Author Index

Cambridge University Press 0521832829 - Economic Policy in the Age of Globalisation Nicola Acocella Index More information

Author index

Acocella, 4, 13, 39, 52, 90, 122, 216, 218, 240, 246, Bianchi, 165, 412 273, 280, 314, 324, 373, 423 Bikhchandani, 445 Aghion, 204 Bird, 205 Akerlof, 33 Blackorby, 198 Alchian, 12, 21 Blair, 143 Alesina, 121, 122, 123 Blanchard, 71, 72 Alt, 117, 126 Blank, 204 Amoroso, 431 Blinder, 298 Aoki, 146, 338 Boadway, 21, 213 Ardeni, 350 Boiteux, 149 Argy, 105 Bordo, 361 Arrow, 13, 42, 79 Borras,´ 413 Artis, 407 Bos,¨ 147, 197 Atkinson, 40, 74, 204, 205 Boubakri, 151 Autorita` garante della concorrenza e del mercato, Bouckaert, 125 174 Boughton, 368 Averch, 175 Bourguignon, 40 Azariadis, 71 Bovenberg, 457 Bowles, 49 Baily, 71 Boyer, 319 Bairoch, 428 Brandolini, 200, 201, 205 Balassone, 407 Bresciani Turroni, 51 Baldassari, 53 Breuss, 386 Baldwin, 336 Brookshire, 221 Banca d’Italia, 421 Brosnan, 389 Bank for International Settlements (BIS), 98, 422, Bruce, 21, 213 438, 440 Brusco, 21 Barbier, 28 Buchanan, 32, 118 Barca, 141 Buiter, 69, 103 Barnes, 204 Burrell, 319 Baron, 176 Burtless, 40 Barr, 49, 198, 204 Buti, 407 Barrett, 451 Barro, 70, 104, 130, 298 Caffe,` 3, 39, 352 Baumol, 17, 180, 197 Cagan, 51 Belanger,´ 124 Calabresi, 25 Benabou,´ 79 Calmorfs, 314 Benassy, 70, 204 Cantwell, 423 Bentivogli, 159, 165, 166 Canzoneri, 338 Berger, 431 Caroli, 204 Bergstrom, 14 Carraro, 182, 454, 462 Bernanke, 105, 130 Carter, 69 Besanko, 176 Carson, 221 Beveridge, 198 Caselli, 373

492

Author index 493

Cassel, 377 Dreze,` 53, 218 Castiglionesi, 53 Driver, 143 Caves, 143 Drummond, 226 Cecchini, 373 D’Souza, 151 CEEP, 148 Dupuit, 17 Chandrasekhar, 381 Chesnais, 191 Economides, 35 Chouraqui, 298 Edwards, 146, 376 Chrystal, 113, 117 European Economic Advisory Group at CESifo Ciccarone, 52, 314 (EEAG), 410 Clower, 70 Eichenberger, 457 Cnossen, 414 Eichengreen, 327, 362 Coase, 9, 24, 25, 32, 128 Eijfﬁnger, 280 Coffey, 371 European Monetary Institution (EMI), 404 Cohen, 123 Esping-Andersen, 199 Colander, 313 Estevadeodal, 463 Coleman, 197 European Agency for Environment, 416 Coles, 14 European Central Bank (ECB), 83, 396, 399, 401, Commission of the European Communities, 40, 284 402, 403, 404 Committee on the Working of the Monetary European Commission, 165, 303, 404, 414, 458 System, 252 Conway, 453 Food and Agriculture Organisation (FAO), 453 Cooper, 72, 447 Federico, 187 Cooter, 25 Fehr, 39 Coricelli, 98 Ferri, 259 Corlett, 37 Fetherston, 340 Cornes, 30, 182 Finger, 390 Cornwall, 11 Fink, 288 Cosset, 151 Finsinger, 150 Costabile, 195, 196 Fischer, 54, 67, 105, 130, 168, 207, 446 Cottarelli, 398 Fisher, F. M., 14 Cozzi, 79 Fisher, I., 56 Cripps, 340 Flanagan, 319 Crocker, 74 Fleming, 241 Cummings, 221 Fleurbaey, 39 Florio, 151, 155 Dabbah, 174 Foley, 29 Dales, 180 Foreman-Peck, 187 Dam, 382 Forster, 40 Davidson, 66 Franco, 407 De Bonis, 446 Frankel, 368, 462 De Cecco, 273, 280 Franks, 143 De Fraja, 149 Franzini, 125, 132, 182, 197 De Grauwe, 375, 394 Fratianni, 373 De Martino, 389, 460 Freeman, 198, 202, 206 De Vries, 365, 368 Frenkel, 275 Debreu, 13 Frey, 457 Del Monte, 196 Friedman, B. M., 66 Delbono, 149 Friedman, J. W., 31 Demsetz, 32, 151 Friedman, M., 35, 60, 61, 63, 367 Dernburg, 243, 275, 300 Fudenberg, 31 Desai, 73, 74 Di Bartolomeo, 122, 273, 314 Galal, 151 Dilnot, 205 Galor, 79, 204 Dixit, 126, 128, 129, 130, 337 Gamble, 143 Domar, 76 Gandolfo, 239, 332, 344, 345, 346, 371 Donahue, 133 Garc`ıa-Penalosa,˜ 204 Donaldson, 143, 198 Gaskins, 167 Dore, 129, 146, 319, 431 Genser, 414 Dornbusch, 54, 67, 372 Gerber, 117 Downs, 116, 118, 124 Gerlach, 377

