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The author augments an otherwise standard business-cycle model with a rich government sector and adds monopolistic competition in the product market and rigid prices, as well as rigid wages a la Calvo (1983) in the labor market.

This specification with the nominal wage rigidity, when calibrated to Bulgarian data after the introduction of the currency board (1999–2018), allows the framework to reproduce better observed variability and correlations among model variables and those characterizing the labor market in particular.

As nominal wage frictions are incorporated, the variables become more persistent, especially output, capital stock, investment and consumption, which help the model match data better, as compared to a setup without rigidities.

The findings suggest that technology shocks seem to be the dominant source of economic fluctuations, but nominal wage rigidities as well as the monopolistic competition in the product market, might be important factors of relevance to the labor market dynamics in Bulgaria, and such imperfections should be incorporated in any model that studies cyclical movements in employment and wages.

The computational experiments performed in this paper suggest that wage rigidities are a quantitatively important model ingredient, which should be taken into consideration when analyzing the effects of different policies in Bulgaria, which is a novel result.

Research based on Bangladesh–US trade data examines the Heckscher–Ohlin model and the Rybczynski hypothesis in this study.

Ordinary least square (OLS) techniques are used in this study, which relies on data from the NBER International Trade and Geography Data and the UN Comtrade Database for the years 2018 and 2008.

The research shows that trade between the United States and Bangladesh follows Heckscher–Ohlin and Rybcyzinski's trade predictions. According to the study, since labor is in plentiful supply in Bangladesh, Bangladesh's labor-based sectors have a higher US labor-to-capital import shares than US capital-based industries. As Bangladesh has not changed significantly from a labor-based country since 2008, it retains the same pattern even though the share of US unskilled labor-based sectors imported from Bangladesh decreased in 2018.

The findings of this study have a wide range of implications for both trade theory and policy debates between Bangladesh and the United States.

Using a dynamic perspective this article examines, the general situation of the development of South Korean direct investment in China since 1992, when the two countries established diplomatic relations. It probes many characteristics of South Korean direct investment in China: its late start yet rapid rise; the smaller average value of Korean project investments; the accelerated process of localization by large South Korean enterprises in China; the diversified industrial distribution; and the wide-ranging geographical distribution. It analyses the reasons for the rapid increase in South Korean investment in China: the use of China's low-priced production factors, the direct entry of South Korean enterprises into the Chinese market, and the stable investment environment with fewer labor disputes that China provides. Finally, this article also proves that South Korean enterprises have achieved satisfactory results from their direct investment in China.

At present, the Chinese economy has entered the “new normal” phase with the transformation of development stages from the low-income to the middle-income ones. Accordingly, there appear a series of innovations in development theories. Innovations involve creative destructions. Therefore, innovative development theories at the present stage either deny the prevailing principles of development economics, or deny the theories that once effectively guided development at the low-income stage, or even sublate some of the development polices which were propelled and proved effective at the beginning of the reform and opening-up. The fundamental reason is that, as the development stages evolve, there occur new development tasks, new periodical characteristics and new laws of development. The paper aims to discuss these issues.

Any development theory from abroad will find it difficult to correctly guide and clarify development problems in a socialist country, such as the huge population and the extreme imbalance between the urban and the rural and among regional developments.

In conclusion, China, as a large world economy, has made innovations in its economic development theory, which indicates that it intends to perfect itself rather than seek hegemony. As the world’s second largest economy, China should adapt to the transformation and further free people’s minds instead of adhering to the old patterns of thinking. It should think over the path of development for a great world economy from the historical starting point of a large world economy and find development strategies to transform itself from a large economy to a great economy, so as to realize the dream of the Chinese nation to build a powerful country.

Only political economy studies both the relations of production and the productive forces, and only a theory combining both can correctly guide China’s economic development, which especially needs to be promoted by taking advantage of socialist economic system. Therefore, the first and foremost principle for a socialist political economy with Chinese characteristics is to insist on liberating and developing productive forces.

This paper aims to study the determinants of private investment in Egypt while accounting for uncertainty associated with financing decisions of the firm using time series analysis over the period 1982-2015. The analysis is based on Tobin’s (1969) Q-theory of investment. The variables used in the empirical model are investment rate, average q index, prices of capital goods, internal finance and external finance.

