Business groups,the financial market and modernization*

Business groups are an important aspect of the industrial organization of many developing countries. This paper develops a theory suggesting that they may be organizations that facilitate modernization in the presence of financial market constraints. An important function of the stockmarket is the diversification of risk that comes with specialized, productive technology. But in the face of serious information problems a well functioning stockmarket may fail to emerge, relegating the economy to a low productivity‐poverty trap. Bilateral links between a firm and a group of others may be a more cost effective way to achieve risk‐sharing. Such business groups may be feasible when a full‐fledged stockmarket is not. As modernization takes place, either because information problems become less severe or more firms enter the economy, business groups actually expand in size before being abruptly rendered obsolete by the stockmarket. This is consistent with empirical results from a number of emerging economies.     

Labour contracts in a stock market economy

In this paper, labour contracts are examined in the context of a general stock market economy where all shareholders are risk averse, and firms act in shareholders interest. The problem considered is whether some firm can offer a wage contract that will make all its shareholders better off. We show by example that, contrary to the arguments in the partial equilibrium framework, it is possible that no such contract will exist, even when there are potential gains to risk sharing. A sufficient condition for the existence of a feasible pareto improving contract is given. It is shown that contract trading will arise provided some firm has no large shareholders.     

An equilibrium model of a second economy market in a centrally planned economy

We study a CPE in which an identical good is sold on the official market (OM) and a “second economy” market (SEM ). Planners set parameters. Managers divide inputs between markets to maximize expected utility of wealth. Consumers are expected utility maximizers who purchase the good on the OM or SEM. On the OM, excess demand exists at the non-Walrasian price; delivery date is stochastic. The SEM offers immediate availability. Our solution concept involves the rational expectations of managers, the consistency of consumers' decisions, and a market-clearing SEM. We solve for SEM price and supply and investigate various comparative statics.     

Foreign exchange controls in a black market economy

An investigation of the impact of foreign exchange controls in a black market economy is undertaken within the context of a choice-theoretic cash-in-advance general equilibrium model. While such controls may improve a ‘distortion-free’ economy's trade balance and balance of payments they are found to increase the domestic price of imports and lower the country's welfare. The ramifications of black market for economic welfare turn out to be ambiguous, depending crucially on the government's reaction to the leakage of foreign exchange into the economy via illegal activity.     

Foreign exchange market regularities in a developing economy

The purpose of this paper is to demonstrate that the ‘empirical regularities’ observed for exchange rates in the major foreign exchange markets apply equally to the case of a developing economy such as Singapore.     

A proposal for a democratic market economy

A type of market socialism is proposed for the United States both as a means of attaining more social equality than private ownership of corporate business makes politically and economically feasible, and of advancing a whole range of liberal purposes by undermining direct and indirect political power of the conservative business community. It is proposed to transfer ownership of corporate business to a system of local-government investment funds under specified national regulation. Such a system could retain all the economic advantages of capitalism, while facilitating better control of inflation, and would have genuine political feasibility in the United States.     

Public support for creating a market economy in Eastern Europe

Employing two large databases, we analyze the determinants of public support for the creation of a market economy in Eastern Europe. From a macroeconomic perspective inflation, unemployment, privatization, and enterprise restructuring reduce this support; alternatively, democratization, the creation of working financial markets, and foreign aid per capita increase support for the market. Across countries, higher inequality undermines market support. From a microeconomic perspective, labor market status, both the objective and the subjective economic situations of a person, political orientation, and the socio-demographic background of the respondent affect support for the market economy. For example, unemployed, relatively poor, older, female, and less-educated respondents living in rural areas are less inclined to favor the creation of a market economy. Journal of Comparative Economics 32 (4) (2004) 720–744.     

现代市场经济的现代性

现代市场经济不再是单一的自由放任的市场经济或单一的国家干预的市场经济，而是“看不见的手”和“看得见的手”两手并用互动的市场经济。就是那只“看不见的手”现在能见度也大为提高，不可同日而语。我们应当放弃把供给管理属市场、需求管理属国家的这种已不合时宜的形而上学的理念，同时注重供给管理和需求管理，在双重管理中发挥市场和国家和双重作用。中国对现代西方经济学各派理论只能采用同一态度：批判与借鉴，没有必要有倾向性的热一派冷一派，以免让人误以为中国是要崇尚那派而增加盲目性。     

Privatisation in transition from central planning to a market economy in Czecho-Slovakia

Conclusions The success of privatisation is closely linked to the success of the transition policy. The lack of a capital market impairs any prospect of successful privatisation. The effects of macroeconomic stabilization policies on privatisation is controversial. Inflation may discourage investments in privatisation. Failure of competition policies may create private monopolies. Management incompetence may bring about PEs failures.One conclusion can be drawn from this picture: privatizing is a very complex undertaking. Its success requires very complex political efforts aimed at improving efficiency, competitiveness and modernization of Czecho-Slovak enterprises.     

