Bruce Elmslie - Academia.edu (original) (raw)

Papers by Bruce Elmslie

History of Political Economy, 1988

One of the most interesting debates in modern economics centers around the question of whether in... more One of the most interesting debates in modern economics centers around the question of whether integrating economies necessarily converge in terms of per capita income and technology. This debate is often believed to have been started by Thorstein Veblen in 1915. However, this paper demonstrates that the genesis of the convergence question goes back to the Scottish Enlightenment and the publication of an essay by David Hume in 1742. The ensuing 'rich country-poor country' debate--between David Hume on the convergence side and Josiah Tucker on the nonconvergence side--represents one of the first major doctrinal debates in economics.

SSRN Electronic Journal, 2012

SSRN Electronic Journal, 2007

ABSTRACT How to teach technical material to undergraduate students with a limited mathematical ba... more ABSTRACT How to teach technical material to undergraduate students with a limited mathematical background is a recurring concern for many teachers in subjects such as economics. One method that has proven successful for the current authors is to connect theoretically sophisticated material with actual data. This enables students to see how the theory relates to the real world, allowing for a deeper understanding of both. This paper develops a simple and insightful empirical application of the Solow growth model that can be used in an undergraduate macroeconomics or growth course. The exercise uses a dataset on perceptions of corruption levels by country to look at the relationship between corruption and the level and rate of growth of output per worker across 70 countries. The results allow students to see for themselves the impact that corruption has on actual countries while also improving their understanding of the distinction between level effects and long run growth effects.

Review of World Economics, 2005

Empirical work on the Heckscher–Ohlin (H-O) theorem has been unable to reach consensus on its con... more Empirical work on the Heckscher–Ohlin (H-O) theorem has been unable to reach consensus on its consistency with the data. In this paper we test the chain version of the H-O theorem empirically for the first time by using data on capital and labor endowments and capital/labor intensities by sector combined with export/import data for the United States. According to our findings, predictions of the theory are not confirmed by the data. However, when gross investment is used as a proxy for productive capital stock and capital/labor ratios are replaced by investment/labor ratios, we find almost perfect concordance between net trade flows and endowments as predicted by theory.

Research Square - Research Square, Dec 1, 2022

We demonstrate a new result regarding reswitching within a classical growth framework. The questi... more We demonstrate a new result regarding reswitching within a classical growth framework. The question of reswitching comes down to a question of factor market substitutability. The assumption of full employment due to a wage adjustment mechanism eliminates a perverse switch point as a stable equilibrium outcome. Implications for future empirical work on reswitching and perverse switches are explored.

SSRN Electronic Journal, 1998

Two fundamental issues have been ignored in the convergence debate which are addressed in this pa... more Two fundamental issues have been ignored in the convergence debate which are addressed in this paper. First, there has been little attention paid to the development of a general model able to explain convergence a divergence. Second, in the rush to put data to a convergence hypothesis, researchers have failed to consider certain methodological procedures with respect to the treatment of capital. To remedy this problem we use an input-output approach to measure catch-up. To address the theoretical lacunae we present case studies of Portugal and Japan, two countries which by 1959 had attained the threshold level of development required to join the "convergence-club", but which, for various historical (path-dependent) reasons, have diverged rapidly from each other in the period since the late 1950's.

Journal of Economic Perspectives

The gravity equation is a current workhorse of empirical trade theory. It is generally acknowledg... more The gravity equation is a current workhorse of empirical trade theory. It is generally acknowledged that this theory, which relates the extent of trade between countries to their respective sizes, distances, and relative trade barriers, was first developed by Jan Tinbergen in 1962. Acceptance of the gravity model as part of the discipline's core was limited by its scant theoretical foundation for the first 40 years of its existence. This paper finds that a theory of trade gravity was first developed by Adam Smith in The Wealth of Nations. Moreover, it is shown that Smith's statement of a proportional relation between economic size and distance came about as an application of his general theory of differential capital productivity in different economic sectors, and his elaboration of a theory of the gains from trade originated by David Hume. It is further shown that Smith had an explanation of the size of border affects in trade volumes, and a gravity theory of trade restrict...

