Family allowances as welfare improvements

The present paper studies the equilibria of a simple overlapping generations model of pure exchange in which money is traded. There is a continuum of agents in each generation and population growth is endogenous via voluntary decisions on children. Any monetary steady state has to satisfy the golden rule that the interest rate equals the growth rate. Still such a monetary steady state may be inefficient. If raising children is not excessively profitable, then there exists a transfer scheme, in favor of those who raise children, which improves upon the steady state.     

Book Reviews

M. Arsjad Anwar, Thee Kian Wie, Iwan Jaya Azis, Pemikiran, Pdaksanaan, dan Perintisan Pembangunan Ekonomi[Concepts, Implementation, and Pioneering in Economic Development], Fakultas Ekonomi Universitas Indonesia and PT Gramedia Pustaka Utama, Jakarta, 1992, pp. xx + 700.

Adam Schwarz, A Nation in Waiting: Indonesia in the 1990s, Allen and Unwin, Sydney, and Westview, Boulder, 1994, pp. 370. Paper: A$24.95.

East Asia Analytical Unit, Expanding Horizons: Australia and Indonesia into the 22st Century,Department of Foreign Affairs and Trade, Canberra, 1994, pp. xviii + 346. A$34.95.

Sjahrir, Pikiran Politik[Political Ideas], LP3ES, Jakarta, 1994, pp. xiv + 191.

Sjahrir, Persoalan Ekonomi Indonesia: Moneter, Perkreditan dan Nenca Pembayaran[Problems of the Indonesian Economy: Money, Credit and the Balance of Payments], Pustaka Sinar Harapan, Jakarta, 1995, pp. xv + 205.

Sjahrir, Analisis Bursa Efek[Analysis of the Stock Exchange], PT Gramedia Pustaka Utama, Jakarta, 1995, pp. xiv + 169.

Sjahrir, Ekonomi Indonesia dalam Perspektif Bisnis[The Indonesian Economy in a Business Perspective], PT Jurnalindo Aksara Grafika, Jakarta, 1994, pp. xvi + 239.

Sjahrir, Kebijakan Negara Mengantisipasi Masa Depan[National Policy: Anticipating the Future], Yayasan Obor Indonesia, Jakarta, 1994, pp. xv + 251.

Sjahrir, Formasi Mikro-Makro Ekonomi Indonesia[Indonesia's Macro and Micro Economy], Penerbit Universitas Indonesia, Jakarta, 1995, pp. xii + 313

F.B.A. Bouman and Otto Hospes, Financial Landscapes Reconstructed: The Fine Art of Mapping Development,Westview, Boulder, 1994, pp. xi + 416. US$45.00

Robert Cribb (ed.), The Late Colonial State in Indonesia: Political and Economic foundations of the Netherlands Indies 1880–1942,Verhandelmgen van het Koninklijk Instituut voor Taal-, Land- en Volkenkunde 163, KITLV Press, Leiden, 1994, pp. xiii + 295.

Shinya Sugiyama and Milagros C. Guerrero (eds), International Commercial Rivalry in Southeast Asia in the Inierwar Period,Yale Southeast Asia Studies Monograph 39, Yale Center for International and Area Studies, New Haven, 1994, pp. ix + 222.

W.L. Korthals Altes, Changing Economy in Indonesia. Volume 15: Prices (Non-Rice) 1814–1940,Royal Tropical Institute, Amsterdam, 1994, pp. 175. Paper: Dfl. 48.00.     

Financial,corporate and tax harmonisation for capital market development in southern Africa

An integrated capital market can significantly improve prospects for a region which seeks to accelerate its development but is critically short of the requisite capital The function of a capital market is the transformation of savings by private individuals into investment capital required by business concerns. However, the processing of transformation requires mediation between their respective interests through an effective mechanism for facilitating access to the market for capital It also requires allocational efficiency so that capital investment is directed where it is most useful and provides the best yield.

This article considers the measures that should be adopted to facilitate harmonisation leading to the growth of a regional capital market which is necessary for regional integration. It reviews trends in capital controls, corporate and financial regulatory practices and tax regimes and discusses the implications for capital mobilisation and investment. The regionalisation of capital would call for considerable convergence and coordination of policy and practice in capital control, regulatory requirements and fiscal systems.     

