blackmarket(D4) Anunauthorizedmarketwithtransactions contrarytogovernmentalregulations. Marketsofthiskindareoftenfoundwhen therearepriceor EXCHANGECONTROLSor therestrictionoftradingtoalistof authorizeddealers.Soviet-typeeconomies werecharacterizedbythesemarkets. BlackMonday(G1) StockmarketcrashinNewYorkand Londonof19October1987.InLondon theFTSEindexdroppedby500points. Seealso:BradyCommission References Bose, M. (1988) The Crash, London: Mandarin Paperback. Black–Scholes option pricing model (D4, G1) A for mula for calculating the value of a call or put EUROPEAN OPTION. This form of pricing takes into account the stock price, exercise price, risk-free interest rate, time to expiry and the standard deviation of the stock return. References Black, F. and Scholes. M. (1972) ‘The Valuation of Option Pricing Contracts and a Test of Market Efficiency’, Jour- nal of Financial Economics 27: 339–418. —— (1973) ‘The pricing of options and corporate liabilities’, Journal of Political Economy 81: 637–57. Blairism (E6) The creed of the UK government led by Tony Blair from May 1997. It continued the public expenditure, education, privati- zation and trade union policies of the previous Conservative governments but also adopted a socialist ‘tax and spend’ policy with increased spending delayed until the NATIONAL DEBT was reduced. Other aspects of this doctrine are the excessive targeting of most government-funded ac- tivities, economic regulation and govern- ment centralization characteristic of previous socialist regimes. Also called New Labour and the Third Way. Seealso:Thatcherism Blaug, Mark, 1927– (B3) Leading historian of economic thought, education economist and biographer of the economics profession. Born in the Netherlands and educated at Columbia University. After working as a statistician at the US Department of Labor, he was assistant professor of economics at Yale University (1954–62) before becoming Professor of the Economics of Education at the University of London Institute of Education; since 1984 he has held chairs in England at Buckingham and Exeter and in theNetherlandsatRotterdam.Hehas written extensively on both human capital theory and labour forecasting and moved from an early interest in the Poor Laws and Ricardian economics to wide-ranging writing and editing of major works on the history of economic thought. Seealso:Ricardiantheoryofvalue References Blaug, M. (1958) Ricardian Economics: A Historical Study, New Haven, CT: Yale University Press. —— (1970) An Introduction to the Eco- nomics of Education, London: Allen Lane. —— (1997) Economic Theory in Retro- spect, 5th edn, Cambridge: Cambridge University Press. —— (1999) Who’s Who in Economics, 3nd edn, Brighton: Wheatsheaf. bliss point (D6) An optimal combination of PRIVATE and PUBLIC GOODS. This combination is derived from a SOCIAL WELFARE FUNCTION. In the figure W 1 , W 2 and W 3 are different social welfare functions, BB is a grand utility maximization frontier, P is the bliss point, U x and U y are ordinal preference func- tions and W = W(U x , U y ) is a social welfare function. At the bliss point P, social welfare is at a maximum because BB touches the highest welfare function contour. © 2002 Donald Rutherford References Bator,F.M.(1957)‘Thesimpleanalysisof welfaremaximization’,AmericanEco- nomicReview47:22–59. blocgrant(H7) TherevenuetransferredbytheUSfederal governmenttoastateorlocalgovernment sothatthelowerlevelgovernmenthas sufficientrevenuestoprovideaservice,e.g. education,atthestandarddesiredby centralgovernment. blockeddevelopment(O1) Economic DEVELOPMENTdeliberatelyim- pededbyothermoredevelopedcountries. Ithasbeenassertedthatdominantcoun- triesoftheworldhaveblockedthedevel- opmentofThirdWorldcountries,per- mittingthemonly ‘PERIPHERALCAPITALISM’. References Amin,S.(1976)UnequalDevelopment:An EssayontheSocialFormationsofPer- ipheralCapitalism,Hassocks:Harvester Press;NewYork:MonthlyReview Press. blockofshares(G1) Anyblockofmorethan10,000shares, accordingtotheNewYorkStockEx- changeRule390.Withfewexceptions,this rulerequiresthatlistedstocksmustbe tradedontheflooroftheexchange,even ifsoldin‘blocks’. blocktrade(G1)seeput-through BlueBook(C8,E6,J5) 1Theannuallypublishednationalincome andexpenditureaccountsoftheUK. 