This paper aims at providing a possible explanation for the seemingly peripheral role played by spatial economics in modern economic theory. It considers successively five points of view according to which space is introduced in economic models and assesses their contributions and limits.

This paper deals with some issues that recently arised from the puzzling evolution of Stock Markets during the nineties, in particular from the sharp increase of equity prices on the Nasdaq. We examine the hypothesis according to which such a bullish market could be explained by investors’ increasingly optimistic expectations about the ‘New economy’ perspectives. We then analyse to what extent the evolution of financial markets may have recently affected aggregate demand in a stronger way than in the past. Using a simple aggregate model with rational expectations, we finally show how monetary policy decisions should be influenced by such changes in the behaviour of investors and consumers.

Starting by and overview of open problems in the Walrasian heritage, the paper reviews tne debates which paved the way to Hicksian temporary equilibrium. In the late twenties and the thirties the open issue of equilibrium and business fluctuations gave rise to new research programmes centered on the need to add the time dimension in equilibrium analysis. The crucial result of the equilibrium and time controversy was that the general equilibrium concept cannot be defined unless it is related to a time horizon and to a process of planning over a time horizon. Ideas of intertemporal and temporary equilibrium in the writings of Hayek and Lindhal are examined in close connection with the debate on information and perfect foresight. The paper evaluates the novelty of Value and Capital with respect to the previous Austrian and Swedish contributions, arguing that the temporally equilibrium approach gained a more precise body of theory, but at the same time it lost its more innovative perspective.

La méthode de la ≪ population attendue ≫ est souvent utilisée pour le calcul des soldes migratoires dans les pays où on ne possède pas de registres régionaux. Elle s’appuie sur la comparaison de deux recensements portant sur une même population ; elle consiste à calculer, à partir d’un taux de survie et des effectifs d’un recensement, une population attendue correspondant à la même cohorte dans l’autre recensement : la différence donne le solde migratoire. L’opération se fait directement si on applique un taux de survie aux chiffres du premier recensement; elle se fait à rebours (méthode indirecte ou inverse) si on applique aux chiffres du second recensement l’inverse du taux de survie. On peut en outre combiner les démarches directe et inverse, et faire la moyenne des résultats tirés des deux méthodes précédentes : on parlera alors de la ≪ méthode de la moyenne ≫.

The hypothesis that the U.K.’s domestic manufacturing industry is subject to significant foreign price competition has been frequently vaunted in both the academic and journalistic literature. Empirical examinations of this hypothesis have either related domestic to foreign prices — in times series analysis — or some measure of the domestic price-cost markup to a tariff or import share variable — in the cross-section approach. Since our concern is with allegedly increasing international competition over time, we examine a simple price formation specification in time series.

We proceed by discussing the theoretical and empirical literature. It is suggested that the existing empirical results may have several possible alternative explanations and that U.K. manufacturing industry may not be subject to significant foreign price competition. It is argued that the conventional hypothesis that imports are independent of the domestic oligopoly structure is not altogether convincing. We pursue a specification which is an adaptation of that adopted by Coutts et al (1978) and use this to question the conventional view of import price competition. The results obtained in the estimation of this model, while not conclusive, do give grounds for doubting the conventional hypothesis.

L'article applique à la micro-économie une distinction classique en philosophie du langage, celle des propositions analytiques et synthétiques. Un article ultérieur la rapprochera de la distinction épistémologique des connaissances a priori et a posteriori. On commence par reprendre les définitions principales de l'analytique et du synthétique, et l'on rejette les objections célèbres que Quine a dirigées contre elles. On montre ensuite comment ces définitions opèrent sur la théorie des biens Giffen et des biens substituts. La distinction de l'analytique et du synthétique permet de clarifier des options que les micro-économistes laissent implicites, au risque de tomber dans des pièges sémantiques; en l'occurrence, elle vient renforcer la critique déjà faite de la définition hicksienne des substituts. A titre annexe, on montre que la méthodologie économique identifie incorrectement les propositions analytiques aux tautologies, et les propositions synthétiques à celles qui sont testables.

Since the Lisbon agenda (2000), European policies are increasingly oriented towards R&D and innovation. In this context, we analyze the effects of a centralized R&D subsidy policy upon steady state and welfare using an agglomeration and growth model composed of two asymmetric countries. If the policy leads to a steady state characterized by a higher growth rate and lower inequalities, the welfare analysis provides a more contrasted vision on the effects of the policy. Indeed, even though such a policy can eliminate some distortions and improve global welfare, it implies a zero-sum game at national level (the policy increases the welfare in the periphery country and decreases the welfare in the core country) when knowledge spillovers are sufficiently localized. Consequently, a centralized R&D subsidy policy conducted in an economy composed of two asymmetric countries would be a positive-sum game only if international knowledge spillovers are sufficiently large.

This paper argues that the balance of power between producers and retailers depends on the relative degrees of differentiation at the two levels of the vertical structure. We propose an extension of Hotelling’s model in which two producers, competing in prices with horizontally differentiated products, face two horizontally differentiated retailers also competing in prices. We study the setting of producers’ and retailers’ margins. We show that when retailers are more differentiated than producers, they dominate the relationship and their margin is higher than producers’.

