Showing papers on "Purchasing power published in 1997"

Resource allocation to health authorities: the quest for an equitable formula in Britain and Sweden

Abstract: In recent years countries with very different healthcare systems have been showing increasing interest in resource allocation policies based on weighted capitation. In countries whose healthcare systems have competing health insurers the main concern has been to construct capitation formulas that prevent favourable risk selection or “cherrypicking.” Reforms to the American Medicare programme and Dutch healthcare proposals have stimulated renewed efforts to find a way of overcoming this problem.1 2 3 4 Countries with national health services, such as the United Kingdom and Sweden, have also experienced far-reaching reforms of health care, with important implications for equity in access to care.5 6 Risk selection should be less of a problem, at least with health authority purchasing, as the population is assigned to a purchaser based on area of residence. The new role of local purchaser, however, calls for more exact methods to allocate “purchasing power,” because local areas will show stronger variation in relative need than regions and counties. We outline British experiences in attempting to devise an equitable formula then present the new model that we have developed in Sweden for Stockholm County Council. We discuss what lessons these experiences hold for other countries facing a similar challenge. In Britain serious attempts to devise more equitable mechanisms for resource allocation for the NHS date back to the 1970s, when it became clear that funding to the regions based on historical activity had perpetuated the inequalities in funding that existed before the NHS. Since then, development work has gone through three distinct phases.7 In the first phase the formula created by the Resource Allocation Working Party was developed for distributing resources from central government to regions. It used mortality in each area as an indicator of healthcare need.8 The formula was in use from 1977–90 and …

Sources of Purchasing Power Disparities between the G3 Economies

Abstract: Recent theoretical and empirical research in international macroeconomics has rediscovered the problem of purchasing power parity (PPP). Empirically, PPP is a bad approximation of both the short-term and medium-term properties of the data. Economists have had difficulties in explaining the persistent misalignments of real exchange rates, but new empirical research by Clarida and Gali (1995) suggests that much of these real exchange rate movements are due to relative demand shocks. The present paper challenges this view by using an extended version of their structural vector autoregressive (SVAR) model in order to identify a larger number of real shocks (labour supply, productivity and aggregate demand) and nominal shocks (money demand and money supply). It is found that whilst some of their results go through in our extended framework, there is serious doubt with respect to the appropriateness of labelling those shocks which drive real exchange rates as aggregate demand disturbances.

Purchasing power and polarized professionalism in British medicine

Abstract: Fundholding (the opportunity to hold a budget at practice level) has given general practitioners (GPs) purchasing power for medical services within the reformed UK National Health Service (NHS). This new purchasing power equates to financial leverage with the NHS consultants in hospitals. Argues that fundholding is presented as an opportunity for GPs to engage in a “turf battle” with the hospital consultants without this battle becoming publicly visible. Fundholding as an accounting‐based intervention masked the nature of the professional challenge which GPs launched against the consultants and, hence, allowed territorial claims to be renegotiated through the medium of contracting. This circumvented the damage to medical professional ideologies which would have ensued if intra‐professional conflicts had become overt. The empirical study which is referred to indicates that GPs are using contracts to improve processes of case management at the hospital interface (an area where consultants have failed to communicate with GPs) and to have an input into the setting of quality standards within the hospitals. The increased financial flexibility conferred through holding budgets is also enabling GPs to expand in‐house services for primary care. Theorizes the changing power relations between GPs and consultants through exploring four dimensions of intra‐professional differentiation: task specialization; client differentiation; organization of work; and career pattern. Concludes that budgets have constituted a catalyst for professional development through reconnecting the monetary bonds between the polarized professionals in British medicine. This study indicates that, as fundholding progresses, the boundary between primary and secondary care is becoming blurred; that lead fundholding GPs are being managerialized; and that the purchasing dialogue between the GPs and the Trusts is marginalizing the role of the Health Boards (bodies which had previously held sole responsibility for the co‐ordination and delivery of health care but which now have a more limited purchasing/commissioning role).

Soviet Household Saving Function

Abstract: In this paper, the Soviet household saving function is estimated using reconstructed data from the unpublished archival material: the Soviet family budget survey data. In addition, a shortage indicator is developed to capture both household purchasing power in comparison with the availability of consumer goods in the official market and the spillover of the household demand for consumer goods from the official retail market to the secondary one. A long-run solution of the Soviet household saving function, which includes a shortage indicator as one of the independent variables, is estimated using these data. The reliability of the long-run solution is confirmed by the short-run dynamics of the Soviet household saving function, which satisfy super-exogeneity, parameter constancy, and several diagnostic tests. The highly significant coefficient of the shortage indicator suggests that Soviet household saving behaviour was affected by shortages of consumer goods during 1965–1989.