Gender and ethical orientation: A test of gender and occupational socialization theories

Ethics and associated values influence not only managerial behavior but also managerial success (England and Lee, 1973). Gender socialization theory hypothesizes gender differences in ethics variables whether or not individuals are full time employees; occupational socialization hypothesizes gender similarity in employees. The conflicting hypotheses were investigated using questionnaire responses from a sample of 308 individuals. Analysis of variance and hierarchical regression yielded unexpected results. Although no significant gender differences emerged in individuals lacking full time employment, significant differences existed between employed women and men, with women appearing more ethical. While occupational socialization predicts an interaction between employment status and gender, these group differences were opposite to those predicted. An implication for the two theories and the current conflicting research support is that these commonly used theories may be of limited usefulness. Some alternative concepts are proposed.E. Sharon Mason is an Assistant Professor of organizational behavior and human resource management in the Faculty of Business, Brock University, St Catharines, Ontario.Peter E. Mudrack is an Assistant Professor in the Department of Management and Organization Sciences at Wayne State University, Detroit, Michigan.     

Investor efficiency in the face of takings

Governmental entities at all levels are empowered to acquire private property for the public's benefit, provided that just compensation is paid. The level of compensation typically viewed by courts as just is market value, but questions arise as to whether market value compensation motivates the private owner of land, potentially subject to a taking, to improve the property to a degree that is socially efficient. Earlier works have found market value to be a compensation level too high to promote efficiency. The present paper offers an analysis, based on a simple model of investor profit maximization, that provides a unified view of models presented in some important earlier works. In a special application of the general case, it is shown that market value can be too low a level of compensation to promote efficient behavior by the land owner.     

Perception of ‘economic reality’ with Design and Technology

Conclusion It has been argued that Design and Technology teachers would be helped by clear distinction between the terms, industry, business and economic. This would help to avoid the confusion between particular ways of viewing business (eg. through an economic concept such as profit maximisation;) and the multi-faceted character of the activity under observation. By this reasoning, the economic dimension of Design and Technology resides in the analysis of needs and the evaluation of products according to the value of the resources used up, and the value and distribution of the resources and products created. The link with discussion of value judgements in the subject (eg. Riggs and Conway, 1991) is very clear. So also is the dependence of this analysis on the definition of needs and evaluation and, crucially, the perceived relationship between the two, in learning and classroom practice.     

Jackknifing Bond Option Prices

Prices of interest rate derivative securities depend cruciallyon the mean reversion parameters of the underlying diffusions.These parameters are subject to estimation bias when standardmethods are used. The estimation bias can be substantial evenin very large samples and much more serious than the discretizationbias, and it translates into a bias in pricing bond optionsand other derivative securities that is important in practicalwork. This article proposes a very general and computationallyinexpensive method of bias reduction that is based on Quenouille's(1956; Biometrika, 43, 353–360) jackknife. We show howthe method can be applied directly to the options price itselfas well as the coefficients in the models. We investigate itsperformance in a Monte Carlo study. Empirical applications toU.S. dollar swap rates highlight the differences between bondand option prices implied by the jackknife procedure and thoseimplied by the standard approach. These differences are largeand suggest that bias reduction in pricing options is importantin practical applications.     

An Analysis of SBA Loan Defaults by Maturity Structure

The financial intermediation literature on small business lending focuses on the determinants and costs to credit access. There is, however, little research examining the repayment behavior of small firms that actually receive loans. In this paper, we address this shortcoming in the literature by examining the default behavior of a sample of Small Business Administration 7(a) guaranteed loans with three distinct maturity structures. We employ a discrete-time hazard approach and show that SBA defaults are time-dependent and that the factors impacting default behavior, as well as its timing, are maturity specific. Specifically, we show the importance of loan maturity, seasoning, economic conditions, and other firm-specific factors in predicting the likelihood of SBA loan defaults. JEL classification: G21     

A utopian view of R&D functions

Technology management research appears to have a much longer history than is commonly assumed. In this short paper attention is drawn to some of Francis Bacon's writings which appeared in the early seventeenth century, and which contain ideas on laboratory organization that still have relevance today. In fact, it is only recently that the same broadness of laboratory functions described in the earlier text has been re–discovered.     

Hedging Housing Risk*

An unusually rich source of data on housing prices in Stockholm is used to analyze the investment implications of housing choices. This empirical analysis derives market-wide price and return series for housing investment during a 13-year period, and it also provides estimates of the individual-specific, idiosyncratic, variation in housing returns. Because the idiosyncratic component follows an autocorrelated process, the analysis of portfolio choice is dependent upon the holding period. We analyze the composition of household investment portfolios containing housing, common stocks, stocks in real estate holding companies, bonds, and t-bills. For short holding periods, the efficient portfolio contains essentially no housing. For longer periods, low-risk portfolios contain 15 to 50 percent housing. These results suggest that there are large potential gains from policies or institutions that would permit households to hedge their lumpy investments in housing. We estimate the potential value of hedges in reducing risk to households, yet yielding the same investment returns. The value is surprisingly large, especially to poorer homeowners.