2Thedocumentsettingoutthetermsand conditionsofafirmagreedthrough COLLECTIVEBARGAININGorunilaterally imposedbyanemployer,e.g.theFord Agreement. bluechip(G1) Astockissuebyacompanyorcorpora- tionwithahighstandingbecauseofits earningsrecord.Suchsharesarechosenas abasisfortheFinancialTimes,DowJones andothershareindices.Thetermistaken fromthegameofpokerasthehighest valuechipsusedareblue. blue-collarworker(J2) USexpressionforapersonengagedin manualemployment;usuallycontrasted witha WHITE-COLLARworker.DE-INDUSTRIALI- ZATION andtheincreasingeducationofthe labourforcehasreducedthenumberof theseworkersand,also,labourunion membership. blueeconomy(P0) Theofficialeconomy,knowntoandre- cordedbygovernment.Thetermisderived intheUKfromtheterm BLUEBOOK,the annualsummaryofthenationalincome accounts. Seealso:blackeconomy;informalecon- omy;unofficialeconomy blue return (H2) A self-assessment business income tax system, recommended by the SHOUP MISSION to Japan of 1949, for collecting taxes from small and medium-sized firms. This system was intended to encourage smaller busi- nesses to maintain minimal accounting systems. blue-sky laws (G1, K2) US Securities Act 1933 and other US statutes which regulate and supervise the US securities industry so that financiers do not attempt to sell something which © 2002 Donald Rutherford theydonotpossess,e.g.partofthesky,to anotherperson,ortodeviseotherfraudu- lentinvestmentschemes. Seealso:bubble;SecuritiesandExchange Commission bogey(G1) Thereturntoorincomefromaninvest- mentwhichisusedasthebenchmarkto judgetheperformanceofafundmanager. Movementsinastockmarketindexare oftenusedasabogey. Bo ¨ hm–Bawerk,Eugenvon,1851–1914 (B3) Leadingeconomistofthe AUSTRIANSCHOOL anddiscipleofCarlMENGER.Hereadlaw atViennaUniversityandtheneconomics atHeidelberg,LeipzigandJenaUniversi- ties;hisstudentcontemporarywas WIESER. From1889to1893hewasacivilservant workingonincometaxandcurrencyre- form.Onthreeoccasions(1893,1896–7 and1900–4)hewastheMinisterof FinanceofAustria;in1902Universityof Viennaappointedhimtoachair.Inhis economicwritings,hebeganwithatheory ofvaluebasedon MARGINALUTILITYand thenproceededtoatheoryofinterestand capital.Hislengthyexpositionofthe ROUNDABOUTMETHODOFPRODUCTION,possible throughtheuseofcapital,iscentraltohis work.Productionmorecapitalisticinnat- urehasonaveragealongerperiodof production.Herefusedtorelatethepay- mentofinteresttoeitherproductivityor exploitation,assertingthatinterestispaid becausepresentgoodshaveahighersub- jectivevaluethanfuturegoods. References Bo ¨ hm-Bawerk,E.von(1959)Capitaland Interest,3vols,trans.G.D.Hunckeand H.F.Sennholz,SouthHolland,IL:Lib- ertarianPress. Kuenne,R.E.(1971)EugenvonBo ¨ hm- Bawerk,NewYorkandLondon:Co- lumbiaUniversityPress. Boisguilbert,PierreLePesantde, 1646–1714(B3) BornatSainte-CroixSaintOuendeRouen, studiedlawatParisandlaterbecamea lieutenantofpolice.Heiscreditedwith introducingtheprincipleof LAISSEZ-FAIRE. HismainworkwasDissertationdela naturedesrichesses,del’argentetdes tributes,ou ` l’onde ´ couvrelafausseide ´ equi re ´ gnedanslemondea ` l’e ´ garddecestrois articles(1707). bond(G1,M2) 1Apromiseundersealtopaymoney. 2Afixedinterestsecurityissuedbya government,corporationorcompany. Seealso:deepdiscountbond;govern- mentbond;junkbond;straightbond bond fund (G1) A fund established to receive the proceeds of a bond issue and to make subsequent disbursements. Such funds are often set up by local authorities. bonding cost (M2) The cost to an agent of putting up a BOND as a guarantee to meet losses. Bonding is common amongst travel agents and insur- ance underwriters. bond market (G1) A market which raises long-term capital for governments and firms through bonds bearing a fixed rate of interest, as well as arranging the trading of issued bonds. bond rating agency (G1) A financial markets specialist which rates the creditworthiness of the principal is- suers of bonds – governments, municipa- lities and corporations. Standard & Poor and Moody’s are the leading US agencies of this kind. Seealso:AAA;BB;BBB;D;DDD; Prime-1 bonus issue (G1) An issue to present shareholders of extra shares in proportion to existing holdings. If issued without charge, known as a SCRIP ISSUE . book value (M4) The value of an asset as recorded in the © 2002 Donald Rutherford booksoraccountsofafirmorother organization.Oftenthisvaluationismade atthetimethatassetsareoriginally