Two fundamental issues have been ignored in the convergence debate which are addressed in this pa... more Two fundamental issues have been ignored in the convergence debate which are addressed in this paper. First, there has been little attention paid to the development of a general model able to explain convergence a divergence. Second, in the rush to put data to a convergence hypothesis, researchers have failed to consider certain methodological procedures with respect to the treatment of capital. To remedy this problem we use an input-output approach to measure catch-up. To address the theoretical lacunae we present case studies of Portugal and Japan, two countries which by 1959 had attained the threshold level of development required to join the “convergence- club”, but which, for various historical (path-dependent) reasons, have diverged rapidly from each other in the period since the late 1950’s.

This paper addresses the question of why Pareto’s sociology has not attracted a major following w... more This paper addresses the question of why Pareto’s sociology has not attracted a major following within economics or sociology. We criticize Pareto’s sociology for the internal inconsistency of its conception of non-logical action, and address limitations in the applicability of his analysis of residues via the sex residue. We also argue that developments in the theory of economic policy by Sidgwick, Marshall, and Pigou created a more user friendly platform for addressing many of the questions that Pareto set out to understand in his sociology, leaving economists little incentive to follow Pareto’s path.

Journal of Economic Development

This article contributes to the growth literature by developing a formal growth model that provid... more This article contributes to the growth literature by developing a formal growth model that provides the basis for studying institutions and technological innovation and examining how human capital and institutional constraints affect the transitional and steady state growth rates of output. The model developed in this article shows that the reason that growth models à la Romer (1990) generate endogenous growth is the use of a set of restrictive and unrealistic assumptions regarding the role of institutions in the economy. The baseline model developed in this article shows that the long-run growth of the economy is intrinsically linked to institutions and suggests that an economy with institutions that retard or prevent the utilization of newly invented inputs will experience low levels and low growth rates of output. The model also predicts that countries with institutional barriers that prevent or restrict the adoption of newly invented technologies will allocate a relative small share of human capital in the R&D sector. Moreover, both the baseline and the extended version of the model suggest that sustainable growth in human capital, not an increase in the stock of human capital, generates a growth effect.

International Journal of Economic Theory

Evidence suggests that race‐ and gender‐based discrimination are prevalent. If discrimination mis... more Evidence suggests that race‐ and gender‐based discrimination are prevalent. If discrimination misallocates resources then it is likely to generate social costs. This paper provides a general equilibrium model of the impacts of discrimination. We analyze effects of labor market discrimination in a model where agents make human capital decisions based on comparing the marginal benefits and marginal costs of additional human capital accumulation. Life expectancy is a consideration in making human capital decisions, and is allowed to be endogenous. We find that the impact of discrimination on equilibrium depends on the nature of any skills bias in discrimination.

Regional and Sectoral Economic Studies, 2004

A good deal of controversy surrounds the empirical regularity of convergence. If capital's share ... more A good deal of controversy surrounds the empirical regularity of convergence. If capital's share is taken to be 1/3, as in national accounts, then convergence should occur at a much faster rate than observed. Problems are worse if the economy is open. With perfect capital mobility convergence should occur at an infinite rate. Convergence estimates appear to be as slow for state economies as for national economies, even though the assumption of perfect capital mobility is a closer approximation of reality for these economies. Some argue that other variables, most prominently human capital, must be included in any cross sectional estimation of convergence. Supposedly, this addition of variables can bring the implied rate of convergence in line with empirical estimates by controlling for differences in the steady state level of per capita income. This paper extends the analysis of Islam (1995) to US states by estimating dynamic panel data models. This is a more appropriate method of allowing for different steady states. We find that the data suggests states converge very quickly, implying a high degree of capital mobility, if each state economy is allowed to have its own steady state captured through its own fixed effect. These results demonstrate the pitfalls of applying closed economy models to study growth in very open economies and the dangers of adding variables to the estimation which have, at best, only a weak relationship to differential steady states.

Oxford Economic Papers, 2015

In 1724, the anonymous essay A Modest Defence of Publick Stews (brothels) arrived in the bookshop... more In 1724, the anonymous essay A Modest Defence of Publick Stews (brothels) arrived in the bookshops of London. Now the essay is widely believed to be the work of Bernard Mandeville. In true heretical fashion, Mandeville detailed the social problems arising from the market in prostitution of his day. The genius of the work comes from the sophisticated tools, previously thought to be the product of the twentieth century, he utilized to analyse the market. These tools included the market failures of externalities and asymmetric information; government failures due to unintended consequences of public policies; and a proposal for regulating the market designed to alleviate these failings. Included in the proposal was a tax consistent with the principles of a first-best policy.

