Vertical trading and uneven development

The phenomenon of vertical trading, in which the center exports a good involving a high degree of processing which leads to economy-wide learning and the periphery exports a good which does not generate such effects, is formalized in a simple dynamic model of trade. It is shown that the periphery can ‘lose’ from such trade relations. Conditions under which this can occur are shown to involve parameters of the learning functions, and the ‘sizes’ of the two countries.     

Revisiting the empirical estimation of the effect of margin changes on futures trading volume

This study revisits the empirical estimation of the effect of margin requirements on trading volume. Although theory suggests that margin requirements impose a cost to traders and will therefore likely reduce volume traded, empirical examinations have generally failed to find this association. The contention of this article is that the theory is correct, but empirical estimation has generally neglected to adjust margins for underlying price risk. After adjusting for risk, this analysis finds economically and statistically significant negative effects of margin requirements on trading volume as predicted by theory. This study examined 6 contracts over a 17‐year time period and found that financial futures contracts (gold, Dow Jones, and 10‐Year Treasury Notes) were considerably more sensitive to changes in margin requirements than agricultural futures (wheat, corn, and oats). © 2003 Wiley Periodicals, Inc. Jrl Fut Mark 23:561–576, 2003     

Distress financing of out‐of‐pocket health expenditure in India

In the absence of a universal health insurance mechanism, the increasing burden of out‐of‐pocket (OOP) health expenditure has become a growing concern in India. To cope with the cost of illness, people use either their savings and income, or they have to rely upon distress means of finance such as depletion of household assets, borrowings from banks and moneylenders, and contributions from family and friends. This paper analyses the changes that have taken place in the incidence and covariates of distress financing in India by using data from National Sample Survey Organisation for the years 2004 and 2014. Results indicate that during this period the incidence of distress sources as a means to finance OOP health expenditure has hovered around 50%. Further, the results reveal a significant socioeconomic gradient in the incidence of distress financing. Socioeconomic and health‐related covariates significantly impact the likelihood of distress financing as a means to cope with OOP health expenditure. The results indicate the need for government action to formulate a comprehensive plan through an increase in public spending on health care that will improve the quantity and quality of the public health‐care system and enhance the scope of health insurance in India.     

Examining the credibility of macroeconomic forecasts: Null of cointegration approach

In this study we examine the accuracy of forecasts of a select group of major macroeconomic variables, representing both the real and the financial sector of the economy. The theoretical foundations are similar to the one used to study exchange rate expectations, i.e. a verification of consistency and rationality in forecast formation. The empirical measure of accuracy is consistency in the expectation formation process, a precursor to rational forecasts. Here we examine the cointegration properties of the actual and forecast series (at multiple horizons) using the modern null of cointegration approach. A very reliable and continuos data set, the ASA-NBER survey is used. We find evidence of short (long) term expectational consistency (inconsistency) i.e. bandwagon effects and a mean reversion tendency in case of real variables, while the forecasts of financial variables are inconsistent across all forecast horizons.     

Trade protection and bureaucratic corruption: an empirical investigation

Abstract .  We examine whether protectionist trade policies lead to increased bureaucratic corruption. Using multiple measures of corruption and trade policies, we find strong evidence that corruption is significantly higher in countries with protectionist trade policies. These results are robust to endogeneity concerns. Next, a panel-data-based GMM methodology is used to estimate a dynamic model of corruption. This estimator controls for country-specific effects, potential endogeneity of trade policy, and existence of measurement errors afflicting the corruption data. The paper strengthens the case for trade liberalization and argues that trade reforms may lead to improvements in governance.     

What’s so Mysterious about Mystery Shoppers? Understanding the Qualifications and Selection of Mystery Shoppers

Mystery shopping are a method of quality management that is utilized often in a variety of businesses. A holistic definition of a mystery shopper is, however, unclear. Literature relating to mystery shoppers was reviewed and analyzed through content analysis, to develop criteria which can be used to define a mystery shopper. The various traits identified were divided into personal traits, training elements, company considerations. The results of the paper provide a thorough analysis of the various traits that constitute a mystery shopper.     

The Fisher hypothesis: examining the Canadian experience

In this study the validity of the Fisher hypothesis is investigated for Canada under both fixed and floating exchange rate regimes. An empirically distinction is drawn between the weak and strong form of the Fisher hypothesis. The Johansen-Juselius (JJ) multivariate cointegration methodology is applied to test the weak form while the Phillips–Hansen fully modified ordinary least squares (FM-OLS) technique is used for the strong form hypothesis. The caninical correlations (JJ) methodology has the smallest bias and dispersion and hence is the best among the alternative testing procedures available. The FM-OLS procedure, on the other hand, allows for an unrestricted cointegration test correcting for both endogeneity in the data and asymptotic bias in the coefficient estimates. The Fisher hypothesis is soundly rejected.     

MATURITY,STAGNATION AND CONSUMER DEBT: A STEINDLIAN APPROACH

This paper extends a Steindlian model of growth and income distribution to incorporate borrowing by consumers. It shows that borrowing by consumers can improve growth prospects in the short run by increasing consumer demand. However, in the longer run the effects of increasing consumer borrowing are ambiguous because, by increasing consumer debt, it redistributes income towards the rich who have a higher propensity to save, thereby possibly depressing aggregate demand and growth despite the borrowing‐induced expansion. The problem may be exacerbated by financial considerations involving the increase of the interest rate due to greater borrowing, but these considerations are not necessary for it. The problem is more likely to occur when autonomous investment demand is weak, i.e. when borrowing‐induced consumption increases are most required to counter tendencies towards stagnation.     

Employment Flexibility,Dual Labour Markets,Growth, and Distribution

Many policymakers and economists have argued in favour of greater labour market flexibility as a part of structural adjustment reforms that are expected to improve economic performance. Existing post‐Keynesian‐Kaleckian (PKK) models are unable to address these issues because they assume away long‐term labour by allowing employment to be short term and adjusting freely with output. This paper introduces long‐term labour into PKK models. We develop a model that provides alternative ways of modelling labour market flexibility and suggest that when aggregate demand issues are important, an increase in employment flexibility is likely to have adverse growth and distributional impacts.     

Convergence and equilibrium in two sector models of growth,distribution and prices

I am grateful to Lance Taylor for encouragement and discussions, and to two anonymous referees of this journal for their detailed and insightful comments on an earlier draft which resulted in its thorough revision.