purchasedwiththeconsequencethat changesinvaluecausedbyinflationare ignored. Seealso:inflationaccounting boom(E3) Apeakineconomicactivity,theupper turningpointinthebusinesscycle.Booms arecharacterizedbyhighoutput,low unemployment,speculativeinvestment andmanyshortstrikes. Seealso:recession boomandbust(E3) Thecharacteristicofacyclicaleconomy. DespitetheoverallstabilityoftheUK economy,forexample,inthelate1990s therewerefluctuationsinsomesectors, especiallyagricultureandmanufacturing. Seealso:cycles;stop–go boomernomics (G1) US investment practice of investing in equities related to the expenditure carried out by the people born in the late 1940s after the ending of the war with Japan brought men home to marry in the USA. bootblack economy (P0) A derogatory term for a national ECONOMY dominated by LABOUR-INTENSIVE service in- dustries. Bootblacking is manual and non- exportable, unlike the products of modern, technologically advanced and internation- ally oriented service industries, e.g. bank- ing and accounting. Seealso:services bootstrap (G1) A self-fulfilling expectation: for example, the belief that investment is pointless because the economy is slowing down with the consequence that the economy does go into recession. border trade (F1) Importing and exporting across a border which is often INTRA-INDUSTRY TRADE. If the border is long, the products exported over one part of a border will also be imported over another. This happens, for example, with building materials over the USA– Canada border. borrower’s curse (G0) Having excessive optimism about a project that is loan financed. borrower’s risk (G1) The hazard of not knowing whether the expected returns to a project will materi- alize. bottleneck (D2) A shortage in the supply of a FACTOR OF PRODUCTION which, if not remedied, can add to inflationary pressures; hence an economy with full employment suffers many bottlenecks. Also, lack of an appro- priate INFRASTRUCTURE has often been a major bottleneck impeding the develop- ment of less developed countries. bottom fisher (G1) An investor who buys stock market secu- rities whose prices have recently slumped in the belief the market has reached its lower turning point. Seealso:bull bottom-line accounting (M2) Accounting which is especially concerned with the net profit or earnings that appears at the bottom of a profit and loss account. bottom-up linkage model (R0) An interregional model of a national economy which aggregates the values of regional variables. The quality of these models in many countries is affected by shortages of regional data. References Ballard, K.P., Gustely, R.D. and Wend- ling, R. (1980) NRIES. Structure, Per- formance and Applications of a Bottom- up Interregional Econometric Model, Washington, DC: Bureau of Economic Analysis. © 2002 Donald Rutherford boughtdeal(G1) Thepurchaseofastockissueora portfolioofinvestmentsbyoneormore financialinstitutionsforresaleinwholeor part.Offloadingpartsofanacquired portfoliohasbecomeeasierasthereare nowsomanytypesoffinancialinstru- ment.Asthesedealscutdealingcosts, theyprovideapopularmethodfor INVEST- MENTTRUSTS toacquiresecurities. Boulding,KennethEwart,1910–92(B3) ApolymatheconomistbornintheUK whomadediversecontributionstomany areasofUSeconomics.Hewaseducated atOxford,ChicagoandHarvardUniver- sities.Hiscareer,whichbeganasan assistantlectureratEdinburghUniversity, wasspentchieflyatMichiganfrom1949 to1977andsubsequentlyatColorado.His writingbeganwithanarticleintheEco- nomicJournalin1932ondisplacement costandresultedintheproductionofover 300articlesandtwelvebooks.Hismajor textbook,EconomicAnalysis,blendedto- gether KEYNESIANISMandNEOCLASSICALECO- NOMICS .In1950,inAReconstructionof Economics,heurgedatheoreticalswitch fromflowstostocks,fromincomesto assets,andfromthepricesoflabourand capitaltotheirnationalincomeshares.His closeexaminationofequilibriumlinked priceandecologicalequilibria.Hisstudy ofsocialorganizationcontrastedtheex- changesystemanditsthreatsystemofwar withtheintegrativesystemofagrants economy. Seealso:grantseconomics References Boulding,K.E.(1945)EconomicsofPeace, NewYork:PrenticeHall. ——(1950)AReconstructionofEconom- ics,NewYork:Wiley. ——(1966)EconomicAnalysis,4thedn, NewYork:Wiley. ——(1978)Ecodynamics,BeverlyHills, CA,andLondon:Sage. ——(1981)APrefacetoGrantEconomics: TheEconomyofLoveandFear,New York:Praeger. Kernan,C.E.