Trade and Personal Distribution of Wealth and Income: Beyond the Stolper–Samuelson Theorem

The effect of international trade on personal distribution of wealth and income is examined via the Stolper–Samuelson Theorem. It is shown that free trade between North and South increases (decreases) wealth and income inequality in the North (South). A concept of three classes – lower, middle and upper – is developed. It is shown that North–South free trade in goods leads to a middle class squeeze in the North and a middle class expansion in the South.     

Strategic Environmental Policy with Technology Licensing

The tendency for countries to cheat on international environmental agreements has been well-documented. One reason is that less developed countries suffer technological disadvantages. While a number of authors have shown that technological transfers can solve the stability problem, real-world giveaways rarely occur. The purpose of this study is to investigate the conditions under which private licensing of pollution abatement technology, linked to cooperation on environmental policy, represents a feasible alternative. We find that, while a Pareto-improving solution exists, the licensing equilibrium is tenuous. Ironically, the more technologically advanced pollution abatement becomes, the less incentive there is for the recipient to cooperate.     

Opportunities for developing the science of operations and supply-chain management

In a separate paper (Singhal and Singhal, 2011b), we identified two sets of opportunities for radical innovations in operations and supply-chain management (O&SCM): pursuing all phases of science and pursuing multiple perspectives. In this paper, we propose and analyze ways to accomplish this task. A network of research teams can be effective in obtaining multiple perspectives and discovering radical innovation if it conducts intensive research over an extended period. Outliers are a source of multiple perspectives and innovative ideas and can help in identifying and addressing risks. Similarly, meta-analyses and syntheses of published works can provide multiple perspectives and lead to radical innovations.     

Computing optimal rebalance frequency for log-optimal portfolios in linear time

The pure form of log-optimal investment strategies are often considered to be impractical due to the inherent need for continuous rebalancing. It is however possible to improve investor log utility by adopting a discrete-time periodic rebalancing strategy. Under the assumptions of geometric Brownian motion for assets and approximate log-normality for a sum of log-normal random variables, we find that the optimum rebalance frequency is a piecewise continuous function of investment horizon. One can construct this rebalance strategy function, called the optimal rebalance frequency function, up to a specified investment horizon given a limited trajectory of the expected log of portfolio growth when the initial portfolio is never rebalanced. We develop the analytical framework to compute the optimal rebalance strategy in linear time, a significant improvement from the previously proposed search-based quadratic time algorithm.     

The Asian economy: current state of play and future prospects

The global financial crisis, the so-called great world recession and recovery have had a serious impact on the Asian and global economies. Together, they managed to engender significant transformation in the contours of both the Asian and global economies. For instance, Asian economies presently depend less on markets in the advanced industrial economies and, due to their enlarging markets, can and did make a substantive contribution to the global recovery. They spearheaded the economic recovery from the global financial crisis. The post-crisis Asian economy is the third pole of the global economy. Significantly, the emerging market economies of Asia did not magnify the external shock this time and performed more like the advanced industrial economies. After a robust recovery in 2010, growth became somewhat subdued in 2011. Projections show that economic performance in the region in 2012 will not be very different from that in 2011 (see WB [World Bank] 2012).     

Imperatives of the science of operations and supply-chain management

Although knowledge in operations and supply-chain management (O&SCM) has advanced substantially during the last six decades, our community has not fully utilized the potential for radical innovations. We identify two sets of opportunities for pursuing radical innovations. First, there is an opportunity to pursue all phases of science, including exploratory and qualitative research, developing theories, causation and internal validity, and testing models and theories for external validity (the ability to generalize knowledge to other situations). This would broaden the domain covered by each research effort, minimize the bias resulting from the choice of research paradigm and research domain, to enhance external validity, and to minimize the gap between our research efforts and the real world our community seeks to reshape. Second, there is an opportunity to pursue multiple perspectives because a scientific conclusion valid for a narrow domain may prove to be partially true or even false if one obtains multiple perspectives. Multiple perspectives can be obtained by investigating different parts of the system, by employing different methods of analysis, by using different sources of data, or by using different subsets of the same data. Developing scientific knowledge requires pursuit of all phases of science and of multiple perspectives. In a separate paper, we propose and analyze ways to accomplish it.     

Computing optimal rebalance frequency for log-optimal portfolios

Log-optimal investment portfolio is deemed to be impractical and cost-prohibitive due to inherent need for continuous rebalancing and significant overhead of trading cost. We study the question of how often a log-optimal portfolio should be rebalanced for any given finite investment horizon. We develop an analytical framework to compute the expected log of portfolio growth when a given discrete-time periodic rebalance frequency is used. For a certain class of portfolio assets, we compute the optimal rebalance frequency. We show that it is possible to improve investor log utility using this quasi-passive or hybrid rebalancing strategy. Simulation studies show that an investor shall gain significantly by rebalancing periodically in discrete time, overcoming the limitations of continuous rebalancing.     

On measures of technical inefficiency and production uncertainty in stochastic frontier production model with correlated error components

Analysis of the behavior of technical inefficiency with respect to parameters and variables of a stochastic frontier model is a neglected area of research in frontier literature. An attempt in this direction, however, has recently been made. It has been shown that in a “standard” stochastic frontier model that both the firm level technical inefficiency and the production uncertainty are monotonically decreasing with observational error. In this paper we show, considering a stochastic frontier model whose error components are jointly distributed as truncated bivariate normal, that this property holds if and only if the distribution of observational error is negatively skewed. We also derive a necessary and sufficient condition under which both firm level technical inefficiency and production uncertainty are monotonically increasing with noise-inefficiency correlation. We next propose a new measure of the industry level production uncertainty and establish the necessary and sufficient condition for firm level technical inefficiency and production uncertainty to be monotonically increasing with industry level production uncertainty. We also study the limiting probabilistic behavior of these conditions under different parametric configuration of our model. Finally we carry out Monte Carlo simulations to study the sample behavior of the population monotonic property of the firm level technical inefficiency and production uncertainty in our model.