TWIN SONS OF DIFFERENT MOTHERS: THE LONG AND THE SHORT OF THE TWIN DEFICITS DEBATE

Interest in the twin deficits hypothesis fluctuates in tandem with the U.S. current account deficit. Surprisingly though, a statistically robust relationship between budget and trade deficits has been difficult to pin down. We argue that a big part of this difficulty is due to the failure to allow for structural breaks in the series when (either explicitly or implicitly) modeling their time series properties. We show that both series are break stationary (and conditionally heteroskedastic) and argue that while there is no common pattern in the long run, the short-run dynamics reveal a sizeable and fairly persistent positive relationship between budget deficit shocks and current account deficit shocks. ( JEL F41, E6, H6)     

A THREE-PHASE APPROACH TO INSTILLING A CONTINUOUS LEARNING CULTURE IN MANUFACTURING EDUCATION AND TRAINING

We describe a “learn-by-doing” approach that involves the following three phases designed in part to integrate management and engineering curricula and instill a continuous learning philosophy: (1) involve cross-functional teams as “process and business owners” in a replica of a real-life manufacturing/design problem (Do), (2) require teams to not only learn by doing but to then apply or implement what they have learned in phase 1 (Apply), and (3) share best practices and knowledge gained with subsequent participants (Document). These last two phases are essential and potentially the most valuable but are often ignored in the learning process. They can be accomplished either manually or through the use of an electronic bookshelf (e.g., company or school intranet), which is a database system used to collect and store templates of best practices, collective wisdom, and related information associated with learning and operational activities. We describe two of several educational packages we have developed and discuss their impact on our teaching, our students, and practitioners.     

THE TIMING OF MARKETS AND MONETARY TRANSFERS IN CASH-IN-ADVANCE ECONOMIES

In cash-in-advance models, do the timing of markets and the timing of the monetary transfer affect equilibrium money demand? The timing of markets generates different individual money demands; however, under the common assumption that agents are identical, these differences do not affect the behavior of equilibrium real balances. In contrast, the timing of the monetary transfer has important implications for agent's information sets; these implications can influence the equilibrium characteristics of real balances.     

THE IMPACT OF HIGH-TECH CAPITAL ON PRODUCTIVITY: EVIDENCE FROM AUSTRALIA

This article examines the relationship between high-tech capital use and productivity. Using Australian data, some evidence is found of a positive relationship between high-tech capital use and productivity in the market sector, but there is much less evidence of excess returns. These results are robust to the use of a variety of different measures of high-tech capital. At the industry level however, the relationship is significant and positive for only some industries. This suggests that the benefits of investment in high-tech capital are not spread evenly across the economy. (JEL O3 )     

GEOGRAPHIC DIFFERENCES IN U.S. UNEMPLOYMENT RATES: A VARIANCE DECOMPOSITION APPROACH

This paper analyzes the determinants of the geographic dispersion of unemployment rates. The model presented here recognizes that structural labor market relationships differ across areas and that area unemployment rates and some of the explanatory variables are determined simultaneously. Most importantly, the methodology introduced here provides an estimate of the impact of each of the explanatory variables on the overall dispersion of unemployment rates, allowing comparison of several competing hypotheses that purport to explain why areas differ so widely in terms of their unemployment rates. The empirical results indicate that inter-area differences in product market demand and in sensitivity to changes in conditions in the product market are the most important factors accounting for geographic differences in unemployment rates. More generally, the results indicate that unemployment rates differ widely across areas not so much because areas differ in terms of the underlying characteristics that determine unemployment rates but because areas are so heterogeneous with respect to labor market structure.     

EXCHANGE RATE VOLATILITY: THE ROLE OF REAL SHOCKS AND THE VELOCITY OF MONEY

The effects of stochastic output shocks on the behavior of ex-change rates and nominal price levels is studied within the context of a two-country, cash-in-advance model. The analysis of this model, in contrast to the existing cash-in-advance literature, demonstrates that exchange rates can be more volatile than price levels even though agents' elasticity of substitution between foreign and domestic goods is greater than one-half. This possibility arises when output shocks are autocorrelated and are due to revisions in expectations that affect the terms of trade and/or the velocity of money.     

Research Note: Developing Outcome Measures in Child Care

Correpondence to Dr Harriet Ward. Research Associate, University of Bristol, Social Policy and Social Planning. The Alfred Marshall Building, 40 Berkeley Square, Bristol BS8 1HY. Summary The complexity of the concept of outcome has discouraged researchinto the impact of the care experience on the child. This Notesummarizes the conceptual thinking behind a comprehensive systemof assessment which is being piloted in four local authorities,and reports on the preliminary results.     

Simmel on Acceleration, Boredom, and Extreme Aesthesia

By focusing on the unique velocity and over‐stimulation of metropolitan life, Georg Simmel pioneered an interpretation of cultural boredom that has had a significant impact on contemporary social theory by viewing it through the modern experience of time‐pressure and social acceleration. This paper explores Simmel's account of boredom by showing how—in the frenzy of modern life—it has become increasingly difficult to qualitatively distinguish which choices and commitments actually matter to us. Furthermore, this emotional indifference invariably pushes us towards more excessive and risky behavior, towards, what I call, “extreme aeshesia.” Insofar as novel experiences quickly become routine in the technological age, it appears that only extreme sensations and experiences can break the spell of boredom, allowing us to momentarily feel strongly for something.     

MANUFACTURING PROCESS TECHNOLOGY and SUPPORT STAFF COMPOSITION: AN EMPIRICAL VIEW OF INDUSTRY EVIDENCE

Despite the attention given to restructuring and trimming down manufacturing firms during the 198Os, little attention has been paid to the mix of skills they needed under different circumstances. We examined the patterns of employment by occupation in manufacturing industries utilizing different production technologies and the effect of establishment size on nonproduction employment. We found that a relationship exists between production technology and nonproduction employment per 100 production workers. Establishment size is found to be a moderator between nonproduction employment and production technology. Our findings imply two clear messages for managers. First, when considering major changes in production technology, managers should be aware that the supporting skills they will need from their nonproduction work force are likely to change greatly. Further, these changes involve technical and managerial workers as well as clerical and production support people. Second, they should restructure the functional or occupational mix of an organization in the context of the process technologies in place. Different process technologies require different structures.