政府干预经济及其在市场经济中角色的确立

不能以"守夜人"来佐证政府干预经济的不合理性;政府干预并非完全基于市场失灵;好政府干预与坏政府干预是不同的;政府干预与市场调节不能完全替代;政府在经济中的角色岂止是干预;当代,政府不仅是宏观经济的调控者,而且是公共产品和公共服务的提供者,国家竞争力的培育者,市场秩序的维护者和社会保障体系的建设者;要处理好市场配置资源与政府行为的关系.     

论市场经济的复杂性

论证了市场经济作为一个自发生成的开放系统,其本源是非设计性的,其发展趋势是难以完全预测和驾驭的;作为一个开放的自组织系统,其本性不是像经典力学的封闭型热力学系统那样"自动趋于均衡",其常态是非均衡的、变动不居的;作为一个属人的复杂系统,其运行不能不受到具有迥然相异之意志、欲望和需求的人们的各种行为的干扰,也不能不受到它运行于其中自然环境、社会制度、历史文化、传统习俗等因素的制约,其未来充满不确定性.社会主义市场经济既具有市场经济一般意义上的复杂性,又具有基于社会主义初级阶段基本国情的特殊意义上的复杂性.中国的理论经济学研究应当正视这个基本事实.     

The impact of climate change skepticism on adaptation in a market economy

Climate change will increase the risk of temperature extremes. Induced innovation could offset some of this threat. This paper explores the demand and supply for climate adaptation innovation in a market economy. Such innovation attenuates the past relationship between the population death rate and extreme heat. Climate change induces this innovation because the rising temperatures increase demand for self protection products and for profit firms respond to these incentives. We then augment the model to introduce “climate skeptics”. Such skeptics reject the claim that the world’s average temperature is rising and thus do not increasingly demand adaptation products. In an economy featuring no government to enact optimal taxation, we quantify how rational agents are affected by the presence of climate skeptics.     

Labor market reform and incidence of child labor in a developing economy

The paper is purported to examine the consequences of possible labor market reform in the developing economies on the incidence of child labor and economic well-being of the child labor supplying families. A two-sector, full-employment general equilibrium structure with child labor and imperfection in the market for adult labor has been used for the analytical purpose. Although this policy is likely to lower the incidence of child labor the welfare of the families supplying child labor worsens. The paper, therefore, questions the desirability of a policy designed at mitigating the child labor problem especially when it makes the poor families worse off.     

A model of the socialist firm in transition to a market economy

This paper models the dynamic adjustment path of a socialist firm in transition to a market economy by a price shock that renders old capital obsolete. The firm can adjust with investment in more productive capital equipments. The optimal time paths of investment, output, and employment are analyzed and the impact of fiscal incentives like investment subsidies and a reduced corporate income tax rate are studied. Like output, the aggregate capital stock follows a J-curve. The conditions for viability of firms and the impact of variables such as wage increases on the value of the firm are discussed.     

Changing patterns of transfers in Slovenia in the last three decades: transition from a socialist economy to a market economy

Rapid population ageing increases interest in economic flows across ages and intergenerational transfers in general. This article uses the National Transfer Accounts methodology to measure consumption and production at each age, and how the difference between consumption and production is financed through (private and public) transfers and the interaction with assets, i.e. ‘asset-based reallocations’. During working ages, people earn more than they consume and with the surplus they finance the deficit of the young and old generations who consume more than they produce. Such a pattern of economic dependency is universal across countries and across time, but huge differences exist in the ages at which individuals produce more than they consume and vice versa. Moreover, the importance of private and public transfers and asset-based reallocations varies across countries and times. In the last three decades, life expectancy at birth in Slovenia increased by 9.3 years, while the age span in which production exceeds consumption narrowed rather than increased. Child dependents are predominantly financed by private transfers, whereas the elderly mainly rely on public transfers. Young and old individuals increasingly rely on public transfers. Together with rapid population ageing, this is likely to jeopardise the public finance system in the future.