Whither the terms of trade? An elaboration of the Prebisch-Singer hypothesis

Movements in the prices of primary products and manufacturedgoods are analysed using a model that introduces differencesin wage and price determination between primary production andmanufacturing. Wages and prices in primary production are treatedas competitively determined, while prices and wages in manufacturingare determined by mark-up pricing and union-employer bargaining,respectively. The objective is to capture the influence of structuraldifferences between manufacturing and primary production onthe terms of trade between industrialised and developing worldsas discussed in the seminal contributions to the developmentliterature by Raul Prebisch and Hans Singer. The model is estimatedusing price and wage data from the post-World War II period.Support is found for the Prebisch-Singer hypothesis; however,our estimates suggest that, during periods of particularly rapidmanufacturing growth, there have been intervals of net improvementin the terms of trade of primary producers.     

Low-wage manufacturing and global commodity chains: a model in the unequal exchange tradition

The institutional setting of subcontracted manufacturing hasa profound impact on how the benefits of trade are distributed.This paper develops a model that combines insights from unequalexchange theorists and global commodity chain analysis to clarifythe distributive dynamics of production networks in which subcontractingand branding are defining features. In this framework, the abilityof productivity growth to increase income from exports is constrainedand depends on how the benefits of productivity improvementsare captured—as lower consumer prices or higher rentsfor brand-name multinationals. Increasing consumption in affluentconsumer markets raises export earnings. However, developingcountries, acting alone, are constrained in their ability toaffect the demand side of global commodity chains. Instead,supply-side policies to support industrial upgrading representa more viable option for raising incomes.     

"潜规则"演进的博弈论解释

潜规则是利益主体经过长期博弈形成的稳定的内部制度,在很大程度上是基于非常现实的利害计算。演化博弈分析表明,潜规则的扩散与初始条件有非常敏感的关系,同时,它一旦产生就有强烈的自加强趋势。要缩小或消灭潜规则,必须改进显规则,引进新的机制,改变潜规则的生态环境。     

Convenience yield and real exchange rate dynamics: A present-value interpretation

In this paper, we empirically investigate the relationship between the convenience yield of government bonds and the real exchange rates using monthly data from 1999 to 2018. We extend the conventional models, based on the present-value relationship between the real exchange rate and economic fundamentals, while explicitly considering the role of the convenience yield. Empirical results suggest that our present-value models can capture the dynamic properties of the real exchange rate documented in the literature, including high persistence, excess volatility and excess co-movement compared with real interest rate differentials. We also find that the sum of expected convenience yields significantly drives real exchange rate movements. Moreover, we find that foreign exchange swap market friction also plays a role in explaining real exchange rates. Finally, we find that monetary policy at the zero lower bound may be essential in real exchange rate modelling.     

Sraffa's path to Production of Commodities by Means of Commodities. An interpretation

The present article provides a reconstruction of the path followedby Sraffa in the long journey (begun in the late 1920s) whichbrought him to his 1960 book. The starting point of Sraffa'sresearch was the formulation of his cost-price equations, whichsurprisingly enough appear to have been derived neither fromRicardo's theory of value, nor from Marx's ‘transformationof values into prices of production’, but rather fromMarx's reproduction schemes, published in volume II of Capital,to which Sraffa was almost certainly brought by his study ofMarx's interpretation of Physiocratic theory in volume I ofTheories of Surplus Value. The main device that Sraffa usedin his attempts to bring to light the existence of solutionsto his system and their properties, which basically meant buildinga consistent wage–profit–price relationship, wasthat of somehow cutting out the prices from this relationship.The paper shows that different routes were attempted by Sraffato achieve this end, and that the main influences on these attemptswere Ricardo and Marx, in particular Ricardo's corn-ratio theoryof profits, and the related conception of a maximum rate ofprofits. In the course of his research, Sraffa was helped bysome distinguished mathematicians, in particular Frank P. Ramseyand Abram S. Besicovitch. Of Ramsey's contribution there areimportant traces, but no more than traces, while ample recordsremain of the relationship between Sraffa and Besicovitch, andthey will play an important part in the story told in this paper.     

