Inflation, the credit market, and economic growth

This paper presents a model which predicts a negative, non-linearrelationship between the rate of inflation and rate of outputgrowth, as observed in many empirical studies. The model describesan economy in which credit market imperfections arise due toasymmetric information between lenders and borrowers. Withinthis environment, two types of lending regime are possible—arationing regime, where high and low risk borrowers are separatedby means of credit rationing, and a screening regime, whereseparation takes place through costly information acquisition.An increase in the inflation rate alters lenders' behaviourin such a way (by increasing the incidence of rationing or thelevel of costly screening, or by switching the lending regimefrom screening to rationing) that adverse growth effect of inflationis magnified. The analysis provides a basis for the empiricalfinding that growth effect of inflation may be strongest insome specific range of inflation.     

Inflation,Inflation Uncertainty,and Relative Price Variability

This paper tests three models that predict a relationship between the variability of relative price changes (RPV) and aspects of inflation such as expected inflation, unexpected inflation, and inflation uncertainty. These are, respectively, the menu-costs model, the Lucas-Barro signal-extraction model, and the Hercowitz-Cukierman extension of the Lucas-Barro model that allows for different price elasticities of supply across markets. The results imply rejection of the hypothesis that any one of the models entirely explains the relationship between inflation and RPV and also imply rejection of the hypothesis that the three models together jointly explain the relationship.     

Minority firms, racism and economic development

Despite the prominence of minority firms within inner-city areas across the country, relatively little is known of their makeup, problems and relations with external agencies. Drawing on a study of 50 Asian employers and key players in local support bodies in the typical inner-city area of Wolverhampton, this paper assesses the market and managerial structure of minority firms, and their links with support agencies. It is argued that racism is a significant constraint on the development of such firms; and that current support from external agencies is lacking. A more focused and higher profile role for a dedicated “Asian Business Unit” is suggested as a strategy for the development of minority enterprise.     

Goods Inflation,Asset Inflation,and the Greatest Peacetime Inflation in the US

In every episode of global monetary inflation originating in the Federal Reserve, we find both asset price inflation and goods inflation. The interrelationship between these two types of inflation depends both on cycle-specific factors and more general factors which transcend the cycle and stem from essential aspects of monetary disorder. The purpose of this article is to analyse the nature of this interrelationship and elaborate on the concepts of monetary disorder, goods inflation, and asset inflation. In today’s world of monetary systems where there is no stable demand for high-powered money (which itself is no longer a highly distinct asset) monetary disorder can be hard to recognize until quite late in the inflationary process. Asset price inflation now has a popular meaning quite different from the original found in Austrian business cycle theory. Two decades of widespread inflation targeting at around 2% per annum have encouraged us to ignore an old lesson. In a well-functioning capitalist economy under a sound money order, prices would fluctuate considerably upwards and downwards with a tendency to revert to the mean over the very long run. Finally the principles and hypotheses developed here are analysed in the laboratory of history, specifically for the greatest peacetime inflation in the U.S. (1963–80).     

Flexible exchange rates,inflation and economic development

Different economies have different propensities to generate inflationary pressures, and different capacity to absorb the strains occasioned by price and wage increases. Because of economic and institutional features of less developed countries, expansionary policies may have to be undertaken in a ‘typical” developing country, more often and to a greater extent than in a ‘typical’ developed country. Even a mild rate of inflation will be damaging under a fixed-exchange-rate system, if domestic prices increase at a faster pace than prices abroad. Chronic balance-of-payments difficulties are confronted by inflationary countries that are attached to a fixed-exchange-rate system. Rather than sporadic, substantial devaluations, periodical mini-devaluations may be advisable in developing countries with a relatively high propensity to inflate.     

Women and economic development

This article relates some experiences of local authority interventions in Wolverhampton which have contributed to effective economic development work with women. The intention is to highlight approaches and actions which we believe need to be incorporated into local authority economic strategy in order to address women's needs. We also aim to identify certain limiting factors arising from the national context. The paper is based on work undertaken by the authors whilst working for Wolverhampton Council.     

Population and economic development

The traditional view has been that population growth has adverse effects on real per capita incomes. China's restrictive population policy appears to have been based on the traditional view. There is substantial evidence that contradicts the conclusion that population growth is adverse to economic growth. Most empirical analyses of the relationship between population and economic growth do not find that there is an adverse effect. The history of the world has been that periods of low population growth have been periods of low economic growth and that high rates of economic growth have occurred when population growth is also high. Most of human history has had low population and low economic growth. Only recently has there been both rapid population and economic growth.     