494 Author index

Giannola, 195, 196 Holmstrom, 145, 146 Giavazzi, 372, 373, 375, 462 Horseﬁeld, 365 Giddy, 444 Hoshi, 146 Gilbert, 370, 381 Hotelling, 17, 127, 149 Giotakos, 172 Hovenkamp, 165 Giovannini, 372 Hughes, 145 Giustiniani, 446 Huizinga, 414 Glaeser, 156 Hume, 218 Glomm, 79 Hunt, 21 Glyn, 120 Gnesutta, 113 Ietto Gillies, 423 Godley, 340 Illing, 446 Gomel, 446 Ilzkovitz, 170 Goodhart, 255, 446 Inman, 17, 35 Goodin, 206 International Monetary Fund (IMF), 80, 366, 369, Gordon, 104, 130 370, 382, 428, 430, 434, 444, 447, 448 Goto, 192, 463 IRI, 147, 148 Granaglia, 200, 201 Graziani, 196 Jackman, 48 Greenaway, 433 Jackson, 117 Greenwald, 73 James, 365, 368 Gregg, 143 Jeanne, 445 Gregory, 298 Jenkinson, 145 Griller, 386 Johansen, 338 Grilli, 273, 274 John, 72 Grimes, 165 Johnson, H. G., 275 Gronchi, 212 Johnson, L., 175 Grossman, G., 79, 118 Jones-Lee, 219 Grossman, H. I., 70 Jordan, 416 Grossman, S., 141 Group of Ten, 440 Kaldor, 78, 237, 350 Grubel, 361, 364, 365 Kalecki, 49, 57, 120 Grunberg, 26, 327, 452 Kaminsky, 439, 444 Guesnerie, 198 Kanbur, 131 Gui, 155 Kaplan, 145, 146 Guiso, 105, 403 Kareken, 278 Kashyap, 146 Hague, 37 Kaufman, 256 Hahn, 13, 14, 69 Kaul, 26, 327, 452 Hall, 142 Kay, 142, 181 Hammond, 14, 209 Kelly, D., 143 Hansmann, 155 Kelly, G., 143 Hardin, 30 Kenworthy, 200, 201 Harris, 143, 217 Keynes, 46, 55, 56, 58, 361, 445 Harrod, 76 Kirman, 14, 73 Hart, 141 Kiyotaki, 71 Hartog, 318 Knight, 3 Haveman, 217 Koenig-Archibugi, 460 Hay, 41 Kolm, 39 Hayek, 128 Krueger, 202 Heintz, 389 Krugman, 344, 445 Heller, 29 Kydland, 103, 104, 130 Helm, 202 Helpman, 79, 118, 344 La Porta, 151 Henderson, 143 Ladd, 198 Hibbs, 121, 122 Laffont, 26, 130, 181 Hicks, 59 Lal Das, 385 Hillebrand, 416 Lall, 344, 381 Hills, 206 Lampman, 198 Hirschman, 9, 132 Lancaster, 36 Holcombe, 9, 123 Layard, 48, 206

Author index 495

Le Grand, 128, 202 Moore, 141 Ledebur, 204 Morris, 41 Lee, 435 Morrisson, 40 Leibenstein, 12 Muscatelli, 298 Leijonhufvud, 70 Mueller, 29, 30, 122, 124, 125, 200, 202 Lerner, 313 Mundell, 241, 338, 394 Levine, 444 Murphy, 142 Levinthal, 42 Musgrave, 41 Levy, 200 Mussa, 369 Lewis, 217 Musu, 451 Lindbeck, 71, 120, 199, 203, 204 Muth, 66 Lipsey, 36 Myles, 131 Littlechild, 175 Myrdal, 3, 350 Liu, 259 Mytelka, 433 Lopez de Silanes, 151 Lucas, 66, 79, 112 Nash, 151 Lucifora, 434 Neal, 198 National Economic Development Office (NEDO), Machlup, 165 152 MacRae, 120 Nelson, 433 Maddison, 47, 98, 422, 426 Neumann, 165 Maddock, 69 Newbery, 153 Madse, 121 Newlyn, 250 Magill, 21 Nibler, 146 Malinvaud, 48, 70 Nicita, 182 Maniquet, 39 Nickell, 48 Mankiw, 71 Niskanen, 124 Markandya, 28 Nogues,´ 390 Mars, 319 Nordhaus, 120, 123, 453 Marselli, 196 North, 130 Marshall, 17 Nozick, 12 Martimort, 126 Nurske, 42 Martin, 151, 170, 382 Martini, 170 Oakland, 29 Marx, 49 Oates, 132, 180 Masciandaro, 122, 273 Odagiri, 192 Maskus, 389 Organisation for Economic Cooperation and Mayer, 143, 145 Development (OECD), 47, 98, 293, 458 McCormick, 393, 416 Okun, 39, 75, 203 McCubbins, 122 Olson, 118 McDonald, 72 Oman, 421 McKenzie, 37 Office for National Statistics (ONS), 152 McKinnon, 440, 444 Ordover, 34 Meade, 37 Orszag, 206 Megginson, 151 Meiklejohn, 170 Padoa Schioppa, 259 Migue,´ 124 Pagan, 111 Milanovic, 431 Pagano, M., 373 Mill, 348 Pagano, U., 25, 26 Miller, 375 Panic,´ 460 Millward, 151 Panzar, 17 Milone, 354 Pareto, 11 Minsky, 45, 50 Parker, 151 Mishra, 198 Pasinetti, 77 Mishkin, 105, 130 Patinkin, 59 Mitchell, 221 Patnaik, 381 MMC (UK), 432 Pearce, 28, 180 Modigliani, 53, 59 Pencavel, 319 Moffitt, 205 Perotti, 205 Monacelli, 407 Person, 40 Montalbano, 212 Persson, 117, 199