Productivity,real exchange rate,and aggregate demand: An empirical exercise applied to Brazil from 1960 to 2011

This research analyzes, from a post Kaleckian perspective, the interactions among the aggregate demand, the real exchange rate, productivity, and real wages in the Brazilian economy from 1960 to 2011. It adopts the longstanding perspective that demand is the driver of capital accumulation and economic growth. The research comprises the following steps: (a) a critical assessment of the growth regime literature, with a particular emphasis on issues related to productivity and the real exchange rate; (b) understanding the relationship between the real exchange rate and the productivity and growth regimes; (c) proposing a theoretical model that relates the real exchange rate, productivity, and the growth regime; and (d) an empirical test of the interaction between the real exchange rate, productivity, and the growth regime. Theoretically the study develops a model showing the interactions between the aggregate demand, the real exchange rate, productivity, and real wages. Furthermore, this research attempts to address the lack of theoretical and empirical studies about the relationship between the aggregate demand, the real exchange rate, productivity and real wages.     

An extensive form interpretation of the private core

Summary. The private core of an economy with differential information, (Yannelis (1991)), is the set of all state-wise feasible and private information measurable allocations which cannot be dominated, in terms of ex ante expected utility functions, by state-wise feasible and private information measurable net trades of any coalition. It is coalitionally Bayesian incentive compatible and also takes into account the information superiority of an individual. We provide a noncooperative extensive form interpretation of the private core for three person games. We construct game trees which indicate the sequence of decisions and the information sets, and explain the rules for calculating ex ante expected payoffs. In the spirit of the Nash programme, the private core is thus shown to be supported by the perfect Bayesian equilibrium of a noncooperative game. The discussion contributes not only to the development of ideas but also to the understanding of the dynamics of how coalitionally incentive compatible contracts can be realized. Received: July 21, 2000; revised version: January 16, 2001     

Welfare effects of exchange controls: An application to the Haitian economy

This paper estimates monthly welfare losses and the shadow exchange rate that followed a policy of restrictions of access to foreign exchange, in force in the Haitian economy from 1985 to 1991. These losses are substantial. The determinants of the parallel market, another phenomenon consistent with such a policy of restrictions, are also estimated. The author thanks Steven A. Y. Lin, an anonymous referee, and seminar participants at the Latin American and Caribbean Economic Association 1997 meetings and the International Atlantic Economic Conference, Boston, MA, October 8–11, 1998, for helpful comments on earlier drafts. All remaining errors are the author's responsibility.     

Real exchange rates and real interest rate differentials: A present value interpretation

Although the real exchange rate-real interest rate (RERI) relationship is central to most open economy macroeconomic models, empirical support for the relationship is generally found to be rather weak. In this paper we re-investigate the RERI relationship using bilateral US real exchange rate data spanning the period 1978-2007. Instead of testing one particular model, we build on Campbell and Shiller [1987. Cointegration tests of present-value models. Journal of Political Economy 95, 1062-1088] to propose a metric of the economic significance of the relationship. Our empirical results provide robust evidence that the RERI link is economically significant and that the real interest rate differential is a reasonable approximation of the expected rate of depreciation over longer horizons.     

An Engelian model of growth and innovation with hierarchic consumer demand and unequal incomes

The paper develops an endogenous growth model which is based on lexicographical consumer preferences. The central variable determining the long-run rate of growth is personal income distribution. Its role in the process of growth depends crucially on the assumption about productivity growth. If productivity grows proportionally to product diversity, then an unequal distribution of incomes, measured by the rate of proportion of top to average incomes, has a positive effect on growth. However, under alternative assumptions, for instance, if productivity is a function of average income, inequality turns out to be harmful for economic growth.     

Kidney exchange: An egalitarian mechanism

Kidney exchange programs utilize both deceased-donor and live-donor kidneys. One of these programs, a two-way kidney paired donation (KPD), involves two patients exchanging their live donors? kidneys. Another possibility is a list exchange (LE): a living incompatible donor provides a kidney to a candidate on the deceased-donor waitlist and in return the intended recipient of this donor receives a priority on the waitlist. By taking into consideration the fact that transplants from live donors have a higher chance of success than those from cadavers, we characterize the set of efficient and egalitarian exchanges involving the KPD?s and LE?s.     

Nonlinear dynamics in exchange rate deviations from the monetary fundamentals: An empirical study

This paper reexamines empirical performance of the monetary exchange rate model with nonlinear dynamics of exchange rate deviation from the monetary fundamentals. First, we apply unit root test of Park and Shintani (2005) to post-Bretton Woods exchange rate data and able to reject the null of unit root deviation from monetary fundamentals against alternative hypothesis of nonlinear stationary process for deutschemark, pound, and Swiss franc. Our empirical results find that exchange rates show high degree of mean-reversion with larger deviation and long periods of overvaluation and undervaluation of dollar. We also find empirical evidence of predictability of the monetary fundamentals at longer horizons.     

