Showing papers on "Purchasing power published in 1989"

What do international comparisons of health care expenditures really show

Abstract: There is much interest in international comparisons of health care expenditures, in particular their relation to national income. They have been widely used to judge countries' performance in cost-containment, and in the United Kingdom have been widely quoted in debates about the funding of the National Health Service. This paper challenges conclusions drawn from simple analyses of this topic, which have used dubious and inappropriate data, questionable methods and assumptions, and simplistic ad-hoc reasoning. It looks particularly at price differences between countries, which have usually been hidden by using exchange rates to standardize national figures. When more appropriate conversion factors called purchasing power parities are used, many of the simple and conventionally-accepted conclusions no longer appear so obvious. The attempt to create apparent scientific facts for policy debates has been based on a misuse of international comparisons.

Identifying Risk-Adjusted Indifference Rents for Alternative Operating Leases

Abstract: For some time real estate operating leases have been available to lessees and lessors which have alternative schemes for allocating the purchasing power risk embedded in the rent and operating expe...

International comparison of purchasing power, real output and labour productivity: a case study of brazilian, mexican and u.s. manufacturing, 1975

Abstract: This study has a twofold objective: (a) a substantive analysis of purchasing power parities (PPP's), real output and labour productivity in Brazil, Mexico and the U.S.A.; and (b) a methodological survey of the analytic problems in measuring PPP's from the production side, rather than the expenditure approach used by the United Nations (ICP). Our main substantive findings were that PPP's for manufacturing did not vary greatly from the 1975 exchange rates, that labour productivity was surprisingly high in the two Latin American countries, and that there are substantial differences in the coverage of national accounts between Mexico and Brazil. We found census concepts of value added to be rather anachronistic, particularly in the U.S.A.; we developed a new short-cut matching procedure for industries with a complex product structure; and we found the unit value approach not inferior to the specification pricing practiced by ICP.

The Impact of Mexico's Economic Crisis on the Demographic Composition of the Maquiladora Labor Force

Abstract: This study focuses on the changes that have occurred since 1982 in the demographic composition of the maquiladora labor force. In the period 1983-1987, the number of obreros employed by the industry has more than doubled, increasing to 262,000 (Table 1). The most important influence on labor demand during this period was the sharp decline in the maquiladora firms' dollar-denominated wage bills. This decline was brought about by the progressive depreciation of the peso in combination with a conservative government wage policy. Labor supply behavior since 1982 has been more problematic; government-determined increases in the benchmark minimum wage have lagged well behind the inflation rate. As a result, the real purchasing power of peso wages is estimated to have fallen 40 percent since 1982. Despite the reduction in real wages, the supply of labor to the maquiladora industry has expanded to accommodate the near-explosive growth of labor demand. In this article we argue and present evidence that maquiladoras, constrained to honor the minimum wage as both a wage floor and wage ceiling, have influenced the elasticity of the labor supply curves they face by broadening hiring criteria and by seeking locations in the interior of Mexico where there are higher levels of unemployment and lower labor force participation rates (LFPR). Further, we advance the proposition that falling real family incomes have influenced border labor supply by stimulating the flow of job seekers to the border area where jobs are plentiful and by encouraging higher LFPRs. Finally, the results of the two post-1982 surveys of maquiladora workers in Cd. Juarez are presented. The surveys provide microlevel insights into how rapid industrial expansion in an environment of general recession has influenced industry employment policies and the characteristics of the maquiladora workforce.

