International policy entrepreneurship and production of international public goods: the case of multilateral trade regime

Abstract. The paper considers public goods in the realm of international governance, provides a framework explaining their provision, and applies it in the analysis of the trade policymaking in the GATT/WTO. International governance regime is seen as a public good; it is conceptualized as an equilibrium state, one where the extent of ideational and material conflicts, incongruities in policy mechanisms and the lack of institutions are substantially minimised. Such state is brought by policy entrepreneurship on the part of multiple actors. Three generic entrepreneurial functions (policy leadership, innovation and facilitation/coordination) are identified. Successful equilibration is characterized by the complementarity of entrepreneurial functions, as well as by the persistence and ingenuity of entrepreneurs in selecting and using specific means and instruments of entrepreneurship. Policy entrepreneurship is considered crucial in several areas, including problem framing, advocacy and coalition building, policy experimentation, and creation of the analytical instruments. It is also salient in moderation of conflicting positions, exercise of influence and management of the policy process.Keywords. Entrepreneurship, Public goods, Trade, International governance.JEL. F13, F50, H41, L2

Factor price convergence in OECD economies: the case of three profit rates indicators

Este artigo examina a convergência da taxa de lucro (taxas de retorno do capital) nas economias da OCDE nos períodos de 1960-2016 e subperíodos relevantes. Ele também compara a convergência das taxas de lucro em economias selecionadas desenvolvidas e em desenvolvimento, usando os dados para o período 1973-2003. As taxas de economia produtiva e de manufatura em toda a economia são estimadas e três conceitos de convergência são considerados (beta, sigma e convergência estocástica). Usamos uma combinação de modelos de séries temporais transversais e univariadas e análise de distribuição de densidade. Para cada medida de taxa de lucro, uma forte evidência de convergência beta é fornecida. Em contraste, a convergência sigma é indicada apenas no caso da taxa de lucro da economia produtiva; enquanto em outros casos, a divergência sigma ou a ausência de convergência ou divergência são prováveis. A convergência estocástica está presente em um número menor de economias e está confinada à economia produtiva e manufatura. A comparação da dinâmica de convergência em economias desenvolvidas versus em desenvolvimento confirmou a convergência beta em ambos os grupos e para seu agregado, mas não estabeleceu convergência sigma, dada a significativa diversidade de economias e suas diferentes trajetórias econômicas.This paper examines profit rate (rates of return to capital) convergence in OECD economies in the periods of 1960–2016 and relevant sub-periods. It also performs comparison of profit rates convergence in selected developed and developing economies, using the data for 1973-2003 period. Economy-wide, productive economy and manufacturing rates are estimated and three convergence concepts are considered (beta, sigma, and stochastic convergence). We use a combination of cross-sectional and univariate time series models and density distribution analysis. For each profit rate measure, a strong evidence of beta convergence is provided. In contrast, sigma convergence is indicated only in the case of productive economy profit rate; while in other cases, sigma divergence or the absence of either convergence or divergence are likely. Stochastic convergence is present in a smaller number of economies and is confined to productive economy and manufacturing. The comparison of convergence dynamics indeveloped versus developing economies confirmed beta convergence in both groups and for their aggregate, but did not establish sigma convergence, given the significant diversity of economies and their different economic trajectories.

Income terms of trade and economic convergence: Evidence from Latin America

The paper considers the effects of income terms of trade (ToT) on GDP per capita in Latin American economies and examines whether improvement in the income ToT (in absolute and relative terms) contributes to the stochastic convergence between respective economies and the US. It is shown that in the majority of the economies, income ToT had positive effects on the level of GDP per capita. The stochastic convergence was documented in Chile, Dominican Republic, and Uruguay. The positive effects of income ToT increase on GDP per capita convergence were documented only in Chile and Uruguay. The growth of the volume of exports played a key role in the process, while the effects on the part of net barter ToT were insignificant. In both economies, the improvement in the income ToT relative to the US level played a positive role in convergence

Real Exchange Rate and the Dynamics of Services Trade Balance in the UK: A Linear and Non-linear ARDL Analysis

The study of the services trade balance dynamics following depreciation is a novel topic in international finance literature, with limited empirical research conducted (principally in the US context). This paper examines the relationship between the real exchange rate and the services trade balance in the UK using the quarterly data for the 2005Q1 - 2019Q4 period. We consider the aggregate as well as disaggregated trade across five services categories and employ linear and non-linear autoregressive distributed lag (ARDL) models. The findings indicate little evidence of a long-term improvement in the trade balance following depreciation, and suggest the absence of J-curve effect. The effects of domestic, ‘rest of the world’ GDP and monetary base on the trade balance were respectively negative, positive, and mixed

Political economy of trade protection and liberalization: in search of agency-based and holistic framework of policy change.