Learning and behavioral stability An economic interpretation of genetic algorithms

This article tries to connect two separate strands of literature concerning genetic algorithms. On the one hand, extensive research took place in mathematics and closely related sciences in order to find out more about the properties of genetic algorithms as stochastic processes. On the other hand, recent economic literature uses genetic algorithms as a metaphor for social learning. This paper will face the question of what an economist can learn from the mathematical branch of research, especially concerning the convergence and stability properties of the genetic algorithm. It is shown that genetic algorithm learning is a compound of three different learning schemes. First, each particular scheme is analyzed. Then it is shown that it is the combination of the three schemes that gives genetic algorithm learning its special flair: A kind of stability somewhere in between asymptotic convergence and explosion.     

An operational interpretation and existence of the Aumann-Serrano index of riskiness

In this note we provide an operational interpretation of the economic index of riskiness of Aumann and Serrano (2008) and discuss its existence in the case of non-finite gambles.     

Adam Smith on colonies: An analytical and historical interpretation

It is our conclusion that Adam Smith advocated and justified policies of anticolonialism and antiprotectionism. Smith was opposed to the theory and policy of mercantilism, which involved an emphasis on the imperialistic exploitation of colonies as a method of accumulating the precious metals within the boundaries of mercantilistic nations. Smith led British public opinion into a period when little-Englandism replaced colonialism and free trade replaced protection. This period continued as long as the Industrial Revolution enabled England to dominate world trade. After 1875, however, the industrialization of the United States, Germany and Japan intensified the competitiveness of international trade and threatened to destroy British domination of world markets. These developments caused a resurgence of the new imperialism and motivated the British government to participate in the partition of Africa and to impose British hegomony over Asia. This new imperialism ran its bloody course of military aggression before it self-destructed at the end of the Second World War.     

The economics of Frank H. Knight: An Austrian interpretation

This paper interprets, in the modern Austrian economics perspective, Frank H. Knight's three core contributions; namely, economic methodology, theories of human action, uncertainty and entrepreneurship. Though Knight is regarded as one of the founding fathers of the Chicago School of economics, this paper argues that Knight's contributions are essentially Austrian. Influenced by William James, Henri Bergson and Max Weber, Knight's subjectivist economics can be seen as a link between Carl Menger and Ludwig von Mises in the history of Austrian subjectivism. This paper further suggests that Knight may be more appropriately located in the Austrian-German School, for the reason that the term “Austrian School” is too narrow to accommodate german influences. This paper concludes that Knight's legacies have left much to be appreciated by neoclassical mainstream economists in general and Austrian economists in particular. The author thanks Dian Kwan for her proof reading in this essay.     

Antipeponthos and reciprocity: the concept of equivalent exchange from Aristotle to Turgot

In modern discussions of reciprocity the concept is distinguished from that of self-interested exchange. In the problem of value in exchange, however, as set up in Aristotle’s Nicomachean Ethics the concept of reciprocity (antipeponthos) as equivalent exchange was central in commercial transactions. The paper discusses (1) the concept of antipeponthos in Aristotle, (2) how issues of trust and inequality of services provided were dealt in Aristotle and (3) the trajectory of the concept of equivalent exchange from Aristotle to Turgot.     

On the optimality of unequal class sizes

The Glass and Smith (Education and Evaluation and Policy Analysis, 1979, 1, 2–16) meta-analysis of class size studies is shown to have employed an inappropriate functional form, negating Lippman's (Economics Letters, 1990, 33, 193–196) result concerning the optimality of equal class sizes. Policy implications for department chairs are noted.     

Dynamics of the economic transition in Poland: An attempt at interpretation

The objective of this analysis is to describe, interpret, and assess the socioeconomic changes that took place in Poland during 1989 to 1997. This is a dynamic approach that considers the relationships that exist between successive phases of transformation and is characterized by both quantitative and qualitative analysis. The study is in three sections. The first section sets forth analytical tools and methods to study systemic transformation at large. It searches for the promising manner of a transition appraisal. The second section discusses division of the economy into sphere of regulation and real sphere. In turn, the third section includes a dynamic analysis of interrelationships between those spheres that are subject to changes in the course of transformation and, in various ways, shape the economic performance in Poland. Finally, this paper draws conclusions concerning the failures and successes of the economic transition.     

Oligopoly in markets with a continuum of traders: An asymptotic interpretation

This paper tries to make relevant for a finite economy the results of Shitovitz on the “pricing-out” of cores of economies with a non-atomles measure space of agents. It is hoped that the comparison of the two sets of results will shed light on the interpretation and modeling of a “large” trader.