International Studies in Economic Modelling – serie

They present, nevertheless, a well integrated picture of systematic advance in the field of input-output analysis on the broad front, stretching from formal mathematical modelling, through construction of large, specialized databases to detailed empirical inquiry and concrete examples of practical applications.

An international collection of twenty papers with three themes: energy demand, modelling energy supply and models of specific markets.

This collection of 13 articles on the European gas market and the management of national petroleum resources uses up-to-date information and advanced analytic techniques to investigate energy issues of considerable policy interest. The lead article is a sophisticated modelling analysis assessing the impact of the forthcoming deregulation of the gas market within the European Community. It is argued that deregulation invalidates earlier long-term forecasts of gas penetration and most likely will lead to an enhanced role of gas as a major energy source for households, industry and power generation. Deregulation will intensify the supply competition between USSR, Norway and Algeria. The potential residential demand for natural gas is estimated in a detailed analysis for four major European countries using advanced techniques of analysis. Other contributions focus on the game structure of the struggle over market shares in the European gas market and the role of negotiations and bargaining in a market with strong elements of vertical control. The environmental consequences of energy policies have become a matter of increasing concern.An early, perhaps the first, attempt to calculate the environmental effects of a transition from oil and coal to natural gas in Europe is presented. Several articles deal with problems of management of natural petroleum resources, in particular, from a Norwegian viewpoint. The studies reported, for example on how to measure the petroleum wealth as a part of a national wealth, and the methods developed for making energy decisions are of relevance for other countries. The book also touches upon the role of the independent oil exporting countries in the world oil market of the 1990s and the impact of oil price fluctuations on the international economy.

The high growth rate in many industrial countries during the first two decades after World War II produced a financial expansion, which in its turn made possible an extension of the growth process. But it also led to a financial crisis, when increasing costs during the 1970s created growing deficits in the balance of payments and the government budgets in many countries. This volume adopts a disequilibrium approach for analyzing the inter-relation between real and financial development, in a world where agents are not able to realize their plans. The authors take as their starting point the theoretical world of Keynes and the Stockholm School, since the modern disequilibrium analysis, in their view, often disregards the financial side of the economy.

This book identifies the likely causes of high inflation and assesses the available policy options for preventing or curing it. The approach consists of making hypotheses about the economic motivation of individuals, developing a model of their behaviour, testing the model against the data and assessing the results. Questions are raised about the efficacy of the conventional policy of creating a recession in order to reduce inflation. Other policy options are suggested including the restructuring of the wage re-negotiation process. The book is aimed at anyone involved in macro-economic modelling, forecasting and policy advice.

Econometric Modelling of World Shipping describes an economic model that may be used to forecast world shipping markets. A unique feature of the model is that it relates to both sectors of world shipping, the dry cargo sector and the tanker sector. This is the first time that a model of this type has been published. This book also breaks new ground in explaining the behaviour of vessel prices, both new and secondhand.

This book provides a picture of the current economic research on trade unions in an edited collection of recent papers, both theoretical and empirical, concerned with the quantitative analysis of trade unions' behaviour and impact. In particular it compares the results of the most recent theoretical developments with empirical studies in each area of research. The papers are grouped into three sections. The first one is devoted to unions' objectives and membership. The papers included in this section show how to aggregate individual's preferences and how various forms of aggregration can influence membership. The second section analyzes the different contractual set-ups and how they influence the final allocation of the labour market. Furthermore, it shows how a bargaining model can help in the explanation of strikes. The last section introduces the debate on the macroeconomic effects of trade unions on both long run equilibria and stabilization policies. In all sectors, empirical papers follow the theoretical ones in order to ascertain how theory is able to explain the major economic facts.

