Melbourne Institute Working Paper Series Abstracts (1998)
Melbourne Institute Working Paper No. 26/98
A Review of Some Methodological Issues in Identifying and Analysing Business Cycles
by
Ernst A. Boehm
November 1998
Melbourne Institute Working Paper No. 25/98
Neoclassical Economics and the Australian Community: How Does the Public Arrange Economic Knowledge ?
by
Malcolm Anderson
November 1998-
ABSTRACT
With the success of neoclassical economic policy applications among governments in OECD (and other) nations, ordinary citizens find themselves increasingly living in societies with new 'ground rules'. Privatisation, competition policies, efficiency and 'user pays' principles, together with labour market reform, imply that individuals and families and other groups may find that a lack of economic 'nouse' may well be welfare reducing. This paper utilises the results of a survey of 236 Australian respondents (drawn from electoral rolls) which probed the extent to which the economic ideas of 'ordinary' Australians were consistent with neoclassical economics (loosely defined). The paper uses principal component analysis to determine the arrangement of lay economic 'knowledge' across three broad areas: trade and tariffs, market clearing, and efficiency. The results have implications for both the teaching of economics in schools, and the communication of economics through economic journalism.
Melbourne Institute Working Paper No. 24/98
The Melbourne Institute General Equilibrium Tax Model,
by
Rosanna Scutella and David Johnson
November 1998Melbourne Institute Working Paper No. 23/98
The Financial and Non-Financial Effects of Corporate Takeovers
by
Tim Brailsford and Stephen Knights
October 1998Melbourne Institute Working Paper No. 22/98
Performance of Australian Government Trading Enterprises: An Overview
by
Joanne Loundes
October 1998-
ABSTRACT
Assessing the performance of Government Trading Enterprises (GTEs) has become increasingly important in the context of the push towards privatisation. This paper provides an overview of GTE performance over the 5 years to 1996 using the IBIS Enterprise Database, following the method of analysing firm performance as outlined by the Steering Committee (1998). The bulk of the results are made up of a balanced panel of firms who were able to provide EBDIT figures over the five years to 1996. The results indicate that there are large differences in performance across firms, and more particularly, across industries.
Melbourne Institute Working Paper No. 21/98
Profitability in Australian Enterprises
by
Simon Feeny and Mark Rogers
July 1998-
ABSTRACT
This paper analyses profitability in a sample of large Australian companies over the period 1985 to 1996. Various measures of profitability are used and the paper provides a discussion of the theoretical basis for these measures. The key issues investigated are a comparison of the profitability measures, the distribution of profitability between firms, and the persistence of firm profitability. The results are compared to previous studies on firm profitability.
Melbourne Institute Working Paper No. 20/98
Productivity in Australian Enterprises: Evidence from the ABS Growth and Performance Survey
by
ark Rogers
-
ABSTRACT
This paper constructs a measure of labour productivity from the ABS Growth and Performance Survey. An overview of labour productivity is provided by considering differences between industry, firm size and firm age categorisations. In addition, the distribution within these categories are analysed. Labour productivity if found to vary substantially across industries and firm size. Since labour productivity does not control for the level of capital used in production this is to be expected. Less expected is the fact that levels of firm productivity within industries (and firm size categories) also vary substantially. This suggests that the factors determining firm productivity must be investigated at the firm level and cannot be assumed to be similar within an industry.
Melbourne Institute Working Paper No. 19/98
Innovation in Australian Enterprises: Evidence from the GAPS and IBIS Databases
by
Mark Rogers
August 1998-
ABSTRACT
This paper investigates the data relating to innovation in three databases: the Growth and Performance Survey (GAPS), the IBIS-Innovation Scoreboard and the Australian Workplace Industrial Relations Survey. The two databases we focus upon are the GAPS and IBIS. Data in GAPS includes questions on whether an innovation had occurred and on expenditures relating to innovation. The IBIS database contains R&D; expenditures and the number of applications for patents, trade marks and designs for large Australian firms. Various summary statistics are presented and the data are analysed with reference to industry, firm size, firm age and foreign ownership categorisations. A number of broad results emerge. The extent of innovations (an output) and innovative activities (inputs) varies substantially across industries. For manufacturing firms the following points emerge. R&D; and 'tooling-up' expenditures are the largest types of innovation expenditures. Small firms are much less likely to undertake R&D;, although, those that do, tend to have high R&D; intensities. The distribution of innovation intensities (e.g. R&D;/sales) is skewed to the right (i.e. there are a small number of high intensity firms that can dominate). R&D; intensity for individual firms appears to be volatile over time, with firms with the highest levels of R&D; intensity tending to have the highest volatility.
