INTERNATIONAL TRADE AND REGIONAL DEVELOPMENT

The paper considers a two-region model of trade based on the authors'earlier (HS) model, in which two nontraded goods, one urban and one rural, were introduced into the Harris-Todaro model. The HS framework captures the duality of the labour market, and it is argued that the HS model is suited to the purpose of regional analysis where the urban and rural agents may be in conflict as their welfare (income) may not respond in an identical manner to exogenous shocks and policy changes. The paper examines the implications of a change in capital and the terms of trade on outputs and regional incomes. It is established that in response to a terms-of-trade shock the prices of urban and rural nontraded goods could move in opposite directions, so structural change could also be in opposite directions. The same could also be true of welfare in the two regions.     

Location and the Growth of Nations

Does a country‘s long-term growth depend on what happensin countries that are nearby? Such linkages could occur for avariety of reasons, including demand and technology spillovers.We present a series of tests to determine the existence of suchrelationships and the forms that they might take. We find thata country‘s growth rate is closely related to that of nearbycountries and show that this correlation reflects more than theexistence of common shocks. Trade alone does not appear responsiblefor these linkages either. In addition, we find that being neara large market contributes to growth.     

Founder CEO management and the long-run investment performance of IPO firms

This study provides a comparative analysis of the long-run investment performance of founder and non-founder CEO led IPO firms in high and low technology environments. We find weak evidence of superior long-run investment performance on the part of founder CEO led IPO firms, since the significance of the results are sensitive to choice of benchmark, portfolio weighting method, and factor regression model. However, in the context of high technology IPO firms, we find consistent evidence to indicate that founder CEO led firms provide significantly higher long-run returns relative to non-founder CEO led firms. Our results suggest that the unique nature of founder CEO leadership is particularly beneficial to IPO firms in high technology environments.     

A DYNAMIC MODEL OF TOURISM, EMPLOYMENT AND WELFARE: THE CASE OF HONG KONG

Abstract.  The present paper uses a dynamic open-economy model with wage indexation to examine the impact of tourism on employment and welfare. Both short-run and long-run situations are analysed. It is well known that tourism converts non-traded goods into tradable goods. An increase in the demand for a non-traded good raises its relative price, which results in an expansion of the non-traded sector at the expense of the traded goods sector. This output shift raises labour employment in the short run. However, in the long run, the higher relative price leads to higher wages, resulting in a negative impact on labour employment. If the output effect is dominant, the expansion in tourism raises employment and welfare. However, under realistic conditions tourism may lower both labour employment and welfare due to rising costs. These results are demonstrated by simulating a dynamic model for the case of Hong Kong.     

Tourism, globalization, social externalities, and domestic welfare

One of the impacts of globalisation has been the growth in tourism and mobility of capital. This paper examines the welfare effect of tourism on the host economy with imperfect competition. Three channels that affects domestic welfare by tourism are: social externalities accompanied with tourists, the terms of trade effect via rises in the non-tradable prices, and the resource movement effect to the manufacturing sector. Owing to the positive terms-of-trade effect and/or the beneficial resource movement effect, the optimal levels of tourism occur at the situations that tourists bring negative social externalities to the economy.     

Aggregation in Area-Yield Crop Insurance: The Linear Additive Model

Previous analyses of area yield crop insurance have used a linear additive model (LAM) to express the relationship between individual and area yield. However, the theoretical foundations of the LAM are unknown. This shortcoming is addressed by establishing two conditions linking microvariables and LAM parameters. The conditions relate to the interaction of risks in individual technologies and the extent of aggregation. If systemic and individual risks are additive in individual yields, and if the law of large numbers hold, then the LAM obtains. This article also shows how departures from these conditions affect the results derived from a LAM analysis.     

Bold Stock Recommendations: Informative or Worthless?

We select a small set of recommendations that lie in the upper and lower tail of the empirical distribution of divergences between a recommendation, and the consensus over the window (−30, −1) days prior to that recommendation. We classify these extremely divergent recommendations as bold, and then subdivide them into informative bold recommendations that lead other analysts (leading-bold) and those that are ignored by other analysts (contra-bold) based on the consensus change in the 30 days after the announcement. We focus on the information conveyed to the market by these bold, leading-bold, and contra-bold recommendations through their effects on cumulative abnormal returns (CAR). We find that bold recommendations are not anticipated by market participants (CARs are negative before a bold buy and positive before a bold sell). The next finding is that the market responds strongly to both leading and contra-bold recommendations over the (0, +4)-day window and that these reactions are stronger than that to nonbold recommendations. In contrast, over the longer (0, +30)-day window, leading-bold recommendations earn additional returns whereas contra-bold ones reverse significantly due to lack of confirmation. The overall pattern is one of rational market reaction both in the short and long windows. We support the rationality of the market reaction by showing that the percentage of leading-bold recommendations exceeds that of contra-bold recommendations, and that these two types of recommendations cannot be separated using observable analyst characteristics such as experience or brokerage size.     