A Keynesian Theory of Banking: A Comment on Dymski

Abstract: In a recent paper, Dymski argues that Post Keynesians have not given sufficient consideration to an analysis of the "microlevel bank behavior" (1988). Post Keynesians have not pursued Keynes's suggestion that banking is "a 'dual' activity, involving credit creation and liquidity provision" (1988, p. 500). Dymski provides a model of banking that he believes is consistent with Post Keynesian theory. He assumes two roles for banks: (1) banks pool risks and provide liquidity to depositors; and (2) banks gather private information regarding the credit worthiness of borrowers, and act as intermediaries to "transfer purchasing power to bank-funded borrowers" (p. 505). I will argue that Dymski's focus on the micro aspects of banking leads to incorrect conclusions regarding the macro foundations of banking: his banks are not "Keynesian." Furthermore, his presentation is inconsistent with the Post Keynesian theory of money. Dymski provides a role for money, but provides no theory regarding what constitutes money, what determines the quantity of money, nor how money is created. Dymski's use of terms like money and liquidity differs from the definitions normally used by Post Keynesians. Dymski should substitute the term currency for the terms money and liquidity. In his model, depositors deposit currency, which banks hold as a reserve against

Money : lectures on the basis of general equilibrium theory and the economics of institutions

Abstract: I. Theoretical Foundations: An Elementary Overview.- 1. General Equilibrium Theory: An Outline.- 1.1 General Equilibrium Theory Without Production.- 1.2 General Equilibrium Theory With Production.- 1.3 The Purchasing Power of Money: Definition.- 1.4 The Determination of the Purchasing Power of Money.- 1.4.1 The Case of a Commodity Standard: The Pure Gold Coin Standard.- 1.4.2 The Case of a Paper Standard: A Pure Paper Circulation.- 1.5 The Classical Dichotomy and the Patinkin Controversy.- Appendix to Chapter 1.- 1. The Determination of the Optimal Consumption Plan of a Household.- 2. The Determination of the Optimal Production Plan of a Firm.- 3. Walras's Law With Any Number of Households and Firms.- Suggested Readings to Chapter 1.- 1. Theory of General Equilibrium.- 2. The Purchasing Power of Money.- 3. Determination of the Purchasing Power of Money.- 2. Capital Theory.- 2.1 The General Approach.- 2.2 A Simple Robinson Economy.- 2.3 Two Present and Two Future Goods: Does "the" Real Rate of Interest Exist?.- 2.4 The Robinson Economy in Stationary Equilibrium.- 2.5 The Young and the Old Robinsons: The Stationary Theory of Overlapping Generations.- 2.5.1 An Overlapping Generations Model Without Production.- 2.5.2 An Overlapping Generations Model With Production.- Appendix to Chapter 2.- The Stationary Rate of Interest May be Different from Zero.- Suggested Readings to Chapter 2.- 1. The Robinson Economy.- 2. The General Case.- 3. The Optimal Capital Stock of an Economy.- 4. Two Approaches to Capital Theory.- 5. General Discussion of Capital and Interest Theory.- 6. The Model of Overlapping Generations.- 3. The Economics of Institutions.- 3.1 Topics of Modern Institutional Economics.- 3.2 What are Transaction Costs?.- 3.3 Transaction Costs in General Equilibrium Theory: A Simple Example.- 3.4 Why Economic Institutions?.- 3.4.1 The Market as an Institution: Auction Markets or Direct Negotiations?.- 3.4.2 Why Do Firms Exist?.- 3.4.3 Why Relational Contracts?.- 3.4.4 Why Public Regulation?.- 3.5 General Equilibrium and Institutional Economics: Some Conceptual Considerations.- Appendix to Chapter 3.- Utility Maximization of the Household Including Transaction Costs.- Suggested Readings to Chapter 3.- 1. Property Rights and Transaction Costs in General.- 2. Transaction Costs in General Equilibrium Theory.- 3. Why Economic Institutions?.- a) Auction Markets or Direct Negotiations?.- b) Why Do Firms Exist?.- c) Why Relational Contracts?.- d) Internalization of External Effects.- e) Why Public Regulation?.- 4. On the Economic Theory of Institutions.- II. Monetary Theory.- 4. The Nature of Money.- 4.1 The Elementary Currency Order: Some Basic Considerations.- 4.2 Further Discussion of the Elementary Currency Order.- 4.2.1 The Bookkeeping Order.- 4.2.2 The Order of Safeguarding the Value of Money.- 4.3 Economic Explanation of an Elementary Currency Order: The Bookkeeping Order.- 4.3.1 An Illustration of the Advantages of a General Unit of Account.- 4.3.2 An Illustration of the Advantages of General Means of Exchange as a Means of Payment.- 4.4 Economic Explanation of the Elementary Currency Order: The Value Safeguarding Order.- 4.5 Money Loans.- 4.6 Competition in Currencies.