DEVELOPMENT ECONOMICS: A REVIEW ARTICLE

Book reviewed in this article:
H. MYINT, Economic Theory and the Underdeveloped Countries (Oxford University Press, London 1971)
P. T. BAUER, Dissent on Development
A. P. THIRLWALL, Growth and Development with special reference to developing economies
G. RANIS (ed.), The Gap between Rich and Poor Nations (Proceedings of a Conference held by the International Economic Association)
B. WARDS, J. D. RUNNALS AND I-. D'ANJOU (eds.), The Widening Gap
L. G. REYNOLDS, The Three Worlds of Economics
B. BALASSA AND ASSOCIATES, The Structure of Protection in Developing Countries
G. L. HICKS AND G. McNICOLL, Trade and Growth in the Philippines     

USE OF NATIONAL ACCOUNTS FOR A SHORT-TERM ECONOMETRIC MODEL: 1954–1966

A quarterly macro-econometric model of Japan's postwar economy has been constructed for the period 1954–1965 FY on the basis of standardized quarterly national income accounts. The model is designed for facilitating short-term economic forecasting and formulating adequate fiscal and monetary policy. Longer-term factors such as labor mobility, technical progress, etc., were also considered in the model.
The model consists of fifty-three equations related to most of the macroeconomic variables in both money and real terms, and the equations were estimated in principle by the limited information maximum likelihood method. Principal exogenous variables related to policy instruments are government expenditures including transfers, parameters of tax functions, interest rate, and prices and fares controlled by the government, etc. In formulating the model, non-linear specifications were used whenever found necessary.
Results of our testing on its predictive capability indicated fairly satisfactory performances for our observation period and also for 1966 FY. Multipliers related to fiscal and monetary policy were also obtained, indicating the dynamic characteristics of the Japanese economy, in particular, represented by dynamic business fixed investment, as compared with corresponding multipliers of the U.S. models.
Although the model is exploratory and to serve as a core for a more disaggregated "Master Model," the usefulness of the model for our purposes and the workability of our quarterly national accounts data for model-building have been recognized. The quarterly data, however, still remain to be improved especially in regard to consistency between income and expenditure and integration with flow-of-funds accounts.     

ROADS AND POVERTY IN RURAL LAOS: AN ECONOMETRIC ANALYSIS

The relationship between poverty incidence and road development is analyzed econometrically in this paper, in the context of rural Laos. Between 1997–1998 and 2002–2003, rural poverty incidence in Laos declined by 9.5% of the rural population. Approximately 13% of this decline can be attributed to improved road access. There is now a high return to providing dry weather access to the most isolated households of Laos, those with no road access at all. They constitute 31.6% of all rural households in Laos and are being left behind by the development of the market economy.     

A DISEQUILIBRIUM ECONOMETRIC MODEL OF THE AUSTRALIAN RAW WOOL MARKET*

This paper develops a quarterly disequilibrium model of the Australian wool market. It is postulated that because of inherent market imperfections the market does not clear. The model consists of demand and supply equations for both private and government traders, a minimum condition to determine quantity transacted and a price adjustment equation based on excess demand/supply. Effective demand/supply concepts which recognise the expectation of rationing are employed to model private demand/supply. Supplier price expectations explicitly account for the lower bound imposed by the minimum reserve price scheme (RPS). The estimates suggest that the disequilibrium hypothesis cannot be rejected, as a consequence measures of market imbalance are provided. The model is also used to simulate the effects of the removal of the RPS.