Preliminary Programme

The purpose of this paper is to, firstly, explore the theories and models aiming to explain the size and growth of government spending, and then apply these insights to the study of the period 1870-1938. It seems impossible to test the demand-side influences without understanding certain supply-side influences and without abandoning single-cause explanations in favor of more disaggregated, multivariate analysis of central government spending. Here I will concentrate on assessing the importance of various democratic institutions, especially via the demand characteristics of military spending, social spending, and the interaction between them, public debt constraints, as well as other institutional constraints and other environmental variables. It is maintained here that the demand for central government spending is strongly connected to the characteristics of the political system and the proposed tradeoff pattern. In addition, exogenous shocks are included in this framework. (Show less)

Since 1950, European industrial productivity has evolved through two periods, pre- and post-1975. During the 1950s and 1960s productivity in Swedish manufacturing was at the head of industrialised countries, however in the 1970s and 1980s industrial productivity fell to a low position in international comparisons but in the 1990s it recovered substantially. Two competing explanations, both connected to economic policy, have been proposed to this development. Firstly, and most widespread among economists, is the explanation that emphasises rigidities in the Swedish economy that hampered structural change and productivity growth. These obstacles were primarily of two different kinds. Established traditional industries were sheltered, e.g. by devaluations that increased profitability without any structural changes. This was aggravated by the fact that the supply of human capital was inelastic due to a wage policy that did not stimulate investments in education. (Cf. Henreksson 1996) Secondly a more economic historically based explanation has been proposed emphasising instead that Swedish structural change was profound from the late 1970s but did not immediately result in high growth rates of output or productivity. Sweden rather exhibited a clear case of the “productivity paradox” that had appeared also in connection with earlier periods of technological shifts and structural transformation. (Schön 1994, 2000) The solidaristic wage policy, which aimed to offset profits effects on wages, was carried out foremost in the fifties and sixties while the policy after 1975, when the Swedish model were disintegrated, was more favourable to profit effects as markets were deregulated. Thus, the causal relation between profits and wages is expected to be weaker for the period 1950-1975, whereas profit is expected to have a stronger effect on wages during the period 1975-1994. In order to find out to what extent the political incentives pre and post 1975 were carried through in reality, and which of the two competing explanation described above, that gets the most empirical support, this paper contributes with an empirical study of the causal relation between wages and net profits pre and post 1975. Besides, the fact that productivity in diverse types of Swedish industries have developed rather differently, points out that there are dissimilar causes for productivity changes in different industrial sub sectors, hence economic policy may involve contradictory affects on different types of industries. The aim of this paper is further to analyse the determinants for productivity in three different types of industries divided with regard to their use of labour, capital and production technique, (namely: labour-intensive, capital-intensive and knowledge-intensive industries), and finally to examine the effect of economic policy on these different industries. In this respect the Cointegrated VAR-model, which is a method to analyse interrelated time series, is used. (Show less)

Often the lack of economic growth of middle- or low income countries is ascribed to difficulties in technology transfers. These countries are supposed not to realise the catching-up potential they have vis-a-vis the technology leader. This paper argues that other factors may be much more important in explaining the large and persistent welfare differences between the less developed countries and the west. Especially the institutional impediments to structural change and growth are analysed. Special attention is paid to the "growth disaster" of Sub-Saharan Africa. (Show less)

The mid-1980s marked the definitive end of Keynesian economic policy in the Netherlands and the rest of Western Europe. Economic policies now focused on the structure of the economy, aiming to facilitate the recovery of supply-side profitability which had suffered from a top-heavy welfare state. According to many authors, private enterprise in the Netherlands, paralyzed by the world economic recession, was internally crippled by heavy taxation, large unemployment benefit payments, and persistent wage rigidities. The recovery of the world economic situation from the late 1980s onward restored profitability. This created new jobs in the Netherlands, seemingly as a result of the new policy measures, and foreign exports recuperated. However, in the wake of neo-liberal reform, the social system as a whole was constantly criticized. Even though the coordinated market economy (as opposed to a liberal market economy, using the conceptual framework of the ‘varieties of capitalism’ approach) was deeply embedded in the Dutch institutional setting, a loud call was heard for liberalisation, privatization and deregulation of the economy. In the meantime, the folklore of ‘poldermodel’ was advocated as having provided a coordinated solution to unemployment – that is to say, as long as the world economy boomed.
From an international comparative perspective, this paper investigates strengths and weaknesses of the Dutch coordinated market economy, aiming to conclude whether a rehabilitation of the ‘mixed economy’ is justified. Specific features of the macroeconomy will be emphasized rather than political ideas and policy aims. How badly did this coordinated economy have to be restructured if it is compared with other OESO countries? (Show less)