The determinants of investment in Greek manufacturing

An attempt is made to provide some insight into the determinants of manufaturing investment in Greece. For this purpose an accelerator-relative costs-profits model is used and both the putty-putty and putty-clay versions are examined. Estimates reveal that demand and profits factors play an important role in investment decision while the impact of relative inputs cost is significant mainly in the short run. Window regression experiments show that there is a dramatic fall in profits elasticity of investment and a corresponding increase in the significance of demend factor in the later periods.     

Waves of migration: a new situation

An attempt is made to forecast migration trends affecting those countries that were formerly part of the Soviet Union. "The new migratory trends are characterized by at least three fundamentally important elements: the ouster of the newly arrived population from the social niche that it had recently occupied, emigration from overpopulated regions, and growing emigration beyond the borders of the former Union."     

Hidden costs of supply management in a small market

Canada regulates its dairy and poultry industries through supply management. The supply‐management programs use target prices, production quotas and import tariff‐rate quotas to raise domestic prices. Canadian supply‐managed producers cannot export their output to world markets as exports would be considered subsidized under World Trade Organization rules. In this paper, we show that once foregone export opportunities are accounted for, supply management may no longer be beneficial to domestic producers of the supply‐managed commodities. The extent to which foregone profits from exports dominate domestic rents depends on Canada's comparative advantage, domestic market elasticities and the extent of supply management distortion in the domestic market.     

The crisis of urbanization in Asia: finding alternatives to megalopolitan growth

The rapid expansion of large Asian cities generates serious social, economic, and physical problems, and has thereby forced these areas to create alternative expansion plans, such as the idea of building up secondary cities and towns. The result of the rapid expansion of large cities, combined with poor urban management, accentuates the mass poverty in many Asian cities. This large urban population is expected to double or triple in size between 1970 and 2000. Because substantial resources are required to manage these megalopolitan areas, it is reasonable to deduce that millions of these city dwellers will be living in absolute poverty by 2000. It is the prospect of continued rapid growth over the next 2 decades that presents the most serious problem for Asian countries. Most metropolises cannot provide enough jobs for the current work force. In addition, public facilities, housing, transportation, and health services are examples of other problems threatened by a heavy concentration of people. Attempts to control this growth have been unsuccessful, mainly due to the 1950s and 1960s emphasis on productive investment, which left rural regions underdeveloped and poor. Secondary cities and regional centers in Asia perform important functions in promoting widespread economic and social development: 1) they stimulate rural economies and therefore establish a pattern of step-wise migration, and 2) they absorb population and therefore, relieve some of the pressure put on the largest metropolitan areas. Studies of secondary cities and their attempts at controlling growth of large metropolitan centers suggest broad guidelines for strategies. Some of these are: 1) the existence of large metropolises has little effect on the growth of primate cities; 2) few controls on growth of large areas are likely to be effective unless there are viable alternative locations at which high threshold economic activities can operate; 3) secondary cities must be closely related to the agricultural economies of their rural hinterlands; and 4) attention must be given to improving transportation and other communication between large metropolitan centers, secondary cities, and smaller cities and towns. The continued concentration of people and economic activities in vast megalopolitan areas will continue to generate serious economic and social problems that may help stimulate the evolution of some of these strategies.     

Balance of payments accounting and exchange rate dynamics

The balance of payments is an accounting identity. Many wonder how the current and capital accounts, which add up to zero, can influence exchange rates. This paper shows how payment flows arising from balance of payments imbalances affect the demands for different currencies in the foreign exchange market over time. Based on a dynamical system approach, the paper demonstrates how international payments evolve depending on the joint dynamic behaviour of different balance of payments components. It finds that international payments and exchange rates interact in fundamentally different ways depending on whether a country restricts its capital inflows and outflows, whether capital flows are accommodating or autonomous and whether the exchange rate is fixed, flexible or, say, governed by a crawling peg. Empirical evidence from major industrial countries as well as from countries hit by currency crises support the paper's theoretical predictions.     

Dynamics of the Market for Corporate Tax‐Avoidance Advice*

This paper addresses the debate over aggressive tax‐planning models and analyzes the role of tax consultants. It focuses on the dynamic interaction between innovation and imitation of aggressive tax‐planning products and governmental tax regulation, and it highlights the importance of the length of regulatory lag in comparison with the time it takes the tax‐consulting industry to imitate newly innovated tax‐avoidance products. It reveals an alignment of interests between highly innovative tax‐consulting firms and the governmental tax legislator/regulator. The conclusions are also relevant for the policy debate on mandatory disclosure rules about aggressive tax‐planning models.     

Involuntary saving through unanticipated inflation: Some further empirical evidence

In a recent paper Deaton formulated a novel disequilibrium theory of saving behaviour. The essence of his hypothesis is that individual consumers have no possible means of distinguishing relative from absolute price changes. This hypothesises subject to further empirical testing in our note. Using data for Canada, Japan, the United Kingdom and the United States we re-examine the hypothesis assuming either static, adaptive, extrapolative or rational price and output expectations.     

Consumption and Remittances in Migrant Households: Toward a Productive Use of Remittances

This article reviews the magnitude of remittance flows into Mexican households and examines the consumption patterns of remittance-receiving households. A thorough understanding of the dynamics of remittances and consumption in migrant households in Mexico should inform policy makers of the best ways to channel these resources into productive uses. The Mexican Income and Expenditure Survey for 1989 is used to compare and test patterns of consumption and uses of remittances in urban and rural Mexico. (JEL F2–F22 , O1–O15 )