(1974)CreativeTension:The LifeandThoughtofKennethBoulding, NewYork:BasicBooks. Boulwareism(J5) Asubstituteforcollective BARGAINING, namedafterLemuelBoulware,theVice- PresidentforIndustrialRelationsatGen- eralElectric.Itconsistedofacompany makingaunilateralofferbasedonre- searchintoaunion’sdemands.Itwasheld bytheUSSupremeCourtin1969that thiswasnotUScollectivebargaining in‘goodfaith’asintendedbythe TAFT– HARTLEYACT . boundaryconstraint(C1) Thelimittothevalueofavariable,e.g. zeroorpositive. Seealso:Tobitmodel boundedrationality(D0) Atheoryofdecisionmakingtakinginto accountthecapacitiesofthehumanmind, whichhasbecomeacentralthemeof BE- HAVIOURALECONOMICS .Itassertsthatthe rationalchoiceofadecision-makeris subjecttocognitivelimitsbecausehuman beingslackknowledgeandhaveonlya limitedabilitytoforecastthefuture. Seealso:cognitivedissonance;economics andpsychology;Simon References Cyert, R.M. and March, J.G. (1975) A Behavioral Theory of the Firm, 2nd edn, Englewood Cliffs, NJ: Prentice Hall. Simon, H.A. (1982) Models of Bounded Rationality, 2 vols, Cambridge, MA: MIT Press. bourgeoisie (D6, N3) The capitalist middle class created by the Industrial Revolution at the beginning of the nineteenth century and regarded as exploitative by MARX. The bourgeoisie was accused of wrongly appropriating surplus value from the product of the PROLETARIAT. bourse (G1) Stock market of a European country. The term is derived from the Bruges commod- © 2002 Donald Rutherford ityexchangefoundedin1360infrontof thehomeofChevaliervandeBuerse. Box–Jenkins(C1) Amethodologicalapproachtothestudy of TIMESERIESwhichhasimprovedshort- termeconomicforecastingbyfollowing themethodofidentificationofeconomic relationshipsandthenestimationofthem anddiagnosticchecking. References Box,G.E.P.andJenkins,G.M.(1970) TimeSeriesAnalysis:Forecastingand Control,SanFrancisco:Holden-Day. boycott(J5) 1Stoppingtradebyrefusingtodealwith aparticularcountryorsupplier.This formofprotest,firstusedagainstIre- land’slandlordsinthenineteenthcen- tury,wasemployedagainstSouth Africawhenapartheidwasinforce, andinmanytradedisputes. 2Anactionbya TRADE(LABOR)UNION whichpreventsafirmfromdistributing itsgoodsinanattempttoforceitto concedetheunion’sdemands.However, industrialrelationslegislationand ANTI- TRUST lawintheUSAhaveincreasingly madethisillegal. Seealso:economicsanctions bracketcreep(H2) Themovementofincometaxpayersinto highertaxbracketsastheinevitablecon- sequenceofthegrowthofmoneyincomes withtheincomebandsforeachrateof incometaxremainingthesame.There- sultsofthisarehighermarginaland averagetaxrates.The TAXREFORMACT1986 (USA)attemptedtoeliminatethiscreep byindexingtaxbracketsandreducingthe numberoftaxbrackets. Seealso:indexation; Rooker–WiseAmendment Bradbury(E5) UKTreasurynoteof£1or10shillings issuedin1914to1928afterthewithdrawal ofgoldcoins.Thesewerenamedafter JohnBradbury,PermanentSecretaryto theTreasury,andwerealsoknownas TreasurynotesorUKcurrencynotes. TheBankofEngland’sdislikeofsmall denominationnotesnecessitatedissueby theTreasury.ThesmallestBankofEng- landnoteuntil1928wasa£5note;inthat year,£1and10shillingnoteswerein- cludedintheBankofEnglandissue. Seealso:banknote BradyCommission(G1,K2) USpresidentialcommissionwhichre- portedin1988ontheWallStreetstock marketcrashofOctober1987.Itsprinci- palrecommendationswerethatoneinsti- tution,preferablythe FEDERALRESERVE SYSTEM ,shouldhavethetaskofco-ordinat- ingfinancialregulation;thatclearingsys- temsshouldbeunifiedasameansof reducingfinancialrisk;thatthereshould bebetterinformation,includingthetrade, timeoftradeandultimatecustomerin eachmajormarket;thatthereshouldbea harmonizationofrulesonmargins;and that‘circuitbreakers’shouldbeco-ordi- natedacrossmarkets. Seealso:circuitbreakermechanism brain drain (F2) International migration of highly qualified persons, especially surgeons, physicians, scientists, information technology specia- lists and engineers, from low-income coun- tries to more prosperous economies, especially the USA. Differences in salaries and research facilities, as well as an over- supply of specialized graduates in less developed countries, have occasioned this, resulting in an increase in the HUMAN CAPI- TAL stock of advanced countries. Some countries have proposed the repayment of