Human capital, inequality, endogenous growth and educational subsidy: A theoretical analysis

This paper develops an endogenous growth model with dualism in human capital accumulation of two types of individuals. The government imposes a proportional income tax on rich individuals and uses the tax revenue to finance the educational subsidy given to poor individuals. We find out the properties of the optimal tax financed educational subsidy policy in the semi-stationary equilibrium of the model using the technique of Stackelberg differential game.     

Economic liberalization, capital mobility and informal wage in a small open economy: A theoretical analysis

Empirical evidence suggests that the size of the informal sector in the developing countries has increased considerably during the liberalized economic regime. The present paper purports to analyze the consequences of economic reforms on the wellbeing of the informal sector workforce using a three-sector general equilibrium model with two informal sectors. The theoretical analysis finds that different liberalized policies produce diverse effects on the informal wage and that these results are independent of the nature of capital mobility between the informal and the formal sectors. It also shows that labour market reforms, contrary to the common wisdom, are likely to produce favourable effects on the informal wage.     

Job-search and foreign capital inflow — A two sector general equilibrium analysis

The purpose of this paper is to extend the Fields' (1989) multi sector job-search model by introducing international trade and capital. Two types of capital are considered: fixed capital and mobile capital. The effects of search intensity and the inflow of foreign capital on the volume and the rate of urban unemployment and on the social welfare are also examined in both of the two cases. The main finding is: more efficient on-the-job search from the rural sector raises unemployment rate when capital is mobile between the two sectors. This is counterproductive to the standard result.     

Equity market and foreign capital

Abstract .  I present a model that demonstrates that the market mechanism is not always effective in stabilizing an open equity market. Foreign capital inflows create multiple equilibria in the equity market, which may simultaneously trigger a currency crisis as well as an equity market crash even if the equity market is well developed.     

Fundamentals, information, and international capital flows: A welfare analysis

In the recent discussion surrounding the design of a new international financial architecture, enhancing transparency has widely been proposed as a policy essential for increasing the efficiency of international capital markets. This paper uses a simple two-country (two-agent) general equilibrium model with incomplete markets and production to explore the welfare consequences of an increase in public information about country-specific fundamentals (increase in transparency). An improvement in the quality of information has two effects on the ex ante welfare of individual countries: A direct effect that increases the efficiency of global capital allocation and welfare, and an indirect general equilibrium effect that increases asset price volatility and may decrease welfare. When the degree of risk-aversion is low, at least one country will gain from an increase in information quality. If the degree of risk-aversion is high, then there are robust examples of economies for which an increase in information hurts all countries. The paper also discusses how certain institutional arrangements (international derivative markets, international agency) could ensure that all countries gain from better information by providing insurance against information-induced asset price risk.     

A risk-based rationale for two-way capital flows: Why do capital flights and inward foreign direct investments co-exist?

This paper develops a positive theory of two-way capital flows—the outward flight of productive capital, and inward foreign direct investment that acquires ownership of local production units. The model exploits insights from decision-making under uncertainty, and traces out how entrepreneurial incentive to engage in risky production impacts equilibrium returns on capital. Contrary to expectation, productive assets tend to flow from capital-poor to capital-rich economies, while foreign direct investment follows the reversed pattern. By examining the nature of optimal interventions, the paper also demonstrates the inherent conflict of interests between host and source countries engaged in capital market liberalization.     

Finance,investment and innovation: A theoretical and empirical comparative analysis

The paper compares the relative efficiency of country models in the relationship between finance and investments. Results, confirmed under three different panel data estimates (Arellano-Bond GMM method, random and fixed effect estimates) suggest that: i) the UK thick market reduces informational asymmetries for large firms and for those firms providing good signals to shareholders; ii) the Japanese vertical (between firms and banks) integration and horizontal (among firms) integration almost eliminates financial constraints (the horizontal integration effect) and equates agency costs across firms (the vertical integration effect). These results are consistent with the short-termist hypothesis which assumes that the Japanese economic system can process information more efficiently reducing managerial myopic behaviour and thereby determining positive effects on long term growth.     

