Scottish Journal of Political Economy
- Publication date:
- Nbr. 68-1, February 2021
- Nbr. 67-5, November 2020
- Nbr. 67-4, September 2020
- Nbr. 67-3, July 2020
- Nbr. 67-2, May 2020
- Nbr. 67-1, February 2020
- Nbr. 66-5, November 2019
- Nbr. 66-4, September 2019
- Nbr. 66-3, July 2019
- Nbr. 66-2, May 2019
- Nbr. 66-1, February 2019
- Nbr. 65-5, November 2018
- Nbr. 65-4, September 2018
- Nbr. 65-3, July 2018
- Nbr. 65-2, May 2018
- Nbr. 65-1, February 2018
- Nbr. 64-5, November 2017
- Nbr. 64-4, September 2017
- Nbr. 64-3, July 2017
- Nbr. 64-2, May 2017
- On the asymmetric effects of exchange‐rate volatility on trade flows: Evidence from US–UK Commodity Trade
We consider the response of each of the 67 industries that trade between the United States and United Kingdom to the volatility of the real dollar–pound exchange rate. When we follow previous research and estimate a linear ARDL model for each industry, we find short‐run effects of volatility in 22 US exporting industries to the United Kingdom that last into the long run only in nine industries. As for the UK exports to the United States, we find short‐run effects in 18 industries that last into the long run in 15 industries. However, when we estimate a nonlinear model for each industry, we find short‐run effects of volatility on 41 US exporting industries and on 43 UK exporting industries, all in an asymmetric manner. Short‐run asymmetric effects lasted into long‐run asymmetric effects in 24 US exporting industries to the United Kingdom and in 33 UK exporting industries to the United States. While total trade shares of industries from the linear models were negligible, those of the industries from the nonlinear models were significant in size, in the tune of one‐third of the trade.
- Business cycle duration dependence and foreign recessions
This study revisits business cycle duration dependence in G7 countries by controlling for foreign recessions, defined as the number of other G7 countries in a recession. Estimates from regime switching logit models show that the monthly likelihood of ending an expansion roughly doubles for every extra G7 country in recession, but the end of foreign recessions do not affect the ending of recessions. They also show that recessions are duration dependent in all G7 countries, but expansions only in the United States and Germany. The economic importance of foreign recessions and duration in driving business cycle phase changes vary across countries.
- What has New Zealand gained from The FTA with China?: Two counterfactual analyses†
We investigate the effects of the 2008 New Zealand (NZ)–China free trade agreement (FTA) on exports from NZ to China, and real GDP per capita in NZ using the synthetic control method to estimate the counterfactuals. NZ exports to China were more than 200% higher in 2014 than what they would have had the FTA never been signed. NZ's food and live animals exports to China were more than 180% higher in 2014 than the counterfactual. Our counterfactuals indicate a small but negative effect of the FTA on NZ's real GDP per capita between 2009 and 2012.
- Issue Information
- The stabilization role of police spending in a neo‐Keynesian economy with credit market imperfections
Motivated by a seemingly persistent “twin‐high” phenomenon in Latin America, we present a novel theoretical framework that has linkages between three institutions (education, criminal justice, and credit) to study policy‐pertinent research questions with regards to whether police spending has the potential to serve as an unconventional policy tool for macroeconomic management. Based on a stylized parameterization, we find formal and illegal human capital to share common cyclical properties, which can be "decoupled" under a rule‐based regime to police spending. This nonetheless comes at a cost of a greater propagation of the credit friction‐induced financial accelerator effect.
- Welfare costs of monetary policy uncertainty in the economy with shifting trend inflation
We study welfare costs of the uncertainty about monetary policy in the economy featuring shifting trend inflation. We follow Ruge‐Murcia (J Econ Dyn Control 36: 914–‐938, 2012) to employ the SMM approach to fit the model to the US data (1979Q1‐2015Q1). We find that the monetary policy uncertainty affects economic welfare through different dimensions. On the one hand, the policy uncertainty itself distorts the economic welfare negligibly, not only by increasing volatilities of consumption and leisure, but also by decreasing their average levels. A higher level of trend inflation then signifies these changes to produce greater welfare costs. Furthermore, the adverse impacts of policy uncertainty on the economy, documented by the impulse response functions of macroeconomic variables to policy uncertainty shock, become larger when central banks raise their inflation targets. On the other hand, the costs of exogenous variations in trend inflation are larger if there is policy uncertainty.
