Physical and Monetary Input-Output Analysis: What Makes the Difference?

A recent paper in which embodied land appropriation of exports was calculated using a physical input-output model (Ecological Economics 44 (2003) 137-151) initiated a discussion in this journal concerning the conceptual differences between input-output models using a coefficient matrix based on physical input-output tables (PIOTs) in a single unit of mass and input-output models using a coefficient matrix based on monetary input-output tables (MIOTs) extended by a coefficient vector of physical factor inputs per unit of output. In this contribution we argue that the conceptual core of the discrepancies found when comparing outcomes obtained using physical vs. monetary input-output models lies in the assumption of prices and not in the treatment of waste as has been claimed (Ecological Economics 48 (2004) 9-17). We first show that a basic static input-output model with the coefficient matrix derived from a monetary input-output table is equivalent to one where the coefficient matrix is derived from an input-output table in physical units provided that the assumption of unique sectoral prices is satisfied. We then illustrate that the physical input-output table that was used in the original publication does not satisfy the assumption of homogenous sectoral prices, even after the inconsistent treatment of waste in the PIOT is corrected. We show that substantially different results from the physical and the monetary models in fact remain. Finally, we identify and discuss possible reasons for the observed differences in sectoral prices and draw conclusions for the future development of applied physical input-output analysis.

The Macroeconomics of the Great Depression: A Comparative Approach

Recently, research on the causes of the Great Depression has shifted from a heavy emphasis on events in the United States to a broader, more comparative approach that examines the interwar experiences of many countries simultaneously. In this lecture I survey the current state of our knowledge about the Depression from a comparative perspective. On the aggregate demand side of the economy, comparative analysis has greatly strengthened the empirical case for monetary shocks as a major driving force of the Depression; an interesting possibility suggested by this analysis is that the worldwide monetary collapse that began in 1931 may be interpreted as a jump from one Nash equilibrium to another. On the aggregate supply side, comparative empirical studies provide support for both induced financial crisis and sticky nominal wages as mechanisms by which nominal shocks had real effects. Still unresolved is why nominal wages did not adjust more quickly in the face of mass unemployment.

Flation

“Flation” is an article adapted from a speech of the same title presented before the International Mass Retail Association Leadership Forum, Scottsdale, Arizona, January 21, 2002.Monetary policy ; Inflation (Finance) ; Deflation (Finance)

Monetary Policy, the Promotion of Growth and the SGP in an ageing society.

Economic theory tells us that even when mainly concerned with price stability, a central bank should target economic activity. This because on one side the effects of monetary policy on prices pass through economic activity, and on the other economic activity is a good indicator of expected (and future) inflation. Hence, I believe that there is room for a more proactive policy on the part of the ECB. This would also help to cancel the feeling of inertia that the public has about past monetary policy. A more flexible interpretation of the Stability Pact would increase the room for manoeuvre of fiscal policy to counteract country specific shocks and asymmetric effects of the unique monetary policy of the EMU. As such, it would help balance the European policy mix, that today places too much emphasis, and consequently too much burden on the ECB. If part of the job of stabilizing the economy is done by fiscal policy, the pressure on the ECB will decrease. On the contrary, in the present situation when a strict application of the SGP call for a procyclical fiscal policy, monetary policy has to act both to reshuffle the economy and to compensate for the restrictive fiscal policy, which may be impossible at a too low rate of inflation. Finally, it is hard to tell, in present circumstances, how monetary policy will be affected by the problem of ageing society in Europe. It may be that inflationary pressures will be dominant, calling for a more restrictive role by the ECB; but it may as well be that, if mass unemployment persists, ageing of the society will have deflationary effects. We have to conclude that monetary policy today should aim, even more convincingly, to full employment.

When outcome expectations become habitual: explaining vs. predicting new media technology use from a social cognitive perspective

This study examined the triadic relationship between expected outcomes, habit strength, and media technology use within the model of media attendance (Larose & Eastin, 2004). Mobile phone users (N = 664) were divided into two groups using a stratified random sampling method. Respondents of group one (n = 334) were surveyed on existing mobile phone use, respondents of group two (n = 310) were surveyed on the intention to use mobile video phone. On the basis of structural equation analysis, the results of this study support the assumption that within the model of media attendance existing media use is more likely to be explained by habit strength, and new media use is more likely to be predicted by outcome expectations

Open macroeconomics in an open economy

There are three pillars of the new Labour Government''s approach to economic policy: delivering macroeconomic stability, tackling the supply-side barriers to growth and delivering employment and economic opportunities to all. This lecture focuses on the reforms the new government has introduced in order to deliver macroeconomic stability and why open and transparent institutions and procedures are central to those reforms. The lecture sets out four principles for macroeconomic policymaking which flow from changes in the world economy and the world of economic ideas over the past twenty or thirty years. These are:-- the principle of stability through constrained discretion -- the principle of credibility through sound, long-term policies -- the principle of credibility through maximum transparency -- the principle of credibility through pre-commitment. The lecture explains each principle in turn and shows how they are being translated into practice in the macroeconomic policy reforms that the new government is introducing at the Treasury and the Bank of reforms which add up to what is now probably one of the most open and accountable system of economic policymaking in the world