FLYPAPER EFFECT INCORPORATING SPATIAL INTERDEPENDENCE

This paper examines the decentralization process in the state of Maharashtra. Among the states in India, Maharashtra's efforts at decentralization are regarded as a success story. Using cross‐section data for 243 urban local governments, the paper examines the flypaper effect, that is, the expenditure stimulus of grants from the state government to the urban governments. The significance of spatial factors has been highlighted in the study. The models have been estimated using spatial econometric techniques. Most of the estimated models show the presence of the flypaper effect.     

Shareholder Value Maximisation,Stock Market and New Technology: Should the US Corporate Model be the Universal Standard? 1

In 1992 a blue‐ribbon group of US economists led by Michael Porter concluded that the US stock market‐based corporate model was misallocating resources and jeopardising US competitiveness. The faster growth of US economy since then and the supposed US lead in the spread of information technology has brought new legitimacy to the stock market and the corporate model, which is being hailed as the universal standard. Two main conclusions of the analysis presented here are: (a) there is no warrant for revising the blue‐ribbon group’s conclusion; and (b) even US corporations let alone developing country ones would be better off not having stock market valuation as a corporate goal.     

Regional economic performance in China1

This paper investigates convergence patterns among China's provinces using GDP data for the period 1952–97. We analyze convergence behaviour on the basis of Markov chains proposed by Quah (1993 ) and the generalized entropy decomposition proposed by Shorrocks (1980, 1984 ). Both sets of results show similar evidence of convergence within the pre‐defined geo‐economic sub‐regions, but no evidence is found of convergence between the sub‐regions. This finding has important policy implications for regional economic development in China. JEL classification: C33, E20, O47.     

RESPONSE OF FINANCIAL MARKETS TO ANNOUNCEMENTS OF THE AUSTRALIAN CURRENT ACCOUNT BALANCE

This paper documents the response of exchange rates, interest rates and stock prices to monthly announcements of the Australian current account balance. Survey data on market participants' expectations and forecasts generated from ARIMA time series models are used to identify the unexpected component of the announcements. The study also controls for day-of-the-week effects that have been documented in the Australian equity market The results support the efficient market hypothesis and show a significant depreciation of the Australian dollar in foreign exchange markets and a significant rise in both short- and long-term interest rates to announcements of larger than expected current account deficits. The study was, however, unable to find evidence of a significant stock price response to the current account announcements.     

Transaction utility effects when quality is uncertain

The existing literature finds that price discrepancy, which represents the difference between expected and observed price, helps explain brand choice and purchase intention. This effect is often attributed to transaction utility, that is, the incremental utility associated with the surprise of observing a price lower or higher than expected. This research considers the possibility, however, that transaction utility is a less important determinant of choice when quality is uncertain. We propose and find that acquisition utility (perceived value for the money) tends to dominate the explanation of purchase intention, but transaction utility is significant only when consumers are more certain about quality. Our discussion considers the relative role of transaction utility in explaining consumer decision making and how the informative and allocative roles of price might be distinguished. He received his Ph.D. in marketing from Ohio State University and his B.S. from Ohio State University. His research interests include information economics and pricing. Previously, he taught at the University of South Carolina. He has published in theJournal of Consumer Research, Journal of Marketing, andJournal of Retailing, among others. He received his Ph.D. at the University of South Carolina, his M.B.A. from the University of Georgia, and a B.S. degree from Clemson University. Previously, he taught at the University of Alabama. His research interests include consumer perceptions of value and interpersonal influences. He has published in theJournal of Consumer Research and theJournal of Marketing Research, among others. He received his Ph.D. in marketing from the University of South Carolina and has a Bachelor’s degree in economics from the University of Delhi. His research interests include price bundling, price effects on perceived quality perceptions, and segmentation of business-to-business markets. He has published in theJournal of Business Research and theAdvances in Consumer Research series, published by the Association of Consumer Research. He previously taught on the faculty of Valdosta State University. She received a B.S. in statistics, a Ph.D. in marketing from the University of South Carolina, and a M.S. in statistics from Virginia Polytechnic Institute. She previously taught at Lehigh University. Her research interests include market segmentation, discrete data analysis, and pricing. She has published in theJournal of Marketing Research, as well as in theProceedings of the American Marketing Association and theAssociation for Consumer Research.     

An Asian Perspective on a World Environmental Organisation

We analyse the possible response from Asian developing countries (ADC) to the proposal for the formation of an international legal entity called World Environmental Organistion (WEO) designed to facilitate the internalisation of global environmental externalities. We argue that the WEO must recognise the fundamental indivisibility of the economic growthenvironment agenda in these countries. If suitable side payments in the shape of tariff concessions, relaxation of non‐tariff barriers and transfers of technology and cash are made and the WEO is seen to be relevant to the environmental problems of ADC, they may well participate in such a venture.     

On a Class of Asymptotically Risk-Efficient Sequential Procedures

A class of sequential procedures is developed for the point estimation of the parameter(s) of a population under a family of loss functions plus cost function of the general form. Condition on the initial sample size is determined which ensures the asymptotic ‘risk-efficiency’ of the proposed class. By means of various examples, it is shown that many sequential point estimation problems can be handled with the help of the proposed class.     

Caste Stratification and Wealth Inequality in India

We analyze the relationship between wealth inequality and caste divisions in India using nationally representative surveys on household wealth conducted during 1991–92 and 2002–03. According to our findings, the groups in India that are generally considered disadvantaged (known as Scheduled Castes or Scheduled Tribes) have, as one would expect, substantially lower wealth than the “forward” caste groups, while the Other Backward Classes and non-Hindus occupy positions in the middle. Using the ANOGI decomposition technique, we estimate that between-caste inequality accounted for about 13% of overall wealth inequality in 2002–03. The stratification parameters indicate that the forward caste Hindus overlap little with the other caste groups, while the latter have significantly higher degrees of overlap with one another and with the overall population. Using this method, we are also able to comment on the emergence and strengthening of a “creamy layer,” or relatively well-off group, among the disadvantaged groups, especially the Scheduled Tribes.