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ECONOMIC ISSUES

Volume 7 (2002)

Part 1, March

Please select from the titles below:

Part 2, September

Please select from the titles below:

Part 1, March

School Leaving Intentions at the Age of Sixteen: Evidence from a Multicultural City Environment (p.1)

by W Thomas, D J Webber and F Walton

Abstract: The intention to continue on to further study by students in full-time education is investigated with particular focus on the role of peer groups and educational experience. Using random effects nominal logit regression analysis and data from the Bradford Youth Cohort surveys, it is found that peer groups and the perceived importance of teachers' advice positively influence the decision to continue onto post-compulsory education. Boys intentions to leave the area in the future appears to be strongly related to the intention to stay on in education, illustrating a link between education and future geographical mobility. The importance of these variables varies between genders.

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Towards a transmutable economics? A comment on Wynarczyk (p.15)

by S P Dunn

Abstract: This note responds to Wynarczyk’s recent claim in this Journal that Austrian and Post Keynesian Economics share a similar axiomatic base. It is argued that while both traditions appear to emphasise the nominal importance of money, creativity and uncertainty, if they are indeed committed to taking uncertainty seriously then both must recognise nonergodic constructs such as money denominated contracts. History matters.

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A Reply to Dunn's Comment (p.21)

by P Wynarczyk

Abstract: This short reply responds to Dunn’s comment in the current issue of this journal challenging the transmutable credentials and axiomatic base of Austrian economics. It is argued contra Dunn (and Davidson) that the Austrians are transmutable theorists too with the economic calculation debate as their fundamentalist revolution.

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Subsidy and Productivity in the Privatised British Passenger Railway (p.25)

by J Cowie

Abstract: This paper gives an overview of subsidy reductions in the privatised passenger rail industry in Britain before focusing on productivity performance across the first four years under the privatised structure. Subsidy reductions are analysed in terms of the average annual percentage increase in passenger revenues and/or decreases in costs required to offset these reductions. Productivity is then examined through the use of a Tornqvist productivity index, with passenger train kilometres specified as the output, and labour, traction rolling stock and infrastructure specified as the inputs. For the network as a whole, it is found that total productivity has risen on average by four per cent per annum over the post-privatisation period. Most gains have been achieved through labour reductions and increases in output from improved utilisation of existing inputs. Compared with the performance of the nationalised British Rail, gains made since privatisation are not as high as those made in the later period of public sector management. It is therefore concluded that it is commercialisation, i.e. the move towards a more market orientated organisation, rather than ownership form per se, that has been the key component in productivity gains.

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The Cobb-Douglas Production Function: An Antipodean Defence? (p.39)

by I Fraser

Abstract: In this paper a re-examination of the original time-series data sets used by Professor Douglas and associated researchers to establish the existence of an aggregate production function is undertaken. Particular attention is paid to the issue of whether the data provide deductive support for the ‘Laws of Production’ as claimed by Douglas (1948). Various statistical methods are used to analyse the data to see if the claims of Douglas are justified. Only the New South Wales data and to a lesser extent the New Zealand data yield results that support the assertions of Douglas - hence the Antipodean defence.

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Process Recurrence and Input Use at the Industry Level: A Coherent Long-Period Analysis  (p.59)

by I Steedman

Abstract: The familiar partial equilibrium analysis of an individual industry's use of a particular input involves changing only one price (that of the particular input in question), even when long period equilibrium is considered. But this is incoherent, other than in fluke cases, since such a price change will always force other industries out of long period equilibrium. When this incoherence is removed, and equilibrium is taken seriously, the comparative statics results obtained can differ sharply from those derived from the familiar analysis.

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Part 2, September

A Classroom Guide to the Equilibrium Exchange Rate Model (p.1)

by S Da Silva

Abstract: The article presents a classroom-suited version of the equilibrium exchange rate model of Stockman (1987) that features Cobb-Douglas functional forms for both production and utility, and considers foreign exchange intervention explicitly.

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Rules, Discretion and Financial Crises in Classical and Neoclassical Monetary Economics (p.11)

by D E W Laidler

Abstract: This paper traces the evolution of debate about the question of Rules versus Discretion in monetary policy from about 1800 until the mid 1930s. Particular attention is paid to long-versus-short-run issues, notably with respect to the 1844 Bank Charter Act, and the Bagehot Principle, as well as to the effects of developments in the theory of value, the cycle and index numbers on economists’ perception on the scope of monetary policy. A brief discussion of post-World-War-2 developments links this material to present day concerns and common themes are noted.

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Assessing the Determinants of Male Earnings Dispersion (p.35)

by K Taylor

Abstract: This paper considers male earnings dispersion in the United Kingdom in four industries from 1973 to 1995. The analysis takes place in two stages. Firstly, earnings dispersion over time is split into two components: between-group earnings dispersion due to differing worker characteristics across the population; and within-group earnings dispersion, that is any remaining earnings dispersion after controlling for measurable worker characteristics. Secondly, that part of earnings dispersion which cannot be explained by observable worker characteristics is examined by industry using time series techniques to assess the impact of technological change; globalisation; female participation; immigration; and institutional changes upon remaining dispersion.

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The Efficiency and Productivity Implications of Corporate Layoffs (p.59)

by M Raj and M Forsyth

Abstract: This paper examines the impact of corporate layoffs on firm efficiency levels. The methodology used provides fresh insights into the effects of layoffs on firm and labour-force performance. This paper uses a data envelopment analysis (DEA) approach to provide a benchmark measure for the operating efficiency of restructured companies that have reduced staff numbers and also companies that have found it necessary to downsize due to declining demand for its product. We apply this linear programming technique to both pre- and post-layoff periods. The findings indicate the sample of companies that restructure and incorporate layoffs as part of the process find an increase in efficiency while the opposite is found for firms that find it necessary to cut staff due to declining performance. The study also examines the relation between layoffs and shareholder wealth. The findings show that layoffs attributed to declining demand are related with poor stock market performance in the long-term post-layoff period. The evidence also suggests that firms involved in reorganisation, and subsequently layoffs, perform strongly and are viewed positively by the market over the 2-year post-layoff period.

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Productivity Growth and Capacity Utilization in the Australian Gold Mining Industry: A Short-Run Cost Analysis (p.71)

by B Shebeb

Abstract: This paper uses a stochastic short-run translog cost function to estimate productivity growth, adjusted for capacity utilisation effects, in the Australian gold mining industry over the time period 1968/69-1994/95. Productivity growth is measured and adjusted for the changes in capacity utilisation. It is found that a large portion of the cost-measure (observed) productivity growth may be attributed to technological change. Changes in capacity utilisation are found to have insignificant impacts on productivity growth in the Australian gold mining industry. Biases from technological change and capacity utilisation are also analysed. Technological change is found to be labour-saving and energy and intermediate inputs-using, but neutrality of capacity utilization cannot be rejected.

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Currency Stabilisation in the 1920s: Success or Failure?  (p.83)

by D H Aldcroft

Abstract: The currency stabilisation process of the 1920s - going back to gold - has been much maligned by scholars past and present. That it had defects and eventually collapsed in the 1930s should not obscure our view of the motives for the return. Given the chaotic currency and financial situation following the First World War, it was inevitable that stabilisation would involve some form of fixed exchange rate system. The new gold standard was by no means perfect but in the conditions obtaining at the time it is very likely that this would have been true of any form of fixed exchange rate system. However, for most countries and, for the global economy, stabilisation appears to have been economically beneficial.

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