Balanced Budget Government Spending in a Small Open Regional Economy

This paper investigates the impact of a balanced budget fiscal policy expansion in a regional context within a numerical dynamic general equilibrium model. We take Scotland as an example where, recently, there has been extensive debate on greater fiscal autonomy. In response to a balanced budget fiscal expansion the model suggests that: an increase in current government purchase in goods and services has negative multiplier effects only if the elasticity of substitution between private and public consumption is high enough to move downward the marginal utility of private consumers; public capital expenditure crowds in consumption and investment even with a high level of congestion; but crowding out effects might arise in the short-run if agents are myopic.

Extending contingency: the impact of strategy, technology, size and business environment on the organisational form of small Chinese firms

This paper is inspired by articles in the last decade or so that have argued for more attention to theory, and to empirical analysis, within the well-known, and long-lasting, contingency framework for explaining the organisational form of the firm. Its contribution is to extend contingency analysis in three ways: (a) by empirically testing it, using explicit econometric modelling (rather than case study evidence) involving estimation by ordered probit analysis; (b) by extending its scope from large firms to SMEs; (c) by extending its applications from Western economic contexts, to an emerging economy context, using field work evidence from China. It calibrates organizational form in a new way, as an ordinal dependent variable, and also utilises new measures of familiar contingency factors from the literature (i.e. Environment, Strategy, Size and Technology) as the independent variables. An ordered probit model of contingency was constructed, and estimated by maximum likelihood, using a cross section of 83 private Chinese firms. The probit was found to be a good fit to the data, and displayed significant coefficients with plausible interpretations for key variables under all the four categories of contingency analysis, namely Environment, Strategy, Size and Technology. Thus we have generalised the contingency model, in terms of specification, interpretation and applications area.