This article develops the international aspects of the two-handed growth strategy. Both the supply and demand side measures are reviewed. The need to work on both sides simultaneously is stressed, even if the specific topic of cooperation privileges the demand side. The report argues that inflation, while always a risk, should not be currently seen as a major issue. Accordingly, it concentrates on the fiscal and external constraints. These two constraints are strongly interrelated. Openness makes fiscal policy significantly less cost-efficient: the case for cooperative action stems from the possibility of internalizing the income flow leakages which may deter governments from working on the demand side of the economy as they make progress on the supply side.

The benefits from cooperation are directly related to openness. In practice, this means that Europe can act autonomously, as it is relatively closed: the two-handed strategy does not need to be made contingent on cooperation with the US and Japan. On the contrary, cooperation within Europe is crucial. Yet cooperation is not synonymous with synchronisation and, in particular, different conditions across countries (inflation, public and external debts) warrant different policies. Flexible cooperation must rely on Germany, France and the UK taking the lead in staging a fiscal expansion to match advances on the supply side.

We study a spatial competition model which is a variant of the celebrated Hotelling (1929) framework. One of the firm is a brick-and-mortar one while the other is on-line. Both firms sell the same product except that (constant) marginal costs may differ. Consumers going to the shop around the corner face transportation costs according to their adress whereas on-line consumers bear a fix cost that may capture technological burden and risk premium. In the pricing Nash equilibria the “new economy” firm has smaller market shares eventhough it offers more attractive prices. For the on-line firm to become a leader, the cost difference must be large enough to offset the comparative disadvantage it face on the demand side. In the long run, increasing competition ultimately forces the local firm out of downtown. We argue that this effect may be related to some of the forecasts concerning the geographical impact of the development of remote access services.

Cet article étudie un modèle principal-agent dans lequel se pose un problème de double risque moral: ni le comportement de l'agent ni celui du principal sont des variables vérifiables. On montre que si le principal doit fournir un effort qui affecte les intérêts de l'agent, iltrouve alors toujours profitable de déléguer cette tâche à une tierce partie — plutôt que de la prendre en charge lui-même. Cette analyse permet, entre autres choses, de justifier une structure hiérarchique à trois niveaux, même dans des contextes très simples. On discute des inefficacités que l'existence de coalitions entre les différents niveaux de la hiérarchie peut provoquer dans une telle structure. Finalement, on compare la structure hiérarchique proposée à une structure à la Mirrlees.

We build a multi-sector model with wage bargaining and imperfect competition to analyse the links between wage interdependence and competitiveness. Quantity constraints together with union power, firm market power and wage externalities play a significant role in the determination of competitiveness and in the transmission of shocks among sectors. This is verified by an empirical study on Belgian data. We identify leading sectors in wage formation and evaluate the effect of sector-specific shocks on the competitiveness of the other sectors.

This paper investigates whether remittance inflows reduce the elasticity of government size with respect to trade openness. Put differently, the paper tests the hypothesis that there is a partial substitution between public insurance through government spending and a private insurance through remittances in more open countries. The insurance role of remittances is evaluated by computing annual panel data coefficients of remittance cyclically with respect to the real GDP cycle. It appears that remittances have become more countercyclical during the end 1990s. Moreover, the trade openness, natural disasters, inflation and the shallowness nature of the financial system are among the main determinants of the countercyclicality of remittance inflows. From a simple theoretical model close to Rodrik (1998) and on the basis of econometric estimations using a large sample of developing countries (66), it appears that the positive impact of trade openness on government spending decreases with the level of remittances received. Moreover, it is when remittances are effectively countercyclical that the mechanism described here works.

According to the European Community Commission the present level of unemployment in Europe should not only last but worsen in the foreseeable future (see CCE 1984). By 1988 the overall unemployment rate in Europe should reach 11,4% if the « optimistic » assumptions retained for the labor supply are to be realized.

These are of course average figures but on the whole they correctly reflect the extraordinary convergence of European deflationary policies. Given structural differences, which remain very limited when one compares them to the other Western economies, the European governments seem to have settled for the same macroeconomic strategies. Of course, they have chosen different timings. France, for example, has grown more than its partners in 1981-1982 but is now experiencing a prolonged recession. Whereas West Germany is doing better as far as GNP is concerned but grew very little in the early 80 s. On the whole however a back of the envelope calculation of « sacrifice ratios » for the leading European economies would yield quite similar results. All over Europe disinflation has been achieved at a high output cost and it is not clear that any country has really done better than its partners.

This paper intends to relate more closely corporate governance, industry dynamics and firms performance. In this perspective, it focuses on the impact of applying the normative, best practice, shareholder value model of corporate governance on industry dynamics and related performance measured by economic as well as financial indicators. At a theoretical level, the paper presents an integrated framework based on the connection between firms governance and industry dynamics issues. But the core of the paper is to advance that the combination of corporate governance and industry dynamics also requires important investigations into empirical aspects. At a case study level, our major finding is that the adoption of the best practice model of corporate governance in the telecoms equipment supplier industry contributed to create large ups and downs in the industry dynamics affecting both economic and financial performances. At a more general level, combining two different datasets Corporate governance Quotient (CGQ) and DATASTREAM, we show the variegated impact of the normative model on industry dynamics and confirm the observed phenomenon of ups and downs amplifications formerly emphasized, at least at the level of stock market performance.

