Short-run energy-economy interactions in Egypt

This paper discusses the short-run adjustment mechanism of the Egyptian economy to changes in the domestic price of oil. The effects of oil price increases have been analysed in the framework of a short-run macroeconomic model with an explicit treatment of energy. The results suggest that a reduction in petroleum use induced by a rise in the price of oil will impose difficult adjustment problems for the economy in the short run in terms of increase in inflation, fall in the share of wage income and sharp output losses. The analysis also indicates that energy demand management through appropriate petroleum pricing strategy cannot bring about desirable impacts on the economy unless efforts are made to reduce cost pressures originating from other energy sectors.     

Strategic Exports and R&D with Internationally Mobile Skilled Labor and Exchange Rate Volatility*

This paper extends the Spencer and Brander (1983) model of strategic exports and R&D by introducing exchange rate volatility and R&D activities that require internationally mobile skilled labor. We find that an increased volatility reduces both the levels of optimal export subsidy and R&D tax. We also find that the endogeneity of skilled wage increases the level of export subsidy and reduces the level of R&D tax if the country is an exporter of skilled labor.     

On the provision of official and private foreign aid

The provision of official relative to private foreign aid varies considerably between donor countries. We explain the variations in terms of country size, household composition, income distribution, and the government's ability to commit to aid, and derive inter alia the results: (1) official aid crowds out private aid, (2) total aid and official aid collected from each household are lower in more populous countries, (3) total aid is lower if (i) the distribution of income favors the more altruistic households, and (ii) the government can credibly commit to a certain level of aid. Evidences suggest that the theoretical results can explain stylized facts.     

On the effectiveness of monetary and fiscal policies in a Keynesian model

One of the central problems in macroeconomics is the comparison of the effectiveness of various monetary and fiscal policy measures for regulating output and employment. Opinions on this issue are quite varied. This paper analyses this controversy in the framework of a non-Walrasian model with price rigidities. It studies a monetary economy where money is the sole medium of exchange in the model ‘money buys goods and goods buy money; but goods do not buy goods’. The works of Benassy, Dreze, Malinvaud and Younes are utilised for constructing a model of Keynesian unemployment equilibrium.     

Capacity constraints,alternative technologies and input-output analysis

This paper extends the standard input-output (10) model by introducing alternative technologies and capacity constraints. A necessary and sufficient condition for the existence of solutions and two alternative sufficient conditions for the uniqueness of a solution have been developed.     

Exact sampling distribution of the omitted variable estimator

In the context of stochastic regressors, the exact sampling distribution of the omitted variable estimator is derived. The result is then used for comparison with the non-stochastic case.     

Growth Patterns and Inequality in the Presence of Costly Technology Adoption

The stylized facts that motivate this article include the diversity in growth patterns that are observed across countries during the process of economic development and the divergence over time in income distributions both within and across countries. We construct a dynamic general equilibrium model in which technology adoption is costly and agents are heterogeneous in their initial holdings of resources. We interpret the adoption cost as the resources expended in acquiring skills associated with new technologies. Endogenous growth occurs in our model largely as a result of human capital deepening. The analytical results of the model characterize three growth outcomes associated with the technology adoption process depending on productivity differences between the technologies. These outcomes are labeled ‘poverty trap,’ ‘dual economy,’ and ‘balanced growth.’ The model is then capable of explaining the observed diversity in growth patterns in addition to the divergence of incomes over time and across countries.     

Foreign Aid, Domestic Investment and Welfare

This paper examines the welfare implications of temporary foreign aid in a simple two-period, two-country model of trade. Domestic investment is endogenous, providing an important link between aid in period one and the terms of trade in periods one and two. Transfer-induced changes in the terms of trade redistribute present and future income between the donor and the recipient. In the presence of barriers to international borrowing and lending, such redistribution gives rise to the possibility of temporary aid being both potentially and strictly Pareto improving.     

Promoting Trade Liberalization: Theoretical Analysis of Foreign Aid as Prize

We investigate whether foreign aid can be used to induce trade policy reforms. We develop a two‐period political economic model where promise of aid in period 2 depends on chosen tariff in period 1. We consider three scenarios depending on whether the donor is passive/active and whether the two governments move simultaneously or sequentially. We find a sufficient condition for unconditional aid to increase the level of optimal tariff, and the possibility of unconditional aid increasing optimal tariff decreases when the donor is active rather than passive.