Men, women, shops and 'little, shiny homes' : the consuming of Coventry, 1930-1939

Abstract: In the 1930s many people leaving the United Kingdom's depressed areas in search of work were drawn to Coventry. Companies involved in the manufacture of motor cars, electrical goods, artificial silk and machine tools were typical of those located in the city. Most incomers found work: unemployment remained at a low level whilst the city's population exploded. The city boundaries were extended, and Coventry was rapidly suburbanised in response to the heightened demand for accommodation. Private developers noted with surprise how few of the new houses were built to let. The 1936 edition of Home Market placed Coventry first on its national index of purchasing power. From the middle of the decade, the city was closely associated with rearmament and four shadow factories provided further employment opportunities. This research addresses changes in the processes and practices of (primarily non-food) shopping amongst prosperous working-class Coventry people in the 1930s. It assesses the development of new spending patterns In relation to new products and services, and examines the role played by gender in determining the who, what, when, where and why of shopping. The thesis asks how these men and women negotiated financial power and consumer choice between them and discovers that the families who benefitted most from new material opportunities were those which placed a value on togetherness'. A range of source material is utilised to interrogate and contextualise oral testimony, and to explore the development of local retail provision. relationship is established between the city's manufacturing, retail and domestic environments. The research suggests that men spent slightly more time in the home, and women slightly less during this period. It also asserts that going shopping was not necessarily about acquiring goods; that acquir1ng goods did not necessarily involve going to the shops; and that the shopper was not always a woman.

Fisher and Wicksell on the Quantity Theory

Abstract: The quantity theory of money, dating back at least to the mid-sixteenthcentury Spanish Scholastic writers of the Salamanca School, is one of the oldest theories in economics. Modern students know it as the proposition stating that an exogenously given one-time change in the stock of money has no lasting effect on real variables but leads ultimately to a proportionate change in the money price of goods. More simply, it declares that, all else being equal, money’s value or purchasing power varies inversely with its quantity. There is nothing mysterious about the quantity theory. Classical and neoclassical economists never tired of stressing that it is but an application of the ordinary theory of demand and supply to money. Demand-and-supply theory, of course, predicts that a good’s equilibrium value, or market price, will fall as the good becomes more abundant relative to the demand for it. In the same way, the quantity theory predicts that an increase in the nominal supply of money will, given the real demand for it, lower the value of each unit of money in terms of the goods it commands. Since the inverse of the general price level measures money’s value in terms of goods, general prices must rise. In the late nineteenth and early twentieth centuries, two versions of the theory competed. One, advanced by the American economist Irving Fisher (1867‐1947), treated the theory as a complete and self-contained explanation of the price level. The other, propounded by the Swedish economist Knut Wicksell (1851‐1926), saw it as part of a broader model in which the difference, or spread, between market and natural rates of interest jointly determine bank money and price level changes.

India's Sleeping Giant: Food

Abstract: Producers should worry less about elite consumers As Indians' purchasing power increases, they will demand quality in basic foods An integrated response can transform the huge inefficiencies into opportunities Speak to the executives of India's largest food companies and they confess a sense of disappointment. For although India is the world's third largest food producer [ILLUSTRATION FOR EXHIBIT 1 OMITTED], the combined turnover of its ten largest food companies is only $2 billion - one-tenth the sum turned over by Nestle's operations in Europe. In a country of one billion people, it seems that the size of the potential food market might have been overestimated. The truth is that the markets for the products on which India's food companies have concentrated - higher value-added items such as breakfast cereals, jams, and sauces - are indeed small because these products are aimed at an elite. The big, and so far largely untapped, opportunity lies with mass-market products - packaged wheat flour (atta), biscuits, poultry, and liquid milk - which could eventually account for more than 80 percent of the total market. In some of these categories, hundreds of millions of customers will be added over the next few years: by 2005, more than 140 million Indians will consume packaged atta, for example, and 300 million packaged milk. This growth in consumption means the overall market for value-added foods will treble from $21.4 billion today to $62.5 billion by 2005. Changing consumption patterns Two factors are driving the change in consumption patterns. The first and most important is rising incomes, which will enable poor people to begin to emulate the diet of the rich. The second is the greater experimentation in eating that results from increased choice. Although most people will tend to remain faithful to cultural notions of what good food is, diets will evolve as a new generation grows up with a higher income. An analysis of the development of eating patterns across 20 countries shows that they go through a distinct evolutionary process [ILLUSTRATION FOR EXHIBIT 2 OMITTED]. In the first "subsistence" stage, the emphasis is on obtaining basic foods for survival: cereals, fats, oils, fruit, and vegetables. This is the stage typical of developing economies, and the point at which most of the Indian population stood until recently. While a population remains at this stage, there is little growth in consumption as a percentage of total expenditure. The flattening out takes place at $1,000 purchasing power parity (PPP) per capita income. The transition to the next "basic" stage typically takes place $1,000 PPP per capita income. Here, the subsistence diet is supplemented with foods such as milk and dairy products, meat, fish, poultry, and eggs. As incomes grow, so does the emphasis on the quality of these basic products. The third "premium" stage comes into play at an income level of $7,500 PPP per capita. Here the focus is on wider choice, increased processing, rising quality, and more exotic ingredients. Consumption includes eating out. This is the stage reached by highly developed economies. Because India is a large and diverse nation, all three evolutionary stages are present at once. While lower-income groups move from subsistence to basic foods, upper-income groups progress from basic to premium items. But over the next decade, the first of these shifts will be more important. The basic sector will double in size by 2005, taking in 33 million more households or nearly 200 million people; the subsistence sector, meanwhile, will grow by only 14 percent (though this will represent an extra 18 million households). The premium segment will grow by 150 percent, though this will only amount to 2.5 million additional households as the segment is so small [ILLUSTRATION FOR EXHIBIT 3 OMITTED] Basic foods for basic needs A simple matrix makes it easier to understand the nature of the opportunity. …

