Classifying monetary economics: fields and methods from past to future

We propose a simple, yet sufficiently encompassing, classification scheme of monetary economics. It comprises three fundamental fields and six recent areas that expand within and across these fields. The elements of our scheme are not found together and in their mutual relationships in earlier studies of the relevant literature; neither does this attempt aim to produce a relatively complete systematization. Our intention in taking stock is not finality or exhaustiveness. We rather suggest a viewpoint and a possible ordering of the accumulating knowledge. Our purpose is to promote discussion on the evolving nature and internal consistency of monetary economics at large.

Production, hidden action, and the payment system

In this paper, we study a model economy that examines the optimal intraday rate. In Freeman’s (1996) paper, he shows that the efficient allocation can be implemented by adopting a policy in which the intraday rate is zero. We modify the production set and show that such a model economy can account for the non-uniform distribution of settlements within a day. In addition, by modifying both the consumption set and the production set, we show that the central bank may be able to implement the planner’s allocation with a positive intraday interest rate.

Creativity and Growth in: Edmund Phelps (2013),Mass Flourishing. How Grassroots Innovation Created Jobs, Challenge and Change

This article reviews the thesis presented by Edmund Phelps, Mass Flourishing. How Grassroots Innovation Created Jobs, Challenge and Change (Princeton University Press, 2013) that modern economic growth is an indirect outcome of human creativity, and that the object of enlightened policy ought to be to promote this creativity, or flourishing, rather than economic growth per se. The book is a remarkable contribution to the literature on economic growth, with its focus on how entrepreneurship and innovation generates endogenous growth and, more importantly to the author, improves human satisfaction.

Two-way communication costs and the boundaries of the firm

Casson and Wadeson (International Journal of the Economics of Business, 1998, 5, pp. 5-27) have modelled the dialogue, or conversation, which customers have with their suppliers in order to convey their requirements, while taking production implications into account. They showed that this has important implications for the positioning of the boundaries of the firm. Unfortunately, their model has the restriction that communication is only costly in the direction of customer to supplier. This paper extends their model by introducing two-way communication costs. It shows that the level of communication cost in the direction of supplier to customer is a key additional factor in determining the nature of the dialogue that takes place. It also shows that this has important additional implications for the positioning of the boundaries of the firm. Custom computer software development is used as an example of an application of the theory.

Communication costs and the boundaries of the firm

Much has been written about where the boundaries of the firm are drawn, but little about what occurs at the boundaries themselves. When a firm subcontracts, does it inform its suppliers fully of what it requires, or is it willing to accept what they have available? In practice firms often engage in a dialogue, or conversation, with their suppliers, in which at first they set out their general requirements, and only when the supplier reports back on how these can be met are their more specific requirements set out. This paper models such conversations as a rational response to communication costs. The model is used to examine the impact of new information technology, such as CAD/CAM, on the conduct of subcontracting. It can also be used to examine its impact on the marketing activities of firms. The technique of analysis, which is based on the economic theory of teams, has more general applications too. It can be used to model all the forms of dialogue involved in the processes of coordination both within and between firms.

Information strategies and the theory of the Firm

Information costs play a key role in determining the relative efficiency of alternative organisational structures. The choice of locations at which information is stored in a firm is an important determinant of its information costs. A specific example of information use is modelled in order to explore what factors determine whether information should be stored centrally or locally and if it should be replicated at different sites. This provides insights into why firms are structured hierarchically, with some decisions and tasks being performed centrally and others at different levels of decentralisation. The effects of new information technologies are also discussed. These can radically alter the patterns and levels of information costs within a firm and so can cause substantial changes in organisational structure.

The economic theory of international supply chains: a systems view

This paper offers an integrated analysis of out-sourcing, off-shoring and foreign direct investment within a systems view of international business. This view takes the supply chain rather than the firm as the basic unit of analysis. It argues that competition in the global economy selects supply chains that maximise the joint profit of all the firms in the chain. The systems view is compared with the firm-centred view commonly used in strategy literature. The paper shows that a firm’s strategy must be embedded within an efficient supply chain strategy, and that this strategy must be negotiated with, rather than imposed upon, other firms. The paper analyses the conditions under which various supply chain strategies - and by implication various firm-level strategies - are efficient. Only by adopting a systems view of supply chains is it possible to determine which firm-level strategies will succeed in a volatile global economy.