- Explaining fiscal decentralization and the role of ethnic Diversity
This paper considers the causes of fiscal decentralization with a specific focus on the role of ethnic diversity. To do so, I employ an instrument for ethnic diversity based on the origin of anatomically modern human life. Using two measures of decentralization that capture decision making autonomy and accounting for the depth of divisions between ethno‐linguistic groups using the structure of language trees, I find that ethnic diversity has a positive effect on the degree of decentralization. It is the amount of fractionalization towards the leaves of the trees, where groups are more numerous and less distinct, that drive decentralization.
- Issue Information
- Can taxes raise output and reduce inequality? The case of lobbying
One of the key institutional elements for reducing inequality is the tax and transfer system. However, economists and policymakers usually view high taxes as detrimental to economic growth. We isolate one important mechanism by which higher taxes reduce inequality and raise per capita gross domestic product (GDP) at the same time. This mechanism operates in the presence of unproductive lobbying. Higher taxes induce a reallocation from lobbying toward production. This raises overall output and reduces the consumption gap between those who benefit from lobbying and those who bear its negative effects.
- Date of birth and selective schooling: Some lessons from the 1944 education reforms in England and Wales
We compare the probabilities of selective (grammar) school entry in England and Wales before and after the 1944 Education Act. The Act had direct and indirect influences on the costs of grammar education and on entry‐exam coverage, design and marking methodology. Post‐1944, grammar school entry among children born in the middle of the school year improved considerably. We argue that age‐adjusted group standardized testing was an important contributory factor. The youngest pupils remained significantly disadvantaged. We produce evidence that this is consistent with the practice of streaming (tracking) junior school children at age 7 into classes delineated by average ability.
- A biased firm in a market with complementary products. A note on the welfare effects
We analyse a duopoly setting with complementary products, in which a firm has a bias about its absolute advantage. We show that the bias can internalize parts of the negative externality that the complementarity of goods creates implying a higher producer's surplus. Moreover, we analyse additional...
- A FAIR DAY'S WORK
- A MULTI‐SECTOR MODEL OF LDC
- A Note on the Wage Effects of the 1972 Raising of the School Leaving Age in Scotland and Northern Ireland
In this note, we use the UK Labour Force Survey to estimate the wage return to an additional year of schooling for Scotland and Northern Ireland exploiting the 1972 Raising of the School Leaving Age (RoSLA). Prior literature on this topic has consistently ignored both countries in a UK context,...
- A REVOLUTION IN MICROECONOMIC ANALYSIS? A REVIEW ARTICLE
- A THEORY OF DISRIMINATORY CLUBS */sp>
- Adam Smith on Monopoly Theory. Making good a lacuna
This article analyses Adam Smith's views on monopoly by focusing on Book IV and V of The Wealth of Nations. It argues that the majority of scholars have assessed Smith's analysis of monopoly starting from premises different from those, actually though implicitly, used by Smith. We show that Smith...
- Adam Smith’s Problems and Ours
The paper contrasts what modern economists, reflecting the priorities of general equilibrium theory, expect to find in the Wealth of Nationswith Smith’s own much broader theoretical and policy concerns. A theory of growth in which increasing returns are pervasive conflicts not only with neo‐classica...
- AN ECONOMETRIC ANALYSIS OF FOREIGN DIRECT INVESTMENT IN THE UNITED KINGDOM
- AN EMPIRICAL EXAMINATION OF THE HANGOVER EFFECT OF IRREVERSIBILITY ON INVESTMENT
Irreversibility does not only raise the user cost of capital and discourage new investment but also hinders disinvestment because of the hangover effect. This paper derives a theoretical model that separates the impact of conventional convex adjustment costs from the impact of irreversibility,...