- Appendix to Chapter 4.- The Black-Fama-Hall System.- Suggested Readings to Chapter 4.- 1. The Elementary Currency Order.- 2. The Economic Explanation of the Use of Money.- 3. The Economic Explanation of the Order of Safeguarding the Value of Money.- 4. The Early History of Money.- 5. The Law of Money.- 6. On Currency Competition.- 5. An Abstract Book-Money Economy.- 5.1 A Central Accounting System.- 5.1.1 The Account of the Household Robinson.- 5.1.2 The Account of the Firm Robinson.- 5.2 Money Loan Transactions.- 5.3 The Neo-Classical Theory of the Money or Nominal Rate of Interest: A Simple Case.- 5.4 The Neo-Classical Theory of the Money or Nominal Rate of Interest: Some Extensions.- 5.4.1 Two Present and Two Future Goods.- 5.4.2 One Good and Three Periods.- 5.5 Interest and Prices.- 5.6 The Case of Two Currencies: Some Elementary Arbitrage Calculations.- 5.7 Fixed or Flexible Exchange Rates? Some Elementary Considerations.- 5.7.1 Flexible Exchange Rates.- 5.7.2 Fixed Exchange Rates.- 5.8 Neutral Money.- Suggested Readings to Chapter 5.- 1. A Pure Book-Money System.- 2. The Neoclassical Theory of the Nominal Rate of Interest.- 3. The Theory of Commodity Futures Markets.- 4. The Term Structure of Interest Rates.- 5. Wicksell's Theory on the Spread Between Real and Nominal Interest Rates.- 6. The Purchasing-Power-Parity Theory (PPP).- 7. The Theory of Forward Exchange.- 8. Fixed versus Flexible Exchange Rates.- 9. Neutral Money.- 6. The Quantity of Money and the Prices of Goods.- 6.1 A World With Transaction Costs.- 6.2 Optimal Cash Balances.- 6.3 Cash Balances in General Equilibrium: A Monetary Overlapping Generations Model.- 6.4 An Illustration of the Monetary Overlapping Generations Model.- 6.5 A Simple Stationary Equilibrium With Rational Expectations.- 6.6 Neutrality of Money With Cash Balances.- Appendix to Chapter 6.- 1. The Dimension of the Marginal Costs of Transaction.- 2. The Optimal Consumption and Investment Plan of the Household: An Example.- 3. On the Direct Utility Approach to the Demand for Money and Bonds.- Suggested Readings to Chapter 6.- 1. Temporary Equilibrium.- 2. Optimal Cash Balances.- 3. Once More: The Model of Overlapping Generations.- 4. Rational Expectations.- 5. The Problem of the Non-Neutrality of Money.- 6. The Monetarism Debate.- 7. Safeguarding the Value of Money - Some Basic Institutional Solutions.- 7.1 Safeguarding the Value of Money With a Redeemable Paper Currency: The Case of a Single Currency.- 7.2 Safeguarding the Value of Money With Redeemable Paper Currencies: The Case of Two Currencies.- 7.3 Safeguarding the Value of Money With an Inconvertible Paper Currency: The Case of a Single Currency.- 7.4 Safeguarding the Value of Money With Inconvertible Paper Currencies: Two Currencies.- 7.4.1 The System of Flexible Exchange Rates.- 7.4.2 The System of Fixed Exchange Rates.- 7.5 Gold or Paper? A Retrospective of This Chapter.- Suggested Readings to Chapter 7.- 1. The Gold Standard.- 2. The Paper Standard.- 3. Balance of Payments Theories.- 4. The Problem of the Stability of Flexible Exchange Rates.- 5. Arguments and Proposals for an International Coordination of Exchange Rate Policy.- 6. Gold or Paper?.- 8. Money and Banks.- 8.1 The Theory of the Banking Firm: Preliminary Considerations.- 8.2 The Banking Firm as a Financial Intermediary: A Simple Model.- 8.3 The Demand For Bank Money.- 8.4 The Banking Firm as the Central Agent of a Primary Currency Community: The Commodity Standard.- 8.5 The Banking Firm as the Central Agent of a Primary Currency Community: The Paper Standard.- 8.6 The Banking Firm as the Central Agent of a Secondary Currency Community.- 8.7 Comments on the Public Regulation of Money and Banking.- 8.7.1 Public Regulation of the Central Agents of Primary Currency Communities (Central Banks).- 8.7.2 Public Regulation of the Central Agents of Secondary Currency Communities (Commercial Banks).- Appendix to Chapter 8.- 1. Profit Maximization of the Bank Assuming Cost of Obtaining Reserves (Section 8.2).- 2. Determination of the Optimal Intertemporal Consumption and Investment Plans of the Consumer: The Direct Utility Approach (Section 8.3).- 3. Determination of the Optimal Intertemporal Consumption and Investment Plan of the Consumer: The Transaction Costs Approach (Section 8.3).- Suggested Readings to Chapter 8.- 1. The Theory of the Banking Firm.- 2. The Currency-Banking Debate.- 3. The Real Bills Doctrine.- 4. Maximization of Seigniorage.- 5. The Theory of Credit Creation.- 6. Minimum Reserves.- 7. The New Monetary Economics.- 8. The Rational Justification of a Central Bank: Free Banking or Central Banking?.- 9. The Theory and Practice of Central Bank Constitutions.- 10. Bank Regulation.- Name Index.

