Showing papers in "Research Papers in Economics in 1992"
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TL;DR: In this article, the authors developed an estimation algorithm that takes into account the relationship between productivity on the one hand, and both input demand and survival on the other, guided by a dynamic equilibrium model that generates the exit and input demand equations needed to correct for the simultaneity and selection problems.
Abstract: Technological change and deregulation have caused a major restructuring of the telecommunications equipment industry over the last two decades. We estimate the parameters of a production function for the equipment industry and then use those estimates to analyze the evolution of plant-level productivity over this period. The restructuring involved significant entry and exit and large changes in the sizes of incumbents. Since firms choices on whether to liquidate and the on the quantities of inputs demanded should they continue depend on their productivity, we develop an estimation algorithm that takes into account the relationship between productivity on the one hand, and both input demand and survival on the other. The algorithm is guided by a dynamic equilibrium model that generates the exit and input demand equations needed to correct for the simultaneity and selection problems. A fully parametric estimation algorithm based on these decision rules would be both computationally burdensome and require a host of auxiliary assumptions. So we develop a semiparametric technique which is both consistent with a quite general version of the theoretical framework and easy to use. The algorithm produces markedly different estimates of both production function parameters and of productivity movements than traditional estimation procedures. We find an increase in the rate of industry productivity growth after deregulation. This in spite of the fact that there was no increase in the average of the plants' rates of productivity growth, and there was actually a fall in our index of the efficiency of the allocation of variable factors conditional on the existing distribution of fixed factors. Deregulation was, however, followed by a reallocation of capital towards more productive establishments (by a down sizing, often shutdown, of unproductive plants and by a disproportionate growth of productive establishments) which more than offset the other factors' negative impacts on aggregate productivity.
4,380 citations
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TL;DR: In this paper, the authors investigated conditions sufficient for identification of average treatment effects using instrumental variables and showed that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect.
Abstract: We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.
3,154 citations
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TL;DR: Amsden as mentioned in this paper showed that South Korea is one of a series of countries (ranging from Taiwan, India, Brazil, and Turkey, to Mexico, and including Japan) to have succeeded through borrowing foreign technology rather than by generating new products or processes.
Abstract: While much attention has been focused on Japan's meteoric rise as an economic power, South Korea has been quietly emerging as the next industrial giant to penetrate the world market. South Korea is one of a series of countries (ranging from Taiwan, India, Brazil, and Turkey, to Mexico, and including Japan) to have succeeded through borrowing foreign technology rather than by generating new products or processes. Describing such countries as `late-industrializers,' Amsden demonstrates why South Korea has become the most successful of this group. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/0195076036/toc.html
3,145 citations
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TL;DR: The International Socio-economic Index of Occupational status (ISEI) as discussed by the authors is derived from the International Standard Classification of Occupations (ISCO) using comparably coded data on education, occupation, and income for 73,901 full-time employed men from 16 countries.
Abstract: Abstract In this paper we present an International Socio-Economic Index of occupational status (ISEI), derived from the International Standard Classification of Occupations (ISCO), using comparably coded data on education, occupation, and income for 73,901 full-time employed men from 16 countries. We use an optimal scaling procedure, assigning scores to each of 271 distinct occupation categories in such a way as to maximize the role of occupation as an intervening variable between education and income (in contrast to taking prestige as the criterion for weighting education and income, as in the Duncan scale). We compare the resulting scale to two existing internationally standardized measures of occupational status, Treiman's international prestige scale (SIOPS) and Goldthorpe's class categories (EGP), and also with several locally developed SEI scales. The performance of the new ISEI scale compares favorably with these alternatives, both for the data sets used to construct the scale and for five additional data sets.
2,199 citations
Journal Article•
TL;DR: A nation is democratic to the extent that its citizens are involved, particularly at the community level, and the confidence and competence to be involved must be gradually acquired through practice.
Abstract: A nation is democratic to the extent that its citizens are involved, particularly at the community level. The confidence and competence to be involved must be gradually acquired through practice. It is for this reason that there should be gradually increasing opportunities for children to participate in any aspiring democracy, and particularly in those nations already convinced that they are democratic. With the growth of children’s rights we are beginning to see an increasing recognition of children’s abilities to speak for themselves. Regrettably, while children’s and youths’ participation does occur in different degrees around the world, it is often exploitative or frivolous. This Essay is written for people who know that young people have something to say but who would like to reflect further on the process. It is also written for those people who have it in their power to assist children in having a voice, but who, unwittingly or not, trivialize their involvement.
