Journal Archive
Volume 40, Issue 1, 2010
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Articles:
I COLIN CLARK MEMORIAL LECTURE 2009
- What Have we Learnt? The Great Depression in Australia from the Perspective of Today (David Gruen and Colin Clark)
II RECENT TRENDS IN ECONOMIC RESEARCH
- The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities (Alexander Kalb)
- The Role of Labor Market Institutions on Wage and Inflation Dynamics: Empirical Evidence from OECD Economies (Fatih Macit)
- A Note on the Concept of Excess Burden (Hans Lind and Roland Granqvist)
- The Determinants of Firm-Level Export Intensity in New Zealand Agriculture and Forestry (Kris Iyer)
- Farmers Resource – Use and Technical Efficiency in
Cowpea Production in Nigeria (B.T. Omonona, O.A. Egbetokun and A.T. Akanbi)
- Response to Peter Monkhouse (Nick Wills-Johnson)
III BOOK REVIEWS
- Neuroeconomics – Decision Making and the Brain by P.W. Glimcher, C.F. Camerer, E. Fehr and R.A. Poldrack
- An Introduction to Climate Change Economics and Policy by F.R. Fitzroy and E. Papyrakis
- Macroeconomic Theory – A Dynamic General
Equilibrium Approach by M.R. Wickens
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COLIN CLARK MEMORIAL LECTURE 2009: What Have we Learnt? The Great Depression in Australia from the Perspective of Today
David Gruen and Colin Clark
Pages: 3-20
Abstract: This lecture examines the lessons learnt from Australia’s experience in the 1930s, and how these lessons have informed more recent economic policy decisions including the policy responses to the current global financial crisis. The lecture argues that the lessons learnt from the Great Depression have informed the macroeconomic frameworks of today. While Australia’s policy frameworks of the 1930s were tragically ill equipped to cope with anything other than small, inconsequential macroeconomic or financial market shocks, the policy frameworks put in place in the modern era have rendered the economy much more resilient to such shocks.
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The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities
Alexander Kalb
Pages: 21-63
Abstract: In this paper we use a simple bureaucracy model of fiscal illusion to analyse the impact of intergovernmental grants on the cost efficiency of local jurisdictions. We find that a higher degree of redistribution within a system of fiscal equalisation or an increase in the amount of grants received by a local jurisdiction leads to an extension of organisational slack or X-inefficiency in that jurisdiction. This theoretical prediction is tested by conducting an empirical analysis using a broad panel of German municipalities. The results of the empirical analysis are consistent with the theoretical findings and therefore support the existence of a negative incentive effect of intergovernmental grants on local authorities' cost efficiency.
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The Role of Labor Market Institutions on Wage and Inflation Dynamics: Empirical Evidence from OECD Economies
Fatih Macit
Pages: 64-77
Abstract: This paper investigates empirically how labor market institutions affect wage and inflation dynamics, particularly the volatility of real wage growth and inflation using a panel data for OECD economies. I also look at how the rate of unemployment is affected by the larger set of labor market variables that captures diverse aspects of the labor market. The main finding of the paper is that benefit replacement rate is the most significant variable in explaining the volatility of real wage growth and inflation. Besides that union density and bargaining coordination also play an important role in explaining the volatilities in these variables. These results for the benefit replacement rate and union density also support the findings of the theoretical models. It is also shown that the labor market institutions have a considerable influence on the level of unemployment as higher levels of benefit replacement rate, longer durations of unemployment benefits, and a higher union density are expected to lead to a higher level of unemployment.
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A Note on the Concept of Excess Burden
Hans Lind and Roland Granqvist
Pages: 78-88
Abstract: It is argued that there has been a shift in the meaning of "excess burden" from Pigou to modern economics, related to what is used as a reference point when the effect of a tax is discussed. Is it the situation before the tax was introduced or what would have happened if a lump sum tax had been used instead? This distinction is important for tax policy, since the latter reference point leads to a larger, sometimes much larger, numerical value for the excess burden. However, the distinction is not often clearly made and this has led to risks for misguided political decisions on taxes. It is further argued that when excess burden and efficiency losses are discussed, economists have neglected to discuss the meaning of “can”, or “possible”, when the Pareto principle is formulated. Is it reasonable to say that welfare "can" be improved by a lump sum tax instead of a "distortionary" tax if, as most economists seem to believe, such a tax is not a realistic alternative? Since conceptual clearness about the excess burden of taxes is important, some suggestions for improving the situation are also presented.
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The Determinants of Firm-Level Export Intensity in New Zealand Agriculture and Forestry
Kris Iyer
Pages: 90-101
Abstract: This paper investigates the determinants of firm level export intensity in New Zealand’s agriculture and forestry over the period 2000-06. Applying a random effects model, it is uncovered that export intensity is driven by firm productivity and export market diversification. Firm size is found to have a negative effect on export intensity. Sector characteristics do not have an empirically discernible influence.
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Farmers Resource – Use and Technical Efficiency in Cowpea Production in Nigeria
B.T. Omonona, O.A. Egbetokun and A.T. Akanbi
Pages: 102-110
Abstract: In Nigeria, the use of stochastic frontier to estimate farm level efficiency effects is still at the rudimentary level and is beginning to build up. Few studies have been undertaken but there is dearth need for more empirical studies on this important issue. This paper presents the analysis of technical efficiency of cowpea production in Osun state southwest Nigeria, using the stochastic production frontier, budgetary and resource-use efficiency analyses. The marginal value products of all the resources used are less than their prices (MVP<MFC), indicating underutilization of resources. The enterprise economic efficiency is 1.17. This means that for every N1 spent by the farmer on cowpea production, 17 kobo was realized as profit. The farmers’ average technical efficiency is 87%, which suggest an appreciable use of inputs in productivity. Analysis efficiency using stochastic production frontier shows that farm size, seed, hired labour, family labour, fertilizer and pesticides are significant at 1% and some socio-economic variables using tobit regression model is found to be significantly different from zero at 1% for cooperative membership and farming experience. It is recommended that farmers should be encouraged to join cooperative society and extension services agents should intensify their efforts in training and mobilizing farmers for improved production of cowpea. Also, farmers should cut down the use of resources (quantity) for optimum production and economic benefit.
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Response to Peter Monkhouse
Nick Wills-Johnson
Pages: 112-123
Abstract: The regulation of infrastructure by the ACCC and other economic regulators in Australia is based around net present value estimation techniques. Recently, Monkhouse (2007) suggested that real options valuation would provide better incentives for investment in infrastructure, but did not elucidate how a regulatory system based on real options valuation should operate. This paper endeavours to sketch the outlines of such a system, and finds that it has considerable promise as an alternative to the status quo, provided an appropriate technique for addressing monopoly rents can be developed.
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Book Reviews:
- Neuroeconomics – Decision Making and the Brain by P.W. Glimcher, C.F. Camerer, E. Fehr and R.A. Poldrack
- An Introduction to Climate Change Economics and Policy by F.R. Fitzroy and E. Papyrakis
- Macroeconomic Theory – A Dynamic General Equilibrium Approach by M.R. Wickens
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