COMPUTABLE GENERAL EQUILIBRIUM MODELS FOR DEVELOPMENT POLICY ANALYSIS IN LDCs

Abstract. The use of CGE models has gained much popularity among policy analysts in LDCs and there is a fast growing body of literature on this area of economics. In this survey, the advantages of general equilibrium approach over partial equilibrium approach in analysing a wide range of policy issues are highlighted. The evolution of CGE modelling is discussed and more than 60 CGE applications related to different policy issues in LDCs are surveyed. This comprehensive survey shows that the CGE models have become quite popular analytical tools among policy analysts in LDCs over the last decade or so. The debate in the economic profession regarding the value and appropriateness of using CGE models for policy analysis is examined in the final section of this paper. Some of the criticisms levelled at CGE models are discussed and it is argued that despite this criticism such models are capable of providing insight into important policy problems.     

Development and the mystification of ‘cultural factors’: One destiny: Our common future in Africa,by A S van Niekerk

In One destiny: Our common future in Africa the author relates, in popular fashion, a series of incidents which convinced him that the basic difference between black and white in South Africa is cultural deep‐seated and the cause of underdevelopment and conflict He develops a circular argument in which world‐view is taken as the root of perceptions, values and activities. The effects of experience and economic and political factors are given secondary importance. This argument cannot accommodate social change and differentiation, and the author tends to concentrate on perceptions and events which he finds morally unacceptable. He gives an unbalanced assessment and an ethnocentric interpretation of African life. Possible reasons for this type of argument are explored and an alternative which takes its departure from the interaction between experience and perception is offered     

A longitudinal study of the cause and consequences of changes in diversification in the U.S. pharmaceutical industry 1977–1986

The paper hypothesizes that diversification by firms based in the pharmaceutical industry during the 1977-86 time period was primarily undertaken to reduce the risks associated with being dependent upon a technologically dynamic environment. Consistent with this non-efficiency motive for diversification, declining economic performance is predicted. A longitudinal empirical analysis provides support for these propositions.     

An Analysis of Differences in Earnings Between Small and Large Commercial Banks

This paper introduces a simple, yet rich, measure of efficiency changes based on the revenue-generating-ability (RGA) principle. Using this principle, we explain the connections between efficiency changes and the variables, such as pretax profits, interest expense, non-interest expense, profit margins, loan loss provision, and asset quality. These connections are used to explain earnings differences between small and large commercial banks.     

Do Gold Market Returns Have Long Memory?

This study examines the long memory behavior in gold returns during the post-Bretton Woods period using a new rescaled range technique. Unlike the conventional rescaled range analysis, the new rescaled range analysis is robust to short-term dependence and conditional heteroscedasticity found in the gold data. Statistical results suggest that the long memory behavior in gold returns is rather unstable. When only few observations corresponding to major political events in the Middle East, together with the Hunts event, in late 1979 are omitted, little evidence of long memory can be found.     

Innovative productivity and returns to scale in the pharmaceutical industry

This study shows that firms in the pharmaceutical industry experience decreasing returns to scale in R & D as the level of R & D expenditures rises. The paper presents the results of our study of the innovative output of 16 pharmaceutical firms over a 19 year period. Given the strong correlation between R & D budgets and firm size, our study suggests the wave of mergers in the industry may yield less innovative productivity than managers expect.     

Endogenous Growth and Negative Externalities

Received March 5, 2001; revised version received August 5, 2002 Published online: April 30, 2003     

Are differences in firm size transitory or permanent?

An Erratum for this article has been published in Journal of Applied Econometrics 18(2) 2003, 249 Previous empirical work on corporate growth rates using cross‐section or short‐panel econometric techniques suggests that growth rates are random but that some degree of mean reversion exists. This means that size differences between firms are transitory. Another, more natural way to explore the long‐run distribution of firm sizes is to examine data on the growth of particular firms over long periods of time. Using a sample of 147 UK firms observed continually for more than 30 years, our conclusions are that growth rates are highly variable over time and that differences in growth rates between firms do not persist for very long. Further, firms show no tendency to converge to either a common size or to a pattern of stable size differences over time. These results are compared and contrasted with standard approaches that suggest that firms reach and maintain stable positions in a skewed size distribution. Copyright © 2002 John Wiley & Sons, Ltd.