1,597 citations
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TL;DR: This paper analyzed changes in employment in specific manufacturing industries in cities between 1970 and 1987 and found that the major source of that persistence appears to be persistence in local demand conditions (i.e., persistence in regional comparative advantage), as opposed to other measured or unmeasured urban characteristics.
Abstract: Using extensive data on 1970 and 1987 urban characteristics, the paper analyzes changes in employment in specific manufacturing industries in cities between 1970 and 1987. Two sets of questions are the focus. First, what present or past characteristics of a city's economic environment are critical in determining current employment levels in different industries? How much persistence in employment patterns is there over time and what is the source of that persistence? The second set of questions explores what inferences can be made from the data and results concerning the nature of externalities in urban markets, involving diversity of suppliers to firms, information spillovers concerning current market conditions and information spillovers involving the spread of technology. While the literature assumes employment levels in individual industries in individual cities show strong mean reversion ("convergence"), in fact that is not the case in the 1970-87 time period. The raw data show strong persistence. The major source of that persistence appears to be persistence in local demand conditions (i.e., persistence in regional comparative advantage), as opposed to other measured or unmeasured urban characteristics. Retention of employment is also strongly helped by the historical degree of local specialization in the industry, perhaps indicating a form of dynamic externality. Other historical conditions are not important.
1,486 citations
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TL;DR: Applied Nonparametric Regression is the first book to bring together in one place the techniques for regression curve smoothing involving more than one variable and argues that all smoothing methods are based on a local averaging mechanism and can be seen as essentially equivalent to kernel smoothing.
Abstract: Applied Nonparametric Regression is the first book to bring together in one place the techniques for regression curve smoothing involving more than one variable. The computer and the development of interactive graphics programs have made curve estimation possible. This volume focuses on the applications and practical problems of two central aspects of curve smoothing: the choice of smoothing parameters and the construction of confidence bounds. HA¤rdle argues that all smoothing methods are based on a local averaging mechanism and can be seen as essentially equivalent to kernel smoothing. To simplify the exposition, kernel smoothers are introduced and discussed in great detail. Building on this exposition, various other smoothing methods (among them splines and orthogonal polynomials) are presented and their merits discussed. All the methods presented can be understood on an intuitive level; however, exercises and supplemental materials are provided for those readers desiring a deeper understanding of the techniques. The methods covered in this text have numerous applications in many areas using statistical analysis. Examples are drawn from economics as well as from other disciplines including medicine and engineering.
1,421 citations
TL;DR: The authors developed a dynamic continuous-time model in which international risk sharing can yield substantial welfare gains through its positive effect on expected consumption growth and showed that steady-state welfare gains from global financial integration that for some regions amount to several times initial wealth.
Abstract: This paper develops a dynamic continuous-time model in which international risk sharing can yield substantial welfare gains through its positive effect on expected consumption growth. The mechanism linking global diversification to growth is an attendant world portfolio shift from safe, but low-yield, capital into riskier, high-yield capital. The presence of these two types of capital is meant to capture the idea that growth depends on the availability of an ever-increasing array of specialized, hence inherently risky, production inputs. A partial calibration exercise based on Penn World Table consumption data implies steady-state welfare gains from global financial integration that for some regions amount to several times initial wealth.
1,269 citations
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TL;DR: The authors explored the relationship between economic growth and environmental quality by analyzing patterns of environmental transformation for countries at different income levels and found that income has the most consistently significant effect on all indicators of environmental quality.
Abstract: The authors explore the relationship between economic growth and environmental quality by analyzing patterns of environmental transformation for countries at different income levels. They look at how eight indicators of environmental quality evolve in response to economic growth and policies across a large number of countries and across time. Several conclusions are drawn; (1) income has the most consistently significant effect on all indicators of environmental quality; (2) many indicators tend to improve as countries approach middle-income levels; (3) technology seems to work in favor of improved environmental quality; (4) the econometric evidence suggests that trade, debt, and other macroeconomic policy variables seem to have little effect on the environment, although some policies can be linked to specific environmental problems; (5) the evidence shows that it is possible to"grow out of"some environmental problems, but there is nothing automatic about doing so - policies and investments to reduce degradation are necessary; and (6) action tends to be taken where there are generalized local costs and substantial private and social benefits.