Managing drug use.

Abstract: This study of Class A drug users in Nottingham identifies a local drug economy with specific demand and supply characteristics. With reference to demand, data are presented on users' purchasing power and purchasing behaviour, including drug re-sales and the use of credit. Crude elasticity relationships are discussed. The analysis of the supply side includes an examination of the dealing system and pricing methods. Following the integration of these two themes by way of summary the paper concludes with a discussion of the implication of its findings for public policy aimed at managing drug use.

Stock or Portfolio Approach to Monetary Theory and the Neo-Keynesian School of James Tobin

Abstract: Publisher Summary This chapter discusses the ascendancy of the stock approach because of Keynes' and Hicks' writings, and Hicks' recent change of mind, Tobin's general asset equilibrium approach and key behavior assumption, and asset demand for money because of risk aversion. Money carries the purchasing power over real goods to each agent in compensation for his service rendered and for goods or assets delivered. When the impounded purchasing power is exercised by the agent in its possession, it necessarily passes out of his hand on to a different agent, carrying the same nominal amount of purchasing power to its next owner. These circulating media were traditionally not supposed to be held stagnant in any part of the body (physical or economic), though they were known in both cases to circulate sometime faster, sometime slower. In 1969, James Tobin wrote an article “A General Equilibrium Approach to Monetary Theory.” In his 1969 article, he simply treated it as just one of the many assets to hold one's wealth in, the demands for which can all be formulated in the same general form, viz., Therefore, he mentioned that the entire asset market equilibrium matters, not just the equilibrium between the demand and supply of money, and that there are more important asset prices to look at than the interest rate, the price for parting with money.

Faculty Compensation and the Cost of Living in American Higher Education.

