Growth and equilibrium indeterminacy: the role of capital mobility

Summary. The paper presents a human capital driven endogenous growth model which, in general, permits a multiplicity of equilibrium balanced growth paths. It is shown that allowing for perfect capital mobility across countries increases the range of parameter values for which the model permits equilibrium indeterminacy. As opposed to the closed capital markets case, simple restrictions on preferences are no longer sufficient to eliminate the indeterminacy. Intuitively, under perfect capital mobility agents are able to smooth consumption completely. This induces an economy with open capital markets to behave like a closed economy with linear preferences thereby increasing the possibility of equilibrium indeterminacy. Received: 18 November 1998; revised version: 10 August 1999     

ANALYSIS OF POVERTY AND EFFICIENCY: AN EARNINGS FRONTIER APPROACH

The paper introduces the concept of an earnings frontier in explaining monthly consumption expenditure (a proxy for income) in terms of human capital and endowments of a household. Individuals who translate their potential earning into actual earnings enjoy a fully efficient position. In contrast, individuals who earn less than their potential earnings suffer from some kind of earnings inefficiency. The paper estimates an earnings frontier using the Corrected Ordinary Least Square (COLS) method and classifies households in terms of efficiency scores. Splitting the sample into an efficient and an inefficient part based on the estimated frontier and a bench mark efficiency score, the status of poverty in the two parts (groups) is studied. The poverty gap between the groups is then decomposed into a characteristics effect and a coefficients effect using the familiar Oaxaca decomposition methodology. The paper also tries to establish a link between the notion of efficiency and the coefficients effect in the Oaxaca decomposition methodology. The results obtained are interpreted in light of the poor but efficient hypothesis.     

Short-run energy-economy interactions in Egypt

This paper discusses the short-run adjustment mechanism of the Egyptian economy to changes in the domestic price of oil. The effects of oil price increases have been analysed in the framework of a short-run macroeconomic model with an explicit treatment of energy. The results suggest that a reduction in petroleum use induced by a rise in the price of oil will impose difficult adjustment problems for the economy in the short run in terms of increase in inflation, fall in the share of wage income and sharp output losses. The analysis also indicates that energy demand management through appropriate petroleum pricing strategy cannot bring about desirable impacts on the economy unless efforts are made to reduce cost pressures originating from other energy sectors.     

Strategic Exports and R&D with Internationally Mobile Skilled Labor and Exchange Rate Volatility*

This paper extends the Spencer and Brander (1983) model of strategic exports and R&D by introducing exchange rate volatility and R&D activities that require internationally mobile skilled labor. We find that an increased volatility reduces both the levels of optimal export subsidy and R&D tax. We also find that the endogeneity of skilled wage increases the level of export subsidy and reduces the level of R&D tax if the country is an exporter of skilled labor.     

On the provision of official and private foreign aid

The provision of official relative to private foreign aid varies considerably between donor countries. We explain the variations in terms of country size, household composition, income distribution, and the government's ability to commit to aid, and derive inter alia the results: (1) official aid crowds out private aid, (2) total aid and official aid collected from each household are lower in more populous countries, (3) total aid is lower if (i) the distribution of income favors the more altruistic households, and (ii) the government can credibly commit to a certain level of aid. Evidences suggest that the theoretical results can explain stylized facts.     

On the effectiveness of monetary and fiscal policies in a Keynesian model

One of the central problems in macroeconomics is the comparison of the effectiveness of various monetary and fiscal policy measures for regulating output and employment. Opinions on this issue are quite varied. This paper analyses this controversy in the framework of a non-Walrasian model with price rigidities. It studies a monetary economy where money is the sole medium of exchange in the model ‘money buys goods and goods buy money; but goods do not buy goods’. The works of Benassy, Dreze, Malinvaud and Younes are utilised for constructing a model of Keynesian unemployment equilibrium.     

Capacity constraints,alternative technologies and input-output analysis

This paper extends the standard input-output (10) model by introducing alternative technologies and capacity constraints. A necessary and sufficient condition for the existence of solutions and two alternative sufficient conditions for the uniqueness of a solution have been developed.