The theory of wage differentials,induced technical progress and the pure theory of International trade

Zusammenfassung Die Theorie der Lohnunterschiede, des induzierten tech-nischen Fortschritts und die reine Theorie des internationalen Handels. — In der Literatur über die Theorie der Lohnunterschiede und des internationalen Handels wird gew?hnlich angenommen, die Lohnunterschiede seien exogen und die Ausgangs-lage sei ein Gleichgewicht. Der vorliegende Aufsatz geht abweichend davon von einem Ungleichgewichtszustand aus. Es wird ein Modell entwickelt, in dem technischer Fortschritt als Folge intersektoraler Lohnunterschiede entsteht (unter der Annahme einer Untergrenze für die Lohns?tze, die durch Subsistenzüberlegungen bestimmt wird). Aus der Untersuchung ergibt sich folgendes: (1) Eine Volkswirtschaft, die durch Lohnunterschiede gekennzeichnet ist, kann sich in eine Volkswirtschaft mit Subsistenz-L?hnen verwandeln. In diesem Fall gibt es automatische Kr?fte, die das System von einem Typ verzerrender Rahmenbedingungen (Lohnunterschiede) zu einem anderen Typ verzerrender Rahmenbedingungen (Subsistenz-L?hne) überleiten. (2) Eine Volkswirtschaft, die durch Lohnunterschiede gekennzeichnet ist, kann eine optimale L?sung infolge des Wirkens zweier Arten von technischem Fortschritt erreichen, n?mlich (a) durch den technischen Fortschritt, der durch intersektorale Lohnunterschiede hervorgerufen wird und (b) durch den technischen Fortschritt vom Kennedy-Typ. Die Literatur über Lohnunterschiede und Handel war haupts?chlich damit besch?ftigt, die Folgen eines exogen bestimmten Lohnes, der keine Beziehungen zu den Parametern des Modells hat, zu untersuchen, und hat dabei die Prüfung der Mechanismen vernachl?ssigt, die imstande sein k?nnen, die Lohnunterschiede zu beseitigen. Dieser Aufsatz ist ein kleiner Beitrag dazu, diese Lücke im Schrifttum auszufüllen.

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Résumé La théorie des différentiels salariaux, le progrès technique induit et la théorie pure du commerce international. — Dans la littérature sur la théorie des différentiels salariaux et le commerce international, on généralement regarde le différentiel salarial comme être exogène et la position initiale comme être une position d’équilibre. Ce papier se sépare de cette pratique générale et regarde la situation initiale comme être une position de diséquilibre. Nous établons un modèle dans lequel le progrès technique entre comme conséquence d’un différentiel salarial intersectoriel (en supposant l’existence d’une borne plus basse des taux salariaux à cause de la considération de subsistence). Les propositions suivantes sont déri-vées de l’investigation, (1) Une économie caractérisée par un différentiel salarial peut transformer elle-même dans une économie de salaire minimum de subsistence. En conséquence il y a des forces automatiques menant le système d’un type de cadre distors (différentiels salariaux) à un autre type de cadre distors (salaire minimum de subsistence). (2) Une économie caractérisée par un différentiel salarial peut arriver à une solution de ?first best? via l’opération des deux types du progrès technique, viz. (a) le progrès technique induit par le différentiel salarial intersectoriel et (b) le type du progrès technique de Kennedy. La littérature sur les différentiels salariaux et le commerce extérieur a princi-palement exploré les conséquences d’un taux salarial fixé exogènement qui n’interagit pas avec les paramètres du modèle et c’est pourquoi a négligé l’étude des mécanismes automatiques qui peuvent éliminer le différentiel salarial. Ce papier est une contri-bution mineure de remplir la lacune dans la littérature sur les différentiels salariaux et le commerce extérieur.

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Resumen La teoría de los salarios diferenciales, progreso técnico inducido y la teoría pura del comercio internacional. — En la literatura sobre la teoría de los salarios diferenciales y el comercio international, la diferencia salarial se considera generalmente como exógena y la posición inicial como una posición de equilibrio. El presente artículo se aleja de esta práctica general y considera la situación inicial como una posición de desequilibrio. Se construye un modelo en que el progreso técnico se produce como una consecuencia del salario difenrencial intersectorial (asumiendo la existencia de un límite aún inferior para las tasas salariales determina-das por la consideratión de subsistencia). Las proposiciones siguientes emergen de la investigación. (1) Una economía caracterizada por una diferencia salarial puede transformarse en una economía de salarios mínimos de subsistencia. De tal manera existen fuerzas automáticas que llevan el sistema de un tipo de marco distorsionador (salarios diferenciales) a otro tipo de marco distorsionador (salarios minimos de subsistencia). (2) Una economía caracterizada por salarios diferenciales puede alcanzar una solución first best via la operación de dos tipos de progresos técnicos, (a) progreso técnico inducido por el diferencial salarial intersectorial y (b) el tipo Kennedy de progreso técnico. La literatura sobre salarios diferenciales y comercio se ha preocupado en su mayor parte de la exploración de las consecuencias de una tasa salarial fijada exó-genamente que no interactúa con los parámetros del modelo, no habiéndole dado la debida importancia al estudio de mecanismos automáticos que pueden ser capaces de remover las diferencias salariales. Este artículo es una contribución menor hacia el relleno de la laguna en la literatura sobre salarios diferenciales y comercio.

     

Information or Opinion? Media Bias as Product Differentiation

Two aspects of media bias are important empirically. First, bias is persistent: it does not seem to disappear even when the media is under scrutiny. Second, bias is conflicting: different people often perceive bias in the same media outlet to be of opposite signs. We build a model in which both empirical characteristics of bias are observed in equilibrium. The key assumptions are that the information contained in the facts about a news event may not always be fully verifiable, and consumers have heterogeneous prior views ("ideologies") about the news event. Based on these ingredients of the model, we build a location model with entry to characterize firms' reports in equilibrium, and the nature of bias. When a news item comprises only fully verifiable facts, firms report these as such, so that there is no bias and the market looks like any market for information . When a news item comprises information that is mostly nonverifiable, however, then consumers may care both about opinion and editorials, and a firm's report will contain both these aspects—in which case the market resembles any differentiated product market . Thus, the appearance of bias is a result of equilibrium product differentiation when some facts are nonverifiable. We use the model to address several questions, including the impact of competition on bias, the incentives to report unpopular news, and the impact of owner ideology on bias. In general, competition does not lead to a reduction in bias unless this is accompanied by an increase in verifiability or a smaller dispersion of prior beliefs.