History of Political Economy, 2015

Ever since Adam Smith and David Hume launched an assault on specific mercantilist policies, most ... more Ever since Adam Smith and David Hume launched an assault on specific mercantilist policies, most economists have been of a similar opinion regarding the mercantilists: they were a loose group of writers who failed to grasp the proper workings of the economy, and/or they were simply a group of writers following their own narrow interests and argued for policies that furthered those interests at the expense of the general welfare. New work in the economic history of Europe from 1500 to 1800 suggests a reexamination of the role played by early mercantilist writers. The link between the Atlantic trade, mercantile interests, and institutional change favoring individual property rights outside of the monarch's inner circle suggests another broader interpretation of some prominent mercantilist writers as institutional reformers.

The American Journal of Economics and Sociology, Oct 1, 2004

Eastern Economic Journal, 1993

In a recent paper, Kemp and Shimomura extend the basic Heckscher-Ohlin model to show that no coun... more In a recent paper, Kemp and Shimomura extend the basic Heckscher-Ohlin model to show that no country has an incentive to hoard its technology. This basic result is not new. It was first shown by William Ellis in 1825. Ellis extended Ricardo's model to obtain the same free trade result. The history behind these similar theoretical developments is remarkably similar. These writers were responding to increased debates over the benefits of free trade when technologies are mobile between countries. The most widely accepted theoretical models of the time were extended so that policy discussions could be grounded in a strong theoretical base.

Most growth theorists agree that understanding the economics of innovation and technological chan... more Most growth theorists agree that understanding the economics of innovation and technological change is central to understanding why some countries are richer and/or grow faster than other countries. The driving force behind recent developments in endogenous innovation models of growth is a desire to eliminate population scale effects. In the semi endogenous growth model growth becomes proportional to the exogenous population growth rate but invariant to policy. This paper makes population growth endogenous by modeling fertility along the lines of Barro and Becker (Fertility Choice in a Model of Economic Growth, 1989) and models an array of government policies to demonstrate how some policies can impact levels and growth rates in a scale free endogenous growth model. In the model government policies are categorized according to whether they have level effects only, level and growth effects, or no impact on levels and/or growth.

History of Political Economy, 1988

One of the most interesting debates in modern economics centers around the question of whether in... more One of the most interesting debates in modern economics centers around the question of whether integrating economies necessarily converge in terms of per capita income and technology. This debate is often believed to have been started by Thorstein Veblen in 1915. However, this paper demonstrates that the genesis of the convergence question goes back to the Scottish Enlightenment and the publication of an essay by David Hume in 1742. The ensuing 'rich country-poor country' debate--between David Hume on the convergence side and Josiah Tucker on the nonconvergence side--represents one of the first major doctrinal debates in economics.

SSRN Electronic Journal, 2012

SSRN Electronic Journal, 2007

ABSTRACT How to teach technical material to undergraduate students with a limited mathematical ba... more ABSTRACT How to teach technical material to undergraduate students with a limited mathematical background is a recurring concern for many teachers in subjects such as economics. One method that has proven successful for the current authors is to connect theoretically sophisticated material with actual data. This enables students to see how the theory relates to the real world, allowing for a deeper understanding of both. This paper develops a simple and insightful empirical application of the Solow growth model that can be used in an undergraduate macroeconomics or growth course. The exercise uses a dataset on perceptions of corruption levels by country to look at the relationship between corruption and the level and rate of growth of output per worker across 70 countries. The results allow students to see for themselves the impact that corruption has on actual countries while also improving their understanding of the distinction between level effects and long run growth effects.

Review of World Economics, 2005

Empirical work on the Heckscher–Ohlin (H-O) theorem has been unable to reach consensus on its con... more Empirical work on the Heckscher–Ohlin (H-O) theorem has been unable to reach consensus on its consistency with the data. In this paper we test the chain version of the H-O theorem empirically for the first time by using data on capital and labor endowments and capital/labor intensities by sector combined with export/import data for the United States. According to our findings, predictions of the theory are not confirmed by the data. However, when gross investment is used as a proxy for productive capital stock and capital/labor ratios are replaced by investment/labor ratios, we find almost perfect concordance between net trade flows and endowments as predicted by theory.

