MAKING WORK PAY FOR WELFARE RECIPIENTS

This paper describes five new welfare reform programs being tested in six areas of the United States and Canada. These programs all use financial incentives to encourage selfsufficiency among welfare recipients. Some programs also provide employment and training services. A microsimulation model is used to predict the impacts of the two most generous programs: the Canadian Self-Sufficiency Project (SSP) and the Minnesota Family Investment Program (MFIP). The simulation results suggest that SSP and MFIP will modestly increase the number of welfare recipients who work. However, because SSP has a fulltime work requirement and MFIP does not, only SSP is predicted to generate an increase in fulltime employment     

THE OPTIMAL MINIMUM WAGE FOR POVERTY MINIMIZATION

This paper characterizes the poverty minimizing minimum wage, and shows how it varies as productivity, inequality and market competitiveness change. We show that the optimal minimum wage is equal to the competitive wage only in special cases. In general, the former is higher than the latter. Thus, poverty minimization does not coincide with employment maximization. We also show that the optimal minimum wage always rises with productivity and, under certain conditions, falls with competitiveness and inequality. Furthermore, the higher the competitiveness and inequality, the more the optimal wage rises with productivity.     

A SEARCH FOR CLOSER ECONOMIC RELATIONS IN EAST ASIA

In recent years, growing interdependence in East Asia through trade and financial cooperation heightened the need for East Asian Economies to engage in closer regional economic relations. This paper attempts to discuss emerging economic integration efforts in East Asia with special reference to bilateral and regional free trade agreements. It discusses backgrounds for recent developments of East Asian regionalism in terms of deepening intraregional economic dependence and financial cooperation, and South Korea's position towards FTAs with major trading partners as well as East Asian economic integration. Important issues and challenges for an East Asian FTA are presented.     

OPTIMAL CAPITAL TAXES FOR PUBLIC GOOD PROVISION*

This paper constructs a general equilibrium trade model of a small open economy that produces many traded private goods and one non-traded public consumption good. Trade in goods is free, but the country taxes the internationally mobile capital to finance the provision of the public good. Within this framework, the paper identifies the conditions under which the optimal policy on the internationally mobile capital calls for a tax. Under the assumptions that (i) the welfare function is concave with respect to the tax rate, and (ii) the net revenue-maximizing capital tax rate is positive, it is shown that the marginal cost of the public good always understates its social marginal cost.     

基于有序搜索算法的土地利用外业调查最优路径规划

最优路径分析是地理信息系统空间分析的重要技术之一,在理论和应用上有着广泛而深入的研究。结合土地利用外业调查的特点和要求,综合分析了复杂的地形情况,建立了代价函数的数学模型,并基于栅格数据,采用有序搜索算法实现最优路径搜索。     

努力开创无锡宣传思想工作新局面

宣传思想战线是党的一条重要战线,宣传思想工作是党的一项重要工作。在深入贯彻落实党的十六大精神,全面建设小康社会、率先基本实现现代化的新形势下,宣传思想工作要坚持以邓小平理论和“三个代表”重要思想为指导,以全面准确深入地学习宣传贯彻党的十六大精神为主线,以全面建设小康社会、率先基本实现现代化为目标,解放思想、实事求是、与时俱进、开拓创新,以科学的理论武装人,以正确的舆论引导人,以高尚的精神塑造人,以优秀的作品鼓舞人,统一思想,坚定信心,凝聚力量,振奋精神,为无锡改革开放和现代化建设提供强大的思想保证、精神动力和…     

AN OPTIMAL SCHEME FOR INJECTING PUBLIC FUNDS UNDER THE MORAL HAZARD INCENTIVE FOR BANKS

I consider whether the injection of cash funds into a bank through the purchase of securities together with a bank closure policy can be designed as a strong incentive instrument for preventing the bank from taking moral hazard action in the presence of deposit insurance. Under certain conditions, the regulator's optimal policy can be to inject new cash funds into a bank through the purchase of securities, even though there are no bankruptcy costs. Furthermore, the regulator may transform the private bank into a government-owned bank. However, this kind of injection policy cannot be independent of the bank closure policy.     