1,104 citations
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Abstract: The aim of this book is to make more widely available a body of recent research activity that has become known as applied general equilibrium analysis. The central idea underlying this work is to convert the Walrasian general equilibrium structure (formalized in the 1950s by Kenneth Arrow, Gerard Debreu and others) from an abstract representation of an economy into realistic models of actual economies. Numerical, empirically based general equilibrium models can then be used to evaluate concrete policy options by specifying production and demand parameters and incorporating data reflective of real economies. Shoven and Whalley describe all aspects of developing applied general equilibrium models, including developing an appropriate equilibrium structure, calibrating the model, compiling counterfactual equilibria, and interpreting results. The authors contend that the Walrasian general equilibrium model provides an ideal framework for appraising the effects of policy changes on resource allocation, assessing who gains and who loses, and the policy impacts not well covered by empirical macro models. The applications in the book illustrate a number of ways in which fresh insights are provided in longstanding policy controversies.
1,008 citations
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TL;DR: In this paper, the authors investigated the consequences of varying specifications and estimations and in particular that of using different measures of R&D (knowledge) capital and of double counting corrections and concluded that the direct production function approach is preferred on several grounds over the rate of returns variation which has been used in the past.
Abstract: This paper uses a newly available dataset on the R&D performance of individual French manufacturing firms for the 1980s to replicate and update a series of studies on French R&D and productivity growth at the firm level during the 1970s The focus of the paper is on the use of a single dataset to evaluate the robustness of the methods commonly used to measure the private returns to R&D We investigate the consequences of varying specifications and estimations and in particular that of using different measures of R&D (knowledge) capital and of double counting corrections Our main findings are the following: first having a longer history of R&D expenditures helps in predicting the productivity growth of firms, but the choice of depreciation rate for R&D capital makes little difference to the results Second, the correction for double counting of R&D expenditures in capital and labor is important and converts a measured "excess" rate of returns to a total rate of return to R&D Third we show that the direct production function approach to measuring the returns to R&D capital is preferred on several grounds over the rate of returns variation which has been used in the past Finally, the productivity, of knowledge capital in the production function is uniformly positive, fairly robust, and correlated with permanent firm or industry effects
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TL;DR: In this article, the authors examined the debate between the North and the South about the enforcement of intellectual property rights in the South within a dynamic general equilibrium framework in which the North innovates new products and the south imitates them.
Abstract: The debate between the North and the South about the enforcement of intellectual property rights in the South is examined within a dynamic general equilibrium framework in which the North innovates new products and the South imitates them. A welfare evaluation of a policy of tighter intellectual property rights is provided by decomposing a region's welfare change into four components: terms of trade, production composition, available product choice and intertemporal allocation of consumption spending. The paper provides a theoretical evaluation of each one of these components and their relative size. The analysis proceeds in stages. It begins with an exogenous rate of innovation in order to focus on the first two components. The last two components are added by endogenizing the rate of innovation. Finally, the paper considers the role of foreign direct investment.
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TL;DR: This article found that retail gasoline prices react more quickly to increases in crude oil prices than to decreases, while wholesale gasoline prices exhibit no asymmetry in responding to crude oil price changes, indicating that refiners who set wholesale prices are not the source of the asymmetry.
Abstract: Our empirical investigation confirms the common belief that retail gasoline prices react more quickly to increases in crude oil prices than to decreases. Nearly all of the response to a crude oil price increase shows up in the pump price within 4 weeks, while decreases are passed along gradually over 8 weeks. The asymmetry could indicate market power of some producers or distributors, or it could result from inventory adjustment costs. By analyzing price transmission at different points in the distribution chain we investigate these theories. We find that some asymmetry occurs at the level of the competitive spot market for gasoline, perhaps reflecting inventory costs. Wholesale gasoline prices, however, exhibit no asymmetry in responding to crude oil price changes, indicating that refiners who set wholesale prices are not the source of the asymmetry. The most significant asymmetry appears in the response of retail prices to wholesale price changes. We argue that this probably reflects short run market power among retail gasoline sellers.
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TL;DR: In this article, a competitive model for the U.S. automobile tire industry is presented, where innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data.
Abstract: Firm numbers first rise, then later fall, as an industry evolves. This nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data. The model is estimated using data from the U.S. automobile tire industry, a particularly dramatic example of the nonmonotonicity in firm numbers. Copyright 1994 by University of Chicago Press. (This abstract was borrowed from another version of this item.)
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TL;DR: In this article, the authors study the business cycle implications of restricting international trade in financial assets, where domestic residents must hold all risky claims to domestic output, trading only noncontingent bonds on the international asset markets.
