Devaluation, Fiscal Deficits, and the Real Exchange Rate

This article examines the use of fiscal policies to sustainthe effects of a nominal devaluation on the real exchange rate.It is shown that the magnitude of the change in the real exchangerate depends not only on the size of the devaluation and thedegree of fiscal adjustment but also on the means by which thefiscal deficit is reduced. The change in the nominal exchangerate necessary to maintain the depreciation of the real exchangerate will depend on whether the fiscal deficit is eliminatedby increasing taxes or by reducing government expenditures ontraded and nontraded goods. The required depreciation of thedomestic currency will be larger if the fiscal deficit is reducedby increasing taxes than it will be if the deficit is cut bylowering government expenditures. Further, the depreciationwould be smaller if the cuts in expenditure fell on traded ratherthan nontraded goods. This result implies that the authoritiesmust ensure consistency between exchange rate action and policiesto reduce fiscal imbalances in order to achieve a desired levelof the real exchange rate necessary to attain balance of paymentsequilibrium.     

From Unjust Markets to Just Distribution

The tendency of the market to concentrate wealth on small groups of individuals and to over-react to shocks to the economy requires the invigilation of the state to protect the disadvantaged. Saul Estrin, Lecturer in Economics at the London School of Economics, contends that socialist acceptance of market efficiency should not be extended to its inequitable distribution of resources and power.     

A Different Kind of Union: Balancing Co-Management and Representation

Local unions engaging in co-management and joint governance arrangements require new capacities and organizational forms to balance managerial responsibilities with representation of both the collective and individual interests of the membership. This article examines the evolution of the local union at General Motors' Saturn Corporation through the internal and external tensions created by the challenges faced in assuming these roles. A new model of local unionism, grounded in this experience and data, is outlined for further testing and research.     

The allocation of household income to food consumption

Low-income households - those toward which various income supplement programs are aimed - not only spend a large share of their incomes on food, but exhibit a higher income elasticity of demand for food than does the rest of the population. Further, a greater proportion of the marginal income generated via welfare payments and food subsidy programs (e.g., food stamps) is devoted to food consumption than is true of wage income. These are among the major conclusions emerging from an extensive Engel Curve analysis applied to the data generated by a five-year (1968–1972) panel study of 5000 U.S. households.     

Marketing Norms Measurement: An International Validation and Comparison

This article replicates a U.S. study of marketing norms in an international setting. The dimensionality and reliability of the scales are tested in the U.S., Singapore and South Africa. Support is found for the use of the scales, as modified. The norms of the current respondents are compared with those of the original U.S. respondents and each other. Differences between the three countries are found with respect to general honesty and integrity norms, but not for specific marketing-related norms. Differences between the original study results and the current findings are assessed in terms of methodological and substantive factors.     

Using group ratings to assess household food security: Empirical evidence from southern Africa

This article addresses the reliability and validity of household welfare rankings using the Group Ratings (GR) method. The GR aimed to measure the food security status of 142 households in seven villages in Malawi. Sets of informant groups rated households from their own community. Results show that the reliability of the method was no more than fair to moderate, and was particularly low for households falling in the middle category of 'intermittently food insecure'. Consensus ratings from the GR sessions were then compared with a number of alternative indicators of food security from a quantitative household survey. GR were associated with the more visible aspects of food security, such as household asset and livestock holdings, but associations with less visible aspects of food security were weaker. The strength of these associations varied from village to village.     

An analysis of the impact of the self-sufficiency project on wages

We measure the impact of the Self-Sufficiency Project (a randomized welfare-to-work experiment in Canada; henceforth, SSP) on relative wage progression. SSP provided a generous 3-year earnings supplement to treatment group members who found a full-time job within a year of the start of the experiment (take-up group). We estimate the treatment on the treated for two sub-groups of the take-up group: the incentivized and non-incentivized groups. Using an econometric model of wage determination, we find evidence of large and significant relative wage progression of approximately 9 percentage points during the 3-year supplement period for the incentivized group. The impact for the non-incentivized group is much smaller (at most 3 percentage points). There is also some limited information that the non-incentivized group in New Brunswick and the incentivized groups in both New Brunswick and British Columbia continued to work more after the 3-year supplement period ended.     

Privatization, Competition, and Budget Constraints: Disciplining Enterprises in Russia

We investigate whether privatization, competitive forces, and the hardening of budget constraints played efficiency-enhancing roles in Russia in the immediate post-privatization period. We find evidence of a positive impact of privatization on labor productivity: a 10% point increase in private share ownership raises real sales per employee by 3–5%. The evidence on product market competition is weaker, depending on model specification. Soft budget constraints are usually found to reduce restructuring but the effect is small and insignificant. We find that in terms of their impacts on productivity, privatization and subsidy reduction are substitutes; privatization and competition (measured as the geographic scope of markets) are complements; and that competition and subsidy reduction are independent. This revised version was published online in August 2006 with corrections to the Cover Date.