The Expenditure Impacts of London-based Individual Higher Education Institutions (HEIs) and their Students on the Economy of England: Homogeneity or Heterogeneity?

This paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010a) to identify the impact of London-based HEIs on the English economy in order to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of London HEIs. When we treat each of the 38 London-based Higher Education Institutions (HEIs) that existed in England in 2006 as separate sectors in conventional input-output analysis, their expenditure impacts per unit of final demand appear rather homogenous (though less so than HEIs in Wales and Scotland), with the apparent heterogeneity of their overall impacts being primarily driven by scale. However, a disaggregation of their income by source reveals considerable variation in their dependence upon general public funding and their ability to draw in income/funding from external sources. Acknowledging the possible alternative uses of the public funding and deriving balanced expenditure multipliers reveals large differences in the net-expenditure impact of London HEIs upon the English economy, with the source of variation being the origin of income. Applying a novel treatment of student expenditure impacts, identifying the amount of exogenous spending per student, modifies the heterogeneity of the overall expenditure impacts. On balance this suggests that the impacts of impending budget cut-backs will be quite different by institution depending on their sensitivity to public funding. However, predicting the outcome of budget cutbacks at the margin is problematic for reasons that we identify.

Modelling Breaks and Clusters in the Steady States of Macroeconomic Variables

Macroeconomists working with multivariate models typically face uncertainty over which (if any) of their variables have long run steady states which are subject to breaks. Furthermore, the nature of the break process is often unknown. In this paper, we draw on methods from the Bayesian clustering literature to develop an econometric methodology which: i) finds groups of variables which have the same number of breaks; and ii) determines the nature of the break process within each group. We present an application involving a five-variate steady-state VAR.

Corruption and Financial Intermediation in a Panel of Regions: Cross-Border Effects of Corruption

The importance of financial market reforms in combating corruption has been highlighted in the theoretical literature but has not been systemically tested empirically. In this study we provide a first pass at testing this relationship using both linear and nonmonotonic forms of the relationship between corruption and financial intermediation. Our study finds a negative and statistically significant impact of financial intermediation on corruption. Specifically, the results imply that a one standard deviation increase in financial intermediation is associated with a decrease in corruption of 0.20 points, or 16 percent of the standard deviation in the corruption index and this relationship is shown to be robust to a variety of specification changes, including: (i) different sets of control variables; (ii) different econometrics techniques; (iii) different sample sizes; (iv) alternative corruption indices; (v) removal of outliers; (vi) different sets of panels; and (vii) allowing for cross country interdependence, contagion effects, of corruption.

Saving and Re-building Lives: an Analysis of the Determinants of Disaster Relief

We analyse both theoretically and empirically, the factors that influence the amount of humanitarian aid which countries receive when they are struck by natural disasters. Our investigation particularly distinguishes between immediate disaster relief which helps the survival of victims and long term humanitarian aid given towards reconstruction and rehabilitation. The theoretical model is able to make predictions as well as explain some of the peculiarities in the empirical results. The empirical analysis, making use of some useful data sources, show that both short and long term humanitarian aid increase with number of people killed, financial loss and level of corruption, while GDP per capita has no effect. Number of people affected had no effect on short term aid, but significantly increased long term aid. Both types of aid increased if the natural disaster was an earthquake, tsunami or drought. In addition, short term aid increases in response to a flood while long term aid increases in response to storms.

How do technical change and technological distance influence the size of the Okun’s Law coefficient?

How does technical change influence the size of the Okun’s Law coefficient? Using a nonlinear version of Okun’s Law augmented with technical change and technological distance, we show that the impact of output movements on unemployment variations is influenced by the imitation or innovation origins of technical change

An issue with own-rates: Keynes borrows from Sraffa , Sraffa criticises Keynes, and present-day commentators get hold of the wrong end of the stick

Scholars who in recent years have studied the Sraffa papers held in the Wren Library of Trinity College, Cambridge, have concluded from Sraffa’s critical (but unpublished) observations on Chapter 17 of Keynes’s General Theory that he rejected Keynes’s central proposition that the rate of interest on money may come to ‘rule the roost’, thus dragging the economy into recession. While Sraffa does indeed express dissatisfaction with Chapter 17, the commentators have, we believe, misunderstood his concern: we suggest that he was unhappy with the ‘own-rates’ terminology employed by Keynes rather than with the substance of the theory developed in Chapter 17.

Competition for FDI and profit shifting: On the effects of subsidies and tax breaks

We investigate competition for FDI within a region when a foreign multinational rm can profitably exploit differences in statutory corporate tax rates by shifting taxable pro ts to lower-tax jurisdictions. In such framework we show that targeted tax competition may lead to higher welfare for the region as a whole than lump-sum subsidies when the difference in statutory corporate tax rates and/or their average is high enough. Tax competition is also preferable from an efficiency point of view (overall surplus) by changing the firm's investment decision when pro t shifting motivations induce the rm to locate in the (before tax) least pro table country.