state financed education as a deterrent to emigration. Seealso:immigration;migration branch banking (G2) A system of banking which permits a banking institution to operate at many locations. This eighteenth-century Scottish © 2002 Donald Rutherford inventionwasslowtobecopiedbyother countries:theUSAonlybegantoadoptit in1933.Branchbankingreducestherisk arisingfromanovercommitmenttothe financialneedstoasinglearea.MajorUK clearingbanksexpandedinthepast throughestablishinglargebranchnet- works.IntheUSAinthelatetwentieth century,branchessprangupinresponseto theliberalizationofstatebankinglaws,the growthofsuburbs,themovementofin- dustrytoperipherallocationsandthe difficultyofreachingbankssituatedin congestedcitycentres.TheInterstate BankingandBranchEfficiencyAct1994 permittedbranchbankingacrossUSstate boundaries. brancheconomy(F4,P0) Anationalorregionaleconomysubstan- tiallycontrolledelsewherebecausemanyof itsbusinessesareforeign-ownedsubsidi- aries.TheScottisheconomyhasacquireda branchstatusthroughtheuseofregional policieswhichencourageinwardinvest- ment;inmanylessdevelopedcountries MULTINATIONALCORPORATIONShavesubstan- tiallytransferredeconomicpowerabroad. branding(L1,M3) PRODUCTDIFFERENTIATIONthatestablishes individualityforaparticularproduct.A producerhopestherebytogainameasure of MONOPOLYPOWERthroughreducingthe amountofsubstitutionbetweenitspro- ductsandthoseofitscompetitors. Seealso:monopolisticcompetition brandloyalty (D1,M3) Aconsumer’s continuedpurchasingofthe samedifferentiatedgoodforaconsider- ableperiodoftime.Asfirmsbenefitfrom astableregulardemand,theywillmakeit anobjective oftheiradvertisingtoachieve thisgoal.Brandloyaltylowers the ELASTI- CITYOFDEMAND fora goodandgivesfirms ameasureof MONOPOLYPOWER. brandstretching(M3) Applyingthenameofanestablished brandtootherproducts.Thisisexten- sively practised by tobacco companies. Brandt Commission (F3, O0) The Independent Commission on Interna- tional Development chaired first by Willy Brandt, previous Chancellor of West Ger- many, and then by Julius Nyerere, ex- President of Tanzania. Its first report, North-South: a Programme for Survival (1980), failed to produce any action; its second report, Common Crisis: North- South Cooperation for World Recovery (1983), responded to the THIRD WORLD debt problem by recommending the AMORTIZA- TION of old debts. breakeven analysis (C1, D4) A graphical representation of the relation- ship between total costs and total revenue with breakeven taking place where total cost is equal to total revenue (i.e. average cost is equal to average revenue). breakeven level of income (M2) The level of income at which all income is consumed and no debts are incurred. breakeven pricing (C1, D4) A firm’s policy of setting prices equal to average total costs with the consequence © 2002 Donald Rutherford Seealso:monopolisticcompetition that neither SUPERNORMAL PROFITS nor losses are made. This was the original pricing policy laid down for UK NATIONALIZED IN- DUSTRIES . breakthrough (O3) A major technological change consisting of a new method of production, a new product or a new market. Seealso:innovation Bretton Woods Agreement (F3) An agreement signed in Bretton Woods, New Hampshire, USA, in 1944 that cre- ated the INTERNATIONAL MONETARY FUND.It set rules for exchange rate behaviour and created a pool of COMMON CURRENCIES, thereby making the IMF the world’s ‘len- der of last resort’. This agreement was a compromise between KEYNES’s proposals for an INTERNATIONAL CLEARING UNION and Harry White’s plan for an International Stabilization Fund. Par values for ex- change rates were fixed in terms of gold. A country had to intervene if its exchange rate was 1 per cent above or below par. An adjustment of more than 10 per cent was permitted if the IMF thought there was a fundamental disequilibrium (a condition vaguely defined) in a country’s BALANCE OF PAYMENTS . Temporary borrowings from the IMF were possible to support a currency. This GOLD EXCHANGE STANDARD of Bretton Woods was abandoned on 15 August 1971. Critics of Bretton Woods noted that the agreement did not provide a mechanism for changing inappropriate national ex- change rate policies, that it failed to make national monetary and exchange rate po- licies compatible, and that it discouraged frequent changes in exchange