Which improves welfare more: A nominal or an indexed bond?*

Abstract: Economists have long argued that loan contracts should be indexed to remove the risks arising from fluctuations in the purchasing power of money: indexation however while eliminating one risk, substitutes another, arising from fluctuations in relative prices of goods. We present a theoretical framework which permits the relative merits of a nominal versus an indexed bond to be assessed in a general equilibrium setting.

Economic growth and education: a new international policy

Abstract: First of all this paper presents a world wide view of economic growth and education in 1994, with data of population, gross domestic product per head, and public expenditure on education per head for 199 countries grouped in 40 geographical areas. In the second place the paper present an international production function that includes both physical capital and human capital, measured by the stock of population with secondary education of second level complete, as factors of production. The model was fitted with data of 37 countries, of different levels of development, and shows a good fit and the significativeness of the coefficient of both variables. Education has a positive influence in economic development As many countries are very far below the world average of production and education expenditure by inhabitant, measured in purchasing power parities around 5620 dollars for production and 257 for education expenditure by inhabitant, the only way to improve their situation is to foster international co-operation, as many of those countries are unable to cope with their challenges because they are so poor. Education has a positive influence on economic growth also reducing excesses in fertility average rates, creating a social environment that improve productive investment, making workers more productive and voters more prepared to choose a good government and promote reasonable socio-economic policies. The international co-operation should improve also, where needed, better quality in education contents of human values, promoting respect to peace, human rights and equality for women, as well as the learning of one or more widely spoken world languages to avoid isolation and promoting the access to a greater wealth of information.

True multilateral indexes for international comparisons of purchasing power and real income

Abstract: I consider the problem of choosing index numbers of purchasing power and real income for international comparisons. I show that the desirable properties of methods based on the Fisher "Ideal" index do not extend to multilateral comparisons, except when tastes are homothetic. By contrast, the Geary method, which underlies the Penn World Tables, provides an approximation to a set of "true" exchange rate indexes which have many desirable properties. In particular, if demands exhibit generalized linearity, the true indexes measure real incomes relative to a hypothetical country whose income is an appropriate average of individual countries'' incomes.

Women’s Power

Abstract: There are two ideas concerning women’s economic status that seem, at first glance, to contradict one another: 1 Women are poorer than men and think of themselves as powerless. 2 U.S. women are potentially the most economically powerful group in the world in terms of their purchasing power.

Purchasing Power: Your Suppliers, Your Profits

Abstract: Managing suppliers - 10 key questions negotiating strategies eliminating waste in the supply chain organizing for high-performance procurement understand your suppliers' pricing policy implement a strategic purchasing. (Part contents.)

Money matters; a reality check, with help from virginia woolf

Abstract: This article provides a qualified defence of economic indicators of human well being. Purchasing power obviously matters as a prerequisite for obtaining basic needs; abundant examples of human behaviour even in the richest countries in the world suggest that it matters for many other reasons, as well. Despite the shortcomings of indicators like GDP and GNP, richer nations (like richer individuals) have options that are simply not available to poorer ones. A particularly serious limitation of such indicators arises from their failure to take into account the distribution of income and wealth, both within and among nations. Higher income does not automatically lead to increased well being, but extreme caution is in order about attempts to dismiss its contribution, or to pathologize certain forms of consumption. While arguing the merits of a lifestyle less organized around consumption, proponents of sustainable development must acknowledge the strength of the evidence that money matters.