Abstract: Since the primary role of international financial linkages is to facilitate consumption smoothing in the face of country-specific shocks, the degree of international financial integration should play an important role in the international transmission of business cycles. This paper therefore studies the business cycle implications of restricting international trade in financial assets. The key restriction is that domestic residents must hold all risky claims to domestic output, trading only noncontingent bonds on the international asset markets. We find that restricting asset trade may or may not change the business cycle implications of the model relative to complete markets, depending on the parameterization of the stochastic process for productivity. When there are important differences, these stem largely from differential wealth effects. We also find that restricting asset trade can resolve the chief problem inherent in complete markets models, which is their predictions of too-high consumption correlations and too-low output correlations. When technology follows a random walk process, the restricted asset markets model predicts that cross-country output correlations are positive, and cross-country consumption correlations are smaller than the output correlations, as is typically observed in the data.
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TL;DR: In this paper, a coherent alternative to neoclassical economics based on the contributions of post-Keynesian and Kaleckian economists is presented, in which elements from the non-orthodox traditions, in particular from the neo-Ricardian school, are welded into a convincing alternative theoretical framework.
Abstract: This innovative book demonstrates that it is possible to construct a coherent alternative to neoclassical economics based on the contributions of post-Keynesian and Kaleckian economists. It identifies elements from the non-orthodox traditions, in particular from the neo-Ricardian school, that can be welded into a convincing alternative theoretical framework.
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TL;DR: In this paper, the authors derived low frequency models implied by high frequency, say daily, ARMA models with symmetric GARCH errors and showed that these models exhibit conditional heteroskedasticity of the GARCH form.
Abstract: The authors derive low frequency, say weekly, models implied by high frequency, say daily, ARMA models with symmetric GARCH errors. They show that low frequency models exhibit conditional heteroskedasticity of the GARCH form as well. The parameters in the conditional variance equation of the low frequency model depend upon mean, variance, and kurtosis parameters of the corresponding high frequency model. Moreover, strongly consistent estimators of the parameters in the high frequency model can be derived from low frequency data. The common assumption in applications that rescaled innovations are independent is disputable, since it depends upon the available data frequency. Copyright 1993 by The Econometric Society. (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.) (This abstract was borrowed from a (This abstract was borrowed from another version of this item.)
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TL;DR: In this article, the identification of the equations and the cointegrating relations is achieved by linear restrictions on the parameters and a criterion for a statistical model to be identifying is given.
Abstract: In this paper we discuss the problem of identification in a model with cointegration. It is pointed out that there is an identification problem for both long-run parameters and short-run parameters. The identification of the equations and the cointegrating relations is achieved by linear restrictions on the parameters and a criterion for a statistical model to be identifying is given. We also define empirical identification of an estimated structure. A switching algorithm for calculating the restricted parameters is proposed. The concepts are illustrated with an empirical analysis of the ISLM model using Australian monetary data.
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TL;DR: In this paper, the authors present intuitive accounts of conceptually difficult ideas making the most recent advances in econometrics accessible to advanced undergraduate and graduate students, and present a survey of the most popular concepts in e-commerce.
Abstract: This unique book successfully presents intuitive accounts of conceptually difficult ideas making the most recent advances in econometrics accessible to advanced undergraduate and graduate students.
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TL;DR: In this paper, the authors provide an empirical analysis of internal migration flows using data from the National Longitudinal Surveys of Youth (NLSS) using the conceptual framework of the Roy model, and find that persons whose skills are most mismatched with the reward structure offered by their current state of residence are most likely to leave that state.
Abstract: Within the conceptual framework of the Roy model, this paper provides an empirical analysis of internal migration flows using data from the National Longitudinal Surveys of Youth. The theoretical approach highlights regional differences in the returns to skills: regions that pay higher returns to skills attract more skilled workers than regions that pay lower returns. Our empirical results suggest that interstate differences in the returns to skills are a major determinant of both the size and skill composition of internal migration flows. Persons whose skills are most mismatched with the reward structure offered by their current state of residence are the persons most likely to leave that state. and these persons tend to relocate in states which offer higher rewards for their particular skills.
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TL;DR: This paper examined the evidence about distribution of income under Communism in Eastern Europe and brought out the differences in experience between countries under Communism: between Central Europe and the former Union; between Czechoslovakia, Hungary and Poland; and between the newly independent states of the former Soviet Union.
