Wealth inequality, entrepreneurship and industrialization

The paper shows that in a two-good economy with a basic and a luxury good sector inequality is indeed a hindrance to provide sufficient incentive for entrepreneurship to low-wealth economic agents. In contrast to the literature it uses both demand and supply-side explanations for the analysis. An entrepreneurial subsidy policy to encourage entrepreneurship in autarky financed by a lump sum tax on the rich is not very effective in unequal economies since it hardly impacts the welfare. When trade is opened up in the luxury good sector of such an economy the sector might cease to exist. In such a scenario, the rich people being the sole consumers would reap the entire benefits of globalization via low price of the imported luxury good. The paper highlights that the crucial question is: ‘how to globalize’ rather than ‘whether to globalize’ and suggests policy measures to make globalization inclusive.     

FIRM SIZE AND PRICING POLICY

We relate pricing policy of firms to their size, where firm size is interpreted as the size of the clientele served by the concerned firm. We argue that a firm with a large clientele faces a more severe reputational backlash if it ‘reneges’, i.e., deviates from its earlier price offer. This allows the firm to effectively commit to its offers, leading to a unique equilibrium without delay. Interestingly, this equilibrium corresponds to the equilibrium of the related model that does not allow for reneging possibilities. For smaller firms, however, the reputational effects are much less intense, and consequently the equilibria may involve deviation possibilities. In this case, the equilibria are non‐unique and may involve delays as well.     

Social preference function and policy prioritisation for Bangladesh: An experiment with analytical hierarchy process

The difficulty in assigning priority weights in the multiple objective optimisation exercise of the planning process often leads to arbitrariness in the determination of priority weights. However, Frish (1957) has demonstrated that despite Arrow's famous impossibility theorem, a social preference function can be numerically established by systematically interviewing the decision makers or responsible politicians. In the light of the above, this paper attempts to achieve two goals: (a) that it is, indeed, possible to find intuitively plausible numerical priority weights and (b) the analytical hierarchy process (AHP) can be used to translate the interview responses into cardinal ordering. The close correspondence between the investment allocations of the Planning Commission and those derived from the priority weights of our exercise with AHP implies that AHP can be used to by-pass detailed planning exercises and thereby make planning more flexible.     

A structural analysis of external debt and economic growth: some evidence from selected countries in Asia and the Pacific

In an attempt to resolve the existing controversy about the cause and effect relationship between external dept and economic slowdown, Granger causality tests are conducted with data on indebted developing countries of Asia and Pacific. The results of these tests indicate that the Bulow–Rogoff proposition that the external debts of developing countries are a symptom rather than a cause of economic slowdown is rejected. They also indicate that the Dornbush–Krugman proposition that external dept leads to economic slowdown is also rejected. Moreover, a feedback-type relationship is not rejected for two countries. In view of the mixed results, this paper also estimates the nexus of inter-relationship between public and private external dept accumulation, capital accumulation and production within a simultaneous equation system. The estimation results indicate that the full effects of the public and private external depts on GNP are small and of an opposite sign, whereas an increase in the GNP level raises substantially the public and private external depts. These findings support Bulow–Rogoff's proposition that the external debts of developing countries are not a primary cause of economic slowdown.     

What to Get and What to Give Up: How Different Decision Tasks and Product Types Affect the Persuasiveness of Promotion‐ versus Prevention‐Focused Messages

