Economic Issues Volume 5

ECONOMIC ISSUES

Volume 5 (2000)

Part 1, March

Please select from the titles below:

F Carmichael and D Thomas, Institutional Responses to Uncertainty: Evidence from the Transfer Market
E Cleeve, The Locational Strategies of Investment in the UK by MNE’s from Developing Countries
A Dawson and P Downward, Measuring Habit Persistence Effects in Attendance at Professional Team Sports Encounters: a Cautionary Note
A T Flegg, J D Boardley, C D Webber and G C Mulvey, An Econometric Study of the Behaviour of Real Wages in Two French Industries
A J Abbott and R Williams, Recent Trends in Enrolments for UK Economics Degrees
D Parker, Reforming Competition Law in the UK: The Competition Act, 1998

Part 2, September

Please select from the titles below:

Part 1, March

Institutional Responses to Uncertainty: Evidence from the Transfer Market (p.1)

by F Carmichael and D Thomas

Abstract: In this paper we examine the organisation of the transfer market for association football players in the English Football League adopting a transactions cost framework. The transfer system for professional footballers is effectively the game’s labour market and we argue that it is characterised by small numbers bargaining and uncertainty and that therefore the transactions cost paradigm is relevant. We analyse 7,367 league transfers between English Football League clubs covering the seasons 1977-8 through 1993-4. Our results suggest that the transfer market has evolved in distinctive ways in response to informational problems. In particular we identify long term relationships between clubs, well established regional markets and the development of the loan system as rational responses to institutional uncertainty. Our conclusion also contains some observations regarding the implications of recent developments affecting the transfer system.

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The Locational Strategies of Investment in the UK by MNE’s from Developing Countries (p.21)

by E Cleeve

Abstract: The 1980s and early 1990s have witnessed the proliferation of multinational enterprises from developing countries (MEDCs), which are also becoming more significant players in the industries in which they participate. In this paper we identify and examine the locational characteristics of these firms in the UK. It also assesses how these locational characteristics of MEDCs reflect those identified in the literature, how they compare with local UK firms and how they relate to multinationals from industrialised countries (MEICs). The results on MEDCs’ locational characteristics in the UK support the literature on other empirical results, differ from UK firms’ locational characteristics and are similar to some of the factors that determine the choice of location of MEICs.

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Measuring Habit Persistence Effects in Attendance at Professional Team Sports Encounters: a cautionary note (p.37)

by A Dawson and P Downward

Abstract: The authors argue that the standard procedure for capturing habit persistence in empirical models of attendance at professional team sports is deficient. A mis-specification traceable to an early (influential) paper appears to affect subsequent work, casting some doubt on its correct interpretation.

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An Econometric Study of the Behaviour of Real Wages in Two French Industries (p.41)

by A T Flegg, J D Boardley, C D Webber and G C Mulvey

Abstract: This paper examines the behaviour of real wages in the French textile and paper industries. The econometric analysis is embedded within theoretical framework of the insider-outsider hypothesis. The models attempt to measure the impact of insiders and outsiders on real wages, and the part that insiders play in creating hysteresis in employment. The analysis uses a range of industry-specific and aggregate variables to measure the influence of insiders and outsiders. Quarterly data for the period 1972-97 are employed.

The econometric results indicate that both internal and external variables play a statistically significant role in explaining changes in real wages, and that the pure insider-outsider hypothesis can be rejected for both industries. As far as its authors are aware, this paper is the first to test for insider power in French industry.

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Recent Trends in Enrolments for UK Economics Degrees (p.61)

by A J Abbott and R Williams

Abstract: This paper examines the changing trends in enrolments on economic degrees in the UK. Other recent studies in this area are reviewed and a survey of admissions tutors is used to identify the most important factors contributing to the decline in applications.

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Reforming Competition Law in the UK: The Competition Act, 1998 (p.69)

by David Parker

Abstract: The l998 Competition Act introduced important changes to UK competition policy after years of concern that UK competition law was in need of reform. The new Act harmonises UK law with European Union legislation on restrictive practices and abuse of a dominant position. At the same time, UK competition policy retains certain features that continue to make it distinct from EU law and practice, especially in relation to the treatment of oligopoly and the regulation of mergers.

This paper details the changes to competition policy introduced by the 1998 Competition Act and reviews in particular the government’s new powers of investigation and the penalties that can now be levied for anti-competitive behaviour. The paper also discusses the role and structure of the new Competition Commission. Where relevant comparisons are made with European Union policy.

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Part 2, September

An Alternative Pedagogy for Economic Modelling (p.1)

by A O Moscardini and K A Lawler

Abstract: There is an awareness amongst teachers of economic modelling that new teaching methodologies and pedagogies are needed. This paper examines the weaknesses of traditional teaching methods and suggests that System Dynamics would be a useful supplement to the learning process for typical economics undergraduates. A brief description is given of the key features of the System Dynamics methodology and an illustrative example has been chosen. This is the multiplier-accelerator model of Samuelson. The System Dynamics approach is compared with more traditional approaches and several pedagogical points are emphasised.

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Monetary Deregulation and Consumption: Evidence from Certain Components of Consumption (p.15)

by N Apergis

Abstract: This paper investigates the impact of the monetary deregulation in Greece that occurred in 1988 on the relationship between real money balances and real credit and certain components of consumption, namely, durables and non-durables. The Granger-causality methodology is used to examine this relationship over the 1958-1987 periods. The results demonstrate that the deregulation has affected only the consumption of durable goods.

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UK Monetary Policy, Earnings Growth and Labour Market Structure 1989-1998 (p.21)

by A Gasteen, J Houston and D Asenova

Abstract: The Bank of England’s Monetary Policy Committee (MPC) sets UK interest rates to control inflation paying particular attention to earnings growth as measured by the Average Earnings Index (AEI). In October 1998, a revised AEI indicated that wage inflation had been overestimated bringing the conduct of monetary policy into question. This index was given credence by the popular belief that structural change in the labour market has reduced the earnings growth rate. However, a further revised AEI in March 1999 suggested wage inflation had been underestimated. This paper investigates why labour market changes have not suppressed earnings growth, assessing the influence of structural factors on the AEI. A new series of occupation-weighted, earnings indices from Labour Force and New Earnings Surveys’ data is computed. The failure to adequately adjust for changes in UK labour market structure (in particular, increased service sector employment and greater female participation) is observed to have slightly underestimated earnings growth.

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Abstinence, Excess, Success?: Alcohol, Cigarettes, Wedlock and Earnings (p.37)

by Sam Cameron and Damian Ward

Abstract: The effects of smoking, drinking and marriage on individuals’ earnings are estimated for the UK labour force for 1974, 1984 and 1994. Smokers are found to incur a wage discount; drinkers a wage premium and married individuals a wage premium with a discount for the first child. Such results are interesting given numerous governments’ policy interests in the activities of smoothing, drinking and the institution of marriage.

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