The Asian Currency Crisis - A Fait Accompli?

Abstract: This paper analyzes the East Asian Currency Crisis to examine what factors led to the crisis and the differential impact across countries. Empirical data of 7 Asian countries over the period 1990 – 1996 is examined. The sample of seven countries is divided into two categories; crisis countries and affected countries. Comparison of several economic indicators is made between these two categories to determine what factors led to the severe consequences in the crisis countries as opposed to affected countries, all of which were subject to contagion. The crisis countries were found to have had aggressive growth policies that were fuelled by reflationary strategies; particularly rapid monetary growth and capital inflows. With higher relative inflation and repressed interest rates, exchange rate equilibrium as dictated by purchasing power and interest rate parities were out of line given pegged exchange rates. The currencies had become overvalued. The result being current account deficits that were financed by capital inflows, increasingly in the form of short term foreign currency denominated loans. The combined impact of all of this had been to increase the crisis countries’ vulnerability to a speculative attack and a resulting self-fulfilling crisis.

Cap and Food Security

Abstract: Although the food security discussion has given more emphasis to the individual (household) level as the proper unit of analysis, it still suffers from applying inappropriate indicators, which are mostly quantity oriented, instead of relying on more recent results of the literature that it is purchasing power or real income that matters. In addition, it has not been made clear so far how food security corresponds to the welfare status of agents. Since food security can more or less be associated with an uncertain world, this should at least be reflected in the value function of individuals who are generally risk averse. Therefore, it is proposed in the paper that the measurement of both food security and welfare should be based on the probability distribution of adjusted real household income over time on a daily basis. Food security can then be defined as the probability of any agent's real income exceeding a critical level, whereas the welfare status is measured as the agent's expected utility of this real income. Special formulas are developed in this context which allow one to calculate producer's and consumer's welfare under price uncertainty and risk aversion separating the risk response effect from the mean income moving effect of price fluctuations. In addition, an alternative measurement of protection in a stochastic world, the so called real protection rate, is proposed which simultaneously covers protection against low prices and volatile prices. All these indicators should be used when comparing and evaluating food security or food insecurity of any agent in whatever region. In the paper the concept is utilized to answer the raised question of how the EU contributes to worldwide food security.

East Asia as an independent engine of growth: prospects and implications for managers

Abstract: States that since the mid‐1980s, substantial deregulation and competitive liberalization of the South‐East Asian economies in their trade and investment regimes has resulted in greater integration of their economies with the North‐East Asian economies. Proposes that, together with the rising purchasing power of the expanding middle class, massive infrastructural development, as well as the expansion in intra‐regional trade and investment, East Asia has emerged as an independent centre of growth in the global economy since the early 1990s. Presents empirical evidence on the rise of this autonomous growth momentum. Contends that, no longer a mere wagon hitched to the locomotive of the US and European economy, East Asia′s emerging independent engine of growth has tremendous implications for executives of multinationals keen to expand market share and form strategic alliances with companies in East Asia. Submits that it also has implications for fund managers in the OECD countries keen to look to the region for asset diversification and higher returns.

Covered Purchasing Power Parity, Ex-Ante PPP and Risk Aversion

Abstract: The standard expectations augmented theory of ex-ante Purchasing Power Parity which was first developed by Roll assumes that agents are risk neutral. A Covered Purchasing Power Condition is developed which holds for the general case of risk aversion. A risk augmented form of ex-ante PPP is then derived using a consumption-based asset pricing framework. This is tested for the post-Bretton woods period for the group of seven main industrial countries. The results suggest that risk aversion has a part to play in explaining deviations from PPP.

Changes in the Rate and Types of Poverty: The Czech and Slovak Republics 1990–1993

Abstract: The beginning of the economic transition in all post-communist countries has caused a number of social problems. First, price liberalization has led to a general decrease in the purchasing power of incomes and thus has made an increasing part of the population vulnerable to poverty. Second, the reduced state monopoly and the start of privatization of big enterprises has resulted in unemployment, which was mostly unknown until this time. In addition to the “old poverty”, which especially endangered single headed or large families and the oldest pensioners, there is an emerging “new poverty” which stems from unemployment or the low adaptability of some households to the new conditions. Economically unstable households are those that are the least able to take advantage of the new possibilities and to mobilize alternative economic sources (e.g., transferring to the expansive segments of the labor market, utilizing secondary incomes, making use of old or newly acquired real estate, etc.).