Human capital in OECD countries: Technical change,efficiency and productivity

The aim of this paper is to analyse the role of human capital in the productivity gains of the OECD countries in the period 1965-90, breaking down the productivity gains into technical change and gains in efficiency. For this purpose we use both a stochastic frontier approach and a non-parametric approach (DEA) and calculate Malmquist indices of productivity. The results obtained indicate the existence of both a level effect (a higher level of human capital raises labour productivity) and a rate effect (a higher level of human capital affects positively the rate of technical change) associated with human capital. The differences among countries in endowments of human capital have worked against labour productivity convergence, since the richer countries, thanks to their greater endowment of human capital, have experienced higher rates of technical change.     

Technological change, human capital update and growth policies

This paper presents a model of growth driven simultaneously by innovation and human capital accumulation. Two different long-run equilibria are possible, according to whether or not workers skills are completely updated over time as knowledge expands. Skill gaps could arise as a consequence of poor education infrastructures, even in the efficient solution; in such circumstances, we find that whilst education policies are able to encourage growth, R&D policies are not. Otherwise, subsidizing education becomes ineffective for enhancing growth, although it could be necessary to avoid possible skill gaps originated by the R&D growth-enhancing policy.JEL Classification: O41, O33The authors wish to thank the financial support received for the project SEC 2001-2469 (Ministry of Science and Technology, Spain, and FEDER), as well as the comments of the co-editor and the referees.     

A structural model of human capital and manufacturing sector change

The relationship between manufacturing job losses per capita, changes in manufacturing earnings per worker, and human capital investment is examined empirically at the level of nearly 3,000 U.S. counties over the period 1980–90. Hypotheses tested address the questions of whether the sectoral composition of the local economy (in this case with an emphasis on manufacturing) affects per worker earnings growth and investment in human capital, and whether investment in human capital in turn affects the economy's sectoral composition and earnings growth. The simultaneous equations estimation reveals direct and indirect effects of initial levels of the endogenous variables on their change during the 1980s. These effects are compared with comprehensive effects obtained using a reduced form regression.Research underlying this paper was funded in part under the National Research Initiative, Competitive Grants Program of USDA/ERS (Grant no. 93-37401-9367). Neither this agency nor the University of Kentucky is responsible for views expressed here.     

The co-evolution of tax evasion,social capital and policy responses: a theoretical approach

The dynamic model presented in this paper intends to account for the evidence, which appears to be particularly significant for Italy, of the incidence of tax evasion in a certain region being negatively correlated with the level of social capital existing in that region. Besides including social capital among the determinants of tax evasion, we extend the model so as to incorporate a mechanism whereby the existing volume of opportunistic behavior—which is proxied by the level of tax evasion—has negative effects on the formation of new social capital, thus helping to explain how regional differences in the endowment of social capital and in the incidence of tax evasion co-evolve and why they tend to be highly persistent. The model seeks also to capture the fact that in a democracy the political determination necessary to effectively repress tax evasion depends on the voters’ propensity toward the phenomenon. Hence, one should expect that–in areas where a relatively large (small) number of citizens are tax cheaters—the consensus in favor of tough policies against tax evasion tends to be weak (strong) and short (long) lasting. Consistently with this intuition, the model shows that regions where social capital is relatively low and tax evasion is relatively high can do better in the long run (i.e., they can reach a steady state characterized by a higher level of social capital and a lower level of tax evasion) when tax-enforcement policies are determined at the national level rather than at the regional level. The opposite holds for regions where social capital is relatively high and tax evasion is relatively low.     

Foreign enclaves and economic development: A theoretical analysis

We consider an urban foreign enclave with sector-specific foreign capital in an otherwise mobile-capital Harris-Todaro model. We consider the taxation of foreign capital. A dynamic version of this model is considered. The long-run equilibrium and the comparative steady-state effects are analyzed. We get some interesting effects of reduction in tax rate on foreign capital on the short-run and the long-run equilibrium levels of domestic factor income and national income under some meaningful conditions.     

