The article brings to light Knut Wicksell's Lund lecture notes of 1902 and 1905 on economic crises. In these notes, written a few years after his book on interest and prices but before most of his published work on business cycles, Wicksell made an attempt to bridge the gap between monetary and real theories of crises. The notes are remarkable for a discussion of how partial overproduction is generalized through the credit mechanism and for an assessment and diagrammatic treatment of the controversies between Malthus, Say and Owen on general overproduction.
In a recent article, Fagerberg [Struct. Change Econ. Dyn. 11 (2000) 393] finds changes in the employment share of the electrical machinery industry to positively impact the manufacturing sector productivity growth. Fagerberg's approach has some methodological drawbacks, however. This note seeks to complement Fagerberg's analysis by estimating the impact of the employment share of technologically progressive industries using a more adequate methodology. Fagerberg's claim that the share of the ‘electronics’ industry positively affects manufacturing is confirmed. However, the size of the impact, and as a consequence the extent of spill-overs, is found to be much smaller than estimated by Fagerberg.
As recognized since long, consumption serving to signal social status, group membership, or self-esteem is a socially contingent activity. The corresponding expenditures are motivated mainly by the symbolic value they have for transmitting the signal. However, this presupposes some form of social coordination on what are valid, approved symbols. Unlike consumption not serving signaling purposes, the technological characteristics of the goods and services consumed may be secondary--what counts is their socially agreed capacity to function as a symbol. The paper discusses in detail the cognitive underpinnings of social agreement on consumption symbols and a model of their spontaneous emergence.
This paper presents the results of an effort to dissect 19th century economic growth in the Netherlands into two principal long run components: the domain of the trend and the domain of long waves. Spectral and cross-spectral analysis is used to identify Kondratieffs in volume series. It appears that the long term pattern of development is composed of an inverse S-shaped trend and a Kondratieff wave that is superimposed upon it. Contrary to the British case, long waves in Dutch volume series appear to run contrary to the corresponding long waves in price series. This finding is at variance with the received view on long waves. This typical result is explained by so-called 'Keynes effect' in combination with the characteristics of a small open economy that has to dance to the tune of the dominant British economy.
This paper documents the comparative productivity performance of the United States and Britain since 1870, showing the importance of developments in services. We identify the transition in market services from customised, low-volume, high-margin business organised on a network basis to standardised, high-volume, low-margin business with hierarchical management, as a key factor. A model of the interaction between technology, organisation and economic performance is then provided, focusing on the transition from networks to hierarchies. Four general lessons are drawn: (1) developments in services must be analysed if the major changes in comparative productivity performance among nations are to be understood fully; (2) different technologies and organisational forms can co-exist efficiently; (3) technological change can cause difficulties of adjustment in technology-using sectors if it is not suited to the social capabilities of the society; (4) reversal of technological trends can lead to reversal of comparative productivity performance.
This paper explores short and long-run changes in the energy to capital relation. The K/E ratio is calculated for Sweden 1870–2000, at the national, industrial and branch levels. A basic result is a substantial long-run increase in the K/E ratio which is positively correlated with the relative price pE/pK. The price response is stronger in energy intensive industries than in labour intensive industries. By considering the useful work (energy services) provided by energy sources, estimated using an aggregate measure of thermodynamic efficiencies, we can conclude, however, that energy services and capital have developed fairly evenly over the 20th century and thus that the long run increase in the K/E ratio depends on embodied biased technical change. From a natural resource and environmental perspective it is clear that the economy has managed to cope with relatively less energy over time, but with a stationary (near constant) capital to energy services ratio. From a growth perspective our results indicate high complementarity between energy services and capital.
This paper quantitatively identifies changes in technological opportunities during the last century. US patent data classified at a very detailed level are used as the source of reference. By analysing the complexities behind the changing technological opportunities, epochs and typical trajectories are traced empirically. Furthermore, it is shown how the composition of technological opportunities has evolved across historical waves. The paper illustrates how technological evolution has become increasingly interrelated and complex and how typical trajectories of individual technologies explain technological evolution better than conventional aggregate measures. Evidence also suggests how path-dependent technological change is characterized by ‘creative incremental development’.