496 Author index

Petersen, 165 Sandmo, 198 Petri, 377 Sapir, 407 Pezzoli, 133 Sarkar, 351 Phelps, 69 Schaling, 280 Phillips, 61 Scherer, 42, 129, 143, 170 Pieper, 381 Schiattarella, 133 Pianta, 193 Schmidt, 39 Piga, 280 Schroder,¨ 366 Pigou, 17, 23, 218 Schultze, 221, 459 Pizzuti, 207 Schumpeter, 42, 79 Platteau, 453 Schwartz, 60, 361 Pollitt, 125, 153 Scicchitano, 200, 201 Prebisch, 350 Seidman, 314 Prescott, 103, 104, 130 Sembenelli, 414 Preston, A. J., 111 Sen, 10, 11, 14, 35, 74, 76, 117, 202 Preston, L.E., 143 Sengenberger, 21 Pretty, 453 Shapiro, 49, 71 Price, R. W. R., 298 Sharma, 445 Price, S., 113 Shleifer, 125, 141, 146, 176 Putnam, 197 Shonﬁeld, 177 Putterman, 39 Sibert, 122 Pyke, 21 Silberston, 142 Silvestre, 39 Qian, 132 Simon, 128 Quinzii, 21 Singer, 350, 351 Singh, 129, 144, 145, 389 Rajan, 141 Siniscalco, 182, 452 Ramsey, 149 Sinn, 204, 457 Rasmusen, 31 Slaughter, 433 Ravenscraft, 143 Smeeding, 40 Ravikumar, 79 Smith, 10, 78 Regan, 25 Snower, 72, 206 Reinhart, 444 Solow, 28, 72, 77, 298 Robichek, 212 Sorge, 407 Robinson, 45, 49, 77, 120 Soskice, 319 Rockett, 462 Spaventa, 375 Rodrik, 428 Spiller, 126 Roemer, 38, 39, 123 Spraos, 446 Rogoff, 122, 462 Spulber, 181 Romani, 128 Staniland, 117 Romer, D., 73 Starrett, 26, 29, 209 Romer, P., 79 Stern, 26, 218, 452 Rondi, 414 Stevenson, 298 Roosa, 277 Stigler, 24 Rose-Ackerman, 125 Stiglitz, 9, 15, 34, 35, 49, 71, 73, 125, 129, 130, 145, Rosen, 71, 205 150, 151, 180, 197, 202, 206, 219, 259, 292, Rosenstein-Rodan, 42 310, 381 Ross, 431 Stutchbury, 319 Rossi, 205, 407 Sullivan, 165 Rothschild, 312, 313 Summers, 56, 72 Roubini, 122, 123 Sutcliffe, 120 Rowthorn, 26 Sutherland, 375, 407 Rusk, 204 Svensson, 279, 399 Svimez, 196, 197 Sachs, 122 Swagel, 433 Saez, 463 Swedenborg, 206 Salin, 366 Sylos Labini, 350 Salvati, 128 Salverda, 434 Tabellini, 117, 122, 273, 274 Samuelson, 30, 35 Tanzi, 457, 458 Sandler, 30, 182, 453 Tarantelli, 314

Author index 497

Taylor, 381 Vickers, 18, 43, 162, 176, 181 Temin, 60 Viner, 37 Terlizzese, 105 Vines, 370, 381 Teulings, 318 Viscosi, 219 Theichroew, 212 Vishny, 125, 141, 146 Theil, 100 Visser, 318 Thompson, 143 Vives, 141 Tiebout, 32, 132 Vogelsang, 150 Tinbergen, 89, 93, 100 von Hagen, 373 Tirole, 31, 126, 181 Vranes, 386 Tizzano, 174 Tobin, 327, 444 Wallich, 313 Todaro, 217 Walsh, 273 Topel, 206 Warshawsky, 145 Traxler, 318 Waterson, 181 Trento, 159, 165, 166 Weber, A. A., 373 Trifﬁn, 364 Weber, M., 105 Tsoukalis, 393, 412, 414, 415 Weingast, 132 Tullock, 118, 124 Weintraub, 313 Turner, 180 Weiss, 34 Weitzacker, 313 ul Haq, 327 Weitzman, 72 Ulman, 319 Welfens, 416, 448 UNCTAD, 292, 421, 422, 423, 424, 425, 426, 428, Williamson, Jeffrey, 40 429, 433, 456, 463 Williamson, John, 234, 446 United Nations Development Programme Williamson, O. E., 32 (UNDP), 39 Willig, 17 United Nations (UN), 28, 39, 73, 74 Winters, 382, 464 USCongress, 370 Wolf, 128 USDepartment of Commerce, 458 Wood, 335, 460 USEnvironmental Protection Agency (USEPA), World Bank, 28, 39, 40, 131, 221, 352, 381, 389, 421 451 Wright, 350 World Trade Organisation (WTO), 386, 428 Van Meerhaeghe, 382 Wyplosz, 327, 442 Van Randenborgh, 151 Van Ypersele, 366, 371 Yarrow, 18, 162, 176 Vandenbroucke, 338 Young, 78 Vannini, 196 Varian, 25 Zammit, 389 Veljanovski, 176 Zazzaro, 196 Vercelli, 54, 69 Zeira, 79, 204 Vernon, 186 Zingales, 141 Vicarelli, 45 Zodrow, 414, 457

Subject index

abuse of dominant position, 163 primary current, 286 ad hoc concertation, 459 total primary, 286 adjustable peg, 363 balance of payments, 237 administered price, 78 automatic adjustment, 322 adverse selection, 33, 445 causes of disequilibrium, 324 agency problem, 33; see also information defined, 80, 237 asymmetric determinants, 80, 237 agent, 33 disequilibrium, 322–4 aggregate demand curve, 67 equilibrium, 81–2, 247 aggregate supply curve, 67 monetary theory of, 275 agreements among firms, 20 policies for adjustment, 324, 363 aid policies for competitiveness, 328 horizontal, 173 policies for excess or insufficient demand, 328 regional, 173 see also appreciation; depreciation sectoral, 173 banana war, 385 ‘animal spirits’, 57 bank anti-dumping measures, 384 English type, 253 anti-ecodumping measures, 388 German type, 253 anti-monopoly policy see antitrust legislation; price universal, 253 control; public enterprise; trade policy see also Central Bank antitrust legislation, 163 Bank of England, 273 impact on trade, 387 Bank of France, 273 in EU member states, 173 bank reserves see reserves in the United States, 164 banker’s antitrust paradox, 169 acceptance, 254 appreciation, 231, 367 bank, 255 asymmetric effects of exchange rate variations, barrier to entry 336–7 strategic, 160 balance of payments equilibrium and, 328–30 Barro–Ricardo equivalence, 298 see also depreciation; floating exchange rate; also barter economy, 54, 250 under specific monetary systems basic income, 48 appropriate assignment of instruments to basket currency, 365 objectives, 338 Basle Capital Accord, 259 arbitrage, 235 beachhead effect, 336 arbitration, 314 ‘beauty contest’, 445 autarky, 343 beggar-thy-neighbour policy, 353 authorities, 131, 133 Beveridge Report, 198–9 automatic (built-in) stabilisers, 101 big Averch–Johnson effect, 175 business, 3 labour, 3 balance bilateral procedures, 400 current, 286 bilateralism, 363, 379 overall budgetary, 286 block exemption, 166

