Are there industrial and agricultural convergence clubs in China?

This paper discusses growth differentials of Chinese provinces geared to agricultural activities and those focusing on industrial production over three decades of economic reform. Following trade theory and endogenous growth theory, we suggest that the fundamental differences between regions arise from their resource allocations at the start of reforms. Thus, capital-abundant regions have tended to specialize in industrial production, while the labor-abundant regions have concentrated on labor-intensive production (agriculture). Many of China's agricultural provinces suffer from oversupplies of labor, which has led large numbers of people to migrate within the country to work in non-farming sectors of economy. We show that provinces with high shares of industrial production (the industrial club) have converged, and that agricultural provinces shifting to industrial production have been catching up to initially industrialized provinces. Provinces that have stayed with an agricultural strategy (the agricultural club) show no evidence of convergence and appear to have been left behind in terms of economic development.growth; agriculture; convergence

Economic Freedom as a Driver for Growth in Transition

This paper reviews the political economy view of economic growth in post-communist economies making the transition to free markets, focusing on the role of economic policy and institutions. We test the hypothesis that better institutions, measured in terms of economic freedom, contribute to growth. The empirical results from the cross-section of transition economies confirm this hypothesis. The paper concludes that non-linearities are present in the growth model and that differences arise depending on how economic well-being is defined.growth; institutions; human capital

Anonymous Money, Moral Sentiments and Welfare

Some markets are prone to develop shadow transactions for the purpose of tax avoidance. Moral sentiments control the allocation of consumers between the legal and illicit markets. Such sentiments include self-esteem and social disapproval. The market solution leads to fiscal externality resulting from tax avoidance and highlights the conflict between private opportunism and collective values. Shadow markets may, however, enhance consumer welfare by limiting the pricing power of firms and by controlling tax collection. The paper develops a model of endogenous segmentation of markets between moral and immoral behavior. The legal producer can price the self-esteem of honest people, who can blackmail the legal producer with their option of visiting the illicit market. The model has implications for monetary economics: moral sentiments, tax rates, illegal transactions, and probability of being caught become relevant for the demand for money.moral sentiments, shadow economy, welfare

Koulutuksen markkinoilla - arvioita ammattikorkeakoulujen tehokkuuseroista ja niiden syistä

Opetus- ja kulttuuriministeriö on parhaillaan uudistamassa korkeakouluverkkoa. Uudistustyön tavoitteena on vahvistaa koulutuksen ja tutkimuksen laatua korkeakouluverkkoa tiivistämällä. Tämä selvitys tarkastelee koulutuksen tarjontaa, ammattikorkeakoulujen tehokkuutta ja tutkinnon suorittaneiden työmarkkinaasemaa. Tutkimuksessa osoitetaan mm. että ammattikorkeakoulujen vetovoimaerot selittävät opintojen sujumista ja AMK:ien kustannustehokkuuden eroja. Toisaalta, vaikka alojen väliset kustannuserot ovat merkittäviä, ovat kulttuurialan sisäiset erot tärkeä tehottomuuden lähde. Kun kulttuuriala jätetään tarkastelun ulkopuolelle, ei ammattikorkeakoulujen välillä ole tilastollisesti merkitseviä eroja kustannustehokkuudessa

Changing economic structures and impacts of shocks — evidence from a DSGE model for China

We construct a small-scale dynamic stochastic general equilibrium (DSGE) model that features price rigidities, habit formation in consumption and costs in capital adjustment, and calibrate the model with data for the Chinese economy. Our interest centers on the impact of technology and monetary policy shocks for different structures of the Chinese economy. In particular, we evaluate how a rebalancing of the economy from investment-led to consumption-led growth would affect the economic dynamics after a shock occurs. Our findings suggest that a rebalancing would reduce the volatility of the real economy in the event of a technology shock, which provides support for policies aiming to increase the consumption share in China.DSGE; rebalancing; monetary policy shocks; technology shocks; China

Anonymous Money, Moral Sentiments and Welfare

Some markets are prone to develop shadow transactions for the purpose of tax avoidance. Moral sentiments control the allocation of consumers between the legal and illicit markets. Such sentiments include self-esteem and social disapproval. The market solution leads to fiscal externality resulting from tax avoidance and highlights the conflict between private opportunism and collective values. Shadow markets may, however enhance consumer welfare by limiting pricing power of firms and by controlling tax collection. The paper develops a model of endogenous segmentation of markets between moral and immoral behavior. The legal producer can price the self-esteem of honest people, who can blackmail the legal producer with their option of visiting the illicit market. The model has implications for monetary economics: moral sentiments, tax rates, illegal transactions, and probability of being caught become relevant for the demand for money