Steepness and deepness in the Australian macroeconomy

This study uses nonparametric tests - the triples test and the BDS test, to examine whether key Australian macroeconomic aggregates exhibit nonlinearities and important 'steepness' and 'deepness' asymmetries at the business cycle frequency. Evidence is found of nonlinearities but there is little evidence of deepness in the Australian macroeconomy. However, there is evidence of steepness, especially concerning labour market variables, as well as both the CPI and M3. The evidence suggests that unemployment (employment) rises (falls) rapidly in recessions and only recovers slowly over time. Also, positive asymmetries in M3 are reflected in similar asymmetries in the CPI but not in output, consumption or investment.

Macroeconomic policy in an output-expenditure model

This paper proposes an alternative framework for examining the international macroeconomic impact of domestic monetary and fiscal policies and focuses on the distinction between national spending and national production and the reactive behavior of foreign investors to changing external account balances. It demonstrates that under a floating exchange rate regime, monetary and fiscal policies can affect aggregate expenditure and output quite differently, with important implications for the behavior of the exchange rate, the current account balance, and national income in the short run, as well as the economy's price level in the long run. In particular, this paper predicts that expansionary monetary and fiscal policies tend to depreciate the currency and only temporarily raise gross domestic product and the current account surplus, although permanently raise the domestic price level. This is a revised version of a paper presented at the Forty-Ninth International Atlantic Economic Conference, March 14–21, 2000, Munich, Germany.

Valuing ecological functions of biodiversity in changbaishan mountain biosphere reserve in northeast china

Conservation of biodiversity can generate considerable indirect economic value and this is being increasingly recognized in China. For a forest ecosystem type of a nature reserve, the most important of its values are its ecological functions which provide human beings and other living things with beneficial environmental services. These services include water conservancy, soil protection, CO2 fixation and O-2 release, nutrient cycling, pollutant decomposition, and disease and pest control. Based on a case study in Changbaishan Mountain Biosphere Reserve in Northeast China, this paper provides a monetary valuation of these services by using opportunity cost and alternative cost methods. Using such an approach, this reserve is valued at 510.11 million yuan (USD 61.68 mill.) per year, 10 times higher than the opportunity cost (51.78 mill. yuan/ha.a) for regular timber production. While China has heeded United Nations Environmental Program (UNEP)'s call for economic evaluation of ecological functions, the assessment techniques used need to be improved in China and in the West for reasons mentioned.

Reconciling Globalisation and Technological Change: Growing Income Inequalities and Remedial Policies

From the mid-1970s through the 1980s and into the 1990s, wage inequality and skill differentials in earnings and employment increased sharply in OECD countries. After 1973 and especially in the 1980s, the US experienced a dismal real wage performance for the less skilled. Among the factors singled out by economists as possible major contributors to this development are economic globalisation processes and skill-biased technological change. Although these are most commonly considered as independent influences, after critically outlining views about these factors, this article argues that strong interdependence exists between them. The article then examines potential policy responses to this growing inequality.

Saving, productivity and national income: a discrete-time geometric framework

This paper proposes an alternative geometric framework for analysing the inter-relationship between domestic saving, productivity and income determination in discrete time. The framework provides a means of understanding how low saving economies like the United States sustained high growth rates in the 1990s whereas high saving Japan did not. It also illustrates how the causality between saving and economic activity runs both ways and that discrete changes in national output and income depend on both current and previous accumulation behaviour. The open economy analogue reveals how international capital movements can create external account imbalances that enhance income growth for both borrower and lender economies. (C) 2002 Elsevier Science B.V. All rights reserved.

The Limits of Rational Choice: New Institutionalism in the Test Bed of Central Banking Politics in Australia

This paper tests the explanatory capacities of different versions of new institutionalism by examining the Australian case of a general transition in central banking practice and monetary politics: namely, the increased emphasis on low inflation and central bank independence. Standard versions of rational choice institutionalism largely dominate the literature on the politics of central banking, but this approach (here termed RC1) fails to account for Australian empirics. RC1 has a tendency to establish actor preferences exogenously to the analysis; actors' motives are also assumed a priori; actor's preferences are depicted in relatively static, ahistorical terms. And there is the tendency, even a methodological requirement, to assume relatively simple motives and preference sets among actors, in part because of the game theoretic nature of RC1 reasoning. It is possible to build a more accurate rational choice model by re-specifying and essentially updating the context, incentives and choice sets that have driven rational choice in this case. Enter RC2. However, this move subtly introduces methodological shifts and new theoretical challenges. By contrast, historical institutionalism uses an inductive methodology. Compared with deduction, it is arguably better able to deal with complexity and nuance. It also utilises a dynamic, historical approach, and specifies (dynamically) endogenous preference formation by interpretive actors. Historical institutionalism is also able to more easily incorporate a wider set of key explanatory variables and incorporate wider social aggregates. Hence, it is argued that historical institutionalism is the preferred explanatory theory and methodology in this case.