498

Subject index 499

Bolkestein report, 414 Community Support Frameworks (CSFs), 412 bootstraps, 377 comparative cost, 344 budget deficit comparative-cost principle, 344 defined, 290 compensating variation, 220 financing see deficit financing competition Bundesbank, 255, 273 conditions for, 13 Bureau International du Travail (BIT), effective, 161 389 for monopoly, 161 bureaucrat, 119, 123 for the market, 161 business cycle ‘classical’, 289 competition, legislation see antitrust legislation buyormake,32 competition, potential, 160 competitive equilibrium, 13, 14 capability, 74 competitiveness, 56 capital factors, 237 account, 80, 237 non-price, 237 mobility, 245 price, 237 mobility and fiscal policy, 299, 300 complementary institutions, 143 see also tax, Tobin compulsory capital movements, 239, 444 licensing, 387 liberalisation, 403 reserve ratio, 269, 271 limitations, 306 reserve system, 402 see also floating exchange rate, speculation and; conditionality of credit, 446 tax, Tobin congestion, 32 capitalist economy, 140 constitution capture theory, 117 fiscal, 102 cartels, 116 monetary, 102 cellophane fallacy, 167 contestability, 160 central (exchange) rate, 371 contingent valuation, 220 Central Bank controllability, 111 as lender of last resort, 255 of exchange rate, 329 independence, economic, 273 of instruments, 99 independence, goal, 273 see also under specific instruments independence, instrument, 273 convertibility, 362–3, 429 independence, political, 273 cooperative game, 462 regulation and supervision, 255 coordination reserve requirement and, 262 disadvantages, 462 see also European Central Bank (ECB); discretionary through compromise, 459 monetary policy; open market operations international, 448 central rate, 234 pure discretionary, 459 centralised solution, 338 corporate governance, 140–7 centrally created reserves, 365 complementary institutions, 142 certificate of deposit, 254 defined, 141 certification of quality, 34, 252 managerial firm, 142 cheap labour, 352 market for corporate control, 143 choice of institutions, 24 models of, 145, 146 citizen’s income, 48 non-ownership instruments of control, 142 classical cycle, 52 corporate social responsibility, 143 club, 32 corridor, 401 club good, 32 cost Coase theorem, 23, 24 direct, 50 cohabitation, 122 full, 50 Cohesion Fund, 412 menu, 53 Colbertism, 344 opportunity, 215, 268, 271 collateral, 400, 401 shoeleather, 54 commitment, 103 slot machine, 53 Common Agricultural Policy (CAP), subadditivity of, 19 412 sunk, 18, 236, 336 common external tariff (CET), 392, 415 transaction, 24, 250 commons, 30 unit labour, 50 Community preference, 415 variable, 50

500 Subject index

cost-benefit analysis (CBA), 209, 210 deficit and externalities, 214 in structural terms, 407 and income distribution, 216 spending, 290 choice criteria, 211–13 deficit financing (spending), 291–2 defined, 210 with debt, 296–8 direct and indirect effects, 214 with monetary base, 292–6 discounting, 210 deindustrialisation, 430 eligibility of a project, 210 Delors Report, 373 environmental impact study and, 220–1 demand shock externalities and, 214 asymmetric, 394 income distribution, 220 deposit, 263 incommensurables, 214 and money, 254 intangibles, 214 creation, 268 internal rate of return (IRR), 212 derived, 265 net present value (NPV), 210 facility, 401 types of, 210 multiplier, 265 valuing life, 219–20 primary, 265 valuing non-marketed goods, 219 types of, 251, 254, 263, 265 valuing the environment, 220 depreciation, 231, 335, 367 valuing time, 225 and demand elasticity, 330–4 willingness to pay (WTP), 215 and effectiveness, 330–6 see also price, shadow asymmetric effects of exchange rate variations, cost-effectiveness analysis, 225–6 336–7 Council of Ministers, 393 balance of payments equilibrium and, 328–36 countercyclical policy, 102 effectiveness, 330 Court of Auditors, 394 influence on capital movements, 335 Court of Justice, 394 j-curve, 335 credibility, 103, 373 objectives, 328–30 credit pass-through, 332 ceiling, 272 supply elasticity and, 334–5 direct, 251 see floating exchange rate; see also under specific indirect, 252 monetary system cross deregulation, 160 rate, 235 derivatives contracts, 236 subsidisation, 250 Descartes’ rule of signs, 212 crowding-out devaluation, 345, 363 effect, 297 and protectionism, 353 financial, 64, 297 defined, 234 ratio, 297 see depreciation real, 297 development cumulative causation, 194 defined, 73 currency diffusion of technological progress, 79 board, 376 direct control measures, 101 cycles, 377 see also incomes policy; non-tariff barrier (NTB); in circulation, 262 price control; public enterprise current account, 80, 237 direct investment, 80 see balance of payments dirty float, 234, 367 current transfers, 80 discretion, 102 custom, 103 discretionary measures, 101 customs tariff, 345 disequilibrium model, 70 Dispute Settlement Body (DSB), 385 data, 107 distribution regime, 140 debt divided government, 122 buy-backs, 438 dollar shortage, 364 securities, 403 dollarisation, 376 debt–equity swaps, 438 domestic credit expansion (DCE), 279 debt–nature swaps, 438 domestic policies, 369, 387 decentralisation dominant position, 167 horizontal, 131 abuse of a, 168 vertical, 131 dominant solution, 31 defensive expenditures method, 225 dumping, 352