The decline in the British share of world trade from the 1870s onward has been attributed to its failure to shift resources from low to high growth sectors, i.e. those of increasing importance in world trade. This thesis is examined for the period 1899–1929 using detailed data and a new method of constant market shares analysis. The results indicate that neither the adaptability of Britain's export sector nor the commodity or country pattern of world trade was working against it to a degree sufficient to account for most of its loss of share in world trade. Instead, the British loss of market share in its traditional exports to its traditional markets explains the overwhelming proportion of the decline.
This paper is concerned with the following three issues in Georgescu-Roegen's bioeconomic paradigm along with his unique epistemology. First, a dialectical approach is shown to be indispensible in dealing with evolutionary changes. Second, since Georgescu-Roegen's work is so tangled, an attempt is made to clarify his view on thermodynamics and the economic process. Finally, Georgescu-Roegen's ‘Fourth Law of Thermodynamics’ is critically reviewed.
This paper first explores how movements in Government spending and private capital investment can be related to changes in the unemployment rate of the USA between 1948 and 1988. The resulting model shows that there are very stable dynamic relationships between purely relative measures of these major macro-economic variables over this time; relationships that appear to continue into the post-1988 period and may help in understanding the differences in the investment–unemployment behaviour of the US economy before and after 1988.
This paper analyzes the relationship between economic growth and technological change in open economies and studies the effects on employment. The main aim is to identify, at the empirical level, possible explanations of the 1960–1990 medium-term dynamics of industrial employment in nine OECD countries—the main six countries of the European Community (Belgium, France, Italy, the Netherlands, the United Kingdom and West Germany) and three important industrialized OECD countries (Canada, Japan and the United States). The theoretical framework is the Kaldorian scheme of cumulative growth focusing on the interactions between productivity growth and demand (production) growth. The version we adopt for the empirical analysis is the “external causation model”, developed by the French school of regulation, which emphasizes the role of export dynamics, given the pattern of domestic components of aggregate demand, and the specific characteristics of the adopting technologies.
In this paper, using census data from the assembly industry during the period 1960–2000, we attempt to expand the knowledge about how innovation and imitation lead to the exploitation of long-term subcontract networks and agglomeration economies; thus having an effect on an improvement in productivity. To this end, a data envelopment analysis is employed to decompose productivity into innovation and imitation. The main findings make it evident that as time passes innovation most noticeably tends to occur towards the outskirts of the core area, and that the level of efficiency readily improves in areas where the division of labor is advanced by relatively small establishments.
Fiscal rules such as level funding have been widely adopted in order to restrict public spending even though they may damage the output of technologically stagnant public services. The conditions for such outcomes are analysed by imposing three fiscal rules upon the growth path of such a service in a two-sector unbalanced growth model. The analysis is assessed in the context of public spending on higher education in 17 advanced economies during 1970–1987. While a variety of qualifying factors is recognised. The evidence suggests that underallocation of resources to higher education may have become widespread, with the most acute difficulties occuring in countries showing the greatest fiscal restriction, i.e. Denmark, New Zealand, and the UK. The need for long-term policy development on technological of financial aspects, or both, is emphasized.
During the period from 1979 to 1984, Israel experienced one of the highest rates of inflation in the world which peaked at more than 450 percent annually in 1984. Most incomes were protected, however, from the inpact of inflation by an elaborate system of indexation that included wages, the income tax structure and the social security benefits. Against this background, the year-to-year changes in income inequality and in poverty are analysed. It is shown that despite the spiralling inflation, there have been only small changes in the measures of income inequality through most of the period. In 1984, when the inflation rate tripled, income inequality—measured by the Gini Coefficient—rose by 8.8 percent and the Poverty Gap rose by 19.4 percent.