rate parities. In practice, it was a DOLLAR STANDARD as most countries fixed their currencies against the US dollar. Its demise was hastened by the problems created by the Vietnam War for the US economy. References Dormael, A. van (1978) Bretton Woods: Birth of a Monetary System, London: Macmillan. bridefare (I3) A welfare programme in Wisconsin, USA, enacted in 1994 that increased welfare benefits to teenage mothers who got mar- ried. Originally this amounted to $91 extra for a single mother with one child on top of benefit of $440 per month. bridge financing (G2) see bridging bridging (G2) Short-term lending needed by a borrower prior to the receipt of permanent finance. This financing is a popular way of effect- ing a major purchase such as a house, or of adjusting an investment portfolio. It is often necessary as purchases are financed by the delayed proceeds from the sale of another asset. Bridlington rules (J5) TRADE UNION recruitment rules agreed by the UK Trades Union Congress in 1939 at its Bridlington Conference to prevent trade unions competing with each other for potential members in the same occupa- tional group. Britannia (E5) UK gold coin issued since 1987 in denomi- nations of £10, £25, £50 and £100. British depository receipt (G1) A means of purchasing US Treasury BONDS in New York and settling in London which was introduced in 1984. Seealso:Americandepositoryreceipt broad money (E4) M2 or M3. brokered deposit (G1, G2) A deposit obtained by stockbrokers for a bank in order to increase its liquidity. As such deposits seek the highest yield, they are highly volatile and consequently un- reliable as liquid assets. broker loan rate (G1) US money market rate, usually 1–1½ per cent below the US prime rate, charged on the debit balances of margin traders; often © 2002 Donald Rutherford regardedasanindicatoroffuturechanges inthe PRIMERATEOFINTEREST. BrookingsInstitution(E6) Anindependentcentrefoundedin1927in Washington,DC,forresearchintoeco- nomics,government,foreignpolicyand othersocialsciences.Itisfamousforits forecastingmodeloftheUSeconomyand foritsinfluentialstudiesofmajorecono- mies,includingthoseofJapanandthe UK.Taxation,internationaleconomics, growthandstabilizationhavebeenmajor researchconcerns. References Fromm,G.andKlein,I.R.(1975)The BrookingsModel:PerspectivesandRe- centDevelopments,Amsterdam:North- Holland. brownfield(Q3) Landpreviouslyusedforindustrialpur- poseswhichrequiresreclamationbefore newbuildingcanbeundertaken. Seealso:blackfieldsite;greenfield brown good (D2, L6) A consumer durable used for leisure pur- poses, e.g. a television set or a compact disc player. Brundtland Report (Q0) The 1987 report of the World Commission on Environment and Development which recommended that THIRD WORLD develop- ment projects should take into account environmental issues such as the destruc- tion of forests and excessive farming which ruins agricultural land for a long time. References World Commission on Environment and Development (1987) Our Common Future, Oxford: Oxford University Press. B share (G1) 1 Chinese stock market share denomi- nated in Chinese currency but payable in foreign currency and designated for foreign investors. 2 An ordinary share of a UK company with voting rights. Seealso:Ashare bubble (D4, G1) 1 An unsustainable rise in an asset price. 2 A speculative venture. Famous bubbles include the Dutch tulip mania of 1625– 37 and the South Sea Bubble in Eng- land of 1720. Unless there are an infinite number of traders, a bubble is irrational in nature. References Blanchard, O. I. and Watson, M.W. (1982) ‘Bubbles, rational expectations and fi- nancial markets’, in P. Wachtel (ed.) Crises in the Economic and Financial Structure, Lexington, MA: Lexington Books. Carswell, J. (1960) The South Sea Bubble, London: Cresset Press. Kindleberger, C. (1978) Manias, Panics and Crashes, New York: Basic Books; London: Macmillan. bubble economy (P1) 1 An economy engaged mainly in market- ing currencies and securities rather than in material production. 