Abstract: Who gains and who loses from economic transformation in Eastern Europe is a key question, but one which is too rarely discussed. This book, first published in 1992, examines the evidence about distribution of income under Communism in Eastern Europe. Contrary to popular impressions, a great deal of information exists about distribution of income and household earnings in Czechoslovakia, Hungary and Poland. With glasnost much material previously kept secret in the USSR has been made available. The book contains extensive statistical evidence that had not previously been assembled on a comparative basis, and brings the story right up to the end of Communism. The findings bring out the differences in experience between countries under Communism: between Central Europe and the former Union; between Czechoslovakia, Hungary and Poland; and between the newly independent states of the former Soviet Union.
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TL;DR: This textbook is designed to make the difficult subject of optimal control theory easily accessible to economists while at the same time maintaining rigour, and derives and explains important results, including the envelope theorem and the method of comparative statics.
Abstract: Optimal control theory is a technique being used increasingly by academic economists to study problems involving optimal decisions in a multi-period framework This textbook is designed to make the difficult subject of optimal control theory easily accessible to economists while at the same time maintaining rigour Economic intuitions are emphasized, and examples and problem sets covering a wide range of applications in economics are provided to assist in the learning process Theorems are clearly stated and their proofs are carefully explained The development of the text is gradual and fully integrated, beginning with simple formulations and progressing to advanced topics such as control parameters, jumps in state variables, and bounded state space For greater economy and elegance, optimal control theory is introduced directly, without recourse to the calculus of variations The connection with the latter and with dynamic programming is explained in a separate chapter A second purpose of the book is to draw the parallel between optimal control theory and static optimization Chapter 1 provides an extensive treatment of constrained and unconstrained maximization, with emphasis on economic insight and applications Starting from basic concepts, it derives and explains important results, including the envelope theorem and the method of comparative statics This chapter may be used for a course in static optimization The book is largely self-contained No previous knowledge of differential equations is required
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TL;DR: In this paper, the authors consider a type of contract, explicit or implicit, that imposes reciprocal obligations on the parties (Barnard, 1936; Simon, 1951; Williamson, 1975; Rousseau, 1990).
Abstract: Excerpt] An organization has the potential to remain viable only so long as its members choose to participate and engage in necessary role behaviors (March & Simon, 1958; Katz & Kahn, 1966). To elicit these contributions, an organization must provide inducements that are of value to its members. This exchange or transaction process is at the core of the employment relationship and can be viewed as a type of contract, explicit or implicit, that imposes reciprocal obligations on the parties (Barnard, 1936; Simon, 1951; Williamson, 1975; Rousseau, 1990). At the heart of that exchange are decisions by employers and employees regarding compensation.
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TL;DR: In this article, price competition in a deregulated wholesale market for electricity is modeled as a sealed-bid multiple-unit auction with a random number of units, and it is argued that, under the existing regulatory rules, one must expect volatile prices, above marginal cost pricing, and inefficient dispatching.
Abstract: With particular reference to the structure of the U.K. industry, price competition in a deregulated wholesale market for electricity is modeled as a sealed-bid multiple-unit auction with a random number of units. It is argued that, under the existing regulatory rules, one must expect volatile prices, above marginal cost pricing, and inefficient dispatching. Evidence from the pricing performance of the U.K. industry is presented and shown to be compatible with the model predictions. The authors also discuss alternative regulatory rules and show that offering to supply at marginal cost can be induced as a dominant strategy for all generators, thereby securing efficient dispatching. Copyright 1993 by Royal Economic Society.
Journal Article•
TL;DR: The Joyless Economy as mentioned in this paper was the first to apply theories of behaviorist psychology to questions of consumer behavior and to do so in clear, non-technical language, concluding that people's need for stimulation is so vital that it can lead to violence if not satisfied by novelty.
Abstract: When this classic work was first published in 1976, its central tenet--more is not necessarily better--placed it in direct conflict with mainstream thought in economics. Within a few years, however, this apparently paradoxical claim was gaining wide acceptance. Scitovsky's ground-breaking book was the first to apply theories of behaviorist psychology to questions of consumer behavior and to do so in clear, non-technical language. Setting out to analyze the failures of our consumerist lifestyle, Scitovsky concluded that people's need for stimulation is so vital that it can lead to violence if not satisfied by novelty--whether in challenging work, art, fashion, gadgets, late-model cars, or scandal. Though much of the book stands as a record of American post-war prosperity and its accompanying problems, the revised edition also takes into account recent social and economic changes. A new preface and a foreword by economist Robert Frank introduce some of the issues created by those changes and two revised chapters develop them, discussing among others the assimilation of counter-cultural ideas throughout American society, especially ideas concerning quality of life. Scitovsky draws fascinating connections between the new elite of college-educated consumers and the emergence of a growing underclass plagued by drugs and violence, perceptively tracing the reactions of these disparate groups to the problems of leisure and boredom. In the wake of the so-called "decade of greed" and amidst calls for a "kindler, gentler" society, The Joyless Economy seems more timely than ever.
