North Sea Oil and Genuine Saving in the Scottish Economy

The World Bank has published estimates of sustainability of consumption paths by adjusting saving rates to take account of the depletion of non-renewable resources. During the period of North Sea oil production Scotland has been in a fiscal union with the rest of the UK. The present paper adjusts the World Bank data to produce separate genuine saving estimates for Scotland and the rest of the UK for 1970-2009, based on a ‘derivation’ principle for oil revenues. The calculations indicate that Scotland has had a negative genuine saving rate for most of the period of exploitation of North Sea oil resources, with genuine saving being positive in the rest of the UK during this period.

Matching and Sorting in a Global Economy

We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and .managers., each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of the two factors, with complementarity between them, while exhibiting diminishing returns to the number of workers. We examine the sorting of factors to sectors and the matching of factors within sectors, and we use the model to study the determinants of the trade pattern and the effects of trade on the wage and salary distributions. Finally, we extend the model to include search frictions and consider the distribution of employment rates.

The international trade as the sole engine of growth for an economy

Can international trade act as the sole engine of growth for an economy? If yes, what are the mechanisms through which trade operates in transmitting permanent growth? This paper answers these questions with two simple two-country models, in which only one country enjoys sustained growth in autarky. The models differ in the assumptions on technical change, which is either labour- or capital-augmenting. In both cases, the stagnant economy imports growth by trading. In the first model, growth is transmitted because of permanent increases in the trade volume. In the alternative framework, the stagnant economy imports sustained growth because its terms of trade permanently improve.

How much does a single graduation cohort from further education colleges contribute to an open regional economy?

Econometric analysis has been inconclusive in determining the contribution that increased skills have on macroeconomic performance whilst conventional growth accounting approaches to the same problem rest on restrictive assumptions. We propose an alternative micro-to-macro method which combines elements of growth accounting and numerical general equilibrium modelling. The usefulness of this approach for applied education policy analysis is demonstrated by evaluating the macroeconomic impact on the Scottish economy of a single graduation cohort from further education colleges. We find the macroeconomic impact to be significant. From a policy point of view this supports a revival of interest in the conventional teaching role of education institutions.

The Growth in Inter-connectedness in the Scottish Economy 1998-2007; a disaggregated analysis.

The measurement of inter-connectedness in an economy using input-output tables is not new, however much of the previous literature has not had any explicit dynamic dimension. Studies have tried to estimate the degree of inter-relatedness for an economy at a given point in time using one input-output table, some have compared different economies at a point in time but few have looked at the question of how interconnectedness within an economy changes over time. The publication in 2010 of a consistent series of input-output tables for Scotland offers the researcher the opportunity to track changes in the degree of inter-connectedness over the seven year period 1998 to 2007. The paper is in two parts. A simple measure of inter-connectedness is introduced in the first part of the paper and applied to the Scottish tables. In the second part of the paper an extraction method is applied to sector by sector to the tables in order to estimate how interconnectedness has changed over time for each industrial sector.

The Political Economy of Resource Rent Distribution

I model the link between political regime and level of diversification following a windfall of natural resource revenues. The explanatory variables I make use of are the political support functions embedded within each type of regime and the disparate levels of discretion, openness, transparency, and accountability of government. I show that a democratic government seeks to maximize the long-term consumption path of the representative consumer, in order to maximize its chances of re-election, while an authoritarian government, in the absence of any electoral mechanism of accountability, seeks to buy off and entrench a group of special interests loyal to the government and potent enough to ensure its short-term survival. Essentially the contrast in the approaches towards resource rent distribution comes down to a variation in political weights on aggregate welfare and rentierist special interests endogenized by distinct political support functions.

The Commons and anti-commons problems in the tourism economy

Countries specialised in tourism tend to face two problems with contradictory effects: the commons and the anti-commons, which lead to tourism over- and under-production, respectively. This paper develops a two-period model to analyse the joint effects of both problems on a small and remote tourism economy. Congestion and the complementariness between foreign transport and local tourism services are key features in this type of markets. As a result, direct selling and the presence of foreign tour-operators emerge as possible market arrangements with different implications in terms of welfare and public intervention. Four main results are obtained. First, in the direct selling situation the optimal policy depends on the relative importance of the problems. Second, the existence of tour-operators always leads to tourism over-production. Third, the presence of a single tour-operator does not solve the congestion problem. Lastly, the switch from several tour-operators to a single one is welfare reducing.