Melbourne Institute Working Paper No. 18/98
Differential Consumption Taxes and Equity: The Limits to Redistribution
by
John Creedy
July 1998
Melbourne Institute Working Paper No. 17/98
Non-Uniform Indirect Taxation, Horizontal Inequity and Re-ranking
by
John Creedy
July 1998Melbourne Institute Working Paper No. 16/98
Incentive and Distributional Effects of a Tax Mix Change: Some Simple Analytics
by
John Freebairn
July 1998-
ABSTRACT
Simple models are used to assess changes in effective average and marginal tax rates on income from work and capital and on income consumed and spent caused by a shift from taxation of income to taxation of consumption. The new income tax rate schedule becomes more progressive than currently. For low income earners with negligible savings, the same aggregate tax burden is paid, but with less lost in income tax and more in consumption tax. For middle and high income earners, on average the aggregate tax burden changes little, but those with larger savings win and those with low savings lose. Also, the lower tax burden on saving and capital income is matched by a higher tax burden on labour income.
Melbourne Institute Working Paper No. 15/98
Understanding Behavioural Responses to Tax and Transfer Changes: A Survey of Low-Income Households
by
Sally Cowling
July 1998-
ABSTRACT
This paper describes a role for qualitative research in examining the behavioural responses of low-income households to changes in personal income taxes, indirect taxes and transfers. A series of Focus Groups were conducted to flesh out decision-making processes with respect to labour supply and consumption. Discussions with sole parents and couples with dependent children are reported in this paper. Focus Group sessions explored the nature and strength of spending adjustments to past variations in prices, and the management of situations in which expenditure exceeded the participant's current income. A second strand of questions focused on the interface between the labour market and the tax and transfer systems. By identifying factors that had influenced their participation or non-participation in the paid labour force, Focus Group members shed light on possible labour supply responses to a change in effective marginal tax rates.
Melbourne Institute Working Paper No. 14/98
Labour Market Programs and Labour Market Outcomes
by
Thornsten Stromback, Michael Dockery and Wiwi Ying
July 1998-
ABSTRACT
This paper uses data from the first wave of the Survey of Employment and Unemployment Patterns to estimate the effect of labour market programs on markets outcomes. Several indicators of outcomes are used, viz. labour force participation, employment and earnings. The findings are compared with the information from DEETYA post program monitoring system. A fair degree of correspondence is found but out results suggest that employment training programs have a large effect on outcomes than indicated by the post program monitoring data.
Melbourne Institute Working Paper No. 13/98
A Progressive Direct Expenditure Tax
by
John Freebairn and Rebecca Valenzuela
June 1998-
ABSTRACT
Australians are again looking at the possibility of major tax reform, including a reexamination of options once taboo, such as the GST. But there is, in fact, a wider range of possible tax systems available to us. One major option not so far considered is the 'direct expenditure tax'. As a concept it is not new, although it is not familiar in the Australian debate. This is surprising, as it has strong potential benefits to offer. A progressive direct expenditure tax would replace the so-called 'income' tax currently levied on individuals and business enterprises. The sum to be taxed would be a measure of expenditure on final consumption. In effect, then, savings would be exempt from taxation. But when the savings, and the returns earned on them, were ultimately spent, they would be taxed. A progressive tax rate schedule, which reflected both capacity to pay and family circumstances, would be applied to individuals and perhaps also to business enterprises, to calculate tax payable.
This expenditure tax offers two alternative options under its direct taxation scheme: the 'cash-flow' and the 'yield-exempt' options. Illustrative simplified tax forms for individuals and for business enterprises using both options are presented, discussed. and compared with the present 'income' tax forms. In order to collect the same revenue as the current 'income' tax system it would replace, a direct expenditure tax would require higher tax rates. This is because the tax base would not include savings which are now subject to income tax. A slight increase in the degree of progressiveness of the current tax rate schedule would also be required, to maintain current notions of equity between richer and poorer taxpayers.
