Trade Liberalisation in Developing Economies: Modest Benefits but Problems with Productivity Growth, Macro Prices, and Income Distribution

Microeconomically, the case for liberalisation is dubious under increasing returns to scale and when firms can invest directly in productivity enhancement. Distributional effects of commercial policy changes can be regressive and large, but the 'rents' they generate can serve as a basis for effective policy intervention contingent on firms' performance. Macroeconomically, the case of liberalisation rests on Say's Law, which is not always enforced. Recent combined current and capital market liberalisations have been associated with strong exchange rates and high interest rates and output and productivity growth have positive mutual feedbacks which liberalisation may well suppress.     

Analysis of the export Constraint on Canadian Wheat In 1977/78

The analysis suggests that Canadian wheat exports in 1977/78 were reduced by an amount between 0.7 and 1.7 million metric tons because of a constraint due to transportation and handling problems. Estimates are made of the effect of this export constraint on domestic utilization, supply and the off-Board price. Estimates are also made of the effects on these variables of three possible Canadian Wheat Board (CWB) strategies for handling the export constraint. The strategies involve the use of delivery quotas and the initial payment as instruments of the CWB.
L'analyse suggère que les exportations canadienes de blé ont été réduites en 1977/78 d'un montant compris entre 0.7 et 1.7 millions de tonnes. Ces réductions sont dûes a l'effet d'une contrainte posée par des problèmes de transport et de maniement. L'impact de cette contrainte sur les exportations a étéégalement estimé sur la demande domestique, sur I'offre et sur le prix hors-Commission. Les effets sur ces mêmes variables ont été aussi quantifies en utilisant trois strategies possibles de la Commission Canadienne du Blé (CCB). Ces stratégies invoquent l'utilisation par la CCB de différents niveaux de quotas de livraison et de paiement initial.     

The Role of Systematic International Market Selection on Small Firms' Export Performance

This article hypothesizes that, on average, small and medium-sized enterprises (SMEs) that use a systematic methodology in selecting foreign target markets (what we call systematic market selection) perform better than SMEs using an ad hoc international market selection methodology. Using a sample of Greek exporting firms, we found that systematic international market selection is a significant determinant of export performance, even when controlling for decision-maker and firm-specific characteristics previous studies found to be related to export success. Implications for managers, trade promotion agencies, and future research are discussed.     

Do option markets substitute for stock markets? Evidence from trading on anticipated tender offer announcements

Using a sample of cash tender offers occurring between 1993 and 2002, we find evidence that the options market has become the preferred venue for traders attempting to profit on anticipated announcements. Options offer advantages relative to stocks. Traders gain leverage by trading in options and multiple options contracts on an individual stock. The results of our study indicate that a substitution effect does exist. Abnormal volume in the option market replaces abnormal volume in the stock market prior to cash tender offer announcements, and this abnormal option volume precedes abnormal stock volume for targets with or without traded options.     

Teaching Innovative Accounting Topics: Student Reaction to a Course in Social Accounting

Accounting students experience degree programmes with a fairly ‘traditional’ range of topics that are taught with an emphasis on technique and learning the ‘status quo’. To the extent that a topic may challenge this pattern by emphasizing new concepts, questioning existing concepts, being more concerned with what accounting ‘might be’ rather than current practice, or some combination of these, some topics may be considered ‘innovative’ additions to the curriculum. Social accounting is an innovative accounting topic that has attracted considerable attention in the literature. This paper reports on an implementation dilemma encountered in a course on social accounting resulting from a clash between preferred student learning attributes and those embodied in social accounting. The use of action oriented teaching strategies to counteract this dilemma is identified. Similar problems and solutions may be applicable for other innovative accounting topics.     

Practical general equilibrium estimation of resource pulls under trade liberalization

This paper discusses the application of a model similar to the one developed in Leif Johansen's Multi-sectoral study of economic growth (1964) to the problem of determining general equilibrium responses of the economy to changes in commercial policy. This method amounts essentially to specifying a log-linear approximation to the general equilibrium solution for the economy, and solving the resulting linear equations for changes in endogenous variables as functions of exogenous variable changes. For a 35-sector model of the Chilean economy with labor as the only variable factor of production (to avoid the problem of overdetermination of many commodity price and output shifts when only two factors are considered in constant returns production functions), it is found that (i) the specification of the way in which intermediate inputs enter the production function is numerically important in determining output responses to tariff changes, detracting from the credibility of fixed coefficient effective rate of protection calculations if variable intermediate input coefficients are the rule (as appears likely empirically); (ii) exchange rate elasticities with respect to individual tariff changes are fairly large, so that the usual partial equilibrium assumption of exchange rate insensitivity to ‘small’ tariff revisions is not valid; (iii) employment effects of different tariff revisions are highly variable and in some cases substantial.     

Exchange rate indeterminacy in portfolio balance, Mundell-Fleming and uncovered interest rate parity models

With full stock/flow accounting respected, the two-country openeconomy portfolio balance model has just two independent equationsfor asset market clearing. It can determine home and foreigninterest rates but not the exchange rate. If asset market equilibriavary smoothly over time, the balance of payments equation inthe Mundell–Fleming model is not independent and cannotset the exchange rate either. The familiar fixed reserves/‘floatingrate’ vs endogenous reserves/‘fixed rate’dichotomy does not exist, and ‘fundamentals-based’econometric models of the exchange rate are bound to fail. Analternative is a two-country IS/LM model with exchange ratedynamics added. Its dynamic properties under uncovered interestrate parity are briefly explored.     

True vendor loyalty or simply repeat purchase behavior?

Local customers—usually defined as those who tend to concentrate their purchases within one or a limited number of brands or stores—have long been of major interest to marketing practitioners and academicians. In organizational purchasing literature, however, little attention has been focused on this important dimension of buyer behavior. The purpose of this article is to underscore the importance of the loyal customer, to distinguish between simple repeat purchasing and true loyalty, and to examine the reasons for such consistent purchase behavior.     

Short-term policy in open semi-industrialized economies: The narrow limits of the possible

This paper develops a model to analyze short-term policy alternatives in semi-industrialized countries. The major points raised are the following: (i) There are two sectors, producing traded and non-traded goods. The latter is characterized by a fairly low elasticity of substitution and a high relative labor share. If the elasticity of substitution in the traded goods sector has an econometrically reasonable value, then short-run improvements in both the labor share and real income may well call for revaluation of the exchange rate and an increase in home good's price (prices of both goods being measured in wage units). (ii) If excess supply functions have Walrasian stability, such price changes will lead to deterioration in the balance of payments: On the other hand, devaluation-induced improvement in the balance of payments (with constant government expenditure) can lead to an improvement in real income, but reduces the labor share. (iii) If the economy is formally unstable, due to capitalists and laborers concentrating their expenditure demands respectively on the goods intensive in factor payments to themselves, then balance of payments improvement in a comparative static analysis may entail reductions in both real income and the labor share. (iv) If the additional realistic assumption is made that elasticities of excess supply functions for the two goods with respect to the interest rate are quite low, then in general improvement of all three targets (real income, balance of payments, and income distribution) will be unattainable. If in addition the government cannot finance expenditure changes by anything but money supply changes, then in general only one target variable can be attained. (v) Numerical sensitivity analysis based on Chilean data indicates that these (and other) rather pessimistic results hold for fairly wide ranges of ‘plausible’ parameter values, as long as the model's short-run Keynesian assumptions are maintained.