Venezuelan economic laboratory. The Case of the altruistic economy of Felipe Pérez Martí

Felipe Pérez Martí, who was the Venezuelan Minister of Planning and Development in the government of Hugo Chávez, proposes an economic model that he calls the altruistic economy or fourth way, which leads cooperative game theory to its logical extremes postulating a pure communism. Here we sustain that, first, it is impossible in the model of Pérez Martí to marginally allocate non-primary goods to those most in need or who most value them, facing a problem of defective economic calculation, and second, in order to achieve equality, he would have to replace his atomic local planners by a central planner, who would be unable to overcome the problem of imperfect and and incomplete information.

Rethinking economy-wide rebound measures: an unbiased proposal

In spite of having been first introduced in the last half of the ninetieth century, the debate about the possible rebound effects from energy efficiency improvements is still an open question in the economic literature. This paper contributes to the existing research on this issue proposing an unbiased measure for economy-wide rebound effects. The novelty of this economy-wide rebound measure stems from the fact that not only actual energy savings but also potential energy savings are quantified under general equilibrium conditions. Our findings indicate that the use of engineering savings instead of general equilibrium potential savings downward biases economy-wide rebound effects and upward-biases backfire effects. The discrepancies between the traditional indicator and our proposed measure are analysed in the context of the Spanish economy.

The size of the underground economy in Germany: A correction of the record and new evidence from the Modified-Cash-deposit-Ratio approach

Based on the Ahumada et al. (2007, Review of Income and Wealth) critique we revise existing estimates of the size of the German underground economy. Among other things, it turns out that most of these estimates are untenable and that the tax pressure induced size of the German underground economy may be much lower than previously thought. To this extent, German policy and law makers have been misguided during the last three decades. Therefore, we introduce the Modified-Cash-Deposit-Ratio (MCDR) approach, which is not subject to the recent critique and apply it to Germany for the period 1960 to 2008. JEL: O17, Q41, C22, Keywords: underground economy, shadow economy, cash-depositratio, currency demand approach, MIMIC approach

Central and Cortical Gray Mater Segmentation of Magnetic Resonance Images of the Fetal Brain