Research Square - Research Square, Dec 1, 2022

We demonstrate a new result regarding reswitching within a classical growth framework. The questi... more We demonstrate a new result regarding reswitching within a classical growth framework. The question of reswitching comes down to a question of factor market substitutability. The assumption of full employment due to a wage adjustment mechanism eliminates a perverse switch point as a stable equilibrium outcome. Implications for future empirical work on reswitching and perverse switches are explored.

SSRN Electronic Journal, 1998

Two fundamental issues have been ignored in the convergence debate which are addressed in this pa... more Two fundamental issues have been ignored in the convergence debate which are addressed in this paper. First, there has been little attention paid to the development of a general model able to explain convergence a divergence. Second, in the rush to put data to a convergence hypothesis, researchers have failed to consider certain methodological procedures with respect to the treatment of capital. To remedy this problem we use an input-output approach to measure catch-up. To address the theoretical lacunae we present case studies of Portugal and Japan, two countries which by 1959 had attained the threshold level of development required to join the "convergence-club", but which, for various historical (path-dependent) reasons, have diverged rapidly from each other in the period since the late 1950's.

Journal of Economic Perspectives

The gravity equation is a current workhorse of empirical trade theory. It is generally acknowledg... more The gravity equation is a current workhorse of empirical trade theory. It is generally acknowledged that this theory, which relates the extent of trade between countries to their respective sizes, distances, and relative trade barriers, was first developed by Jan Tinbergen in 1962. Acceptance of the gravity model as part of the discipline's core was limited by its scant theoretical foundation for the first 40 years of its existence. This paper finds that a theory of trade gravity was first developed by Adam Smith in The Wealth of Nations. Moreover, it is shown that Smith's statement of a proportional relation between economic size and distance came about as an application of his general theory of differential capital productivity in different economic sectors, and his elaboration of a theory of the gains from trade originated by David Hume. It is further shown that Smith had an explanation of the size of border affects in trade volumes, and a gravity theory of trade restrict...

Two fundamental issues have been ignored in the convergence debate which are addressed in this pa... more Two fundamental issues have been ignored in the convergence debate which are addressed in this paper. First, there has been little attention paid to the development of a general model able to explain convergence a divergence. Second, in the rush to put data to a convergence hypothesis, researchers have failed to consider certain methodological procedures with respect to the treatment of capital. To remedy this problem we use an input-output approach to measure catch-up. To address the theoretical lacunae we present case studies of Portugal and Japan, two countries which by 1959 had attained the threshold level of development required to join the “convergence- club”, but which, for various historical (path-dependent) reasons, have diverged rapidly from each other in the period since the late 1950’s.

This paper addresses the question of why Pareto’s sociology has not attracted a major following w... more This paper addresses the question of why Pareto’s sociology has not attracted a major following within economics or sociology. We criticize Pareto’s sociology for the internal inconsistency of its conception of non-logical action, and address limitations in the applicability of his analysis of residues via the sex residue. We also argue that developments in the theory of economic policy by Sidgwick, Marshall, and Pigou created a more user friendly platform for addressing many of the questions that Pareto set out to understand in his sociology, leaving economists little incentive to follow Pareto’s path.

Journal of Economic Development

This article contributes to the growth literature by developing a formal growth model that provid... more This article contributes to the growth literature by developing a formal growth model that provides the basis for studying institutions and technological innovation and examining how human capital and institutional constraints affect the transitional and steady state growth rates of output. The model developed in this article shows that the reason that growth models à la Romer (1990) generate endogenous growth is the use of a set of restrictive and unrealistic assumptions regarding the role of institutions in the economy. The baseline model developed in this article shows that the long-run growth of the economy is intrinsically linked to institutions and suggests that an economy with institutions that retard or prevent the utilization of newly invented inputs will experience low levels and low growth rates of output. The model also predicts that countries with institutional barriers that prevent or restrict the adoption of newly invented technologies will allocate a relative small share of human capital in the R&D sector. Moreover, both the baseline and the extended version of the model suggest that sustainable growth in human capital, not an increase in the stock of human capital, generates a growth effect.

International Journal of Economic Theory

Evidence suggests that race‐ and gender‐based discrimination are prevalent. If discrimination mis... more Evidence suggests that race‐ and gender‐based discrimination are prevalent. If discrimination misallocates resources then it is likely to generate social costs. This paper provides a general equilibrium model of the impacts of discrimination. We analyze effects of labor market discrimination in a model where agents make human capital decisions based on comparing the marginal benefits and marginal costs of additional human capital accumulation. Life expectancy is a consideration in making human capital decisions, and is allowed to be endogenous. We find that the impact of discrimination on equilibrium depends on the nature of any skills bias in discrimination.

