Economics and Finance

Business cycle theory is a broad and disparate field. Different schools of thought offer alternative explanations for cycles, often using different mathematical methods. This book aims to provide academics and graduate students of economics with an exposition of business cycle theory since Keynes. The author places the main theories — Keynesian economics, monetarism, new classical economics, the real business cycles theory, and new Keynesian economics — in a historical context by presenting them in the chronological order of their appearance and highlighting their differences and commonalities. He minimizes the necessary mathematical prerequisites by using a unifying mathematical approach: stochastic second-order difference equations, which is explained in detail. Throughout the book, the international dimension of business cycles is acknowledged. The theoretical results obtained are set alongside empirical facts in separate boxes. Each chapter finishes with a set of problems designed to deepen the reader's understanding of the theories presented, and further reading sections providing access to related material.

The first section of the book is concerned with how economics is, and should be used, in business. It stresses that the value of economics lies in being able to provide us with a better understanding of social and commercial issues, rather than help us forecast economic trends. Similarly, it provides a direction for the development of management science as a means of understanding the behaviour of firms.

The second section of the book examines the application of economics to the central strategic issues facing firms – their choice of activities and markets. It provides an exposition of the resource‐based theory of strategy, which examines the dynamics of the successes and failures of firms by reference to their distinctive capabilities.

The next section develops some broader themes that are suggested by the resource‐base view of strategy that recognizes the importance of corporate personality. This perception implies that large companies are fundamentally social institutions and the economic and social consequences of this result are examined.

The final section is a collection of shorter essays, which are designed to illustrate how business economics can be used to analyse a range of individual commercial issues such as pricing positioning and the evolution of industry structure.

In the past decade or so, systems integration has become a key factor in the operations, strategy, and competitive advantage of major corporations in a wide variety of sectors (e.g. computing, automotive, telecommunications, military systems, and aerospace). In the past, systems integration was confined to a technical, operations task. Today, systems integration is a strategic task that pervades business management not only at the technical level but also at the management and strategic levels. This book shows how and why this new kind of systems integration has evolved into an emerging model of industrial organisation whereby firms and groups of firms join together different types of knowledge, skill, and activity, as well as hardware, software, and human resources to produce new products. The business of systems integration has fundamental implications for the capabilities of firms. Firms have made a transition from being vertically integrated to being the integrator of somebody else's activities. This book, the first to systematically explore the re‐invention of systems integration from a business and innovation perspective, is based on contributions from leading international scholars. It delves deeply into the nature, dimensions, and dynamics of the new systems integration, deploying research and analytical techniques from a wide variety of disciplines including, the theory of the firm, the history of technology, industrial organisation, regional studies, strategic management, and innovation studies.

This book is timely since the Basel Committee on Banking Supervision at the Bank for International Settlements is in the process of making major revisions in the capital rules for banks. It is important that capital adequacy regulation helps to achieve financial stability in the most efficient way. Capital adequacy rules have become a key tool to protect financial institutions. The research contained within the book covers some key issues at stake in the capital requirements for insurance and securities firms. The contributors are among the leading scholars in financial economics and law. Their contributions analyze the use of subordinated debt, internal models, and rating agencies in addition to examining the effect on capital of reinsurance, securitization, credit derivatives, and similar instruments.

In the 1980s and 1990s, many countries opened their capital accounts and liberalized their domestic financial markets as part of the wave of liberalization that characterized the period. In 1997 the IMF even proposed changing its charter to include a mandate to promote capital market liberalization. At the time, many other economists warned that open capital accounts would lead to volatility and increased risk without contributing to growth or stability. Yet there was virtually no body of material or survey of literature that could provide the background for the debate on this issue. This book — which brings together some of the leading researchers and practitioners from around the world — attempts to fill that gap and goes a step further by providing alternative policy options to enhance macroeconomic management. The first chapter addresses the effects of capital market liberalization on developing countries in the presence of market failures and proposes policy interventions that allow developing countries to manage the risks associated with the volatility of capital flows. The rest of the book is organized around three major themes. The first part examines in detail the effects of capital market liberalization on developing countries. The second part analyses experiences with different types of capital account management — price-based and quantity-based regulations as well as other interventions in financial markets. The third part considers different forms of national and global financial regulations that may be used to manage the risks that capital flows generate on domestic financial systems.

