Narrow Results

Recent happiness studies show that income explains only 2% of the variance in happiness. Quality-of-life indicators also correlate less with income but more with advances in knowledge at the world level. Individuals and nations still engage in the rat race for higher incomes due to the competition for relative standing, the ignoring of the environmental disruption effects, our accumulation instinct, the influence of advertising and peer pressure, and the inadequate recognition of the habituation effect. In addition, economists over-estimate the costs of public spending, emphasising the excess burden of taxation, ignoring the negative excess burden in the public spending side and ignoring the grosser inefficiency of private consumption. These considerations suggest that more public spending in the right areas like education, research, and environmental protection may be much more welfare-improving despite some unavoidable inefficiencies. The restriction of private cars in Singapore may be desirable despite being excessive in accordance to the narrower economic analysis. It may also be appropriate to emphasise non-income factors important for welfare, including freedom and democracy.

We develop an overlapping generation model to examine how the relationship between status concerns, fertility and education affect growth performances. Results are threefold. First, we show that stronger status motives heighten the desire of parents to have fewer but better educated children, which may foster economic development. Second, the government should sometimes postpone the introduction of an economic policy in order to maintain the process of economic development, although such a policy aims to implement the social optimum. Third, status can alter the dynamic path of the economy and help to explain the facts about fertility during the great transition.

Over the past 30 years, British unions have been marginalised from economic policymaking. Union membership and collective bargaining coverage have fallen dramatically, and the sometimes negative economic impact of unions at the workplace level has disappeared. While strong unions were once key contributors to macroeconomic problems such as high inflation, the weakening of organised labour has created other economic problems for policymakers in Britain, such as rising inequality. The social and political consequences of deepening inequality may force a reconsideration of the role of both the state and of unions in upholding labour standards.

Many of the key reforms of the past three decades that helped to strengthen the Australian economy were implemented during the operation of the Accord that existed between Australian Labor Party governments and the union movement. In order to address structural economic problems, unions agreed to moderate wage outcomes and to facilitate the transition to workplace bargaining in return for social welfare gains for workers, which successive governments have maintained. These reforms helped to improve labor market efficiency and allowed firms to integrate successfully into international markets, without substantially compromising the interests of workers and their families, which thereby allowed economic dislocation and social unrest to be contained. In contrast to the assertions of certain Australian employer groups, research has consistently shown that union involvement in workplace bargaining has a benign impact on business productivity. However, declining membership presents a significant challenge to the capacity of Australian unions to influence economic outcomes at the national and workplace levels in the future.

Argenziano and Gilboa (2019) obtain a very important result “that consumer choice data alone are sufficient … [to] provide a microfoundation for a weighted utilitarian social welfare function that reflects common moral intuitions about interpersonal comparisons of utilities”. This paper compares this result with my 1975 Review of Economic Studies paper and examines the sense in which consumer data alone are sufficient. A way to dispense with interpersonal comparisons of utility in specific issues by following efficiency supremacy is also discussed. The suspicion of interpersonal comparison and utilitarianism may be based on misunderstandings.

This study looks at the relationship between the success of microfinance institutions and the degree of economic freedom in their host countries. Many microfinance institutions are currently not self-sustaining, and both theoretical and empirical work suggests that the economic environment in which they operate is an important factor in their ability to reach this goal, furthering the mission of outreach to the poor. The sustainability of the microfinance institutions is analyzed here using a large cross-section of institutions and countries. The results show that microfinance institutions operate primarily in countries with a relatively low degree of overall economic freedom and that government intervention in the economy can reduce their sustainability.

Closing the infrastructural gaps and fostering the entrepreneurial processes are considered the key to reduce African unemployment and boost productivity to achieve inclusive development. Therefore, investment in infrastructure is crucial for creating a conducive entrepreneurial environment. In this paper, we provide a contribution for this purpose, by evaluating the impact of infrastructure on entrepreneurship in a panel of twenty African countries for a period of 2006–2018. Consistent with previous studies, we find that infrastructures play a significant role in improving entrepreneurial development. In specific, we show that transport, electricity, water and sanitation facilities, ICT and broadband infrastructures have a positive and significant effect on entrepreneurial startups in Africa. Our reports show clearly there is a positive association between infrastructures and entrepreneurial startups at a one percent significance level. These findings are robust to alternative estimation. It points out that physical infrastructure is more relevant in the case of less developed countries in promoting entrepreneurial development.