Regional and Sectoral Economic Studies, 2004

A good deal of controversy surrounds the empirical regularity of convergence. If capital's share ... more A good deal of controversy surrounds the empirical regularity of convergence. If capital's share is taken to be 1/3, as in national accounts, then convergence should occur at a much faster rate than observed. Problems are worse if the economy is open. With perfect capital mobility convergence should occur at an infinite rate. Convergence estimates appear to be as slow for state economies as for national economies, even though the assumption of perfect capital mobility is a closer approximation of reality for these economies. Some argue that other variables, most prominently human capital, must be included in any cross sectional estimation of convergence. Supposedly, this addition of variables can bring the implied rate of convergence in line with empirical estimates by controlling for differences in the steady state level of per capita income. This paper extends the analysis of Islam (1995) to US states by estimating dynamic panel data models. This is a more appropriate method of allowing for different steady states. We find that the data suggests states converge very quickly, implying a high degree of capital mobility, if each state economy is allowed to have its own steady state captured through its own fixed effect. These results demonstrate the pitfalls of applying closed economy models to study growth in very open economies and the dangers of adding variables to the estimation which have, at best, only a weak relationship to differential steady states.

Oxford Economic Papers, 2015

In 1724, the anonymous essay A Modest Defence of Publick Stews (brothels) arrived in the bookshop... more In 1724, the anonymous essay A Modest Defence of Publick Stews (brothels) arrived in the bookshops of London. Now the essay is widely believed to be the work of Bernard Mandeville. In true heretical fashion, Mandeville detailed the social problems arising from the market in prostitution of his day. The genius of the work comes from the sophisticated tools, previously thought to be the product of the twentieth century, he utilized to analyse the market. These tools included the market failures of externalities and asymmetric information; government failures due to unintended consequences of public policies; and a proposal for regulating the market designed to alleviate these failings. Included in the proposal was a tax consistent with the principles of a first-best policy.

History of Political Economy, 2015

Ever since Adam Smith and David Hume launched an assault on specific mercantilist policies, most ... more Ever since Adam Smith and David Hume launched an assault on specific mercantilist policies, most economists have been of a similar opinion regarding the mercantilists: they were a loose group of writers who failed to grasp the proper workings of the economy, and/or they were simply a group of writers following their own narrow interests and argued for policies that furthered those interests at the expense of the general welfare. New work in the economic history of Europe from 1500 to 1800 suggests a reexamination of the role played by early mercantilist writers. The link between the Atlantic trade, mercantile interests, and institutional change favoring individual property rights outside of the monarch's inner circle suggests another broader interpretation of some prominent mercantilist writers as institutional reformers.

The American Journal of Economics and Sociology, Oct 1, 2004

Eastern Economic Journal, 1993

In a recent paper, Kemp and Shimomura extend the basic Heckscher-Ohlin model to show that no coun... more In a recent paper, Kemp and Shimomura extend the basic Heckscher-Ohlin model to show that no country has an incentive to hoard its technology. This basic result is not new. It was first shown by William Ellis in 1825. Ellis extended Ricardo's model to obtain the same free trade result. The history behind these similar theoretical developments is remarkably similar. These writers were responding to increased debates over the benefits of free trade when technologies are mobile between countries. The most widely accepted theoretical models of the time were extended so that policy discussions could be grounded in a strong theoretical base.

Most growth theorists agree that understanding the economics of innovation and technological chan... more Most growth theorists agree that understanding the economics of innovation and technological change is central to understanding why some countries are richer and/or grow faster than other countries. The driving force behind recent developments in endogenous innovation models of growth is a desire to eliminate population scale effects. In the semi endogenous growth model growth becomes proportional to the exogenous population growth rate but invariant to policy. This paper makes population growth endogenous by modeling fertility along the lines of Barro and Becker (Fertility Choice in a Model of Economic Growth, 1989) and models an array of government policies to demonstrate how some policies can impact levels and growth rates in a scale free endogenous growth model. In the model government policies are categorized according to whether they have level effects only, level and growth effects, or no impact on levels and/or growth.