After a turbulent century of unprecedented social and technological change, capitalism has emerged as the dominant ideology and model for economic growth in the richest, most developed countries. But only thirty years ago economic growth was faltering, inflation rising, and the Left were arguing for greater state intervention in industry. How did this transformation happen? And what price have we paid in the process? This book provides a history of the problems facing the economies of Europe, Japan, and the US during the latter half of the 20th century, and questions whether capitalism has really brought the levels of economic growth and prosperity that were hoped for. The book then looks at the impact the rapidly developing economies of China and the South are likely to have on the older economies of the North. As the race is on to maintain growth and protect competitive advantage, the book asks: is the ‘race-to-the bottom’ inevitable, with welfare states being dismantled to meet competitive demands? Or is there an alternative model that sees a strong commitment to welfare provision as essential to economic growth? Can we afford not to tackle inequality at home as well as abroad?

When taxes are introduced on carbon and energy, and the revenue is used to reduce other taxes, will a positive effect be achieved both for the environment and for the economy? In 1990, Finland was the first country that introduced a tax on CO₂. Later, Sweden, Denmark, Netherlands, Slovenia, Germany, and the UK followed suit with tax reforms that shifted taxation from labour to carbon and energy. Over the years, CO₂ and energy taxes have gradually been raised, so that in Europe taxes of more than 25 billion EUR a year have been shifted. In this book, these experiences with carbon‐energy taxation, along with tax‐shifting programmes lowering other taxes, are examined in detail. Availability of unique and original data, including sector‐specific energy prices and taxes, as well as the use of advanced statistical techniques, such as co‐integration analysis and panel‐regression techniques along with the time‐series‐estimated macro‐economic model – Energy–Environment–Economy model for Europe (E3ME), makes this analysis truly comprehensive. Results of the analysis show that even though the taxes implemented have been relatively modest, they have, in the countries examined, contributed to a reduction in the emissions of greenhouse gases of up to 7 per cent, while for five of the countries a small increase in economic activity is recorded as a result of the tax‐shifting, with other impacts separated out. Due to concerns for competitiveness, the largest industrial emitters of greenhouse gases within Europe continue to benefit from exemptions from the carbon‐energy taxation schemes, as outside Europe there are major emitters without any economic penalties attached to greenhouse gas emissions. On basis of the lessons from carbon‐energy taxation learned in Europe, the editors of the book indicate how carbon‐energy taxation could usefully be combined with emissions trading, and they discuss how the recommendations from IPCC for a gradually escalating carbon price could be accomplished while preventing carbon leakage.

Throughout its history as a social science discipline, demography has been associated with an exclusively quantitative orientation for studying population problems. An important outcome of this is that demographers tend to analyse population issues scientifically through sets of fixed social categories that are divorced from their embeddedness in dynamic relationships and in varied local contexts and processes. The collection of essays in this volume questions these fixed categories in two ways: firstly, by examining the historical and political circumstances in which such categories have their provenance, and secondly, in reassessing their uncritical applications over space and time in a diverse range of empirical case studies. Reflexive questioning is achieved by encouraging a constructive interdisciplinary dialogue involving anthropologists, demographers, historians, and sociologists.

This volume seeks to examine the political complexities that lie at the heart of population studies, through a focus on category formation, category use, and category critique. It is shown that this takes the form of a dialectic between the needs for clarity of scientific and administrative analysis and the recalcitrant diversity of the social contexts and human processes that generate population change. The critical reflections on the established categories in each of the essays included here are enriched by meticulous ethnographic fieldwork and historical, archival research, drawn from all the continents. The essays collected here, therefore, exemplify a new methodology for research in population studies, which does not simply accept and use the established categories of population science, but seeks critically and reflexively to explore, test, and re‐evaluate their meanings in diverse contexts. The essays show that for demography to realise its full potential, there is an urgent need to re‐examine and contextualise the social categories used today in population research.

This book provides a systematic account of the privatization process at the global scale, presenting an overarching description of the phenomenon, and panel data empirical analyses testing some of the predictions of the recent economic theory of privatization. At the macroeconomic level, privatization processes of the 1980s and 1990s are shown to be a cyclical phenomenon shaped by economic, political, and institutional determinants. At the microeconomic level, privatization has been partial and incomplete, with only minority rights transferred to the private sector. However, genuine privatization, involving the full transfer of control to the private sector, is difficult to achieve as several conditions must be met. First, markets should be competitive or suitably regulated. Second, private investors should be adequately protected by the law in order to avoid expropriation. Third, political institutions should be designed to limit the veto power of constituencies ousting full divestiture. Last but not least, governments should be credibly committed not to interfere post-privatization in the operating activity of the companies. As a consequence, private ownership is likely to coexist with public control, at least in the near future.