Melbourne Institute Working Paper No. 12/98
Indirect Tax Reform in Australia: The Welfare Effects on Different Demographic Groups
by
John Creedy
June 1998-
ABSTRACT
The welfare effects of several indirect tax reforms in Australia are examined for a number of types of household in a range of income groups. The welfare chances, measured using equivalent variations, are based on the use of the linear expenditure system, where parameters are different in each of the income groups. The effects of the current system and of several reforms are found to differ significantly among, the household types. However, the results suggest that the extent of vertical redistribution involved in the current indirect tax structure, and possible reforms to it, are small. The role of exemptions are examined in the case of food, for which the budget shares are systematically higher in lower income households., and health services. In view of the strong assumptions used at each stage, the results must be regarded as tentative
Melbourne Institute Working Paper No. 11/98
Management, Organisational and Technological Change in Australian Workplaces: Evidence from the AWIRS Data Sets
by
Mark Rogers
May 1998
Melbourne Institute Working Paper No. 10/98
The Definition and Measurement of Innovation
by
Mark Rogers
May 1998-
ABSTRACT
This paper discusses the definition and measurement of innovation at the firm-level. Innovation is the process of introducing new ideas to the firm which result in increased firm performance. Various measures of innovative activity are discussed and evaluated. All the individual measures discussed can only act as partial indicators of the extent of innovation. This is because innovation covers an extremely broad range of activities which varies between firms. To create better measures of innovation it is necessary to aggregate the various individual measures. Methods to achieve this are discussed. The paper also provides a short review of previous Australia firm-level studies on innovation.
Melbourne Institute Working Paper No. 9/98
The Definition and Measurement of Productivity
by
Mark Rogers
May 1998-
ABSTRACT
This paper introduces the various methods that have been used to analyse productivity. Productivity is defined as the ratio of output to input for a specific production situation. Productivity changes can be caused by either movements in the 'best practice' prdcuction technology, or a changes in the level of efficiency. The paper discusses the various problems encountered in measuring productivity when there are multiple outputs and inputs. Also, the problems concerning the measurement of inputs and outputs are discussed. Methods that analyse the level of inefficiency within a sample of firms are reviewed. These include data envelopment analysis, stochastic production functions and panel data methods. Lastly, a few Australian productivity studies are reviewed to illustrate the empirical use of the various definitions and techniques.
Melbourne Institute Working Paper No. 8/98
Performance of the Operational Wansbeek-Bekker Estimator for Dynamic Panel Data Models
by
Mark N. Harris and Laszlo Matyas
April 1998-
ABSTRACT
Wansbeek and Bekker (1996) considered a new estimator for simple dynamic panel data models (where there are no exogenous variables) which involved a complex weighting matrix. In this paper we propose an operational variant of this estimator which is applicable to the more realistic case where there are exogenous variables. We also propose an easy-to-compute approximation to the weighting matrix. The performance of this (these) new estimator(s) is examined, revealing very desirable small sample properties in a wide range of situations that the applied researcher is likely to encounter, especially in moderate time series length panels.
Melbourne Institute Working Paper No. 7/98
The Theory and Measurement of Profitability
by
Ian Drummond Gow and Stuart Kells
March 1998
Melbourne Institute Working Paper No. 6/98
The Welfare Effects of Indirect Taxes in Australia
by
John Creedy
March 1998
Melbourne Institute Working Paper No. 5/98
The Econometrics of Gravity Models
by
Mark N. Harris and Laszlo Matyas
February 1998-
ABSTRACT
Gravity type models have often been used to analyse trade flows between countries and trading blocs. Previously however, these models were only applied to either cross-section data, or to single country time-series data, which imposed severe explicit (or implicit) restrictions on the specification of the model. Recently Gravity models have been generalised and adapted to a panel data setting, where several time-series of cross-section data sets were pooled. This approach not only increases the degrees of freedom, it also enables the proper specification of source and target country effects and time (or business cycle) effects. In this paper, we review in a unified framework, the recent developments in the econometric methodology of Gravity models, and refine the estimation techniques to account for any possible simultaneity bias. Although a fully specified fixed effects Gravity model has been estimated previously, this paper contains the first ever results of its random effects counterpart. We also suggest an extension to the basic model, which accounts for the fact that contemporaneous trade flows are likely to be strongly related to previous ones. Once more, this appears to be the first application of such a model in the literature. Finally, all of these various models and methods are illustrated with an application to export flows in the APEC region. The results clearly suggest that it is important to properly specify the model, in terms of source, target and business cycle effects. If this is not the case, policies could be instigated that do not take into account, for example, that some countries have 'naturally' higher propensities to import than others. Moreover, if these effects are not properly specified the affect of other important driving factors, e.g. population will be wrongly estimated. In both cases, policy will be misguided. Important explanatory variables are found to be domestic and target country GDP, and dependent upon specification, local and domestic population, the exchange rate and foreign currency reserves. Also, there is strong evidence that current export flows are highly correlated with those of the previous year.