2 An unstable economy likely to be de- flated after a burst of growth. The precarious nature of the NEW ECONOMY with different technologies is a modern example. bubble policy (Q2) A policy which allows an emitter of pollutants to discharge more at one source if there is an equivalent reduction at other sources. An example would be a firm with two plants A and B being permitted to increase its emissions at A if it reduces them at B. Buchanan, James McGill, 1919– (B3) US economist, educated at the Universi- ties of Tennessee and Chicago and pro- fessor of economics from 1956 at various universities in Virginia; appointed Uni- versity Distinguished Professor and Gen- eral Director of the Center for the Study of Public Choice, Virginia Polytechnic Institute, in 1969. He is famous for founding PUBLIC CHOICE THEORY: this unites © 2002 Donald Rutherford the theories of market exchange and of the functioning of political markets. Inspired by a year in Italy (1955), where he read nineteenth-century European classics of PUBLIC FINANCE, he developed the concept of a democratic government receiving taxes from consenting citizens in return for governmental services by establishing constitutional rules to maintain majority consensus. His wide-ranging critique of public sector economics relies on the no- tion that costs are basically subjective; also he departs from the doctrine of the MAR- GINAL COST PRICING of public utilities. His analysis of choice is extended to cover the behaviour of politicians, legislators and bureaucrats. Although a leader of the school of public choice economics, he recognized the early contribution of WICKSELL who discussed the distribution of the costs of proposed public expenditure. As Frank KNIGHT and Henry SIMONS were his mentors when he was a postgraduate student at Chicago, it is not surprising that his work has been loyal to the principles of capital- ism and individualism. In 1986, he was awarded the NOBEL PRIZE FOR ECONOMICS for his work on public choice theory. References Buchanan, J.M. (1966) Public Finance in a Democratic Process: Fiscal Institutions and Individual Choice, Chapel Hill, NC: University of North Carolina. —— (1972) Theory of Public Choice: Political Applications of Economics, Ann Arbor, MI: University of Michigan Press. Buchanan, J.M. and Tullock, G. (1962) The Calculus of Consent, Ann Arbor, MI: University of Michigan Press. Reisman, D. (1990) The Political Economy of James Buchanan, Basingstoke: Mac- millan. bucket shop (L2, L8) An agency selling goods, services or securities at a discount. The main exam- ples of these are vendors of unsold newly issued shares, and travel agents selling low-priced air tickets of airlines operating their scheduled flights with many unoccu- pied seats. Buddhist economics (O4) An approach to ECONOMIC GROWTH which takes into account spiritual development and does not squander NATURAL RESOURCES so that all have a ‘right livelihood’. References Buiter, W. (1989) Principles of Budgetary and Financial Policy, Hemel Hempstead: Harvester Wheatsheaf. Schumacher, E.F. (1973) Small is Beauti- ful: a Study of Economics as if People Mattered, ch. 4, London: Blond & Briggs. budgetary policy (H2) The principles underlying the revenue and expenditure accounts of a govern- mental or other organization. The ac- counts used in a budget will reflect the responsibilities of that organization and its relationships with others, e.g. a state budget will show its financial relation- ship with the federal government of that country. In those accounts will be stated the sources of revenue and objects of expenditure, a reflection of the taxing and other fund raising carried out and the spending programmes chosen by that government or firm. It is usual to divide budgets into current and capital budgets. An overall budgetary policy can be summarized by whether it is balanced, in surplus or in deficit. Until Keynesian policy ideas influenced governments, gov- ernment budget deficits were regarded as a sign of financial recklessness; now budget deficits are regarded as a fiscal policy option available to most govern- ments. Seealso:fiscalpolicy © 2002 Donald Rutherford [...]