Explaining High Economic Growth in Small Tourism Countries with a Dynamic General Equilibrium Model

This paper shows that tourism specialisation can help to explain the observed high growth rates of small countries. For this purpose, two models of growth and trade are constructed to represent the trade relations between two countries. One of the countries is large, rich, has an own source of sustained growth and produces a tradable capital good. The other is a small poor economy, which does not have an own engine of growth and produces tradable tourism services. The poor country exports tourism services to and imports capital goods from the rich economy. In one model tourism is a luxury good, while in the other the expenditure elasticity of tourism imports is unitary. Two main results are obtained. In the long run, the tourism country overcomes decreasing returns and permanently grows because its terms of trade continuously improve. Since the tourism sector is relatively less productive than the capital good sector, tourism services become relatively scarcer and hence more expensive than the capital good. Moreover, along the transition the growth rate of the tourism economy holds well above the one of the rich country for a long time. The growth rate differential between countries is particularly high when tourism is a luxury good. In this case, there is a faster increase in the tourism demand. As a result, investment of the small economy is boosted and its terms of trade highly improve.

Entrepreneurial Orientation, Intangible Assets and Firm Growth: the impact of ‘Spirit and Material’ on the growth of Chinese private firms

This paper has three contributions. First, it shows how field work within small firms in PR Chinese has provided new evidence which enables us to measure and calibrate Entrepreneurial Orientation (EO), as ‘spirit’, and Intangible Assets (IA), as ‘material’, for use in models of small firm growth. Second, it uses inter-item correlation analysis and both exploratory and confirmatory factor analysis to provide new measures of EO and IA, in index and in vector form, for use in econometric models of firm growth. Third, it estimates two new econometric models of small firm employment growth in PR China, under the null hypothesis of Gibrat’s Law, using our two new index-based and vector-based measures of EO and IA. Estimation is by OLS with adjustment for heteroscedasticity, and for sample selectivity. Broadly, it finds that EO attributes have had little significant impact on small firm growth, and indeed innovativeness and pro-activity paradoxically may even dampen growth. However, IA attributes have had a positive and significant impact on growth, with networking, and technological knowledge being of prime importance, and intellectual property and human capital being of lesser but still significant importance. In the light of these results, Gibrat’s Law is generalized, and Jovanovic’s learning theory is extended, to emphasise the importance of IA to growth. These findings cast new empirical light on the oft-quoted national slogan in PR China of “spirit and material”. So far as small firms are concerned, this paper suggests that their contribution to PR China’s remarkable economic growth is not so much attributable to the ‘spirit’ of enterprise (as suggested by propaganda) as, more prosaically, to the pursuit of the ‘material’.

UK Macroeconomic Forecasting with Many Predictors: Which Models Forecast Best and When Do They Do So?

Block factor methods offer an attractive approach to forecasting with many predictors. These extract the information in these predictors into factors reflecting different blocks of variables (e.g. a price block, a housing block, a financial block, etc.). However, a forecasting model which simply includes all blocks as predictors risks being over-parameterized. Thus, it is desirable to use a methodology which allows for different parsimonious forecasting models to hold at different points in time. In this paper, we use dynamic model averaging and dynamic model selection to achieve this goal. These methods automatically alter the weights attached to different forecasting models as evidence comes in about which has forecast well in the recent past. In an empirical study involving forecasting output growth and inflation using 139 UK monthly time series variables, we find that the set of predictors changes substantially over time. Furthermore, our results show that dynamic model averaging and model selection can greatly improve forecast performance relative to traditional forecasting methods.

What Belongs Where? Variable Selection for Zero-Inflated Count Models with an Application to the Demand for Health Care

This paper develops stochastic search variable selection (SSVS) for zero-inflated count models which are commonly used in health economics. This allows for either model averaging or model selection in situations with many potential regressors. The proposed techniques are applied to a data set from Germany considering the demand for health care. A package for the free statistical software environment R is provided.