Melbourne Institute Working Paper No. 4/98
Labour as an Asset: Can it Partition the Labour Market?
by
Elizabeth Webster
January 1998-
ABSTRACT
Labour is becoming an important asset vis-a-vis physical capital as the asset structures of firms change over time. The peculiarities of labour assets are that they appreciate with usage rather than depreciate. By contrast to physical capital, over-use leads to an increase in their value and under-use leads to an erosion. The more able or those considered to have the most potential are generally recruited to this asset sector of the labour market where positive work experiences are reinforcing while the less able or those considered to have less potential are excluded. Accordingly, the work experiences and skills of the labour force becomes more polarised. Regarding the aggregate labour market in this light may account for some of the observed changes in the labour market over the last few decades.
Melbourne Institute Working Paper No. 3/98
Measuring the Performance of Large Australian Firms
by
Derek Bosworth and Stuart Kells
January 1998-
ABSTRACT
This paper is concerned with the measurement of company performance in the context of the IBIS panel data set of large Australian firms. The analysis provides a framework which distinguishes between: 'static', 'comparative static' and 'dynamic' measures; and 'partial', 'multiple' and 'total' measures. The chapter demonstrates that all of these measures are related to economic measures of firm profitability. Thus, some time is spent in defining profits and, in doing so, developing the linkages between economic and accounting concepts of performance. Finally, it relates the discussion of the conceptual issues of measuring performance to the information available in the IBIS database.
Melbourne Institute Working Paper No. 2/98
Research and Development, Intangible Assets and the Performance of Large Australian Companies
by
Derek Bosworth and Mark Rogers
January 1998-
ABSTRACT
This paper analyses two basic questions concerning R&D; and the performance of large Australian firms using data from the IBIS data base. First, what factors determine the extent of investment in R&D.; Second, what impact does R&D; have on the dynamic performance of Australian firms. A review of previous work on these questions is included. In analysing the first question, using a sample of up to 85 firms, we find that technological opportunity is a major determinant of R&D.; In addition, it appears that firms which are less "focused" (in terms of diversification of activities) have lower R&D; intensities. Firm size appears to have no relationship to R&D; intensity. To investigate dynamic performance we use a Tobin q approach which seeks to explain the market value of firms. We find that intangible assets are an important determinant of market value. In particular, we find that contemporaneous R&D; expenditure is positively linked to market value. The strength of this relationship depends on the exact sample used. Lastly, firms which have experienced relatively high levels volatility in R&D; expenditure appear to have lower market values.
Melbourne Institute Working Paper No. 1/98
Transitions in the Labour Market: Evidence from the Survey of Employment and Unemployment Patterns
by
Thorsten Stromback, Michael Dockery and Wiwi Ying
January 1998-
ABSTRACT
This paper investigates factors associated with changes to people's labour market status over the 12 month period September 1994 to September 1995. Overall, 28 per cent of people looking for work at the beginning of the period were working by September 1995 and 21 per cent of working people became 'lookers'. Regression analysis found that the transition from looking to working was associated with age - prime age people were more likely to become workers; disability - the disabled were less likely to be working; labour market history - year of previous work experience was positively associated with one's chance of working, trade union membership - members were more likely to be working and household - people with a spouse working full-time were more likely to have gained a job. There is some evidence that the transition out of looking and into working was affected more by individual heterogeneity than state dependence.