... mobility (F2) The flow of financial capital between one employment and another It was assumed by RICARDO and other practitioners of CLASSICAL ECONOMICS that capital would flow between places and industries until rates of profit were equalized See also: mobility of national corporation © 20 02 Donald Rutherford labour; multi- capital–output ratio (D2) The amount of capital divided by the amount of output... became a professor of economics at Stockholm University in 19 02 He was a founder of modern Swedish economics, especially noted for Theory of Social Economy (originally published in 1918) and monetary writings He rejected both labour and MARGINAL UTILITY theories of value in favour of a price theory which he also applied to his study of the RATE OF INTEREST He relied on the QUANTITY THEORY OF MONEY in... inputted economic variables This type of effect makes it difficult for policy-makers to be sure of the effects of their decisions Foreign exchange markets often display butterfly effects See also: chaos theory C C (E2, G2) 1 Total consumer expenditure of a national economy This is shown as a function of national income in the CONSUMPTION FUNCTION 2 The lowest quality of security, according to Standard... ratio (G2) The ratio of a bank’s holdings of cash to its total deposits, sometimes used as a measure of control over the banking system to guarantee its liquidity In the second half of the twentieth century, LIQUID ASSET ratios came to be the preferred method of controlling the total volume of bank deposits cash dispenser (G2) A machine provided by a bank or other deposit-taking institution, often at... Cadbury code of corporate governance (G3) The recommendations of the Committee on the Financial Aspects of Corporate Governance chaired by Sir Adrian Cad- © 20 02 Donald Rutherford bury The final report, issued in December 19 92, recommended at least three nonexecutive directors on boards of directors, checks on the power of any individual with ‘unfettered powers of decision’ and an audit committee of non-executives... Rutherford a comment’, Review of Economic Studies 21 : 1 12 35 chain migration (F2, J1) A sequential process of migration with one phase of migration linked to subsequent phases of migration A major example is when the first cohort of migrants induces subsequent flows of migrants consisting of their relatives and friends who have been persuaded to move because of the information sent back by the ‘pioneers’... major achievement, in Distribution of Wealth (1899), was to expand MARGINALISM into the concept of marginal productivity in order to tackle problems of production and distribution In Philosophy of Wealth (1885) he used CLASSICAL ECONOMICS as the foundation of his own economic theory; in Capital and its Earnings (1888) he became © 20 02 Donald Rutherford one of the founders of modern capital theory References... large proportion of a country’s total tax revenue but are imposed for the distributional reason of increasing the relative tax burden of the rich In practice, governments often reduce the effective rate of capital taxes by a variety of allowances, e.g to allow for depreciation, life insurance and pensions See also: wealth tax capital theory (D2, E2) A theory which links the theories of production, growth,... from 1 927 to 1958 Principally renowned for his BUSINESS CYCLE research at the NATIONAL BUREAU OF ECONOMIC RESEARCH, Washington, DC, in 1930–44 and chairman of the Board of Governors of © 20 02 Donald Rutherford the US FEDERAL RESERVE SYSTEM from 1970 to 1978, where he practised his conservative monetary beliefs As US Ambassador to West Germany in 1981–5 he negotiated the German Treaty of 19 82 to obtain... the insertion of a card to account-holders of that bank or a bank in association with it Usage of dispensers varies from country to country In the UK and France they are particularly popular: by 1985, there were © 20 02 Donald Rutherford 6,886 in the UK and 7,1 72 in France but only 2, 000 in West Germany See also: automated teller machine; debit card; smart card cash economy (G2, P0) Part of a national . Department of Labor, he was assistant professor of economics at Yale University (1954– 62) before becoming Professor of the Economics of Education at the University of London Institute of Education;. NC: University of North Carolina. —— (19 72) Theory of Public Choice: Political Applications of Economics, Ann Arbor, MI: University of Michigan Press. Buchanan, J.M. and Tullock, G. (19 62) The Calculus of. 20 02 Donald Rutherford C C (E2, G2) 1 Total consumer expenditure of a na- tional economy. This is shown as a function of national income in the CON- SUMPTION FUNCTION . 2 The lowest quality of