Prior research has distinguished between ad message frames that are promotion‐focused (i.e., eager‐sounding and achievement‐oriented) and those that are prevention‐focused (i.e., vigilance‐hued and safety‐themed). In three studies, the authors investigate the relative persuasiveness of promotion‐ versus prevention‐focused messages in the context of different decision tasks (i.e., acquisition vs. forfeiture) and different types of featured products/attributes (i.e., hedonic vs. utilitarian). Studies 1 and 2 focus on message structures conducive to imagery‐based processing. The results show that promotion‐focused messages are relatively more persuasive than prevention‐focused messages in acquisition tasks than in forfeiture tasks in the case of hedonic products (and products with salient hedonic attributes). Relative persuasiveness of the two message frames is not affected by decision task in the case of utilitarian products (or products with salient utilitarian attributes). Study 3 uses message structures suited for analytical processing. In this study, interestingly, the relative persuasiveness of prevention‐focused (vs. promotion‐focused) messages is greater in forfeiture tasks than in acquisition tasks in the case of utilitarian products. Relative persuasiveness of the two message frames is not affected by decision task in the case of hedonic products. Theoretical and managerial implications of the findings are discussed.     

Asymmetry dynamics in real exchange rates: New results on East Asian currencies

This paper provides new evidence on the purchasing power parity (PPP) hypothesis in six East Asian countries. Based on nonlinear unit root tests, we discovered that the results are broadly consistent with the fact that real exchange rates (RERs) follow a nonlinear mean reversion process. We presented new evidence that the adjustment towards the PPP parity is asymmetric (LSTAR process) above and below the equilibrium value in all but one case — the Malaysian ringgit (MYR). The empirical results suggest that it is important that the conventional tests of PPP be amended to take account of asymmetries in the adjustment process in RERs.     

The infant mortality-fertility debate: some international evidence

"The aim of this paper is to analyze empirically the causal relationship, if any, between infant mortality and fertility in thirty-five developing countries." The focus is on possible relationships between the infant mortality rate and the fertility rate. "The hypothesis that infant mortality causes fertility is tested. The possibility of a 'reverse causation' is also analyzed. A one-sided distributed lag test as proposed by Granger...is employed." The results are analyzed in light of several versions of the mortality-fertility proposition, including demographic transition theory, choice theory, Ricardian theory, and the modern economic theory of population.     

The impact of the acreage allotment program on rice farming

This paper designs an acreage response model under the acreage allotment farm program incorporation a policy-inducing variable. The single-equation regression model for each rice-producing state is estimated by the ordinary least squares mulitiple regression procedure. The estimated parameter shows a significant direct relationship between the rice acreage planted and plicy-inducing price in all the rice-growing states. The estimated short-run elasticities for Arkansas, California, Louisiana, Mississippi, and Texas were 0.72, 0.59, 0.67, 0.66, and 0.81 respectively. The heterogeneity in the magnitude of the elasticities during the acreate allotment period suggests considering a rice program formulation in response to each state's variability in physical restraints, availability of irrigation water, average yields, and return over cost, thereby providing risk management incentives to rice growers to respond positively to the farm program.     

Who drives whom ‐ sukuk or bond? A new evidence from granger causality and wavelet approach

Sukuk is a highly appealing alternative instrument of conventional bond in the financial market over the last two decades. To a certain extent, the market players assume sukuk as the same as bond. However, sukuk has its own fundamental asset backed principles, whereas bond is backed by debt. The objective of the study is to examine the Granger‐causality and lead–lag relationship between sukuk and bond by using the data of the Malaysian Government securities return for both conventional and Islamic instruments. The data for every working day of 7 years covering the period from January 31, 2007 to December 31, 2013 were collected from Bloomberg database. The yield returns of both securities have been plotted for each six months of a year. This study applied both Granger‐causality and dynamic co‐movement techniques such as, continuous wavelet transforms (CWT) coherence for analyzing the temporal evolution of the frequency content of both securities by decomposing each period into different time scales. The empirical findings of the paper reveal that with a bit of exception, there is a causal relationship between sukuk securities and conventional bonds for a given period of time. For robustness, this study applied the wavelet coherence approach and found that bond is led by sukuk in the long term investment horizon rather than in the short term. Our findings relating to the lead‐lag relationship between sukuk and bonds have important implications in terms of policy regulations and investment management. Future research and market practices could reinvestigate the differences between these two securities across different markets and types.