Cost and subsidy driven adjustment processes have played a much more important role in the trade reorientation of the Hungarian economy than generally assumed. The link between export and overall profitability of export-oriented firms has tightened over the 1980s. Subsidies which had been used to compensate for export losses were largely eliminated and began to favour firms with profitable exports. In 1981–1984 a higher than average profit ratio of export-oriented firms can be explained by their better performance in dollar exports and in domestic sales. In 1985–1987 their profits from rouble and dollar exports were lower than the average of the corporate sector. After 1987 the profitability of dollar exports of export-oriented firms improved.
This paper examines the determinants of the substantial decline of West German production-related carbon intensity in the face of falling energy prices. A computable general equilibrium model is used to determine the simulated effects of observed changes of world energy prices and domestic energy policy on the sectoral patterns of carbon emissions, energy consumption, output, value-added and other indicators of structural change. The structural changes not accounted for by energy prices and energy policy are attributed to changing patterns of productivity growth in Germany and the rest of the world (ROW) and changing patterns of ROW demand. Weights on these driving forces are selected by least squares. One key finding is that the contribution of ROW productivity and demand patterns to emission-relevant structural change unaccounted for by energy prices and energy policy is just under 30%. The remainder is split almost equally among patterns of domestic autonomous energy efficiency improvement and domestic labor efficiency patterns.
Two aspects of the recent performance of the Dutch economy (1982–2001) have attracted wide international attention: (1) rapid employment growth and (2) a significant slowdown in labour productivity growth. This paper argues that the shift from a high-productivity, low-employment towards a low-productivity, high-employment growth path constitutes a structural change set off by the policy of low wage growth launched in 1982. Various theoretical perspectives—including neo-classical substitution, induced technological change, vintage and the Verdoorn Law—point to channels through which wage growth restraint may hold back labour productivity growth. Our growth accounting analysis—based on these perspectives—suggests that a substantial part of the Dutch labour productivity growth slowdown can be attributed to the wage growth slowdown.
There is now an extensive empirical literature relating to tests for various forms of convergence between the real per capita outputs of different countries. The evidence from these tests is mixed, and depends upon the type of data used, the countries in question, and the sample period in question. However, very little attention has been paid to the possibility of an associated convergence in “well-being” across countries. Indeed, it is interesting to posit the lack of any connection between convergence in output (income) and convergence in well-being. In this paper we address this issue in the context of 14 OECD economies, using various measures of well-being, and different tests of convergence. The latter include a time-series test recently proposed by Nahar and Inder [Nahar, S., Inder, B., 2002. Testing convergence in economic growth for OECD countries. Applied Economics 34, 2011–2022], and a test based on fuzzy clustering proposed by Giles [Giles, D.E.A., in press. Output convergence and international trade: time-series and fuzzy clustering evidence for New Zealand and her trading partners, 1950–1992. Journal of International Trade and Economic Development]. Our findings indicate that in general one should not expect convergence in output to be associated with convergence in well-being.
The relationship between economic structure and productivity growth has been a subject of increasing interest over recent decades. The innovative focus of this paper concerns the role of the service sector in this relationship. Services play a core role in advanced economies, both from a quantitative and a strategic point of view. However, empirical research in this area lies considerably behind the research into the agricultural and manufacturing sectors. This paper focuses on the impact of tertiarisation on overall productivity growth, using a sample of 37 OECD countries in the period between 1980 and 2005. The results partially refute traditional knowledge on the productivity of services. Contrary to what conventional theories suggest, this research demonstrates that several tertiary activities have shown dynamic productivity growth rates, while their contribution to overall productivity growth plays a more important role than was historically believed.
This paper assumes that the term ‘competitiveness’, if properly used, does describe an important feature of the world economy. This concept suggests the consideration of important issues that are central to the understanding of the distribution of wealth, both nationally and globally. Competitiveness issues have been central in public policy for at least 500 years. The paper considers two different intellectual traditions behind the literature on economic growth: the classical mode and the collusive mode. When the second mechanism operates, the producer (company or nation) retains an important part of the benefits of improved productivity, and the issue of competitiveness may be discussed.The paper argues for the relevance of past economic policies and examines the non-monetary aspects of preclassical and later ‘anticlassical’ economic thought in England, United States, Germany, Japan.A discussion of competitiveness as a ‘proxy’ for the pursuit of dynamic imperfect competition concludes the essay.