Subject index 501

duty environmental policy, 415–16 fiscal, 345 impact on trade, 387 protective, 345 principle of integration, 415–16 dynamic efficiency, 141 environmental protection, 449 and market failures, 41 equality of price and marginal cost, 15 dynamic rationing, 278 equation of exchange, 60 earmarking, 206 type of, 106 ECB see European Central Bank equilibrium Ecoaudit, 416 competitive, 13 ecodumping, 384, 388 existence, 12, 13 Ecofin, 393 equity, 12, 38–9 Ecolabel, 416 see also first theorem of welfare economics; economic constitution, 2 income distribution; redistribution policies; economic exchange, 314 second theorem of welfare economics; welfare economic policy, 2 state as a game equivalent variation, 220 choice of institutions, 24 ethical individualism, 11 constitutional choices, 2 Euratom, 392 current choices level, 1 euro, 374, 406 institutional choices, 2 eurobanks, 443 macroeconomic, 249 eurobond, 444 microeconomic, 139 eurocurrency, 440 normative theory of, 89, 116 eurodollar, 440 positive theory of, 89, 116 Europe Agreements, 415 social choices level, 2 European Agricultural Guidance and Guarantee theory of, 4 Fund (EAGGF), 411 theory of current decisions, 4 European Atomic Energy Community, 392 see also instruments; objectives; see also under European Central Bank (ECB), 394, 396 specific policies modes of intervention, 398 transaction, 80 operational independence, 398 ecosystem, 27 organs, 396 ECU, 372 political independence, 398 effective or net saving, 28 standing facilities, 400 effective-market classification principle, 338 two-pillar strategy, 399 efficiency, 10, 11 types of operations, 399, 400 adaptive, 12 European Coal and Steel Community (ECSC), 392 allocative, 10, 11, 139, 147, 149, 150, 151, 159, European Commission, 393 164 European Common Market, 392 see Pareto efficiency; see also under specific European Council, 393 policies European Economic and Monetary Union (EMU), consumption, 11 373 dynamic, 12, 139, 147, 159, 190 European Exchange Rate Mechanism (ERM), 371 dynamic, and market forms, 42 European Investment Bank (EIB), 394 ‘general’, 11 European Monetary System (EMS), 371, 406 innovative, 164 snake, 371 Pareto, 10, 11, 13, 14, 15, 30, 155, 160 see also European Economic and Monetary production, 11, 175 Union static, 139, 159, 160, 190 European Monetary System II (EMS II), 374, 406 wages, 71 European Parliament (EP), 394 X, 10, 11, 150 European Regional Development Fund (ERDF), elasticity of supply, 334–5 411 employment rate, 75 European Single Market (ESM), 186, 393 endogenous European Social Fund (ESF), 411, 412 growth, 78 European System of Central Banks (ESCB), 396, rationing, 278 401 entry barriers, 432 European Union environment as a monetary area, 394 natural, 27 Common Agricultural Policy (CAP), 175 environmental impact assessment (EIA), 225, redistributive policies, 411 416 regional policy, 411

502 Subject index

European Union (cont.) and floating exchange rates, 300, 301 social policy, 412 asymmetry, 291 Structural Funds, 411 defined, 284 trade policy, 385 objectives, 284 exchange rate, 101 see also budget deficit; public debt; public controllability of, 329 expenditure; taxation equilibrium, 445 Fisher fixed see fixed exchange rate effect, 56 floating see floating exchange rate equation, 60 hard, 355, 372 fixed exchange rate, 329 nominal, bilateral, 231 defined, 233–4 nominal, effective, 231 discipline imposed by, 368, 372 policy, 101, 329–30, 406 see also appreciation; depreciation; European purchasing power parity (PPP), 74, 352 Monetary System (EMS); Gold Exchange real, bilateral, 232 Standard; Gold Standard real, effective, 233 fixed price model, 70 excludability, 26 fixed target approach, 93–4 exit, 132 flexibility exogenous growth, 78 of prices, 55 expectations, 57 of wages, 55 adaptive, 62 floating exchange rate rational, 103 advantages, 367 export refunds, 415 and country autonomy, 368 external as a re-equilibrating mechanism, 233–4 diseconomy, 21, 313 defined, 233–4 economy, 20, 313 dirty float, 367 economy, dynamic, 42 disadvantages, 368 externality, 13, 139, 186, 313, 448 managed float, 367 consumption, 21 speculation and, 367–8 network, 35 see also appreciation; depreciation; purchasing production, 21 power parity (PPP) theory foreign exchange market, 231 factual judgements, 10 dual, 369 fairness, 39 two-tier, 369 Federal Reserve, 269 foreign investment policy federal state, 132 impact on trade, 387 fiat money, 254, 366 franchising, 161 financial free intermediaries, 251–3 entry and exit, 17 liabilities, 252 reserves, 268 market, role of, 143 riding, 17, 29, 31 stability, 441 trade, 343 structure, 253 full cost principle, 50 system, 253; credit-centred, 252; market-centred, full information, 13 251 fundamental budget accounting, 284 financial account, 80 fundamental disequilibrium, 363 Financial Instrument for Fisheries Guidance fundamentals, 445 (FIFG), 411 futures contracts, 236 financing mechanism, 370 fine-tuning, 279, 400 gambler’s ruin problem, 431 firm, 9 game theory, 113 with large shareholders, 145 General Agreement on Tariffs and Trade (GATT), first best, 36 382 first theorem of welfare economics, 12, 13 General Agreement on Trade in Services (GATS), fiscal 383 constitution, 101 Global Environmental Facility (GEF), 380 drag, 289 globalisation, 186, 455 federalism, 132 causes of, 427 policy, 101, 407 competitiveness and, 431 and capital mobility, 299, 300 defined, 421 and fixed exchange rates, 298 economic policy and, 434