This study explores the impact of non-constant returns to scale and imperfectly competitive product markets on the empirical performance of the q-model of investment. We present an econometric specification linking the unobserved shadow price of capital to financial market data when returns-to-scale are not necessarily constant and product markets are not necessarily competitive. Furthermore, unlike most Q-studies, we work within a discrete-time framework, and give explicit attention to the relations between inventories, sales, and production. Our new specification allows us to recover parameters characterizing returns-to-scale, product market, and adjustment cost elasticities. Estimates are reported for 12 mature industries in the United States drawn from VALUELINE.

Le redéploiement spatial des services publics est à l’étude dans plusieurs administrations tant en Belgique qu’à l’étranger. Les difficultés liées à la crise économique nous invitent en effet à repenser la manière dont on peut satisfaire les besoins des usagers tout en disposant de moyens plus limités : c’est le problème de la recherche d’une plus grande efficacité. Mais la crise nous incite également à accorder davantage d’attention aux plus défavorisés par une politique redistributive : c’est le problème de la recherche d’une meilleure équité. Ces deux problèmes présentent de nombreuses facettes. Ce numéro spécial des Recherches Economiques de Louvain s’attache à l’une d’entre elles: celle qui concerne la localisation géographique des services publics, c’est-à-dire la répartition des équipements collectifs sur un territoire donné. Plus concrètement, cela consiste à traiter les questions suivantes: Faut-il modifier les localisations actuelles? Si oui, quels équipements faut-il supprimer et où faut-il placer ceux qu’il serait nécessaire de créer? Si non, que peut-on gagner à redéfinir les zones desservies par les équipements existants?

Consider the domain of economic environments E whose typical element is ξ = (U1, U2, Ω, ω*), where ui are Neumann-Morgenstern utility functions, Ω is a set of lotteries on a fixed finite set of alternatives, and ω* ∈ Ω. A mechanism f associates to each ξ a lottery f(ξ) in Ω. Formulate the natural version of Nash’s axioms, from his bargaining solution, for mechanisms on this domain. (e.g., IIA says that if ξ′ = (U1, U2, Δ, ω′), Δ ⊂ Ω, and f ∈ Δ then f(ξ′) = f(ξ).) It is shown that the Nash axioms (Pareto, symmetry, IIA, invariance w.r.t. cardinal transformations of the utility functions) hardly restrict the behavior of the mechanism at all. In particular, for any integer M, choose M environments ξi, i = 1, … , M, and choose a Pareto optimal lottery ωi ∈ Ωi, restricted only so that no axiom is directly contradicted by these choices. Then there is a mechanism f for which f(ξi) = ωi, which satisfies all the axioms, and is continuous on E.

De nombreuses études faites dans le cadre des travaux de l'Institut de Recherches Economiques et Sociales ont précisé l'évolution séculaire et les mouvements longs des prix. Notre but est d'y ajouter le résultat de recherches sur les mouvements des taux de fret et d'assurance maritimes. Ces deux facteurs revêtent, en effet, une importance considérable dans la formation des prix sur un marché international.

En Angleterre, en premier lieu, l'attention se porta sur les mouvements des frets maritimes. Le Board of Trade publia en 1904, un indice des frets de 1884 à 1903, que Hobson compléta plus tard, en couvrant la période de 1819 à 1912; cet indice est basé sur les frets de blé et de denrées alimentaires vers l'Angleterre et les frets de charbon et de fer au départ du Royaume-Uni, et porte sur 22 routes maritimes. En 1938, Isserlis établit un indice de 1869 à 1936, d'après les rapports annuels de la maison Angier, rapports donnant les frets les plus hauts et les plus bas pour 200 routes maritimes vers l'Angleterre et 100 vers l'extérieur. Enfin, pour la période postérieure à la première guerre mondiale, on dispose d'un indice de la Chamber of Shipping, publié dans le Statist, d'un indice de Macrosty, d'un nouvel indice pondéré d'Isserlis, etc.

New U.S. evidence from NIPA contradicts some of the well-known Kaldor stylized facts, and call for a reformulation of the modern theory of economic growth. Among these new facts, two must be stressed: A permanent decline in the relative price of durable goods, and a permanent increase in the real equipment to real GDP ratio. To be consistent with these new facts, growth models must include at least two sectors and address the problem of defining aggregate output. In this paper, the economic theory of index numbers is used to define the growth rate of real output in a growth model with embodied technical change. The main findings are: (i) NIPA’s methodology measures growth in accordance with the economic theory on index numbers, and (ii) when the growth rate is measured as in NIPA, the contribution of embodied technical change to per capital GDP growth in the U.S. is 69%, which reinforce the claim that embodied technical change is important for growth.