Industrial Structure, Trade and Regional Economics : Market Segmentation

We consider a general equilibrium model a la Bhaskar (Review of Economic Studies 2002): there are complementarities across sectors, each of which comprise (many) heterogenous monopolistically competitive firms. Bhaskar's model is extended in two directions: production requires capital, and labour markets are segmented. Labour market segmentation models the difficulties of labour migrating across international barriers (in a trade context) or from a poor region to a richer one (in a regional context), whilst the assumption of a single capital market means that capital flows freely between countries or regions. The model is solved analytically and a closed form solution is provided. Adding labour market segmentation to Bhaskar's two-tier industrial structure allows us to study, inter alia, the impact of competition regulations on wages and - financial flows both in the regional and international context, and the output, welfare and financial implications of relaxing immigration laws. The analytical approach adopted allows us, not only to sign the effect of policies, but also to quantify their effects. Introducing capital as a factor of production improves the realism of the model and refi nes its empirically testable implications.

Evaluation of tumour vascularisation in two rat sarcoma models for studying isolated lung perfusion. Injection route determines the origin of tumour vessels.

Isolated cytostatic lung perfusion (ILP) is an attractive technique allowing delivery of a high-dose of cytostatic agents to the lungs while limiting systemic toxicity. In developing a rat model of ILP, we have analysed the effect of the route of tumour cell injection on the source of tumour vessels. Pulmonary sarcomas were established by injecting a sarcoma cell suspension either by the intravenous (i.v.) route or directly into the lung parenchyma. Ink perfusion through either pulmonary artery (PA) or bronchial arteries (BA) was performed and the characteristics of the tumour deposits defined. i.v. and direct injection methods induced pulmonary sarcoma nodules, with similar histological features. The intraparenchymal injection of tumour cells resulted in more reliable and reproducible tumour growth and was associated with a longer survival of the animals. i.v. injected tumours developed a PA-derived vascular tree whereas directly injected tumours developed a BA-derived vasculature.

Where is the economics in spatial econometrics?

Spatial econometrics has been criticized by some economists because some model specifications have been driven by data-analytic considerations rather than having a firm foundation in economic theory. In particular this applies to the so-called W matrix, which is integral to the structure of endogenous and exogenous spatial lags, and to spatial error processes, and which are almost the sine qua non of spatial econometrics. Moreover it has been suggested that the significance of a spatially lagged dependent variable involving W may be misleading, since it may be simply picking up the effects of omitted spatially dependent variables, incorrectly suggesting the existence of a spillover mechanism. In this paper we review the theoretical and empirical rationale for network dependence and spatial externalities as embodied in spatially lagged variables, arguing that failing to acknowledge their presence at least leads to biased inference, can be a cause of inconsistent estimation, and leads to an incorrect understanding of true causal processes.

Genetic- or transforming growth factor-beta 1-induced changes in epidermal peroxisome proliferator-activated receptor beta/delta expression dictate wound repair kinetics.

Advances in wound care are of great importance in clinical injury management. In this respect, the nuclear receptor peroxisome proliferator-activated receptor (PPAR)beta/delta occupies a unique position at the intersection of diverse inflammatory or anti-inflammatory signals that influence wound repair. This study shows how changes in PPARbeta/delta expression have a profound effect on wound healing. Using two different in vivo models based on topical application of recombinant transforming growth factor (TGF)-beta1 and ablation of the Smad3 gene, we show that prolonged expression and activity of PPARbeta/delta accelerate wound closure. The results reveal a dual role of TGF-beta1 as a chemoattractant of inflammatory cells and repressor of inflammation-induced PPARbeta/delta expression. Also, they provide insight into the so far reported paradoxical effects of the application of exogenous TGF-beta1 at wound sites.

Productivity shocks and aggregate fluctuations in an estimated endogenous growth model with human capital

Employing an endogenous growth model with human capital, this paper explores how productivity shocks in the goods and human capital producing sectors contribute to explaining aggregate fluctuations in output, consumption, investment and hours. Given the importance of accounting for both the dynamics and the trends in the data not captured by the theoretical growth model, we introduce a vector error correction model (VECM) of the measurement errors and estimate the model’s posterior density function using Bayesian methods. To contextualize our findings with those in the literature, we also assess whether the endogenous growth model or the standard real business cycle model better explains the observed variation in these aggregates. In addressing these issues we contribute to both the methods of analysis and the ongoing debate regarding the effects of innovations to productivity on macroeconomic activity.

A balance of questions: what can we ask of climate change economics?