This research is concerned with the model specification of a dynamic Average Q model. In that respect, the current research describes the data, presents the empirical methodology and estimates the Average Q model of investment and obtains the results. The empirical procedures and results of studying the average Q model. It includes testing for the unit root in the time series, vector error correction model (VECM) and cointegration long run analysis, and finally estimations of the model under uncertainty and empirical results.

Stochastic shocks to the determinants of private investment in Egypt have their impact on investment rate. The representation of impulse response in VECM shows that a one standard deviation shock to the value of the firm has a positive impact on investment rate. Stochastic shocks to both internal finance and external finance have slightly positive response from investment rate. Also, a stochastic shock to investment rate has a positive yet declining response from itself. However, a stochastic shock to prices of capital goods has a negative impact on investment rate. The representation of variance decomposition in VECM shows that investment rate is positively affected yet at a declining rate by a one standard deviation shock in both internal and external finance during the period 1982-2015. Also, a stochastic shock in the value of the firm or in the prices of capital goods has a slightly positive impact on investment rate.

Investment and capital accumulation are the main vehicles for economic growth and development. There have been fluctuations in Egypt’s investment rates since mid-1970s due to variations in saving rates. Thus, it is important to present some policy implications that could potentially assist the enhancement of the Egyptian economy. In that respect, the estimated results of the empirical model show that changes in the prices of capital goods in Egypt are significant factors that have negative impact on investment rate. Prices of imported capital goods in Egypt are affected by foreign exchange market conditions in the form of significant changes in the pound exchange rate. Thus, foreign exchange market reforms, as adopted recently in the Egyptian economy and improvements in trade balance, are important steps to alleviate obstacles that hinder investment. Regarding the source of finance, the estimated results showed that changes in both internal and external finance have a positive impact on investment rate. In this case, it is the firm’s decision to choose the method of financing its investment depending on factors such as its market value, institutional size and capacity and the opportunity cost of the funds used in financing the required investment.

This paper presents an alternative approach to evaluating the overall efficiency and performance of Taiwanese container ports. Specifically, a parallel activity with series structure concept in the form of data envelopment analysis (MNDEA) is used to construct a model that applies to three different activities: harbor management, stevedoring and warehousing operations. We will further divide each activity into two process types, production processes and services processes. We will also adopt a Delphi survey approach and use the Analytic Network Process (ANP) to identify these processes’influence dependence and their degree of importance for the MNDEA model setting. An empirical application demonstrates the performance of Taiwanese container ports by using MNDEA with window analysis techniques via the directional distance functionThe results demonstrate that the application is effective in indicating and/or suggesting resource-adjustments, while considering which undesirable output levels and shared inputs were involved. The results also present directions for possible improvements in workplace efficiency.

The purpose of this study is to investigate efficiency and productivity of Turkey’s both brokerage sector and intermediary institutions (IIs) that have been active in Turkish capital markets.

Data envelopment analysis (DEA) and Malmquist total factor productivity index (MPI) are used to analyze efficiency and productivity of Turkey’s both brokerage sector and 51 Turkish IIs constantly operated between the years 2008 and 2018. Paid-in capital, administrative expenses and trading volumes are used as input, while net trading commissions and net profit/loss are used as output in analysis. The calculations of this analysis are made with DEAP 2.2 program and Python.

The results reveal that during the analysis period, percentage of efficient institutions among 51 IIs was between 18% and 39% while the sector’s mean efficiency score ranged between 52% and 65%. While 2009 is the year with the highest number of efficient institutions, 2013 is observed to be the least. Finally, the results of productivity analysis indicate that all types of IIs are not fully productive during the related period. The striking finding obtained is that though there is a decrease in total productivity change, the technological change has a positive effect on their productivity change.

This study is a double-layered research paper that includes efficiency analysis by DEA in the first step and productivity analysis by using MPI in the second step.

In this paper, the authors study the long-run determinants of total factor productivity (TFP) in three major European economies over the period 1983–2017, namely Germany, France and Italy.

The authors focus on the capital misallocation effects, scale effects and labor misallocation effects. To this end, the authors study how real interest rate shocks, real exchange rate shocks, real wage shocks and changes in labor regulation affected TFP in major European countries over the last decades. The authors employ a theoretical and an empirical model to investigate the issue. The empirical results are obtained using a VAR model for estimation.

