Service provision for street-based traders in Pietermaritzburg,KwaZulu-Natal: comparing local findings to lessons drawn from Africa and Asia

South Africa's informal economy absorbs approximately one-quarter of the labour force of 15 million people and is therefore the fastest growing sector of employment. Street-based trading constitutes a major subsector within the informal economy and is continuously expanding through unrelenting proliferation of survivalist micro-enterprises. However, few organisations that support enterprises are accessible or appropriate to survivalist and informal sector micro-enterprises. Interviews were conducted with 98 Pietermaritzburg street-based traders and ten KwaZulu-Natal service providers to determine service provision requirements. The results are compared with findings of four international studies. The findings suggest that for survivalist enterprises to benefit from entrepreneurial education and training services, obstacles with regard to South African traders' understanding of entrepreneurship and cultural limitations to enterprise growth should be overcome. Service institutions also require incentives to serve the informal sector, as well as the capacity to design and deliver appropriate services.     

Costly state verification and debt contracts: a critical resume

This paper presents a critical review of the Costly State Verification framework starting from the basic model by Gale and Hellwig [Review of Economic Studies 52 (1985) 647] and further examining the most recent developments. It aims both at discussing the optimality of debt contract in alternative contexts and at offering a reply to the critiques usually moved to this approach within a unified framework.     

Is sustainable growth optimal?

This paper analyzes sustainable growth in a stochastic environment, with human extinction as a possible outcome. The basic constraint of sustainability is that consumption never decreases over an infinite horizon, which requires that the probability of extinction be maintained at zero. We show that this problem can be examined in a standard optimal-growth model. Under certain conditions, the solution of this problem is a corner solution with probability of survival equal to one, at the cost of economic growth. These conditions depend on the initial development level and on the elasticity of utility with respect to consumption. In some circumstances, which depend on the social discount rate, optimal-growth paths do not exist. In these situations, the sustainable-growth concept has a clear autonomy with respect to the usual optimality criterion.     

Will East Germany Become a New Mezzogiorno?

Despite massive regional policy efforts, GDP per capita in Southern Italy has only briefly converged on Northern Italian levels in the 1960's. Failure of convergence since then is associated with a policy switch from investment toward income maintenance, with reduced wage sensitivity to regional labor market conditions and with increases in rent-seeking opportunities and corruption. East Germany's early experience of rapid wage and income, but not productivity, convergence raised fears that aMezzogiornoscenario could be repeated. Since then, however, investment and productivity have risen while wage setting has become more flexible. Given East Germany's greater “social capability” for growth, and provided that investment continues to be encouraged, the prospects for convergence are now more promising.J. Comp. Econom.,June 1997,24(3), pp. 241–264. Magdalen College, University of Oxford, Oxford OX1 4AU, United Kingdom; University College London, London WC1E 6BT, United Kingdom; and School of Oriental and African Studies, University of London, London WC1H 0XG, United Kingdom.     

Mortgage Terminations and Pool Characteristics: Some Additional Evidence

The amount and timing of unscheduled principal amortization determines the ex-post yield to holders of mortgage-backed securities. In this paper, the relationship between pool characteristics and the early return of principal is addressed. Empirical results are based on actual terminations from June 1985 to June 1986 on a sample of all GNMA pools. The relative termination experience of pools with loan rates close to the refinancing rate faced by the underlying borrower is examined in detail. The impact of pool age and size is also considered. Unscheduled termination depends on the refinancing rate, as well as the specific characteristics of a pool.     

THE DIFFERENTIAL EFFECTS OF SINKING FUNDS ON BOND RISK PREMIA

This study analyzes the effect that two options created by the inclusion of a sinking fund clause in a bond indenture have on the bond issue's secondary market risk premium. The impact of market prices that exceed current sinking fund redemption prices, and of par versus premium redemption, is clearly apparent when a set of issue-specific and macroeconomic control variables are incorporated into a model of bond risk premia. Thus, secondary market prices for the large-volume utility bond transactions in the sample reflect knowledge of individual-issue, time-varying indenture characteristics.     

Some applications of stochastic analysis in financial economics: An outline

The basic features of a recent approach to the theory of continuous trading, are presented.

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Sommario Vengono presentate le linee base di un recente approccio alle opzioni in tempo continuo basato su tecniche di analisi stocastica.

     

Financial market volatility

The volatility of financial markets has attracted a lot of attention in recent years. However, while particular episodes, such as the bond market turbulence in 1994 and considerable exchange rate movements in 1995, may give the impression that markets have become more volatile, there appears to have been no systematic increase in volatility over the last 20 years in major industrialised countries.