A DYNAMIC MODEL OF TOURISM, EMPLOYMENT AND WELFARE: THE CASE OF HONG KONG

Abstract.  The present paper uses a dynamic open-economy model with wage indexation to examine the impact of tourism on employment and welfare. Both short-run and long-run situations are analysed. It is well known that tourism converts non-traded goods into tradable goods. An increase in the demand for a non-traded good raises its relative price, which results in an expansion of the non-traded sector at the expense of the traded goods sector. This output shift raises labour employment in the short run. However, in the long run, the higher relative price leads to higher wages, resulting in a negative impact on labour employment. If the output effect is dominant, the expansion in tourism raises employment and welfare. However, under realistic conditions tourism may lower both labour employment and welfare due to rising costs. These results are demonstrated by simulating a dynamic model for the case of Hong Kong.     

The distribution of personal income: Revisited

In a recent paper, Majumder and Chakravarty (1990) propose a four-parameter model which they find provides a better fit to some income data than the lognormal, gamma, Singh-Maddala, Dagum, and generalized beta of the second kind (GB2) distributions. This note (1) demonstrates that the model proposed by Majumder and Chakravarty is a reparameterization of the GB2 and (2) reconciles the corresponding contradictory empirical findings reported by Majumder and Chakravarty.     

Non‐additivity in portfolios of exploration activities: a real options‐based analysis of equity alliances in biotechnology

Firms invest in exploration‐oriented activities to seek competitive advantage and in response to changing environments. Real options formulations represent an emerging strand of thinking on such investments. In this paper we begin with the observation that firms often simultaneously invest in multiple exploration projects. We identify two sources of potential interactions among these real options investments. First, we investigate the effects of correlations between the outcomes in different options. Second, we analyze the effects of investments that are fungible across project options. We show that under different conditions multiple options can be sub‐additive (due to redundancies in outcomes) or super‐additive (due to fungible inputs). We test the implications of our model with data from the biotech industry and find supporting evidence. Our model and results have some interesting implications for the exploration literature and real options lens. Copyright © 2004 John Wiley & Sons, Ltd.     

Can order exposure be mandated?

In this paper, we examine whether the hidden portion of limit orders represents depth that would be revealed if traders were not allowed to hide it, and the associated market quality implications. Specifically, we examine the decisions by the Toronto Stock Exchange to first abolish the use of hidden limit orders in 1996, and then reintroduce them in 2002. We find that quoted depth does not change following either decision, suggesting that the hidden portion of orders represents depth that would otherwise not be exposed. Using confidential order data for the period following the reintroduction of hidden limit orders, we find that total inside depth increases. For both events, volume does not change and the usage of the limit order book increases if hidden limit orders are allowed. This suggests that if traders are required to expose their orders they will not exit the market, but instead will switch to using market orders. We also find evidence to suggest that informed traders use hidden limit orders to minimize price impact if the probability of non-execution is small.     

Tourism, globalization, social externalities, and domestic welfare

One of the impacts of globalisation has been the growth in tourism and mobility of capital. This paper examines the welfare effect of tourism on the host economy with imperfect competition. Three channels that affects domestic welfare by tourism are: social externalities accompanied with tourists, the terms of trade effect via rises in the non-tradable prices, and the resource movement effect to the manufacturing sector. Owing to the positive terms-of-trade effect and/or the beneficial resource movement effect, the optimal levels of tourism occur at the situations that tourists bring negative social externalities to the economy.     

Exploring the relationship between freedom from corruption and business governance in the Oceania region

This paper empirically investigates the relationship between Freedom from Corruption Index and business governance in the Oceania region by using the Pearson’s correlation coefficients, ordinary least square regression model and ordinary least square regression based decomposition analysis. This paper found that all eleven business governance indicators are positively correlated to Freedom from Corruption Index. Eight business governance indicators; namely, (1) trading across borders, (2) enforcing contracts, (3) resolving contracts, (4) ease of doing business, (5) registering property, (6) getting credit, (7) paying taxes and (8) starting a business significantly influences Freedom from Corruption Index. One standard deviation increase in eleven business governance indicators is associated with about 3.47 % point increase in Freedom from Corruption Index. All eleven business governance indicators contribute between 20 and 40 % differences in freedom from corruption in the Oceania region. All eleven business governance indicators contribute between 5.17 and 10.88 % to freedom from corruption in the Oceania region.     

Aggregation in Area-Yield Crop Insurance: The Linear Additive Model

Previous analyses of area yield crop insurance have used a linear additive model (LAM) to express the relationship between individual and area yield. However, the theoretical foundations of the LAM are unknown. This shortcoming is addressed by establishing two conditions linking microvariables and LAM parameters. The conditions relate to the interaction of risks in individual technologies and the extent of aggregation. If systemic and individual risks are additive in individual yields, and if the law of large numbers hold, then the LAM obtains. This article also shows how departures from these conditions affect the results derived from a LAM analysis.     

The interrelationships between brand and channel choice

We propose a framework for the joint study of the consumer’s decision of where to buy and what to buy. The framework is rooted in utility theory where the utility is for a particular channel/brand combination. The framework contains firm actions, the consumer search process, the choice process, and consumer learning. We develop research questions within each of these areas. We then discuss methodological issues pertaining to the use of experimentation and econometrics. Our framework suggests that brand and channel choices are closely intertwined, and therefore studying them jointly will reveal a deeper understanding of consumer decision making in the modern marketing environment.     

A policy of credit disruption: the Punjab Land Alienation Act of 1900

If land is titled and transferable, it can be used as collateral against which money can be borrowed. The resulting increase in access to credit is usually expected to foster economic growth. This article focuses on a policy in colonial India that made land less available as collateral for debt. Using a panel dataset for Punjab districts from 1890 to 1910, the findings show that this reduced the availability of mortgage-backed credit, but did not hurt proxies for economic development, such as acreage and cattle, at least in the short run.