APOE genotype influences triglyceride and C-reactive protein responses to altered dietary fat intake in UK adults

Background: The response of plasma lipids to dietary fat manipulation is highly heterogeneous, with some indications that APOE genotype may be important. Objective: The objective was to use a prospective recruitment approach to determine the effect of dietary fat quantity and composition on both lipid and nonlipid cardiovascular disease biomarkers according to APOE genotype. Design: Participants had a mean (±SD) age of 51 ± 9 y and a BMI (in kg/m2) of 26.0 ± 3.8 (n = 44 E3/E3, n = 44 E3/E4) and followed a sequential dietary intervention (the SATgenϵ study) in which they were assigned to a low-fat diet, a high-fat high-SFA (HSF) diet, and the HSF diet with 3.45 g DHA/d (HSF-DHA), each for 8 wk. Fasting blood samples were collected at the end of each intervention arm. Results: An overall diet effect was evident for all cholesterol fractions (P < 0.01), with no significant genotype × diet interactions observed. A genotype × diet interaction (P = 0.033) was evident for plasma triglycerides, with 17% and 30% decreases in APOE3/E3 and APOE3/E4 individuals after the HSF-DHA diet relative to the low-fat diet. A significant genotype × diet interaction (P = 0.009) was also observed for C-reactive protein (CRP), with only significant increases in concentrations after the HSF and HSF-DHA diets relative to the low-fat diet in the APOE3/E4 group (P < 0.015). Conclusions: Relative to the wild-type APOE3/E3 group, our results indicate a greater sensitivity of fasting triglycerides and CRP to dietary fat manipulation in those with an APOE3/E4 genotype (25% population), with no effect of this allelic profile on cholesterol concentrations. The SATgenϵ study was registered at clinicaltrials.gov as NCT01384032.

Entrepreneurship: a personal view

Entrepreneurship studies is a booming area of research with a profusion of concepts and some redundancy in terminology. There is a gap between theory and empiricism which can only be bridged by greater use of formal models.

Damage rate is a predictor of fatigue life and creep strain rate in fatigue of tensile human cortical bone samples

We present results on the growth of damage in 29 fatigue tests of human femoral cortical bone from four individuals, aged 53–79. In these tests we examine the interdependency of stress, cycles to failure, rate of creep strain, and rate of modulus loss. The behavior of creep rates has been reported recently for the same donors as an effect of stress and cycles (Cotton, J. R., Zioupos, P., Winwood, K., and Taylor, M., 2003, "Analysis of Creep Strain During Tensile Fatigue of Cortical Bone," J. Biomech. 36, pp. 943–949). In the present paper we first examine how the evolution of damage (drop in modulus per cycle) is associated with the stress level or the "normalized stress" level (stress divided by specimen modulus), and results show the rate of modulus loss fits better as a function of normalized stress. However, we find here that even better correlations can be established between either the cycles to failure or creep rates versus rates of damage than any of these three measures versus normalized stress. The data indicate that damage rates can be excellent predictors of fatigue life and creep strain rates in tensile fatigue of human cortical bone for use in practical problems and computer simulations.

Applications of micromorphology to understanding activity areas and site formation processes in experimental hut floors

Experimental buildings at Butser Ancient Farm and St. Fagans (UK) and Lejre (Denmark) were sampled to investigate micromorphology of known activity areas, to contribute to our understanding of the internal use of space in excavated buildings and formation processes of house floor deposits. The experimental buildings provided important information relating to activity residues and sediments over the 16 years that the buildings were in use. Specifically, these results contribute to our understanding of the routes and cycles for transportation of materials in occupation contexts, which can be used to inform archaeological studies. It has been possible to identify internal ‘hot spots’ within the buildings for the deposition of activity residues and for the formation of specific deposit types. Analysis also highlighted postdepositional alterations occurring in internal occupation deposits, which has provided a means of identifying roofed and unroofed spaces in the archaeological record.

Reaching the underbanked and unbanked in subsistence markets at the nexus of the formal and informal economy

It is estimated that globally over 2 billion people do not have a bank account, with many more in the developed and developing worlds ‘under-banked’, meaning they have limited access to financial services. Reaching the unbanked and underbanked with appropriate financial services is widely recognised as critical for future global economic growth and prosperity. Drawing upon multidimensional understandings of poverty, and framed by literature on poverty pools, traps and cycles, this paper explores the use of financial products and services in the developing world and critically reflects on their potential role in poverty alleviation and wider sustainable development. Discussions are illustrated with reference to qualitative empirical research undertaken in East and Southern Africa, and a sense-making of the lived financial experiences of low income individuals, households and communities.

Threshold effects in price transmission: The case of Brazilian wheat, maize, and soya prices

Recent studies into price transmission have recognized the important role played by transport and transaction costs. Threshold models are one approach to accommodate such costs. We develop a generalized Threshold Error Correction Model to test for the presence and form of threshold behavior in price transmission that is symmetric around equilibrium. We use monthly wheat, maize, and soya prices from the United States, Argentina, and Brazil to demonstrate this model. Classical estimation of these generalized models can present challenges but Bayesian techniques avoid many of these problems. Evidence for thresholds is found in three of the five commodity price pairs investigated.