LINK was held at the time of the tenth anniversary of the commencement of the generalized floating rate regime. It might be debatable whether one should celebrate the birth of this regime or mourn over the death of the Bretton Woods system, but no one would disagree with the view that we shall have to live together with this ten-year old neighbor for some years to come so that we should learn more about the temper of this temperamental system. At the 1982 LINK meeting, one special session was devoted to an investigation of alternative methods of modeling capital flows and exchange rates [see Klein and Krelle (1983)]. During the meeting a plan evolved to organize a comparative study among multi-country or world models that have incorporated exchange rate determination mechanisms. Originally, the Federal Reserve Board Multi-Country Model, the World Economic Model of the Economic Planning Agency (Japan) and the LINK system itself had been planned to participate, but in an early stage of preparation the OECD INTERLINK also joined the group with its latest attempt to endogenize exchange rates among major currencies. In what follows the first four papers report on the methods of endogenizing exchange rates in the framework of multilaterally linked models. They also report on the simulation results designed to facilitate comparisons among alternative approaches. The final paper discusses major similarities and differences of the simulation experiments. Each model. of course has its own history of exchange-rate modeling. An early attempt in FED-MCM can be found in Bemer et al. (1977), which was based on the structural balance of payments approach. Due to difficulties in obtaining stable equation estimates for international capital transactions, among other reasons, a shift has been made to a single-equation method

There has been much concern in recent years over “imbalances” in world trade. The United States’ deficit on current account has been the principal focus of attention. It has been associated with continued pressure on the dollar since March 1985 with intermittent sharp movements in exchange rates. Some commentators have warned of the risk of a complete loss of confidence in dollar-denominated financial assets, leading to rising interest rates and recession in the United States.1 Such a recession would have international consequences, especially in the current period of high international indebtedness of many countries.

This paper examines some alternative specifications of the aggregate consumption function for eight OECD countries. Wealth effects are potentially important as determinants of consumption and as a transmission channel from monetary influences to real variables. However, measurement difficulties prevent direct incorporation of wealth in empirical work on consumption in many countries. Here, wealth effects are incorporated implicitly into estimated functions in a way that differentiates between indexed and non-indexed assets. Results indicate that, while inflation appears to affect measured consumption ratios in all countries examined, an interaction between inflation and interest rates that would be implied by wealth effects is not always present. The implications of different consumption functions are tested within a macroeconomic model, the OECD INTERLINK system. The response of output and consumption to standard fiscal policy shocks generally becomes smaller when inflation ...

Cette etude porte sur la "ventilation" des variations de la croissance du revenu nominal entre la croissance reelle et l'inflation. Elle presente une analyse descriptive des donnees de la periode d'apres-guerre ainsi qu'une analyse par regression qui postule l'existence d'une ventilation dynamique stable. Cette analyse a ete effectuee pour tous les pays Membres de l'OCDE. On admet en general que les pouvoirs publics ont la possibilite de maitriser l'evolution du revenu nominal encore que l'etude presente egalement quelques donnees relatives aux rapports entre l'inflation et la croissance du revenu nominal et de la masse monetaire. On examine aussi le role des anticipations et de l'incertitude et leurs rapports avec l'action des pouvoirs publics ...

Since the work of Hamada (1974, 1976) a prima facie case has been established for the international coordination of macroeconomic policy. In a world where policies have spill-over effects on other economies, and in which governments have more policy targets than instruments, independent policy-making is generally sub-optimal; cooperation is required to reach a Pare to optimum. One obvious way in which policy changes in one country can impose externalities on another is through exchange rate movements.

Holtham Gerald. L'extension du système monétaire européen : une problématique vue de Londres. In: Revue d'économie financière, n°8-9, 1989. L’Europe monétaire : SME, Écu, Union monétaire, sous la direction de Michel Aguetta et Jean-Pierre Patat. pp. 231-239.