Leontief's main analytical contributions lie in the formulation of inductive theory, which begins with the facts, then rises to the more general, and finally returns to the facts. Such theorizing is increasingly warranted in the field of economic development because countries remaining poor now look for insights into how to trigger growth in successful late-industrializing country experience rather than in abstract models. This paper attempts to outline an inductive approach to understanding the government's role in East Asia's economic transformation.
In this paper we analyze qualitatively and quantitatively the potential effect of the accession on the development of several Central and Eastern European (CEE) countries (specifically, the Czech Republic, Hungary, and Poland). To achieve the task we design an endogenous growth model of an accession economy with special features. Since we perceive the process of accession as progressive opening of the economy in terms of trade and capital flows, on the one hand, and as a massive technological transfer that enables fast technological catch-up with the technological frontier of the advanced countries, on the other, we build a small open economy version of the two-sector endogenous growth model of the Uzawa–Lucas style with knowledge diffusion. The model is first calibrated to stylized facts of the economic development during the accession process in the EU periphery countries. In general, the experience of the EU peripheral countries fits the predictions of our model reasonably well. Using alternative scenarios in several dimensions we then calibrate the model according to the data on the CEE countries above and simulate their behavior. The interplay of various initial conditions and the parameters of the accession generate different accession patterns and also rather different speeds of convergence to the EU average. The model outcomes do not only provide us with these quantitative estimates but also improve our understanding of the economic mechanisms, which underpin those transitions.
AbstractThis paper examines the time-varying time series processes of the interaction between government fiscal deficits, the current account balance and the real exchange rate for the U.K. and U.S. economies. This is achieved in a novel way by estimating a time-varying vector autoregression model that allows for time variation in the stochastic variance and autoregressive parameters. This paper finds that, contrary to results reported in the recent literature, government deficit shocks worsen the U.S. current account balance. In contrast, results based on the historical time series for the U.K. show evidence of fiscal deficits having actually improved the current account balance. However, in commonality, the time-varying estimates show that the impact of fiscal deficits on the U.K. and U.S. current account balance has fallen in magnitude over the past 20 years. The time-varying variance decomposition results illustrate that fiscal deficit shocks played a key role in driving U.K. current account and real exchange rate fluctuations throughout the 1980s. In contrast, fiscal deficit shocks have been a small factor in the variation of U.S. current account and exchange rate fluctuations over the past 25 years. The time-varying results in this paper do not support the view that future fiscal deficit reductions alone can eliminate U.K. and U.S. current account imbalances.
Structural change analysis has an important tradition in economic theory. However, up to the present date, no attempt had been made to provide an overall survey on the matter. This paper aims to fill this gap. To this end, bibliometric methods were applied, combining 9703 citations from the area's 'seed journal' with a review of 910 abstracts of all theoretical and empirical articles on structural change that were published over the past 40 years in the journals indexed in the Econlit. We testify the recent rise of interest in structural change where technological issues gained increasing relevance. The 1990s witnessed a spurt in formal work, but more recently such trend was not confirmed; on the contrary, there has been a strong impetus towards empirically led work. Our analysis further reveals that most contributions put great emphasis on technology-driven growth and lack an appropriate treatment of the demand side.
Standard sources of growth accounts are empty of content because they rely on neoclassical production theory. Rather, analysis can be based on productivity growth equations derived from national income and product accounts (NIPA) accounting conventions and a helpful algebraic identity. These schemes impose valid restrictions on growth rates of the wage rate, profit rate, capital, labor, and their respective average productivities. One states that the output growth rate equals employment growth plus productivity growth. The standard "convergence" model basically adds accumulation dynamics to this identity. Replacing the aggregate production function with proper accounting restrictions gives a growth model with detailed results that differ markedly from those of the standard model. Alternative, essentially Kaldorian supply- and demand-based alternatives to sources of growth based on a familiar output growth versus productivity growth diagram with constant employment growth contours added in look like a useful alternative to the mainstream models. With distributive dynamics added in, the model would also generate Goodwin-style cycles.