Using a nonlinear autoregressive distributed lag and frequency domain analysis, this paper examines the impact of various uncertainty indicators on oil market fear (OMF) in Nigeria, from 1997M1–2020M3. The results show that economic policy uncertainty (EPU), climate policy uncertainty (CPU), and financial globalization uncertainty (FGU) have perverse effects on the OMF. We observed that a bi-directional causal relationship between EPU and the OMF exists temporarily. A unidirectional causal effect exists from CPU to OMF. We further show a bi-directional causal relationship between OMF and FGU. Policy recommendations are discussed accordingly.

Europe's economic performance has deteriorated continuously over the last two decades both in terms of its unemployment and its labor force participation rate; more recently its productivity has declined relative to the United States. This is due to a complex interaction between the how these welfare states are designed, the institutions created by the European Union, idiosyncratic factors resulting from linguistic differences, population dynamics and other cultural factors, and an increasing emphasis on non-economic objectives. Although structural reforms can provide a solution, it will be a long, difficult and costly process. A more successful approach involves a redesign of the macroeconomic framework in Europe. Aggregate demand stimulation should be given priority since it will not only increase employment directly, but, by slightly raising inflation, will allow negative real interest rates and separate real wages movements from nominal wages. More generally, EU institutions appear to have been designed assuming a perfect world; instead these need to be designed around existing national institutions and cultural practices.

China-bashing has become a popular US media and political sport. This is largely due to the US trade imbalance and the belief, by some, that China is responsible for it because it manipulates its currency to hold down the dollar prices of its goods, unfairly creating a trade advantage that has contributed to the loss of US businesses and jobs. This paper reviews the problem of the large trade imbalance that the United States has with China and its relationship to Chinese exchange rate policy. It examines the link between a Chinese renminbi appreciation and the trade balance and also whether a generalized dollar decline could solve the global or Chinese US trade imbalance. The consensus view explained here is that a renminbi appreciation is not likely to fix either the trade imbalance with China or overall. If these perceived benefits of a managed float are small or non-existent, then perhaps they should be pursued anyway because of small costs or even benefits for China. Section IV looks at the costs of a managed float in terms of the benefits of the earlier peg. Opponents of a fixed dollar/yuan exchange rate ignore the costs of a managed float for China, especially with limits on currency convertibility. These costs are outlined here in order to provide an economic basis for the earlier fixed rate and China’s reluctance to appreciate. Finally it is suggested that the necessary convertibility on capital account, toward which China is moving, could easily result in yuan depreciation under a floating rate regime. This is hardly the end that China critics have in mind and it is not one that would improve US or other trade imbalances with China.

The present article is a reply to the article by John A. Tatom titled "The US-China Currency Dispute: Is a Rise in the Yuan Necessary, Inevitable or Desirable?," recently published in this journal. We found that John Tatom seems to only give a partial description of the US-Chinese economic relations, of the main features of the Chinese economy, and also of the macroeconomic policy options available to China. We argue that the real exchange rate is not the appropriate measure for a currency undervaluation, but it is the continuous, one-directional and accelerating accumulation of foreign exchange reserves. We also argue that the likely improvement in the US trade balance deficit caused by an appreciating Yuan will not be offset by growing US trade balance deficits with other East Asian countries. Furthermore, giving up the actual currency peg will benefit rather than harm China, provided that the steps towards Yuan flexibility will be taken in the right sequence and order. We hold that a revaluation of the Yuan is necessary, inevitable and desirable just as much as it happened to be with the Deutschmark in 1969. It would not "damage Chinese development." China needs a Yuan appreciation mainly in its own interest to assure domestic financial market stability, and to avoid an overheating of its economy and a soaring inflation.

This paper modeled the proximate determinants of the scores on 60 items from Minnesota Multiphasic Personality Inventory-2 (MMPI) and of school participation of approximately 1,000 children who had lost their mothers due to AIDS and from other causes using the data from a survey in Ethiopia. The scores on MMPI items reflecting emotional and social adjustment, and school participation before and after maternal deaths were modeled in a multi-disciplinary framework incorporating the time sequence of events. The main findings were that while AIDS orphans scored lower on MMPI items, variables such as presence of the father, household income, feeding and clothing conditions, and attitude of the fostering family were significant predictors of children's scores. Secondly, girls were at a disadvantage in terms of the scores on MMPI items. Third, variables such as income and good feeding and clothing conditions were significant predictors of school participation. Fourth, school participation before maternal death was an important predictor of subsequent school participation probabilities. An ordinal regression model was estimated to address certain methodological problems. Overall, the results indicated that economic subsidies to fostering households would enhance child welfare in Ethiopia.