Subject index 503

forms of, 421 functional, 38 impact of, 430 personal (or family), 38 new features of, 426 primary, 200 Gold Exchange Standard, 321, 362–3 regional, 38 gold point, 360 see also redistribution policies Gold Standard, 101, 269, 359–60 income elasticity of demand for services, 430 golden rule of economic policy, 109 incomes policy, 308 golden share, 147 and competitiveness, 305 goods movements, 80 and income distribution, 308–9 government, 9 and industrial policy, 314 consumption, 285 and productivity, 315 debt see public debt defined, 308 expenditure, primary, 286 guidelines, 310 failures see non-market failures in the real world, 315 intervention, justification of, 255 institutional, 311, 314 investment, 285 market, 311 sector, 284–6 market-based, 308, 313 government budget, 284–6 objectives, 308 see also budget deficit; fiscal policy; public statist, 311 debt tax-based, 313 green accounting, 28 tax-tied, 313 growth see also price control; tradable permits and development, 73 incumbent, 160 defined, 73 indexation, 53 endogenous, 78 indirect control measure, 101 Harrod–Domar, 76 industrial district, 21 theories of, 76 industrial policy, 185, 186, 188 warranted rate, 76 horizontal, 188 growth rate, natural, 76 in France, 190 in Japan, 190 harmonisation of the EU, 412 of financial legislation, 403 productive structure, 185 of technical standards, 413 selective, 188 Harrod’s instability, 76 industrial relations, 48, 319 hedge, 236 infant industry, 348 hedonic price index method, 219, 225 relative, 233, 377 herd behaviour, 445 inflation hidden action problem, 34 targeting, 279, 398 high-powered money, 262 tax, 294 ‘hit and run’ tactics, 18 types of, 50, 51 human capital, 79, 141 see also devaluation; fiscal drag; incomes policy; human development index (HDI), 74 price controls; revaluation hypothecation, 206 information hysteresis, 72, 336 asymmetric, 20, 33, 66, 67, 71, 176, 177 full, 20 IMF see International Monetary Fund innovation implementation, 311, 313, 314, 315 financial, 254 implicit contract, 71 process, 12, 186 import deposit, 346 product, 12, 186 incentive, 178 innovative ability, 12 automatic, 189 insider trading, 147 capital investment, 194 insider–outsider, 72 discretionary, 189 instability of capitalism, 45 for output reduction, 178–9 institution, 1 industrial policy, 188 institutionalised cooperation, 459 problem, 34 instrument regional policy, 188 controllability, 99 incentive, to labour, 194 defined, 90 income effectiveness, 99 permanent, 64 independence, 99 income distribution, 38, 139 macroeconomic policy, 249

504 Subject index

instrument (cont.) labour see also appreciation; depreciation; fiscal policy; incentives, 194 incomes policy monetary policy protection policies; impact on trade, 387 microeconomic policy, 139 standards, 389 see also antitrust legislation; externalities; price lag, types of, 101 control; public choice; regulation Lamfalussy Report, 404 separability, 99 law of one price, 13 types of, 100 layoff,48 integration leaky-bucket parable, 39 deep, 421 learning shallow, 421 by doing, 42, 79, 348 interest group, 116, 117 curve, 349 interest rate, 58 process, 348–9 conventional nature, 58 legal tender, 250, 253 government debt and, 292 lemons, 33 market, 60 lender of last resort, 255, 405, 446 natural, 60 see also Central Bank nominal, 241 leverage buyout, 145 real, 241 liberal-democratic principle, 11 swap, 236 lobby, 116 inter-industry trade, 427 lock-in effect, 277 intermediate target, 279, 328 London Interbank Offered Rate (Libor), 236 one-step intervention, 279 longer-term refinancing operation, 400 two-step intervention, 279 loss function, 96 internal rate of return (IRR), 212 Lucas critique, 111–12 internalisation of externalities, 23 international M1, 254 opening, 158 M2, 254 policies, 369 M3, 254, 399 international agreements, 379 Maastricht International Bank for Reconstruction and agreements, 263, 273 Development (IBRD), see World Bank treaty, 374 international cooperation, 449 macroeconomic policy see instruments International Development Association (IDA), 380 main refinancing operation, 400 International Finance Corporation (IFC), 380 managed float, 234, 367 International Labour Office (ILO), 389 managerial firm, 142 International Monetary Fund (IMF), 362–3, 365, marginal 369, 380, 437, 446 efficiency of capital, 57, 212 conditionality, 369 lending facility, 400 conditionality of credit, 446 private product, 23 facilities, 437 productivity of labour, 47 financing mechanism, 370 rate of substitution (MRS), 11 lender of last resort, 446 rate of technical substitution (MRTS), 11 regular financing activities, 369 rate of transformation (MRT), 11 Special Drawing Rights valuation, 366 social product, 23 surveillance, 369 market International Trade Organisation, 382 capital, 251 intervention price, 348 complete, 13, 216 intra-industry trade, 427 concentration, 432 inverse reduced form, 108 contestable, 18 invisible contingent, 32 hand, 10 derivatives, 251 items, 80 empty, 33 island parable, 66, 67, 69 exchange rate, 74 iso-vote curve, 121 failures, 14, 46; macroeconomic, 46; microeconomic, 15 j-curve, 335 financial, 251 j-effect, 335 for corporate control, 144 jointness in production or consumption, 21 forward, 32, 235 incomplete, 20 ketchup effect, 203 see also externalities; information, asymmetric; Kyoto protocol, 181, 449 public goods

