Introduction to the special issue on the role of nonfarm income in poverty reduction: evidence from Asia and East Africa

In this special issue, we present seven studies that collectively attempt to investigate the role of non‐farm income in long‐term and short‐term poverty reduction in Asia and Africa. The first four studies out of the seven use long‐term panel data over two decades in the Philippines, Thailand, Bangladesh, and India. These studies show drastic increases in non‐farm income shares and corresponding declines in poverty levels over time, especially in the Philippines and Thailand. Education levels of household members and returns to education also increased significantly in these countries. The remaining three studies use cross‐sectional and short‐term panel data from Ethiopia, Kenya, and Uganda. These African studies show high proportions of poor households and low shares of non‐farm income that are somewhat comparable to the situation in the 1980s described in the Asian studies. Without the Green Revolution that provided stable farm income and potential financial resources to invest in children' education in Asia, it is not clear if African farm households can follow the Asian examples.     

The welfare effect of tariff rate reductions in a many country world

Consider a two-commodity n-country model without inferior goods where import tariffs are the only trade barriers. In this paper we establish that the world's welfare is improved if the country with the highest tariff rate unilaterally reduce its rate to the level of the second highest country or if all the countries of the world reduce tariff rates proportionally. The second rule serves as a theoretical justification of the Kennedy and Tokyo Round Tariff Reductions.     

Multidimensional Poverty and Perceived Happiness: Evidence from China,Japan and Korea*

We compare multidimensional poverty and its associations with perceived happiness in China, Japan and Korea. Using largely comparable nationwide survey data, we focus on multidimensional poverty in terms of income, schooling, health and social protection. We find multidimensional poverty to be more prevalent in China than in Japan or Korea; sex and age‐based differences are largest in Korea. We further confirm significant associations between multidimensional poverty and perceived happiness. For all three countries, the aggregated poverty dimensions could largely identify unhappy individuals, with both wider coverage and higher odds than is possible through unidimensional analyses.     

An Explicit Finite Difference Approach to the Pricing Problems of Perpetual Bermudan Options

The pricing problem of options with an early exercise feature, such as American options, is one of the important topics in mathematical finance. Pricing formulas for options with the early exercise feature, however, are not easy to obtain and the numerical methods are thus frequently required to derive the price of these options. The value function of perpetual Bermudan options is characterized with the partial differential equation and this is solved by the finite difference method in this article.     

Böhm-Bawerk and Shibata on power or market

In 1935 the Japanese economist Shibata criticized Böhm-Bawerk's discussion to deny the role of power on market and argued that the validity of Böhm-Bawerk's conclusion depends crucially on his special assumptions on the structure of production in his theory of interest. Unfortunately, both Böhm-Bawerk and Shibata used in their discussions an untenable supposition that the value of heterogeneous capital, which depends on values of endogenous variables, can be given exogenously. Our aim is to reconsider the problem in the light of a new interpretation of Böhm-Bawerk's theory of interest, which is free from this supposition.     

Lattice structure of knowledge and agreeing to disagree

This paper is a contribution to the study of the underlying mathematical structure of common-knowledge, which gives the well-known result of Aumann about the impossibility of ‘agreeing to disagree’. We present the Bayesian subjective probability model with player's belief: i.e. a triple (? %plane1D;4AF;, μ), in which i is a player. ? is a lattice in the field of sets of a state space Ω, %plane1D;4AF;, is a correspondence assigning to each state ω a filter %plane1D;4AF;(ω) in ?, and μ is a common-prior. For this model, we impose none of the important restrictions on the information structure in the Aumann-Bacharach model: axiom of knowledge K₁. axiom of transparency K₂ and axiom of wisdom K₃. We can extend both the disagreement theorem of Aumann and the agreement theorem of Geanacoplos and Polemarchakis under the assumption that each ? is an Artinian lattice.     

A Generalization of Continuity and Convexity Conditions for Correspondences in Economic Equilibrium Theory

Fixed-point theorems for multi-valued mappings and economic equilibrium existence theorems are generalized from the viewpoint that the continuity and/or convexity assumptions on a mapping may be replaced by weaker local conditions on the vector field defined by the mapping. The generalization gives us natural conditions on individual (possibly non-ordered) preferences or aggregated demand behaviours so that we may obtain several extensions of recent results in social and game-theoretic equilibrium theories.
JEL Classification Numbers: C60, C62, C72, D50, D51.     

HOW LONG SHOULD WE STAY IN EDUCATION IF ABILITY IS SCREENED?

We examine how ability‐screening affects demand for education and the shape of an optimal education system. Explicitly incorporating gradual screening by education into the model, we illustrate how individuals of different abilities decide to stay in education or drop out. Gradual screening induces low‐ability individuals to receive over‐education, reducing the net benefit obtained from education by society as a whole, as well as such individuals. A mixed education system, in which public education is provided before private education, is superior to a wholly private system, in terms of both efficiency and equity, because it reduces the over‐education of low‐ability individuals.