Alberto Heimler and Daniele Meulders In the last decade the modelling of the interrelationship between public finance and the rest of the economy has seen substantial advances, reflected in many of the papers delivered to the Applied Econometrics Association Conference held at Confindustria, Rome, on 30 November and 1 December 1989. In particular, the development of the literature on applied general-equilibrium modelling has found most of its applications in the field of taxation, enlarging and completing the estimation of the welfare loss due to distortionary taxes. In this context an important extension has been the introduction of overlapping-generation models. Furthermore, it has become clear that most individual decisions, especially the decision whether or not to work, are dependent upon the tax system, in the sense that the higher the marginal income tax the larger the wedge between labour cost and take-home pay, the last one being the decision variable in the demand for leisure. Finally, in the European context, the completion of the internal market has brought about the necessity to harmonize fiscal systems in the EEC member countries. A number of papers study, therefore, the effects of fiscal reform on efficiency, welfare and growth.

Time elapses continuously not in discrete jumps of, say, a quarter or a month. Hence models specified in continuous time are more realistic than the usual models in which time is taken to elapse in such discrete jumps. However much data available to economists is of the discrete-time kind. This was once thought to render impossible the econometric estimation of continuous time models. Over the past decade a body of theory has been built up to show that such estimation is not only possible but has serious practical applications. This collection of essays aims to provide not only the latest developments in the theory but also with original examples to show how it is possible to implement in real situations. Econometricians may find this book useful reading as may those concerned with macroeconomic issues who wish to keep in touch with the "frontiers" of their subject.

The broad field of molecular collisions is one of considerable current interest, one in which there is a great deal of research activity, both experi­ mental and theoretical. This is probably because elastic, inelastic, and reactive intermolecular collisions are of central importance in many of the fundamental processes of chemistry and physics. One small area of this field, namely atom-molecule collisions, is now beginning to be "understood" from first principles. Although the more general subject of the collisions of polyatomic molecules is of great im­ portance and intrinsic interest, it is still too complex from the viewpoint of theoretical understanding. However, for atoms and simple molecules the essential theory is well developed, and computational methods are sufficiently advanced that calculations can now be favorably compared with experimental results. This "coming together" of the subject (and, incidentally, of physicists and chemists !), though still in an early stage, signals that the time is ripe for an appraisal and review of the theoretical basis of atom-molecule collisions. It is especially important for the experimentalist in the field to have a working knowledge of the theory and computational methods required to describe the experimentally observable behavior of the system. By now many of the alternative theoretical approaches and computational procedures have been tested and intercompared. More-or-Iess optimal methods for dealing with each aspect are emerging. In many cases working equations, even schematic algorithms, have been developed, with assumptions and caveats delineated.

H. KLEINPOPPEN AND J. F. WILLIAMS It has only very recently become possible to study angular correlations and coherence effects in different areas of atomic collision processes: These investigations have provided us with an analysis of experimental data in terms of scattering amplitudes and their phases, of target parameters such as orientation, alignment, and state multipoles, and also of coherence parameters (e. g. , the degree of coherence of excita­ tion). In this way the analysis of electron-photon, ion-photon, atom-photon, or electron-ion coincidences from electron-atom, ion-atom, or atom-atom collisional excitation has led to a breakthrough such that the above quantities represent most crucial and sensitive tests for theories of atomic collision processes. Similarly, the powerful (e, 2e) experiments (electron-electron coincidences from impact ionization of atoms) have attracted much attention where improved experimental studies and detailed theoretical description provide a wealth of information on either the col­ lisional ionization process or the atomic structure of the target atom. Interference effects, many-electron correlations, and energy and angular momen­ tum exchange between electrons in a Coulomb field playa decisive role in the under­ standing of postcollision interactions. New results on coherence effects and orienta­ tion and alignment in collisional processes of ions with surfaces and crystal lattices show links to relevant interference phenomena in atomic collisions. In small-angle elastic electron-atom scattering the effect of angular coherence can be studied in a crossed beam experiment.

Alberto Heimler and Daniele Meulders In the last decade the modelling of the interrelationship between public finance and the rest of the economy has seen substantial advances, reflected in many of the papers delivered to the Applied Econometrics Association Conference held at Confindustria, Rome, on 30 November and 1 December 1989. In particular, the development of the literature on applied general-equilibrium modelling has found most of its applications in the field of taxation, enlarging and completing the estimation of the welfare loss due to distortionary taxes. In this context an important extension has been the introduction of overlapping-generation models. Furthermore, it has become clear that most individual decisions, especially the decision whether or not to work, are dependent upon the tax system, in the sense that the higher the marginal income tax the larger the wedge between labour cost and take-home pay, the last one being the decision variable in the demand for leisure. Finally, in the European context, the completion of the internal market has brought about the necessity to harmonize fiscal systems in the EEC member countries. A number of papers study, therefore, the effects of fiscal reform on efficiency, welfare and growth.