The standard approach to the economics of climate change, which has its best known implementation in Nordhaus's DICE and RICE models (well described in Nordhaus's 2008 book, A Question of Balance) is not well equipped to deal with the possibility of catastrophe, since we are unable to evaluate a risk averse representative agent's expected utility when there is any signi cant probability of zero consumption. Whilst other authors attempt to develop new tools with which to address these problems, the simple solution proposed in this paper is to ask a question that the currently available tools of climate change economics are capable of answering. Rather than having agents optimally choosing a path (that differs from the recommendations of climate scientists) within models which cannot capture the essential features of the problem, I argue that economic models should be used to determine the savings and investment paths which implement climate targets that have been suggested in the physical science literature.

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.

Nowcasting Scottish GDP Growth

The delays in the release of macroeconomic variables such as GDP mean that policymakers do not know their current values. Thus, nowcasts, which are estimates of current values of macroeconomic variables, are becoming increasingly popular. This paper takes up the challenge of nowcasting Scottish GDP growth. Nowcasting in Scotland, currently a government office region within the United Kingdom, is complicated due to data limitations. For instance, key nowcast predictors such as industrial production are unavailable. Accordingly, we use data on some non-traditional variables and investigate whether UK aggregates can help nowcast Scottish GDP growth. Such data limitations are shared by many other sub-national regions, so we hope this paper can provide lessons for other regions interested in developing nowcasting models.

Asynchronous growth and competition in a two-sex age-structured population model

Asynchronous exponential growth has been extensively studied in population dynamics. In this paper we find out the asymptotic behaviour in a non-linear age-dependent model which takes into account sexual reproduction interactions. The main feature of our model is that the non-linear process converges to a linear one as the solution becomes large, so that the population undergoes asynchronous growth. The steady states analysis and the corresponding stability analysis are completely made and are summarized in a bifurcation diagram according to the parameter R0. Furthermore the effect of intraspecific competition is taken into account, leading to complex dynamics around steady states.

Risk Attitude And Wage Growth: Replication And Reconstruction

We replicate Shaw (1996) who found that individual wage growth is higher for individuals with greater preference for risk taking. Expanding her dataset with more American observations and data for Germany, Spain and Italy, we find mixed support for the earlier results. We present and estimate a new model and find that in particular the wage level is sensitive to attitudes towards risk taking. Comments given at the Labour Economics Conference in honour of Niels Westergaard (Nyborg, August 2008) and EALE 2008 (Amsterdam) and at seminars in Maastricht,Reus and Essen (RWI) are gratefully acknowledged. The authors also acknowledge financial support from the Spanish Ministry of Science and Innovation (grant number SEJ2007-66318) and from the Barcelona Economics Program of CREA. JEL code: J24; J30. Key words: wage growth, risk, post-school investment.

Low doses of ionizing radiation promote tumor growth and metastasis by enhancing angiogenesis.

Radiotherapy is a widely used treatment option in cancer. However, recent evidence suggests that doses of ionizing radiation (IR) delivered inside the tumor target volume, during fractionated radiotherapy, can promote tumor invasion and metastasis. Furthermore, the tissues that surround the tumor area are also exposed to low doses of IR that are lower than those delivered inside the tumor mass, because external radiotherapy is delivered to the tumor through multiple radiation beams, in order to prevent damage of organs at risk. The biological effects of these low doses of IR on the healthy tissue surrounding the tumor area, and in particular on the vasculature remain largely to be determined. We found that doses of IR lower or equal to 0.8 Gy enhance endothelial cell migration without impinging on cell proliferation or survival. Moreover, we show that low-dose IR induces a rapid phosphorylation of several endothelial cell proteins, including the Vascular Endothelial Growth Factor (VEGF) Receptor-2 and induces VEGF production in hypoxia mimicking conditions. By activating the VEGF Receptor-2, low-dose IR enhances endothelial cell migration and prevents endothelial cell death promoted by an anti-angiogenic drug, bevacizumab. In addition, we observed that low-dose IR accelerates embryonic angiogenic sprouting during zebrafish development and promotes adult angiogenesis during zebrafish fin regeneration and in the murine Matrigel assay. Using murine experimental models of leukemia and orthotopic breast cancer, we show that low-dose IR promotes tumor growth and metastasis and that these effects were prevented by the administration of a VEGF receptor-tyrosine kinase inhibitor immediately before IR exposure. These findings demonstrate a new mechanism to the understanding of the potential pro-metastatic effect of IR and may provide a new rationale basis to the improvement of current radiotherapy protocols.