Efficiency wages,unemployment and international factor movements

This paper examines the implications of unemployment resulting from efficiency wages for international factor movements in a standard Heckscher-Ohlin model where the relative size of the endowments of skilled and unskilled workers and the efficiency wage induced unemployment level in the unskilled labour market are simultaneously determined given the population, supply of capital and its distribution in the economy. Capital in the economy is used only to train individuals for the skilled labour market, where workers are fully employed. It is shown that the optimum labour inflow in the market with domestic distortion and the optimum capital inflow are always positive because they reduce the severity of distortion by raising employment and income for the residents. The income and employment of foreigners also increase. Under this situation the optimum labour or capital outflow on the other hand is always zero. These conclusions directly contradict the result obtained for international factor movements in the presence of exogenously determined unemployment.     

The relationship between earnings' yield,market value and return for NYSE common stocks: Further evidence

The empirical relationship between earnings' yield, firm size and returns on the common stock of NYSE firms is examined in this paper. The results confirm that the common stock of high E/P firms earn, on average, higher risk-adjusted returns than the common stock of low E/P firms and that this effect is clearly significant even if experimental control is exercised over differences in firm size. On the other hand, while the common stock of small NYSE firms appear to have earned substantially higher returns than the common stock of large NYSE firms, the size effect virtually disappears when returns are controlled for differences in risk and E/P ratios. The evidence presented here indicates that the E/P effect, however, is not entirely independent of firm size and that the effect of both variables on expected returns is considerably more complicated than previously documented in the literature.     

Does fundamental indexation lead to better risk‐adjusted returns? New evidence from Australian Securities Exchange

We investigate the claims of superiority of fundamental indexation strategy over capitalisation‐weighted indexation using data for Australian Securities Exchange listed stocks. While our results are in line with the outperformance observed in other geographical markets, we find that the excess returns from fundamental indexation in Australian market are much higher. On a rolling 5‐year basis, the fundamental index always outperforms the capitalisation‐weighted index. Our results suggest that superior performance of fundamental indexation could not be entirely attributed to value, size or momentum effects. The outperformance persists even after adjusting for slightly higher transaction costs related to turnover.     

Fuzzy revealed preference theory

Rationality has traditionally been defined as choice behaviour which can be explained in terms of some implicit binary preference. The point of departure of this paper lies in permitting the binary preference relation to be “fuzzy.” Concepts from fuzzy set theory are used to formalise different notions of rationality, including degrees of rationality. The relation between these and traditional concepts is formally explored. In welfare economics, quasi-orderings have often been used to capture the inherent imprecisions of human value judgements. It is argued here that, in many situations, a more appropriate tool for this may be fuzzy orderings.     

Locational choice for free trade zones: a comment

In this comment we derive conditions under which there are no equilibria for the models investigated by Miyagiwa (1993).     

Efficiency wages,unemployment and international factor movements

"This paper examines the implications of unemployment resulting from efficiency wages for international factor movements in a standard Heckscher-Ohlin model where the relative size of the endowments of skilled and unskilled workers and the efficiency wage induced unemployment level in the unskilled labour market are simultaneously determined given the population, supply of capital and its distribution in the economy.... It is shown that the optimum labour inflow in the market with domestic distortion and the optimum capital inflow are always positive because they reduce the severity of distortion by raising employment and income for the residents. The income and employment of foreigners also increase. Under this situation the optimum labour or capital outflow on the other hand is always zero. These conclusions directly contradict the result obtained for international factor movements in the presence of exogenously determined unemployment."     

The Regional Comprehensive Economic Partnership: new paradigm or old wine in a new bottle?

The Association of Southeast Asian Nations (ASEAN) is currently negotiating with its six trading partners to form a new trade agreement called the Regional Comprehensive Economic Partnership (RCEP). The RCEP intends to harmonise rules and regulations across multiple overlapping free trade agreements in the region, and thereby attract new members. However, it faces several challenges. The mention of a flexibility principle and the ‘ASEAN Way’ of decision‐making has led many to believe that the RCEP will be yet another low‐quality regional trade agreement. However, the RCEP presents all ASEAN members with the opportunity to take a role in setting the agenda for a region‐wide agreement. Hence, despite its challenges, ASEAN must make the effort to reach an attractive RCEP vis‐à‐vis other competing regional agreements. Accordingly, this paper describes what the RCEP is intended to be, how it emerged, and the issues that might affect the agreement's final quality, in order to evaluate if it will establish a new paradigm or a repackaged version of ASEAN's existing trade agreements.