Union survival strategies for the twenty-first century

Abstract: Clearly, the necessary changes in the law and culture will not come easily or quickly. But, transcending all forms of these labor market segments is a set of concerns that arguably should spur a search for common ground between labor and management. The proliferation of automated technologies, together with the continuing impact of foreign competition with cheap labor markets, has led some to predict that, over the next quarter century, we will witness the elimination of the blue-collar, mass assembly-line worker from the production process.14 Moreover, the theory that those losing jobs in the manufacturing sector will be generally absorbed into the service sector is losing currency as it is becoming clear that service jobs are, themselves, not invulnerable either to offshore outsourcing (e.g., telephone operators, data processors) or to automated technology (e.g., bank tellers, office secretaries). Nor is it realistic to expect the new “knowledge sector” to absorb more than a fraction of the unemployed and underemployed casualties of this transformation. As a result, the widening gap between the haves and have nots will only continue to grow. As the trend accelerates, certain possibilities for a labor-management accommodation emerge. For one thing, although corporations may be enjoying short-term gains from present wage stagnation, downsizing, outsourcing, and casting off of permanent employees, the longer term effects include a work force with considerably diminished consumer purchasing power. In some industries, corporations are already acknowledging the adverse effects of this trend. Furthermore, as employers are contributing into pension funds on behalf of fewer and fewer “employees,” the forced savings pool that has for many years constituted a primary financing source of capital investments in our economy, will gradually be depleted.15 At the same time as employers are coming face to face with the disadvantages of the union-free environment they have so long sought, employers are also rediscovering the contributions to productivity, quality, and efficiency that can be gained from a truly empowered work force with an independent voice in the workplace. All of this should lead an enlightened management to place less currency on resisting unionization and other legitimate forms of independent employee representation, and to join labor in advocating strong labor standards and effective labor law for all four of the labor market segments that exist today and will exist tomorrow.

World Food Insecurity: A Policy Dilemma

Abstract: Almost 1 billion people live in a state of food insecurity. The income earned by them is only slightly more than 1 percent of world GDP. Even though the resources required to feed these people adequately are small, their food deficit is persistent and difficult to solve. Solutions must involve a radical restructuring of government away from interventionist poli- cies and towards being a facilitator of economic growth and development focusing on over- coming market failures. Resources in support of agricultural research and development (R&D) have been declining worldwide and are undermining the growth in productivity that is required in order to have further declines in real agricultural prices. These lower prices would be one important step towards improving food security by increasing purchasing power of low-income households. Reducing the number of food insecure by half as recom- mended by the World Food Summit requires serious commitments from both the world food exporters as well as the food-insecure countries themselves.

Current issues in European social rented housing

Abstract: Experience has taught us that social housing policy is determined mainly by socio‐economic developments. The success (or lack thereof) of the social housing policy can be attributed to elements such as fluctuation in interest rates and inflation, as well as to developments in building costs and purchasing power. Furthermore, demographic developments have their own influence on policy. Because the European economies are becoming more and more interwoven, this paper observes an increasing convergence of problems in social housing in various European countries, although countries differ in their customs, traditions and law‐making. A number of current issues are considered that can influence social housing policy and can play a role in making strategic choices, for example, ageing in the population, unemployment, the treatment of spatial segregation and the quality of life in housing projects. The paper concludes that the government and social housing organisations are partners in solving the problem...

Purchasing Power Parity and Equilibrium Real Exchange Rate

Abstract: The literature on the purchasing power parity (PPP) theory reports that all versions of the PPP theory do badly in explaining exchange rate movements in terms of changes in national price levels . If purchasing power parity holds true, the real exchange rate remains constant over time. The negative empirical results point to the failure of PPP. This paper contends that if the equilibrium real exchange rate has shifted over time due to real shocks, then what is interpreted as the failure of the PPP may not actually be so. This paper investigates the issue and econometric tests indicate that the variable trend/cointegration implication is broadly consistent with the quarterly movements of bilateral exchange rates for the period 1973Ql to 1993Q4 between the U.S . and other countries like Germany, Japan, U.K., and Switzerland. One implication of this study is that it can serve as a benchmark for determining the limits of the band of target zone models.

TIPS for Safer Investing

Abstract: Inflation - a persistent increase in the price level- threatens people's financial well-being by reducing the purchasing power of money, cutting into the future value of savings, and, when unexpected, lowering the real rate of return on investments To protect their holdings, people take great pains to find investments whose returns exceed the inflation rate, such as stocks, bonds, and numerous other financial instruments But when their returns are corrected for inflation, investors often see negative numbers