Subject index 505

liberalisation, 158 theory of the balance of payments, 275 pre-emption, 160 uses, 262 primary, 251, 263 money real-life, 15 commodity, 251, 253 relevant, 167 fiat, 254 secondary, 251 multiplier, 265 segmentation, 20 velocity of circulation, 60 spot, 32, 235 monopolisation, 164 mark-up moral hazard, 33–4, 278, 405, 445 rate, 50 see also information, asymmetric theory, 50 moral suasion, 315 Marshall Plan, 392 most favoured nation clause (MFN), 343, Marshall–Lerner condition, 332 382 maturity transformation, 252 movements of goods, 237 means of payments, 250 Multifibre Agreement (MFA), 346 means-test, 199, 206 Multilateral Investment Guarantee Agency medium of exchange, 250 (MIGA), 380 menu costs, 312 multilateralism, 363, 379 merit goods see merit wants multinational, 423 merit wants, 40–1, 216 actual, 267 microeconomic policy see instruments potential, 267 minimal state, 139 (public) expenditure, 290–1, 296–7 minimum Mundell principle, 338 lending rate, 263 mutual recognition of technical standards, 413 national content requirement, 346 mint parity, 360 national champion, 165, 186 misalignments, 445 natural monopoly, 16 mismatch, 49 Navigation Act, 343 mixed oligopoly, 149, 177 negotiated development planning, 196 model neo-corporatism, 314 decision, 106 net present value (NPV), 210 inverse reduced form, 108 newly industrialising economies (NIEs), 344 Mundell-Fleming, 241 nominal rigidity, 70 reduced form, 108 non-cooperative solution, 31 structural form, 106 non-discrimination, 379 monetary non-interest-bearing deposit, 327 accommodating, 294 non-market failure, 89, 128 and direct control, 268 non-profit institution, 9, 155 aggregate, 254 non-rivalry, 26, 28 see also public good as a rule, 102 non-tariff barrier (NTB), 345 asymmetry of effects, 270, 281 non-tradable sector, 427 base, 262 capital movements and, 274 objectives, 92 circuit, 59 as ‘bads’, as goods, 96 constitution, 101 consistent, 93 cycle, 123 fixed, 93 economy, 22, 250–1 flexible, 93 floating exchange rate and, 274 intermediate, 277–80 see also domestic credit held by banks, 262 expansion held by the public, 262 priority approach, 93 indicator, 278 substitutability, 93 international, 359; see also centrally created trade-off between, 93 reserves; European Monetary System (EMS); see also social welfare function Gold Exchange Standard; Gold Standard; official discount rate, 263 International Monetary Fund official reserve, 80, 81 objectives, 249, 272 Okun’s law, 76 policy, 101, 305 Okun’s misery index, 98 see also political business cycle; fixed exchange open market operation, 262, 269–70, 400 rate and, 274 outright transactions, 263 regime see monetary policy, objectives permanent transactions, 263 sources, 262 optimising approach, 96 system, 359 and centrally-created reserves, 365 opting out, 206

506 Subject index

option, foreign currency, 236 shadow, 216 orderly market agreement (OMA), 346 social, 216 Organisation for Economic Cooperation and see also price control Development (OECD), 458 price cap, 175 overinvoicing, 327 price control, 159, 174–6, 312 overnight interbank rate, 279 and effectiveness, 313 overshooting, 340 and efficiency, 313 of exchange rate, 377 and income distribution, 175 ownership structure, 141 as a counterweight to market power, 313 effectiveness, 176 parameter, 107 fixing a rate of return, 175 Pareto optimum, 10, 11, 13, 15, 30, 155 macroeconomic purpose, 175 desirability, 14 setting a maximum price (price cap), 175 Pareto principle see Pareto optimum see also incomes policy parity, 234, 363 price policy, 308 partisan politician, 121 price-quotation system, 231 pass-through, 333 price-taker, 13 paternalism, 41 principal, 33 peace clause, 383 principle of mutual recognition, 404 penalty TIPs see incomes policy, tax tied prisoner’s dilemma, 30–1 perfect competition, 13, 15 privatisation, 147 Phillips curve, 460 in the UK, 151 derived, 62 production regime, 140 expectations-augmented, 61, 104, 127 profit rate, 309 long-run, 63, 68, 104, 121 progressivity, 197 original, 62 project, 221 short-run, 62, 68, 121 property right, 21, 24, 140, 142 vertical, 63 and efficiency, 24–5 piecemeal measures, 89 and externalities, 24–5 Pigovian tax, 178 assigning, 24 plan, 90 protectionism, 343 planning, 89 protectionist instrument, 345 policy public choice, 118, 128, 160 attitude, 441 public company, 146 invariance, 68 public consumption, 297 policy makers, identity of, 119 public debt, 291, 296–8, 302–7 policy neutrality, 68 determinants of growth, 302–4 political budget cycle, 123 funding, 305 political business cycle, 119 historical development, 302–3 Kalecki on, 120 interest on, 285, 286, 303–4, 306 Nordhaus on, 120 limits to growth, 304 partisan theory, 121, 123 monetisation, 305 political economics, 117 reduction policies, 305–7 political economy, 117, 158 repudiation, 305 political exchange see also social pact see also budget deficit political party, 117 public enterprise, 147, 174, 177 portfolio investment, 80 allocative efficiency, 150 potential output, 75 incentives, 150, 155 poverty, 39 objectives, 177 relative, 200 performance, 150 poverty line, 39 Ramsey-Boiteux price, 149 preference, endogenous, 216 regulation, 155 price X-inefficiency, 150 absolute, 151 see also privatisation administered, 313 public expenditure agreed, 312 balanced budget and, 290–1 future, 236 content, 290–1 maximum, 174–5 debt financing, 296–8 minimum, 174–5, 412 deficit financing, 291–2 relative, 45, 151 monetary base financing, 292–6 set, 312 types, 285