Continuous-time econometrics is no longer an esoteric subject although most still regard it as such, so much so that it is hardly mentioned in standard textbooks on econometrics. Thanks to the work done in the last 20 years, both the theoretical and the applied side are by now well developed. Methods of estimation have been theoretically elaborated and practically implemented through computer programs. Continuous-time macroeconometric models for different countries have been constructed, estimated and used. Being myself involved in these developments, it was with great pleasure that I accepted the invitation to organize a session on continuous-time econometrics in the context of the International Symposium on Economic Modelling (jointly organized by the University of Urbino and the book series International Studies in Economic Modelling, and co-sponsored by the Consiglio Nazionale delle Ricerche). The reaction of 'continuists' from all over the world was so enthusiastic that I was able to arrange two sessions, one on the theory and the other on the applications. The symposium was held in Urbino on 23-25 July 1990. The papers presented in Urbino have been revised in the light of the discussion at the symposium and the referees' comments. Hence, what is published here should become another standard reference in the field of continuous-time econometrics.

An international collection of twenty papers with three themes: energy demand, modelling energy supply and models of specific markets.

Over the 1980s unions have lost about 5 million members in OECD countries. The proportion of unionized workers is increasing in the services, public sector and among women. Today, almost two out of five union members are employed in the public sector. Wide differences remain in the levels of unionization in diverse countries, while in the United States, France and Spain union members account now for little more than 10% of the labour force, in the Nordic countries (Sweden, Finland and Denmark) the corre'sponding figure is between 75 and 85%. In general, rates have been higher in Europe than in North America. Economic analysis is paying increasing attention to these developments and to their policy implications (Edwards, Caronna and Todling, OCDE 1991). Recent progress in economic theory has enabled some light to be cast on the determinants of unionism, on the other hand, efforts aimed at coming to grips with the economic reality of unions have significantly contributed to theoretical advancement by extending and modifying conventional microeconomic wisdom. The reader of this volume will judge whether the insight gained is sufficient, or - as a recent survey concluded ~ the problem has proved to be virtually intractable (Johnson, p. 24). These can be grouped under three headings, corresponding to the three parts of the volume, which will be illustrated in the Introduction.

RONALD C. DUNCAN During the 1980s, substantial advances were made in the global modelling of commodity markets in several areas, advances which were reflected in many of the papers delivered to the Applied Econometrics Association meeting held at the World Bank in Washington, DC, in October 1988. The several areas where I see advances being made, some of which the International Commodity Markets Division of the World Bank has taken part in, are the following: (a) in the theoretical specification of commodity price behaviour; (b) in the increased emphasis on modelling imperfect markets; (c) in the incorporation of the interrelationships between macro­ economic and commodity market variables; (d) in the specification of supply response, particularly in respect of perennial crops; and (e) in the realization of complementarity between time series analysis and economet­ rically estimated structural models. Improvements in the specification of the commodity price formation process have probably been the most important of the above advances. Until the early 1980s, prices were modelled as a simple linear function of stocks. Gilbert has played an important role in introducing the rational expecta­ tions hypothesis into the specification of commodity prices. Recent work by Gilbert, Trivedi, and Deaton and Laroque offers the possibility of non-linear specification of the relationship between prices and stocks within an expectational framework and of thereby capturing the phenomenon of sharp run-ups in commodity prices. Gilbert has also played an important role in clarifying the interrelation­ ships between macroeconomic variables and primary commodity prices.

