The Fallacy of Free Trade II

This paper argues that not a single proposition of the modern theory of free trade is upheld by the recent experience of the United States. Freer trade is supposed to raise GNP growth and productivity growth as well as the living standard. Until 1972, when the US was practically a closed economy with a trade/GNP ratio averaging a low of 12%, GNP growth was 3.8%, productivity growth was 2%, and real wages had been rising for 150 years. Since 1972, the trade/GNP ratio has been rising steadily, US GNP growth has been only 2.5%, productivity growth is below 1%, and real wages have been falling for over three-quarters of the labor force.     

India's Global Trade Potential: The Gravity Model Approach

Abstract

In this article an augmented gravity model equation has been used to analyze the world trade flows using a sample of 146 countries. The coefficients thus obtained are then used to predict trade potential for India. Ordinary Least Squares with cross-section data for the year 2000 have been used for estimation. The results show that all three traditional “gravity” effects are intuitively reasonable, with statistically significant t-statistic often exceeding 50 in absolute value. Alternative measures of gross national product (GNP) dollar value and purchasing power parity do not alter either the sign or significance of different explanatory variables. Historical and cultural similarities also impact positively upon bilateral trade. As concerns India's trade potential, the model shows that there is tremendous potential with China and trade can more than double if barriers and constraints are removed. Our estimates also indicate a huge potential, of the order of US$6.5 billion, with Pakistan.     

The initiation of audit committee interlocks and the contagion of accounting policy choices: evidence from special items

Review of Accounting Studies - We document that the initiation of audit committee interlocks is associated with contagion in reported special items. We argue that this is, in part, attributable to...     

Auction theory adaptations for real life applications

We develop extensions to auction theory results that are useful in real life scenarios.1. Since valuations are generally positive we first develop approximations using the log-normal distribution. This would be useful for many finance related auction settings since asset prices are usually non-negative.2. We formulate a positive symmetric discrete distribution, which is likely to be followed by the total number of auction participants, and incorporate this into auction theory results.3. We develop extensions when the valuations of the bidders are interdependent and incorporate all the results developed into a final combined realistic setting.4. Our methods can be a practical tool for bidders and auction sellers to maximize their profits. The models developed here could be potentially useful for inventory estimation and for wholesale procurement of financial instruments and also non-financial commodities.All the propositions are new results and they refer to existing results which are stated as Lemmas.     

Regulation,Minimum Wage and Informality: Introduction to Symposium

Are markets in developing and transition economies over‐regulated or under‐regulated? This is a perennial question in the development discourse, but one for which answers appear to come more from preset ideology than from context‐specific analysis and evidence. These issues become even more pressing when the debate turns to the links between regulation, deregulation and inequality. The recent experience of rising inequality in many countries has also brought to the fore predictable policy positions. A key aspect of labor regulation in developing countries, and one becoming more prominent in the era of rising inequality, is the minimum wage. The range of issues around regulation, minimum wage and informality was addressed by papers presented to a conference held in New Delhi on December 17–18, 2014. The conference was co‐sponsored by the World Bank, UK Department for International Development, Cornell University and Columbia University. The organizers of the conference were Kaushik Basu, Stefan Dercon, Ravi Kanbur and Jan Svejnar. A selection of papers from the conference which passed the usual review procedures of the Review of Development Economics, and a further selection of papers from those submitted to the journal, form this symposium.     

Foreign Capital and Urban Congestion in Emerging Markets

Traditional literature emphasizes the role of foreign capital, especially foreign direct investment (FDI) in explaining the high growth rates that many emerging economies have enjoyed during 1990s and 2000s. The present paper accepts this conventional wisdom but argues that the FDI has also created problems of urban sprawl and congestion that would not be so intense if economic development had primarily come from domestic sources. This is because the FDI is typically concentrated in urban areas that abound in manufacturing and it neglects the rural areas where agriculture predominates. The paper suggests that a small tax on foreign capital tends to mitigate the side effects of foreign investment.     

Senior Pleasure Tourists: Examination of Their Demography,Travel Experience,and Travel Behavior Upon Visiting the Bangkok Metropolis

The senior travel market has become an increasingly important area of interest to travel agents. This study examines senior travellers based on their travel experience, behavior, and overall experience on visiting Thailand, in terms of their age, marital status, and education. In this study, a sample of 384 senior foreign tourists responded to a survey carried out at the Bangkok International airport. Seniors are shown not to be a uniform conservative market, which has implications for product development. Profiles differed in the priority attached to travel experience factored into health, safety, language, itineraries, and general conditions in connection with travel. Travel behavior of seniors also differs in terms of types of tour, lodging preference, outdoor activity, mode of transportation, type of information used, and people travelled with. Recommendations based on these findings have strategic implications for travel companies and travel organizers.     

The accuracy of IPO earnings forecasts in Thailand and their relationships with stock market valuation

In order to help reduce information asymmetry between managers and prospective investors, IPO prospectuses in Thailand are required to publish managers' forecasts of the forthcoming year's earnings. This type of direct disclosure is especially important in a developing economy such as Thailand where financial intermediaries and information vendors are relatively sparse, and where investors are rarely professionals. Our results demonstrate that managers' earnings forecasts are much more accurate than extrapolations of historical earnings. We show that forecast accuracy is related to underpricing, and it has a directional, but not statistical, association with one-year stock returns and one-year wealth relatives.