OPTIMAL POLICY FOR PRODUCT R&D WITH ENDOGENOUS QUALITY ORDERING: ASYMMETRIC DUOPOLY*

We examine the optimal R&D subsidy/tax policy under a vertically differentiated duopoly. In a significant departure from the existing work, we consider the case of asymmetric costs of product R&D where there is a small technology gap between firms. In our analysis, the endogeneity of quality ordering is explicitly taken into account. We demonstrate the possible anti‐leapfrogging effect of R&D subsidy/tax policy. By committing to a firm‐specific subsidy schedule contingent on firms’ quality choices, the government can not only correct distortions in product quality but also select the socially preferred equilibrium. The latter role is fulfilled by preventing the technologically inferior firm from becoming a quality leader in the industry. Both Bertrand and Cournot cases are analysed.     

OPTIMAL WEIGHT FOR REALIZED VARIANCE BASED ON INTERMITTENT HIGH‐FREQUENCY DATA*

Japanese stock markets have two types of breaks, overnight and lunch, during which no trading occurs, causing an inevitable increased variance in estimating daily volatility via a naive realized variance (RV). In order to perform a more stabilized estimation, we modify Hansen and Lunde's weighting technique. As an empirical study, we estimate optimal weights by using a particular approach for Japanese stock data listed on the Tokyo Stock Exchange, and then compare the forecast performance of weighted and non‐weighted RV through an autoregressive fractionally integrated moving average model. The empirical result indicates that the appropriate use of the optimally weighted RV can lead to remarkably smaller estimation variance compared with the naive RV, in many series. Therefore a more accurate forecasting of daily volatility data is obtained. Finally, we perform a Monte Carlo simulation to support the empirical result.     

SEARCH EXTERNALITIES IN MACROECONOMIC THEORY

The paper gives a survey of the basic features of macroeconomic models with search externalities. It presents a simple static general equilibrium model with search externalities. Within this context the main results characterizing steady state in dynamic search models are reproduced in a simple context. Specifically, the link between transaction technology and strategic complementarity is analysed. It is shown that increasing returns to scale in the transaction technology create feed-back effects and multiple, Pareto-ranked equilibria may arise. With economies of scale in matching, fluctuations in the economy can be large even with a low elasticity of search activity. The formal equivalence to models with investment externalities is analysed. In an application to the labour market, the allocative role of wages in the presence of search frictions and hysteresis effects are discussed. General conditions are given under which the set of welfare ranked equilibria is described by a closed loop. Finally, it is shown that with a more general transaction technology, even with constant returns to scale multiple equilibria may occur in the presence of externalities.     

OPTIMAL FOREIGN BORROWING REVISITED

Foreign capital has become increasingly important in financing investment and growth in developing countries. Foreign capital flows, however, can be volatile as is evident from the recent financial crises. It has also recently been noted by researchers that there is little systematic empirical evidence that foreign capital contributes to the economic growth of developing countries. In this context, this paper attempts to theoretically reevaluate the borrowing behaviour of a developing economy that relies on foreign borrowing for its capital formation. In particular, this paper investigates the implications of different lending policies of international financial institutions. It is found that no matter whether the borrowing interest rate increases with the level of foreign debt per capita or with the foreign‐capital/total‐capital ratio, the economy always moves toward the stationary state. The result holds even when the representative agent regards the interest rate given as constant. This implies that foreign borrowing does help economic growth, irrespective of lending policies of international financial institutions.     

ON EMPLOYMENT CONTRACTS WITH ENDOGENOUS ON-THE-JOB SEARCH

We consider an equilibrium search model and employment contracts when workers have endogenous on-the-job search. When a firm tries to retain an employee by matching outside offers, variable search intensity leads to a moral hazard problem. We first consider workers with identical productivities. We derive an equilibrium where firms commit not to respond to outside offers and workers search less. Second, we investigate the case with heterogeneous workers and asymmetric information. Assuming that firms can commit to retain all workers irrespective of their ability, we establish conditions under which it is optimal to do so. This policy again reduces the incentive for active on-the-job search. We discuss an equilibrium where all firms use these so-called ‘pooling’ contracts.     

TRAINING,TURNOVER, AND SEARCH*

This article explores a model of firm‐specific training in a job search environment with labor turnover. The main substantive finding is a positive association between training and wages (when dispersed). The article then precisely characterizes how both wage dispersion and firm profitability depend on the flow value b≥ 0 of workers' unmatched time. It is shown that: (i) for all high values b, no equilibrium exists; (ii) for intermediate values b, multiple equilibria arise, where firms earn zero profits, and choose from a general wage distribution; (iii) for all lower values b, there is a unique equilibrium, with firms earning positive profits, and choosing from an atomless set of wages.