This article presents a preliminary comparison of the systems of integrated economic and environmental accounts in Sweden, Germany, the UK, Japan and the Netherlands. These countries have presented their results in a National Accounting Matrix including Environmental Accounts (NAMEA). Although the first Dutch NAMEA may have served as an example, for each country different features can be found depending on differences in objectives, available statistical sources and subsequently institutional backgrounds. Moreover, most countries have developed the NAMEA simultaneously with other accounting approaches. The first section compares differences in objective, scope and methods. The second section presents an preliminary comparison of the results which shows that comparable accounts will not automatically lead to comparable results.
This paper starts with the basic premise: that conventional measures of productivity growth—often used as a measure of corporate performance—which ignore external or social output, are biased. We then construct an alternative productivity growth measure using activity analysis which integrates the externality/social output into a generalized productivity measure reflecting social responsibility. This method is very general and could be applied to gauge corporate social responsibility. We provide an application to US agriculture to demonstrate the approach: we show that conventional measures of productivity are biased upward when production of negative externalities (or bad) outputs is increasing. Conversely, this same measure of productivity is biased downward when externalities in production are decreasing.
Accountability of socio-economic policies for their environmental impacts is at the heart of sustainable development. Accounting for economic performance and its environmental effects is the first step towards integrating environmental concerns into economic policies. Integrated economic-environmental accounting assesses certain aspects of the sustainability of economic growth in terms of produced and natural capital maintenance. However, comprehensive development analysis comprises further non-economic objectives that do not lend themselves to monetary valuation. Social evaluation of these objectives by means of norms, standards, and targets is required for integrated development.
This paper tests several related hypothesis for explaining US economic growth since 1900. It begins from the belief that consumption of natural resources—especially energy (or, more precisely, exergy) has been, and still is, an important factor of production and driver of economic growth. However the major result of the paper is that it is not ‘raw’ energy (exergy) as an input, but exergy converted to useful (physical) work that—along with capital and (human) labor—really explains output and drives long-term economic growth. We develop a formal model (Resource-EXergy Service or REXS) based on these ideas. Using this model we demonstrate first that, if raw energy inputs are included with capital and labor in a Cobb–Douglas or any other production function satisfying the Euler (constant returns) condition, the 100-year growth history of the US cannot be explained without introducing an exogenous ‘technical progress’ multiplier (the Solow residual) to explain most of the growth. However, if we replace raw energy as an input by ‘useful work’ (the sum total of all types of physical work by animals, prime movers and heat transfer systems) as a factor of production, the historical growth path of the US is reproduced with high accuracy from 1900 until the mid 1 970s, without any residual except during brief periods of economic dislocation, and with fairly high accuracy since then. (There are indications that an additional factor, possibly information technology, needs to be taken into account as a fourth input factor since the 1970s.) Various hypotheses for explaining the latest period are discussed briefly, along with future implications.
In this paper, we discuss the background of German Environmental Economic Accounting (GEEA). One of the elements of GEEA is material and energy flow analysis. The corresponding accounts are presented in the Material and Energy Flow Information System (MEFIS). This data base can be used for many purposes including application in the National Accounting Matrix including Environmental Accounts (NAMEA). The data availability for analyzing particular environmental burdens is described. Specific indicators for greenhouse effect and acidification are presented in the form of charts and tables.
As part of the Swedish effort at integrating economic and environmental issues, Statistics Sweden has developed a system of physical environmental accounts. The system is based on the concept of satellite accounts which supplement the traditional national accounts. Here, Statistics Sweden focuses on the chain linking natural resources to economic activities and emissions. Current projects include the use of energy and the emission of pollutants, statistics on waste generation and recycling, and accounts for phosphorus and nitrogen flows. Attention is also paid to improvements of data on expenditures on environmental protection.