Abstract: Dr. Smith, a faculty member at Harvard, receives an annual compensation package worth $63,200, while Mr. Doe, a faculty member at Augustana College, a small four-year institution in Rock Island, Illinois, receives a package worth $39,100. Both individuals are earning the average compensation for faculty at their respective institutions. Smith's superior compensation is hardly surprising; after all, he is a faculty member at one of the most affluent universities in the world. Appearances, however, can be deceiving. Smith's purchasing power in the Boston area is in fact worth only about $41,500 after adjusting for cost of living, the same as Doe's level of purchasing power in Rock Island. This hypothetical example underscores the fact that compensation alone is not a precise indicator of the financial well-being of the professoriate. A compensation package of $40,000 in Boston is not one and the same as a compensation package of $40,000 in Louisville, Scranton-Wilkes Barre, Champaign-Urbana, Palo Alto or Rock Island, Illinois. The purpose of this article is to demonstrate that cost-of-living differentials throughout the United States are so substantial that merely discussing academic compensation without reference to cost-of-living

Domestic Stability Versus Exchange Rate Stability

Abstract: In accepting the title assigned for this paper, I do not mean to agree that the two stabilities necessarily conflict. Often, to be sure, they do. Countries that clung to the fixed gold parities of their currencies in the early 1930s, including France and other members of the European gold bloc until 1936, suffered worse contagion of the world depression than if they had let their currencies depreciate. Other countries mitigated the contagion by accepting relatively early depreciation, as Great Britain and the Sterling Area countries did in 1931 and as Spain did around the same time.

Managing the Reduced Purchasing Power of the Acquisitions Budget

Abstract: The recent rapid escalation of journal prices and the decline in purchasing power of the acquisitions dollar have required academic librarians to put into practice drastic short term measures to balance budgets and pay invoices. One library's experience is cited to give examples of short term measures which can be put into effect quickly to handle shortfalls or overencumbrances. Budget balancing reductions must be monitored and integrated into long term financial plans and revised collection development strategies. The acquisitions librarian must be prepared to make operational modifications and develop the ability to forecast the effects of external and internal changes on the library's resources budget and its services while the collection development librarian must change the criteria and course of acquisitions strategy.

Comments on “The Economic Cycle in Bourbon Central Mexico: A Critique of the Recaudación del diezmo líquido en pesos,” by Ouweneel and BijleveldI

Abstract: In the years after 1780, the prices of livestock; of meat sold in towns, of maize, pulque, sugar, and tobacco; and of land for sale and rent all rose in New Spain. Conversely, the price of goods imported from Europe fell. Since the wages of the laboring classes did not rise, the real income of that section of the population which entered the labor market fell. And, with regard to a wide range of commodities, the purchasing power of silver coin fell. Much of the economic growth of this period, expressed in fiscal receipts, trade figures, and mintage of specie may have been illusory, the result of inflation rather than of "real" increase in activity or value. It is the aim of Arij Ouweneel and Catrien C. J. H. Bijleveld (hereafter cited as O-B) to ascertain the causes of inflation after 1780; to question the value of church tithes as an index of agricultural production; to deny the possibility of using maize price series as an index of inflation; and to subject a variegated set of statistical series to computerized correlation in order to demonstrate the incidence of hardship among the Mexican masses. Their intentions are ambitious and will undoubtedly provoke much discussion. The purpose of the comments which follow is not to challenge their underlying vision of Bourbon Mexico, but simply to examine the strength of their arguments and to query the reliability of some of their statistics. O-B are at their most original in providing a century-long list of the number of tributaries in selected districts in central Mexico. This shows that the number of registered individuals rose from 187,547 in 1770 to a maximum of 340,113 in 1798, an increase of 8i percent in 28 years. Obviously, the superior level of official competence, so apparent after the Galvez visitation, may well have affected the rate of registration. That the total did not change in the years 1786-89, at a time when the country was racked by harvest failure, indicates the dimension of what O-B