Subject index 507

public good, 21, 26 see also antitrust legislation; incomes policy; congestion, 32 price control defined, 26 relevant market, 167 excludability, 26 rent seeking, 202 financing, 182 repurchase agreement, 254 global, 26, 27, 441, 464, 448 reputation, 103 impure, 30 reservation wage, 48 mixed, 30 reserve currency, 362 non-excludability, 26 reserves, excess (free), 252 non-rivalry, 26, 28 restrictive agreement, 166 production, 29, 182 restructuring, 186 pure, 30 revaluation, 363 rivalry, 26 defined, 234 public project, 209 see also appreciation public saving, 286 revenues public sector enterprise see public enterprise capital account, 285 purchasing power parity (PPP), 74 current, 285 theory, 352, 377 government, 285 reverse transactions, 263 qualitative policy, 100 reward TIPs see incomes policy, tax tied quantitative policy, 100 Ricardian equivalence, 298 quantity theory of money, 60 rigidity quick tender, 400 of money wage, 55, 59 quota of nominal price, 55 import, 345, 385 risk diversification, 252 output, 412 rivalry, 26 Roosa effect, 277 race to the bottom, 390, 455 RPI–X method, 175 Radcliffe report, 252 rule rate of return, 175 automatic, 101, 102 rational expectation, 66 fixed, 102 rationing mechanism, 51 flexible, 103 rationing of credit, 249, 279 recycling, 437 safeguard clause, 459 redistribution policy, 185, 197, 411 Say’s law, 55 and welfare state, 197 scale economies, 13, 252 see also incomes policy; price control; second dynamic, 348 theorem of welfare economics; welfare scope economies, 252 state screwdriver plant, 346 reduced form, 108 second best, 35–6 reform policy, 100 second theorem of welfare economics, 14 reforms, 100 securitisation, 253 regional policy, 185, 193 seigniorage, 294, 364 and antitrust, 173 self-fulfilling expectation, 377 in Italy, 194 sensitive products, 415 regionalism, 379 Sherman Act, 164 regressivity, 197 shirking, 34 regular financing activity, 369 shock-absorber, 373 regulation, 181 signalling, 34 defined, 159 simple rule, 64 environmental, 159 simultaneous solution, 93 financial, 159, 255–9 single banking licence, 404 forms of, 159 Single European Act (SEA), 373, 392 of entry, 159 Single European Market (SEM), 373, 413 of intellectual property, 159 snake, 371 of conduct, 159 social of structure, 159 agreement, 314 penalising nature, 159 capital, 196 prescriptive nature, 159 classes, 117 quality and disclosure, 159 discount rate, 216, 218 role of, 152 dumping, 352, 384, 389

508 Subject index

social (cont.) corporate income, 456 pact, 314 direct, 285 shock absorber, 186 erosion, 292, 306 welfare function (SWF), 96 evasion, 291, 306 Special Drawing Rights (SDRs), 365, incidence, 351 366 indirect, 285 speculation, 236, 367 lump-sum, 286–7 spillover, 132, 349, 448 multiplier, 86–90 spread, 443 personal income, 145–7 Stability and Growth Pact (SGP), 374, 407, Pigovian, 178 408 sales, 455 stagflation, 52, 289 Tobin, 306, 327 stakeholder, 143, 145 see also fiscal policy standard tender, 400 tax avoidance, 291, 306 standardised forward contract, 236 tax bracket state failure, 128 creep, 289 state-owned enterprise (SOE), 147 progressivity, 289 sterilisation, 246 tax competition stickiness of nominal price, 55 harmful, 458 stock adjustment, 247 unfair, 458 Stolper–Samuelson theorem, 434 tax expenditure, 292 store of value, 250 tax havens, 455, 458 strategic tax on capital movements, 327 behaviour, 17 tax policy, 455 complementarities, 72 tax shifting see tax, incidence environmental assessment, 225 taxation Structural Funds, 411 common base, 414 objectives, 411 home state, 414 structural operations, 400 progressive, 288–9 subadditivity of costs, 19 proportional, 287–8 substitutability on the demand side, 167 technical equation, 101 supervision temporary (open market) operations, principle of preventive home country, 263 404 terms of trade, 78, 331, 351 prudential, 403 between commodities and manufactures, structural, 403 350 supply-side theorem effect, 288 balanced budget, 291 polices and tax, 288 Haavelmo, 291 surprise effect, 67 second best, 36 sustainability tied sales contract, 164 strong, 28 time inconsistency, 102–5 weak, 28 TIPs, 313 sustainable development, 28 tradable, 158 swap, 236 permit to increase prices, 313 system externality, 186 right (permit), 178, 180 sectors, 427 takeover, 129, 142, 143 trade target balance, 80 defined, 90 diversion, 388 fixed, 108 policy, 343, 385, 412, 415; EU 385 flexible, 110 trade-off TARGET system, 404 between efficiency and equity, 39 target zone regime, 234 between unemployment and inflation, 54, tariff 63 control, 159 see also Phillips curve protection, 345 Trade-Related Aspects of Intellectual Property tariffication, 383 Rights (TRIPS), 384 tax Trade-Related Investment Measures (TRIMs), and capital mobility, 306 384 coordination, 414 tragedy of the commons, 30

Subject index 509

transfer value judgement, 10 to firm, 285 variable capital account, 286 endogenous, 107 cash, 198 exogenous, 107 current, 285 irrelevant, 107 in-kind, 198 variable import duties, 415 official, 285 VAT destination principle, 414 to household, 285 vicious circle (inflation–depreciation–inflation), 334 transfer pricing, 292, 327 voice, 132 ‘transformation’ curve, 93 volatility, 445 transmission of the effects, 454 volume-quotation system, 231 transnational corporation (TNC), 423, 424, 432 voluntary debt reduction, 438 travel cost method, 225 Voluntary export restraint (VER), 346 trickle down, 381 voting with one’s feet, 32, 132 Triffin dilemma, 364 trust, 164 wage freeze, 311 ultrarationality, 298 monetary, 55 uncovered interest-rate parity, 239 real, 55 underinvoicing, 327 Washington consensus, 381 unemployment welfare economics, 4 frictional, 47 welfare state, 120 involuntary, 46 effectiveness, 200 voluntary, 47 impact on efficiency, 203 unemployment rate, 47 ketchup effect, 203 natural, 60 model, 198 unions, 116 see also leaky-bucket parable unit of account, 250 welfarism, 11 United Nations (UN), 379 willingness to pay (WTP), 222 specialised institutions, 379 workfare, 206 subsidiary bodies, 379 World Bank, 380 United Nations Conference on Trade and world government, 459 Development (UNCTAD), 379 World Trade Organisation (WTO), 380, 382, 385, United Nations Development Programme 387–9 (UNDP), 379 United Nations Environment Programme (UNEP), xeno-currencies, 440 379 Uruguay Round, 383–4 yardstick competition, 176, 177