Schistosomiasis and development

This paper evaluates evidence relating to the belief, long held by tropical health workers, that schistosomiasis control would contribute significantly to economic development. The many attempts to estimate the macro benefits of control in terms of the ‘economic loss’ due to the disease are criticized for their emphasis on aggregate output benefits and for the unrealistic assumptions made in estimating the increment in, and marginal product of, efficiency labour units which might result from control. Micro research has so far failed to establish a clear empirical basis for the assumption that schistosomiasis seriously impairs labour productivity — but this may be attributable to sampling bias resulting in the exclusion of workers with severe disease.     

Stability of the World Trade Web over time – An extinction analysis

The World Trade Web (WTW) is a weighted network whose nodes correspond to countries while edge weights reflecting the value of imports and/or exports between countries. In this paper we introduce to this macroeconomic system the notion of extinction analysis, a technique often used in the analysis of ecosystems, for the purpose of investigating the robustness of this network. In particular, we subject the WTW to a principled set of in silico “knockout experiments,” akin to those carried out in the investigation of food webs, but suitably adapted to this macroeconomic network. Informed by results in network theory as well as studies of contagion in economic networks, we seek to understand the role of connectance in the robustness of the system. We interpret increasing connectance as one aspect of a move towards globalization and liberalized trade policy. Broadly, our experiments confirm two conjectures. First, that the WTWs are “robust yet fragile” networks — robust to random failures but fragile under targeted attack. Second, that growing connectance has both positive and negative impacts on robustness. More specifically, we find that increasing connectance corresponds to increasing robustness for small shocks but to decreasing robustness in the face of large, cascading shocks up to the system. This yields evidence in support of the view that globalization, as witnessed by increasing connectance, increases the ability of a system to absorb shock up until a certain size, whereupon the shock overwhelms the system and sparks a broader contagion. We anticipate that experiments and measures like these can play an important role in the evaluation of the stability of economic systems.     

Price and quantity adjustment in a dual character market The case of the Greek poultry sector

In this paper we set up, estimate and test a short-run model for the poultry sector in Greece. The model allows for the simultaneous existence of a monopolistically competitive and a competitive segment, and determines producer and consumer prices, and the quantity consumed. We provide evidence on steady-state parameters such as demand and supply elasticities, as well as on speeds of adjustment of prices and quantities. The evidence suggests that adjustment is very rapid, although quantities appear to be adjusting more quickly than prices. The model is used to examine the dynamics of adjustment to demand and supply-side disturbances.     

Analytic solutions for the value of the option to (dis)invest

It is well known that costly reversibility complicates capital investment analysis to the point where closed form expressions for the value of a firm's investment opportunities seldom exist. In such circumstances numerical evaluation is normally taken as the most practical (and often, the only) way of determining investment value. However, we demonstrate that power series expansions can often be used to obtain analytic expressions for the value of a firm's investment opportunities. We use them in a research and development (R&D) setting to determine investment value when cash flows are generated by two well known stochastic processes. The first is based on the Cox, Ingersoll and Ross (1985) 'square root' process; the second on the Uhlenbeck and Ornstein (1930) mean reverting random walk. The criteria which lead to optimal investment decisions when the option to abandon or take up investment opportunities have the non‐trivial values implied by these processes, are also briefly examined.     

Conflict and inflation in industrial countries

This paper examines expirically the conflict theory of inflation, using a sample of pooled time-series, cross-section data over the period 1971–87 for 10 industrial countries: USA, Japan, Canada, Germany, France, UK, Italy, Belgium, Netherlands and Sweden. To this end a wage-price adjustment model based on the ideas of distributional conflict in wage formation and mark-up pricing in goods markets is set out. The model provides a satisfactory explanation of the inflationary process in industrial countries. It is shown that conflict between workers and capitalists over the distribution of income exerts a significant influence on the pattern of inflation. Import prices, inflationary expectations and labour market conditions are also important, with the latter acting as a regulator of class conflict.     

Layoffs and duration dependence in a model of turnover

A semi-Markov model of turnover, resulting from optimizing behavior on the part of workers, is developed. Duration dependence in the transition out of employment is modelled as resulting from a layoff probability which decreases with tenure. Some preliminary results, based on DIME data, are presented. These indicate that a declining hazard rate in the transition out of employment is a significant feature of the data.