The Uncertain Future of Monetary Policy

Abstract: Although the conduct of monetary policy has always been enveloped in controversy, its objectives have by and large not been controversial. These are a stable price level to give a constant purchasing power of money, a fully employed economy and reasonably stable interest rates. The problem is that these are usually incompatible, giving rise to a conflict of objectives. It falls upon the operating principles on which the conduct of monetary policy is based to resolve the conflict. The principle once followed of currency convertibility resolved the conflict in favour of a fixed value of money by giving priority to convertibility into gold, which imposed a constraint on the pursuit of the other objectives. When convertibility under the gold standard was restricted and then finally ended, the conflict of objectives became unresolved, which as could be expected has left us with continuing controversy. The two other most well-known operating principles to guide the conduct of monetary policy are interest-rate targeting and monetary targeting. Both have run into serious difficulties and have been rejected as operating targets, although not abandoned completely; both continue as partial guides for policy. What operating principle will or can in the future be the basis for the conduct of monetary policy remains unsettled and unclear. Dissatisfaction with the lack of commitment to stability of prices or foreign exchange rates has led some experts (such as my colleague Robert Mundell) to argue for a return to convertibility, but that solution to the conflict of objectives has little support.

The Implications for Acquisitions of Stagnant Budgets

Abstract: Libraries have not been able to keep up with inflationary and other price increases for library materials. As a result their purchasing power has declined. Because the rates of price increase vary by subject and type of publication, acquisitions budgets are being distorted. Strategies for containing the worst of these side-effects are discussed. The most important of these is the establishment of a meaningful dialogue with administrators and faculty to determine priorities and directions to go. Cancellations of serials are not the only answer, though a necessary first step is the re-evaluation of all subscriptions. The longer-term implications of new technologies are examined and a new approach to budgeting is recommended.

Principles of agricultural economics: Product supply and input demand

Abstract: Introduction Whereas the previous chapter was concerned with the theory of supply and input demand at the level of the firm, attention now switches to supply and input demand at the market level. That is, we are concerned with the outcomes of the decisions of all farmers in a particular market, where the market for any commodity may be defined in relation to whole countries, regions of countries, or even at the world level. Since agricultural policy is typically made at national or regional level, and since the statistics which provide the key information about developments in the agricultural sector are usually presented for these levels, policy-related empirical research needs to focus upon market level behaviour. Certainly, issues of market level agricultural supply are central to development strategies, and there will be a requirement that the agricultural sector should provide a growing surplus (over and above the needs of the agricultural population) of agricultural product. The reasons for this have been well documented but can be summarised as: (i) to increase food supplies and agricultural raw materials at ‘ low’ prices, (ii) to increase the purchasing power of farmers and hence the domestic market for non-agricultural products in the rural sector, (iii) to facilitate transfers of labour and other resources from agriculture for industrial development, and (iv) to increase foreign exchange earnings from agricultural exports. The contribution which the agricultural sector can make in these areas will depend on the responsiveness of domestic producers to economic incentives and to price signals in particular.

Assessment of Nutrition Knowledge, Attitudes and Practices of Mothers

Abstract: The unfortunate state of nutrition in countries like India is attributed to several factors. Poverty and low purchasing power are no doubt major factors contributing to malnutritio. Lack of awareness regarding nutritional needs and paucity of information also aggravate the problem.

Estimating the Impact of Higher Electricity Rates on Intersectoral Prices: An Input-Output Approach

Abstract: A recent ruling by the United States Supreme Court makes it more likely than ever that the cost overruns associated with nuclear power plant construction will be passed on to consumers. The ruling of the court did not address the retail sale of electricity directly. However, an implication of the opinion is that wholesale electric price increases will be passed on to the final consumers. This paper employs an input-output framework, theRAS matrix updating technique, and an energy price model to determine the intersectoral price impact of an electric rate hike on a plains state economy. The purpose was to generate information on the process of price shock transmission throughout a regional economy and to identify the sectors most affected. Moreover, the upper limit of the price shock to the household sector also is discussed. The major findings of the paper are that the services sector is most affected by the electric rate hike and agriculture is least affected. Furthermore, the results indicate that no sector is significantly impacted. However, the cumulative result on households could be substantial and cause a reduction in their purchasing power.