International Financial Liberalization and Economic Growth

This paper pulls together existing theory and evidence to assess whether international financial liberalization, by improving the functioning of domestic financial markets and banks, accelerates economic growth. The analysis suggests that the answer is "yes." First, liberalizing restrictions on international portfolio flows tends to enhance stock market liquidity. n turn, enhanced stock market liquidity accelerates economic growth primarily by boosting productivity growth. Second, allowing greater foreign bank presence tends to enhance the efficiency of the domestic banking system. In turn, better-developed banks spur economic growth primarily by accelerating productivity growth. Thus, international financial integration can promote economic development by encouraging improvements in the domestic financial system.     

The relation between forward prices and futures prices

This paper consolidates the results of some recent work on the relation between forward prices and futures prices. It develops a number of propositions characterizing the two prices. These propositions contain several testable implications about the difference between forward and futures prices. Many of the propositions show that equilibrium forward and futures prices are equal to the values of particular assets, even though they are not in themselves asset prices. The paper then illustrates these results in the context of two valuation models and discusses the effects of taxes and other institutional factors.     

Changing Skill Intensity in Australian Industry

This article examines changes in industry skill scores for Australia for the period 1991 to 2001 using indices of cognitive skill for industry based on Census employment data. Changes in mean industry cognitive skill levels are analysed, as are the relative contributions of changes to the occupational structure within industry and changes to the industry structure of employment. The main findings are that the drivers of skill change differed substantially between the two Census periods. Prior to 1996 the majority of the change was due to shifts towards industries with a more highly skilled workforce. After 1996 changes in the economy‐wide skill level were dominated by within‐industry changes in occupational composition. This coincided with a sharp pickup in the rate of capital expenditure on information and communication technologies. The increasing use of part‐time employment overall had a deskilling effect.     

The taming of the Shrew(ish snake)?

An article in the last issue of INTERECONOMICS discussed problems of the monetary integration in Europe as they may arise under the new European Monetary System¹. It dealt more particularly with the exchange rate problems whereas the following contribution is concerned with the intervention and credit mechanism.     

Comments on qualitative results for investment proportions

Some mean/variance efficient portfolios will have positive investments in all individual assets when covariances satisfy the conditions given here. These conditions are more useful empirically than qualitative results that depend on the inverse covariance matrix. The prospect appears dim for general and useful qualitative results.     

Bayesian estimation of a random coefficient model

This paper carries out a Bayesian analysis of the Hildreth-Houck (1968) random coefficient model and applies it to some cross-section production function data. Posterior distributions for mean coefficients, actual coefficients, variances and variance ratios are derived. The variance ratio posteriors are largely uninformative but they do lead to relatively informative densities on the variances, and the problem of negative variance estimates, obtained with previous techniques, is overcome. Posterior densities for the mean coefficients are not extremely sensitive to the variance ratios.     

World Food Council's Tenth Session

The World Food Council held its 10th ministerial session from 11–15 June in the Africa Hall of the UN Economic Commission for Africa, which is located in Addis Ababa, Ethiopia. The meeting was historic: ten years had swiftly passed by since the World Food Conference met in Rome. What had been accomplished? The solemnly proclaimed resolution on the eradication of hunger had obviously not been fulfilled. In fact, the world's hungry and malnourished continue to prevail at around the half-billion number. Moreover, Africa was in the throes of a food crisis which had almost swept across that drougt-plagued continent, at least south of the Sahara.