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TL;DR: In this paper, the authors attempt a general test of the displacement hypothesis, developing time series estimates of manufacturing pollution intensity for a large sample of developed and developing countries between 1960 and 1988.
Abstract: Several previous studies have asked whether environmental controls imposed in the industrial economies are diverting investments in pollution-intensive activities off-shore. Broadly, these studies conclude that direct investment does not appear to be stimulated by such regulations, partly because the cost of emission controls is generally a tiny fraction of operating costs. Yet direct investment reflects only part of what may be happening to world production patterns. Technology transfers may occur with no simultaneous direct investments, and production may readily shift toward a different global distribution without either direct investment or technology transfer. The authors attempt a general test of the displacement hypothesis, developing time series estimates of manufacturing pollution intensity for a large sample of developed and developing countries between 1960 and 1988. Among their conclusions: As a result of shifts in industrial composition, total manufacturing emissions relative to GDP grow faster than GDP at lower levels of per capita income and slower than GDP at higher levels of income. This happens because manufacturing has a declining share of GDP at higher income levels, not because of any shift toward a cleaner mix of manufacturing activities. The more rapidly growing high-income countries have actually enjoyed negative growth in toxic intensity of their manufacturing mix. Stricter regulation of pollution-intensive production in the OECD countries appears to have led to significant locational displacement, with consequent acceleration of industrial pollution intensity in developing countries. The poorest economies seem to have the highest growth in toxic intensity. One cannot, of course, be certain of the causal connection. Pollution intensity has grown most rapidly in developing economies that are relatively closed to world market forces. Relatively closed, fast-growing economies experienced rapid structural transitions toward greater toxic intensity. The opposite seems to have been true for more open economies.
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TL;DR: The case for government intervention in rural financial markets in developing countries has been discussed in this paper, with the focus on the learning process that must take place for financial markets to operate effectively.
Abstract: Understanding of the economic causes and consequences of market failure in credit markets has progressed a great deal in recent years. This article draws on these developments to appraise the case for government intervention in rural financial markets in developing countries and to discover whether the theoretical findings can be used to identify directives for policy. Before debating the when and how of intervention, the article defines market failure, emphasizing the need to consider the full array of constraints that combine to make a market work imperfectly. The various reasons for market failure are discussed and set in the context in which credit markets function in developing countries. The article then looks at recurrent problems that may be cited as failures of the market justifying intervention. Among these problems are enforcement; imperfect information, especially adverse selection and moral hazard; the risk of bank runs; and the need for safeguards against the monopoly power of some lenders. The review concludes with a discussion of interventions, focusing on the learning process that must take place for financial markets to operate effectively.
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TL;DR: This article examined the determinants of four measures of inward foreign direct investment to the United States from seven industrial countries over the period 1979 to 1988 and found strong evidence that relative wealth significantly affects FDI.
Abstract: There has been a significant correlation between inward foreign direct investment in the United States and the U.S. real exchange rate since the 1970s. Two alternative reasons for this relationship are that the real exchange rate affects the relative cost of production and that the real exchange rate alters reTative wealth across countries. In this paper we explore these alternatives by examining the determinants of four measures of inward foreign direct investment to the United States from seven industrial countries over the period 1979 to 1988. We find strong evidence that relative wealth significantly affects foreign direct investment in the United States. We find little evidence that relative wages have a significant impact on the determination of foreign direct investment in the United States. These results are robust to the choice of countries in our sample and when controlling for changes in tax codes.
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Abstract: A sealed primary sodium-halogen cell is disclosed which comprises a casing, an anode positioned in the casing, the anode selected from the class consisting of sodium, sodium as an amalgam, and sodium in a nonaqueous electrolyte, a solid sodium ion-conductive electrolyte positioned in the casing adjacent the anode, and a cathode positioned adjacent the opposite side of the electrolyte, the cathode comprising a mixture of bromine, iodine, bromine and iodine, or bromine and aluminum bromide with phosphoryl chloride or phosphoryl bromide.