Please select from the titles below:
- Economic Theory and Technical Progress
- The Cost of Insider Trading: Evidence from Defined Markets
- On Austrian-Post Keynesian Overlap: Just How Far is New York from Knoxville, Tennessee?
- Analysing Trends in UK Household Income Inequality: A New Approach
- A Note on the Country Specific Nature of Asymmetric Adjustment: Australia and the United Kingdom
- New Evidence on Causal Relationships between Money Supply, Prices and Wages in the United Kingdom
- Advertising and Firm Performance: Some New Evidence from United Kingdom Firms
- On the Cyclical Behaviour of Prices
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Economic Theory and Technical Progress (p.1)
by L PasinettiEconomists' recent outburst of interest in technical progress follows upon a widespread feeling of inadequacy of current economic theory. This paper traces the origin of this inadequacy back to the historical circumstances that led an influential group of English economists in 1815 to put forward the `law of diminishing returns' to land cultivation, jointly with the theory of rent. It shows how technical progress, though not denied in principle, was eliminated by assumption for analytical reasons. That choice - it argues - arose from historical circumstances specific to a particular country in a particular time. Yet it has influenced the development of economic theory ever since. Later on, neoclassical economists have further exacerbated the effects of that initial choice. The paper argues in favour of going back to the origin and reversing the Classical choice.
The Cost of Insider Trading: Evidence from Defined Markets (p.19)
By L Vaughan WilliamsIn this paper, two complementary markets for bets on UK horse races are examined for evidence of information inefficiency in the form of unexploited price differentials between these markets for the same product. It is shown that bettors could on average improve their expected return by shifting their betting patterns in a defined way. Evidence is adduced which supports the hypothesis that the apparent inefficiency is a consequence of perceived insider activity. In particular, in situations where there are likely to be limited opportunities for insider trading, the `inefficiency' disappears. Although the evidence produced here applies to a relatively unsophisticated market, it poses legitimate questions about the operation of more complex financial markets.
On Austrian-Post Keynesian Overlap: Just How Far is New York from Knoxville, Tennessee? (p.31)
By P WynarczykThe paper critically explores Davidson's axiomatic-based argument that Post Keynesian and Austrian economics lack meaningful analytical overlap. It challenges his dismissal of the Austrian perspective as little more than a poor relation of orthodoxy which offers little gains in intellectual trade for Post Keynesianism. It will be maintained that the Austrian approach shares all of the axioms, and more besides, highlighted by Davidson as the sole preserve of Post Keynesian economics. He concedes too little to the Austrians and too much to Keynes and the Post Keynesians. Davidson neglected the evolving intellectual affinities between these two research traditions by ignoring areas of commonality and exaggerating the extent of discord. He endeavoured to diminish the standing of Austrian economics by reducing it to a special `backwater' of neoclassicalism whilst at the same time promoting his own particular variant of Post Keynesianism as a general representation of the entire school partly in order to present a more unified and cohesive alternative to the mainstream than in actuality.
Analysing Trends in UK Household Income Inequality: A New Approach (p.49)
By D Leslie and A WhartonUsing data derived from 30 years of the IFS Households Below Average Income Data Set, this paper examines the impact that the UK social security system had on UK household income inequality between 1961 and 1991. It asks whether rising inequality during the 1980s was due to a greater proportion of households being in receipt of social security or whether it was due to the fact that the system became less generous to households on social security because benefits were index linked rather than being linked to average living standards. Using a new, systematic procedure for decomposing changes in income inequality, strong evidence is found for a rising inequality `numbers' effect, largely offset by an inequality-decreasing `generosity' effect, during the 1970s and an uncompensated inequality-increasing generosity effect during the 1980s.
A Note on the Country Specific Nature of Asymmetric Adjustment: Australia and the United Kingdom (p.67)
By S CookRecent research has shown consumers' expenditure in both Australia and the UK to display asymmetric behaviour, but of differing forms. In this note the asymmetric natures of Australian GDP and investment are examined and compared with recent results for the UK. These results highlight the country specific nature of asymmetric behaviour more forcefully than previous results for consumption. This leads to different conclusions over the presence of asymmetry in the two economies rather than just its form.
New Evidence on Causal Relationships between Money Supply, Prices and Wages in the United Kingdom (p.75)
By M HasanThe paper re-examines empirically the causal relationship between money stock, prices and wages in the United Kingdom. Using a vector error-correction modelling technique with suitable diagnostics, such as Akaike's FPE statistics and `F' tests for under-fitting the causal model, the results indicate a feedback relationship between money and prices, prices and wages, and wages and money stock. The results are supportive of the expectations- augmented Phillips-curve view of inflation and the monetary accommodation hypothesis.
Advertising and Firm Performance: Some New Evidence from United Kingdom Firms (p.89)
By D Paton and L Vaughan WilliamsIn this paper we present new evidence on the relationship between advertising and firm performance using UK survey data. Advertising is found to be correlated with profitability for those firms operating mainly in consumer goods industries. We also adopt a new approach, which uses receivership as an unambiguous measure of firm performance, to clarify the direction of causality in the relationship. We find that, within consumer goods industries, firms who advertise are less likely to exit from the market due to receivership than those who do not advertise. The results are consistent with the hypothesis that advertising exerts a significant effect on firm performance.
On the Cyclical Behaviour of Prices (p.107)
By I MoosaThis paper puts forward the proposition that, contrary to the prevailing conventional wisdom, there is no stylised fact about the cyclical behaviour of prices. It is argued that the empirical evidence on the issue is mixed and that the cyclical behaviour of prices is ambiguous because of the randomness of the occurrence of shocks. It is also argued that both supply and demand shocks can cause prices to be either procyclical or countercyclical depending on the policy response. Finally, it is shown that the issue is complicated further by the problem of temporal aggregation bias.
Page last modified on 31 May 2000