Motivation. The study of human brain development in itsearly stage is today possible thanks to in vivo fetalmagnetic resonance imaging (MRI) techniques. Aquantitative analysis of fetal cortical surfacerepresents a new approach which can be used as a markerof the cerebral maturation (as gyration) and also forstudying central nervous system pathologies [1]. However,this quantitative approach is a major challenge forseveral reasons. First, movement of the fetus inside theamniotic cavity requires very fast MRI sequences tominimize motion artifacts, resulting in a poor spatialresolution and/or lower SNR. Second, due to the ongoingmyelination and cortical maturation, the appearance ofthe developing brain differs very much from thehomogenous tissue types found in adults. Third, due tolow resolution, fetal MR images considerably suffer ofpartial volume (PV) effect, sometimes in large areas.Today extensive efforts are made to deal with thereconstruction of high resolution 3D fetal volumes[2,3,4] to cope with intra-volume motion and low SNR.However, few studies exist related to the automatedsegmentation of MR fetal imaging. [5] and [6] work on thesegmentation of specific areas of the fetal brain such asposterior fossa, brainstem or germinal matrix. Firstattempt for automated brain tissue segmentation has beenpresented in [7] and in our previous work [8]. Bothmethods apply the Expectation-Maximization Markov RandomField (EM-MRF) framework but contrary to [7] we do notneed from any anatomical atlas prior. Data set &Methods. Prenatal MR imaging was performed with a 1-Tsystem (GE Medical Systems, Milwaukee) using single shotfast spin echo (ssFSE) sequences (TR 7000 ms, TE 180 ms,FOV 40 x 40 cm, slice thickness 5.4mm, in plane spatialresolution 1.09mm). Each fetus has 6 axial volumes(around 15 slices per volume), each of them acquired inabout 1 min. Each volume is shifted by 1 mm with respectto the previous one. Gestational age (GA) ranges from 29to 32 weeks. Mother is under sedation. Each volume ismanually segmented to extract fetal brain fromsurrounding maternal tissues. Then, in-homogeneityintensity correction is performed using [9] and linearintensity normalization is performed to have intensityvalues that range from 0 to 255. Note that due tointra-tissue variability of developing brain someintensity variability still remains. For each fetus, ahigh spatial resolution image of isotropic voxel size of1.09 mm is created applying [2] and using B-splines forthe scattered data interpolation [10] (see Fig. 1). Then,basal ganglia (BS) segmentation is performed on thissuper reconstructed volume. Active contour framework witha Level Set (LS) implementation is used. Our LS follows aslightly different formulation from well-known Chan-Vese[11] formulation. In our case, the LS evolves forcing themean of the inside of the curve to be the mean intensityof basal ganglia. Moreover, we add local spatial priorthrough a probabilistic map created by fitting anellipsoid onto the basal ganglia region. Some userinteraction is needed to set the mean intensity of BG(green dots in Fig. 2) and the initial fitting points forthe probabilistic prior map (blue points in Fig. 2). Oncebasal ganglia are removed from the image, brain tissuesegmentation is performed as described in [8]. Results.The case study presented here has 29 weeks of GA. Thehigh resolution reconstructed volume is presented in Fig.1. The steps of BG segmentation are shown in Fig. 2.Overlap in comparison with manual segmentation isquantified by the Dice similarity index (DSI) equal to0.829 (values above 0.7 are considered a very goodagreement). Such BG segmentation has been applied on 3other subjects ranging for 29 to 32 GA and the DSI hasbeen of 0.856, 0.794 and 0.785. Our segmentation of theinner (red and blue contours) and outer cortical surface(green contour) is presented in Fig. 3. Finally, torefine the results we include our WM segmentation in theFreesurfer software [12] and some manual corrections toobtain Fig.4. Discussion. Precise cortical surfaceextraction of fetal brain is needed for quantitativestudies of early human brain development. Our workcombines the well known statistical classificationframework with the active contour segmentation forcentral gray mater extraction. A main advantage of thepresented procedure for fetal brain surface extraction isthat we do not include any spatial prior coming fromanatomical atlases. The results presented here arepreliminary but promising. Our efforts are now in testingsuch approach on a wider range of gestational ages thatwe will include in the final version of this work andstudying as well its generalization to different scannersand different type of MRI sequences. References. [1]Guibaud, Prenatal Diagnosis 29(4) (2009). [2] Rousseau,Acad. Rad. 13(9), 2006, [3] Jiang, IEEE TMI 2007. [4]Warfield IADB, MICCAI 2009. [5] Claude, IEEE Trans. Bio.Eng. 51(4) (2004). [6] Habas, MICCAI (Pt. 1) 2008. [7]Bertelsen, ISMRM 2009 [8] Bach Cuadra, IADB, MICCAI 2009.[9] Styner, IEEE TMI 19(39 (2000). [10] Lee, IEEE Trans.Visual. And Comp. Graph. 3(3), 1997, [11] Chan, IEEETrans. Img. Proc, 10(2), 2001 [12] Freesurfer,http://surfer.nmr.mgh.harvard.edu.

A New open economy macroeconomic model with endogenous portfolio diversification and firms entry

This paper provides a new benchmark for the analysis of the international diversi…cation puzzle in a tractable new open economy macroeconomic model. Building on Cole and Obstfeld (1991) and Heathcote and Perri (2009), this model speci…es an equilibrium model of perfect risk sharing in incomplete markets, with endogenous portfolios and number of varieties. Equity home bias may not be a puzzle but a perfectly optimal allocation for hedging risk. In contrast to previous work, the model shows that: (i) optimal international portfolio diversi…cation is driven by home bias in capital goods, independently of home bias in consumption, and by the share of income accruing to labour. The model explains reasonably well the recent patterns of portfolio allocations in developed economies; and (ii) optimal portfolio shares are independent of market dynamics.