A stripped-down model of labor market in open economy with technology progress allows to identify the relevant variables affecting TFP. On the empirical ground, the authors find a positive relationship between TFP and real interest rate in the long run. Importantly, the authors detect a positive relationship between TFP and real exchange rate. Further, the authors show that the TFP can respond positively to a stricter labor market regulation and to a higher real compensation per employee. The results provide support to the idea that TFP has a positive relation with prices in the long run, while it may be biased along the cycle because of price rigidity.

The present model is stylized and may not capture all of the details of reality. The analysis should be extended to a larger number of countries. Technology progress could be proxied using different variables, as the R&D expenditure or the number of patents. Micro data, for specific sectors and industries, can improve the quality of the empirical investigation.

Mainly the authors find that TFP has a positive relationship with price changes in the long run, while it may be biased along the cycle because of price stickiness. Capital misallocation and labor misallocation can negatively affect TFP. Thus, the observed divergences in European TFP can be traced back to the misallocation effects attributable to the decrease of real interest rate and real wages, together with the raising labor flexibility. Mainly, the authors detect a positive long-run relationship between TFP and real exchange rate. This outcome strengthens the supply-side view of the relationship between productivity and real exchange rate.

The authors believe that the present setup can be helpful to reflect critically on the nodes at the core of the productivity slowdown and asymmetries in the eurozone. The aim is to implement renewed policies in order to favor economic growth, convergence and stability in the euro area.

This research addresses the issue of asymmetries among European economies by focusing on the role played by real prices in the long run. Traditionally, the dynamics of TFP have been attributed only to technological components, human capital and knowledge. This work shows that the dynamics of prices such as the real interest rate, the real exchange rate and the real wage can also influence the technological process by pushing the production system toward choices that are not always optimal for economic growth. An interesting result of this research concerns the positive relationship between real exchange rates and TFP in the long term, evidence of an important supply-side effect on the technological process.

An aggregate production function has been used in macroeconomic analysis for a long time, even though it seems that it is conceptually confusing and problematic. The purpose of this paper is to argue that the measurement problem related to the heterogenous capital input that exists in macroeconomics is also relevant to microeconomic market situations.

The author constructed a microeconomic market model to address both the problems of the measurement of the physical capital and of substitutability between labor and capital in the short run using two types of technologies: labor neutral and labor reducing. The author proposed that labor and physical capital inputs are complementary in the short run and can become substitutes only in the long run when the technology advances.

The author found that even if the technology improves at a fast rate over time, there are then diminishing returns of profits to technology and an upper limit to profits. Moreover, the author showed that under the labor-reducing technology, labor class earns more initially as technology improves, but their incomes start declining after some threshold level of passage of time.

The author cautioned the applied researcher that the estimated labor and capital coefficients of generalized Cobb–Douglas and constant elasticity of substitution of types of production functions could not be interpreted as partial elasticities of labor and capital if in reality the data come from fixed-proportions types of processes.

This study investigates the dynamic production structure of the Japanese manufacturing industry by using the adjustment cost approach. The study is to shed some light on the unique dynamic structure of the Japanese manufacturing industry. The study attempts to help design and predict industrial policies that are implemented to enhance domestic investments by the Japanese government.

This study obtains a system of dynamic factor demand and output supply equations by applying the dual approach to the intertemporal value function as represented by the Hamilton–Jacobi equation. By using industrial panel data for 1973–2012 of the Japanese manufacturing industry, the study estimates the system of the behavioral equations and corresponding elasticities. The study uses hypothesis tests and dynamic elasticities to investigate the dynamic structure of the Japanese manufacturing industry.

Estimation results show that labor and capital are quasi-fixed variables that adjust about 0.2 percent annually to the long-run optimum levels. Estimated adjustment rates are very slow as often presumed about the Japanese manufacturing industry, which uses lifetime employment practice and slow decision-making process in investment decisions. The results also show that output supply and factor demand elasticities vary greatly depending on time horizon. Factor demand increases when its own price increases in the short run, suggesting that factor adjustment is mostly determined factor prices in the past due to sluggish factor adjustment. However, factor demand becomes a normal downward-sloping curve in the long run as factor adjustment gets completed.

Japanese manufacturing firms hire employees through lifetime contract to exploit the benefits of dynamic learning-by-doing and execute investments carefully considering all the possible impacts. Under the strategy, adjustment costs for changing workers and capital stock are minimized. Dynamic adjustment model is expected to shed some light on the unique dynamic structure of the Japanese manufacturing industry. However, researches regarding the dynamic factor adjustment of the Japanese manufacturing industry are hard to find. This study is expected to fill the research vacuum.