The paper provides comprehensive review of alternative explanations of the trade policy formation, associated rise of trade protectionism, and difficulties of trade liberalisation. Normative economic, systemic, public interest, political, institutional and constitutional economic theories of trade policy, together with political science models of trade cooperation are considered. The paper shows that current research in the area tends to accentuate the factors that entrench trade protectionism, while paying insufficient attention to the role of agency, policy dynamics and informal institutions that may bring in trade liberalisation. Requirements for holistic and dynamic analysis of trade policy are outlined

The optimum size of public education spending: panel data evidence

The paper examines the presence of positive effect of public education spending in a panel of 50 developed, developing and transition economies (over the 1980-2012 period) on the level and growth of output, and, provided such effect holds, considers the optimal provision of public education spending. The econometric methodology relies on panel unit root and cross-sectional dependence tests, panel regression with fixed effects, and panel quantile model with fixed effects. It is demonstrated that public education spending is productive at the margin under alternative specifications, and has positive externalities on the private economy, while the factor productivity in the government sector is higher than in the private. For the panel as a whole, the public education tended to be under-provided (the optimal level of 5.05% of GDP compared to the actual average level of 4.14% of GDP); however, the over-provision is observed in the slow-growing economies in the lower quantiles

Income terms of trade and economic convergence: Evidence from Latin America

The paper considers the effects of income terms of trade (ToT) on GDP per capita in Latin American economies and examines whether improvement in the income ToT (in absolute and relative terms) contributes to the stochastic convergence between respective economies and the US. It is shown that in the majority of the economies, income ToT had positive effects on the level of GDP per capita. The stochastic convergence was documented in Chile, Dominican Republic, and Uruguay. The positive effects of income ToT increase on GDP per capita convergence were documented only in Chile and Uruguay. The growth of the volume of exports played a key role in the process, while the effects on the part of net barter ToT were insignificant. In both economies, the improvement in the income ToT relative to the US level played a positive role in convergence

Profit rates in the developed capitalist economies: a time series investigation.

This paper examines whether there is empirical evidence to support the hypothesis of secular decline in the economy-wide profit rates as predicted by classical economic theories. We specifically consider profit rates in the OECD economies based on the national accounts data contained in the Extended Penn World Table database. In our analysis we use linear trend, Augmented Dickey-Fuller (ADF) tests, and also allow for structural breaks and instabilities in the series. Results suggest that profit rates in OECD economies exhibited a wide variety of patterns, including stochastic and deterministic trends, random walk, reversals, as well as stability. Secular decline (fluctuation around falling deterministic trend) hypothesis is supported for Canada, Portugal and the USA, while secular rise is witnessed for Greece and Norway

Profit rates in the developed capitalist economies: a time series investigation.

This paper examines whether there is empirical evidence to support the hypothesis of secular decline in the economy-wide profit rates as predicted by classical economic theories. We specifically consider profit rates in the OECD economies based on the national accounts data contained in the Extended Penn World Table database. In our analysis we use linear trend, Augmented Dickey-Fuller (ADF) tests, and also allow for structural breaks and instabilities in the series. Results suggest that profit rates in OECD economies exhibited a wide variety of patterns, including stochastic and deterministic trends, random walk, reversals, as well as stability. Secular decline (fluctuation around falling deterministic trend) hypothesis is supported for Canada, Portugal and the USA, while secular rise is witnessed for Greece and Norway

Nonparametric approach to portfolio diversification: the case of Australian equity market.

This study investigates the portfolio diversification possibilities among Australian sectoral, size and style indexes and between Australian aggregate equity index and selected international indexes. Two analytical methods are used – nonparametric cointegration that appears to be the most appropriate for the financial data analysis, and principal component analysis (PCA) that is suitable for detecting relations among a large number of variables and for clustering co-moving variables. Having identified linear and non-linear unit roots in the time series data we show that based on Bierens’ nonparametric cointegration the number of cointegrating relations between respective indexes increases (and the portfolio diversification opportunities diminish) in the post-GFC period (2007-2012) relative to the historic average (1992-2012). Regarding sectoral diversification, the PCA results suggest that sectoral relations underwent minor changes in the post-GFC period with few additional diversification opportunities appearing