construction. Naturally, we are open to suggestions from all readers of, and contributors to, the series regarding its approach and content. Finally, I would like to thank all those who have helped the launch of this series. The encouraging response received from authors who have contributed the forthcoming volumes and from the subscribers to the series has indicated the need for such a publication. Homa Motamen-Scobi London December 1987 Preface In 1990 both OPEC and the OECD will celebrate their thirtieth anntvers­ aries. OPEC was founded - rather unnoticed - by oil-producing countries still struggling to gain control over national petroleum resources. Future members were still under colonial rule. The foremost aim of the new organization - years before it was able to make metropolitan newspaper headlines - was stabilizing oil prices. Stability in those days meant prevent­ ing oil prices from falling in real terms. The OECD was formed by mostly mature industrial economies marking the normalization of the postwar international economy after years of reconstruction, strict trade regulations, etc. The aim of the new organization was to promote 'the highest sustainable growth and employment' in member countries. Incidentally, 1960 was also the year which gave birth to a more loosely defined block in the world community, namely the underdeveloped countries, qS the African colonial empires finally broke up. The two organizations became adversaries in the 1970s in the power struggle over the energy flows of the world.

The centrally planned economies (CPEs) of the Soviet Union and Eastern Europe have experienced severe imbalances in domestic and external markets over the past several decades. As a result, they have been chronically afflicted by problems such as excess demand, repressed inflation, deficits of commodities, queues, waiting lists, and forced savings. Economists have responded to these phenomena by developing appropriate theoretical and empirical models of CPEs. Of particular note have been the pioneering studies of Richard Portes on disequilibrium econometric models and Janos Kornai on the shortage economy. Each approach has attracted followers who have produced numerous, innovative macro- and microeconomic models of Poland, Czechoslovakia, the German Democratic Republic, Hungary, and the USSR. These models have proved to be of considerable value in the analysis of the causes, consequences and remedies of disequilibrium phenomena. Inevitably, the new research has also generated controversies both between and within the schools of shortage and disequilibrium modelling, concerning the fundamental nature of the socialist economy, theoretical concepts and definitions, the specification of models, estimation techniques, interpretation of empirical findings, and policy recommend­ ations. Furthermore, the research effort has been energetic but incomplete, so many gaps exist in the field.

It is generally agreed that the operation of the labour market lies at the heart of macroeconomic activity. Following Keynes' attack on the postulates of the classics in The General Theory a number of labour market paradigms have been proposed including the Phillips curve, new classical and union bargaining models. These paradigms usually form the centrepiece of any good text on macroeconomic theory. Our purpose in this volume is not to restate these paradigms but to explore the extent to which they might be empirically modelled. To this end the volume includes a set of econometric models of the UK labour market where each contribution relates very closely to one of the principal paradigms. The purpose of this collection is threefold. First and foremost we wanted to present an integrated set of case studies in applied econometrics with reference to labour market modelling. In doing so we hope the volume will appeal to third year undergraduates and postgraduate students studying applied econometrics and labour economics. Secondly, the contributions have been carefully selected to illustrate the main paradigms since each contribution is intellectually self­ contained. It is arguable that this may be disadvantageous as far as the truth is concerned if eclecticism is preferable. On the other hand it has pedagogic advantages in drawing sharp distinctions between the various approaches.

among the 159 member countries of the United Nations Organization which are treated as country units, while smaller countries are grouped together in regions. The number of equations used is approximately 13 700, while the number of software steps for computation is approximately 100000. Computation, including tabulation, can nevertheless be performed very rapidly, and only about 20 minutes is required to make forecasts from the present up to the year 2000. The FUGI model is at present being used by the Projections and Perspectives Studies Branch, Department of International Economic and Social Affairs of the United Nations, for simulations of United Nations medium- and long-term international development strategies, while the Project LINK model is being used for short-term forecasts (Onishi, 1985). Stimulated by our latest joint research with the United Nations University on a 'global early warning system for displaced persions', we have felt the need for our FUGI model to go beyond its present capacities centred on an 'economic' model (in the rather traditional, restricted sense of the term) and to develop into a model that can in the future analyse 'global problematiques' or 'global complexes of symptoms' and complicated questions including various types of environmental problems and the sorts of displaced persons issues to which we are now directing our attention. We are thus expanding the scope of our fifth-generation FUGI model, presently under development, to deal with such issues.