Dynamic inconsistency and non-preferential taxation of foreign capital

When capital is sunk after it is invested, a host government facing heterogeneous foreign investors has a strong incentive to reduce preferential taxes over time in order to attract less eager investors while fully expropriating past investors. This induces investors to wait rather than invest in the initial period, and leads to loss of tax revenue. This dynamic inconsistency problem is resolved if the host government commits to non-preferential taxation in each period even if it does not commit to future tax rates.     

Real exchange rates,asset prices and terms of trade: A theoretical analysis

This paper develops a continuous-time two-country dynamic equilibrium model, in which the real exchange rates, asset prices, and terms of trade are jointly determined in the presence of nontradable goods. The model determines the relation between the financial markets and real goods markets in the world economy and their responses to various shocks under the home bias assumption. A positive domestic supply shock induces a positive return on the domestic asset markets and a deterioration of terms of trade that improves the foreign output and boosts the foreign asset markets. Demand shocks act in the opposite way. This model also analyses the impact of change in the relative price of nontradable to tradable goods on the terms of trade and asset markets. A higher productivity growth in tradable goods than in nontradable goods leads to a higher relative price of nontradable to tradable goods, which appreciates the real exchange rate, deteriorates the terms of trade, and depresses the domestic and foreign asset markets. A lower relative price of nontradable goods depreciates the real exchange rate, improves the terms of trade, and lifts both the domestic and foreign asset markets.     

德国对外直接投资与利用外资的现状和特点

德国是世界第三强国,也是欧洲头号经济大国。1999年,德国国内生产总值为38772亿马克（19824亿欧元）;2000年为39761亿马克（20330亿欧元）,增幅达2.6%。德国是中国在欧洲最大的贸易与经济技术合作伙伴,了解、研究和分析德国最近十年的对外直接投资、利用外国直接投资的现状、特点及其国别、行业结构,对中国更有效地吸引德国企业来华投资,以及根据实际情况适当借鉴德国对外投资的经验均有启示作用。背景、现状与特点自1990年两德统一以来,随着贸易壁垒的日益消除和政治鸿沟的不断弥合,国际间资本流动明显加快,经济全球化不断向纵…     

Population ageing,time allocation and human capital: A general equilibrium analysis for Canada

This study explores the long-term impact of population ageing on labour supply and human capital investment in Canada, as well as the induced effects on productive capacity. The analysis is conducted with a dynamic computable overlapping generations model where in the spirit of Becker [Becker, Gary (1965), A theory of the allocation of time, The Economic Journal, Vol. 75, pp. 493–517.] and Heckman [Heckman, James (1976), A life-cycle model of earnings, learning and consumption, The Quarterly Journal of Economics, Vol. 84, pp. 511–544], leisure has a quality-time feature and labour supply and human capital investment decisions are endogenous. The role of human capital in the growth process is based on the framework used by Mankiw et al. [Mankiw, N. Gregory, Romer, David and Weil, David N. (1992), A contribution to the empirics of economic growth, Quarterly Journal of Economics, Vol. 107, no. 2, pp. 407–437]. The paper indicates that population ageing creates more opportunities for young individuals to invest in human capital and supply more skilled labour at middle age. Consequently, the reduction in labour supply of young adults initially lowers productive capacity and exacerbates the economic costs of population ageing. However, current and future middle-age cohorts are more skilled and work more, which eventually raises productive capacity and significantly lowers the cost of population ageing. Finally, these results suggest that the recent increase in the participation rate of older workers might be the beginning of a new trend that will amplify over the next decades.     

A normative analysis of public capital

A normative analysis of short-term public capital investment is carried out using cost benefit analysis. This cost benefit approach explicitly incorporates the durability of capital into the computation and thus include an aspect of public capital omitted from previous studies which focus on productivity. Estimation methods used else where have been improved by properly handling several concerns that have been raised. In addition, this behavioural model yields many structural equations suitable for estimation which results in highly efficient parameter estimates. Although a small elasticity is found for public capital, the benefit is greater than the cost.