Urbanization and economic development

"This paper seeks to contribute to the discussion on the relationship between the levels of urbanization, levels of economic development and the pattern of economic activities." The focus is on the situation in developing countries, and the data are from published World Bank sources. Data on per capita income are used to stratify countries into development levels. The study includes data on centrally planned economies and on African countries.     

Upgrading labor quality,structural change,and economic development

Economic development involves fundamental structural changes that move resources from agriculture to industry, from low value-added to high value-added activities. In this paper, this basic theme in development economics is formalized in a simple model, comparable to the neoclassical model of trade and growth. In the proposed model, free trade realizes static efficiency of comparative advantage but tends to preserve the status quo in which the South trades primarily commodities for manufacturers with the North. Through facilitating accumulation of human capital, the trade policy that protects domestic high value-added activities may raise welfare in the long run.     

通货膨胀、通货膨胀不确定性与中国实际产出增长

基于中国1993年1月至2010年12月的月度数据,本文采用双变量GARCH模型测量了中国通货膨胀不确定性,并借助于传统的Granger因果检验以及基于马尔科夫区制转移向量自回归(MS-VAR)模型下Granger因果检验等方法对通货膨胀、通货膨胀不确定性与中国实际产出增长进行了实证研究.本文研究发现:中国通货膨胀和通货膨胀不确定性之间存在着Granger意义上的双向因果性,在作用机制上支持了Okun-Friedman理论假说以及Holland论断;传统的Granger因果检验表明中国通货膨胀、通货膨胀不确定性对中国实际产出增长之间存在Granger意义上的因果性,但是基于MS-VAR模型的Granger因果检验研究则表明上述因果性仅存在于特定的机制下.     

Exports,Inflation and Growth

This article seeks to identify some of the main determinants of exports and economic growth in cross-sectional data from the World Bank covering 160 countries for 1985–94. First, the linkages between the propensity to export and population, per capita income, agriculture, primary exports and inflation are studied by statistical methods. Then, the relationship between economic growth and some of the above-mentioned determinants of exports as well as investment are scrutinized the same way. The main conclusion is that, in the period under review, high inflation and an abundance of natural resources tended to be associated with low exports and slow growth.     

India's missing girls: biology, customs, and economic development

We review the evidence on the sex ratio among children belowthe age of six. International evidence shows that the sex ratioat birth is slightly biased towards boys, but boys suffer greatermortality, a pattern consistent with Darwinian evolution. Witheconomic development, the male bias in the child sex ratio increases.South and East India show levels and trends in the child sexratio that are consistent with this evidence. However, unbalancedsex ratios in the northern and western states since the firstcensuses indicate discrimination against girls. Technologicaldevelopments permitting sex-selective abortions have seriouslyaggravated the imbalances in these states. Economic modellingof parental choice regarding a child's gender suggests thatgender imbalances may be consistent with individual maximizationand marriage-market equilibrium. Nevertheless, these choiceshave adverse welfare consequences, which will be aggravatedby the decline in population growth and consequent relaxationof the ‘marriage squeeze’.     

Monetary Aggregates Targeting,Inflation Targeting and Inflation Stabilization in Ghana

The central bank of Ghana (BoG) has operated monetary aggregates targeting and inflation targeting since the 1980s, to ensure enhanced output growth, low unemployment and stable, low inflation. Under inflation targeting, the inflation rate averaged 13.26 per cent per annum between 2007 and 2015, compared with 29.22 per cent per annum under monetary aggregates targeting. The relatively lower inflation rates notwithstanding, an average inflation rate of 13.2 per cent per annum is far above the medium‐term target of 8 per cent. This paper has examined the effectiveness of monetary aggregates targeting and inflation targeting in keeping inflation at moderate levels. The autoregressive distributed lag (ARDL) model was applied to the data covering the period 1970–2015. The results show that monetary targeting has steered inflation to moderate levels only in the short run while inflation targeting has maintained low inflation rates in both short run and long run. But neither regime has kept inflation at stable levels and within the target band, due to the sluggish transmission of broad money supply and prime rate changes to inflation. We implore the monetary authorities to strengthen the institutional setup for steering short‐term interest rates in Ghana. They should also enhance the BoG Act 2002 (Act 612), to develop secondary anchors and rules around output, money supply and fiscal deficit. Finally, the monetary policy committee should monetary policy credibility and transparency through strengthening its communication framework.     

Job-centred economic development

Giloth, Robert P. (ed) 1998: JOBS AND ECONOMIC DEVELOPMENT: STRATEGIES AND PRACTICE. London: Sage, £14.99 paper, £31.00 cased.