Measuring the effects of monetary policy in Pakistan: a factor-augmented vector autoregressive approach

This paper examines the effects of monetary policy on macroeconomic variables in Pakistan’s economy using a data-rich environment. We used the factor-augmented vector autoregressive (FAVAR) methodology, which contains 115 monthly variables for the period 1992:01 to 2010:12. We compared the results of VAR and FAVAR model and the results showed that FAVAR model explains the effects of monetary policy which are consistent with the theory and better than the VAR model. VAR model shows the existence of price puzzle and liquidity puzzle in Pakistan while FAVAR model did not provide any evidence of puzzles. Interest rate negatively influences prices, hence interest rate is a good instrument for controlling inflation in Pakistan but it takes a lag of 5 months. The transmission of monetary policy shock is faster in case of prices as compared to output in Pakistan. FAVAR model supports the effectiveness of interest rate channel in Pakistan.     

Profit efficiency among Bangladeshi rice farmers

Production inefficiency is usually analyzed by its three components—technical, allocative, and scale efficiency. In this study, we provide a direct measure of production efficiency of the Bangladeshi rice farmers using a stochastic profit frontier and inefficiency effects model. The data, which are for 1996, include seven conventional inputs and several other background factors affecting production of modern or high yielding varieties (HYVs) of rice spread across 21 villages in three agro-ecological regions of Bangladesh. The results show that there are high levels of inefficiency in modern rice cultivation. The mean level of profit efficiency is 77% suggesting that an estimated 23% of the profit is lost due to a combination of technical, allocative and scale inefficiency in modern rice production. The efficiency differences are explained largely by infrastructure, soil fertility, experience, extension services, tenancy and share of non-agricultural income.     

Risk Sharing Mechanism in Japan's Auto Industry: The keiretsu Versus Independent Parts Suppliers

This study investigates (1) whether risk sharing behavior of subcontractors has changed over the two decades (1973–94); (2) whether there are any differences between keiretsu firms and independent firms in sharing risk; (3) how ownership of its parts-suppliers through minority shareholdings by automakers or sending directors to parts-suppliers affects the suppliers' risk sharing behavior. Empirical results support the risk-sharing hypothesis in general. The keiretsu firms are more risk averse than independent firms in the first period (1973–85). In the second period (1985–94) independent firms become more risk averse than keiretsu firms. This may suggest that the keiretsu system would work as a shock absorber in an unfavorable business environment.     

A longitudinal examination of intellectual capital reporting in Marks & Spencer annual reports, 1978–2008

This paper examines the intellectual capital content of Marks & Spencer annual reports over a 31 year period from 1978 to 2008 using a content analysis instrument. Motivated by the gap among prior studies in respect of longitudinal samples, the paper also sets out to note the ways in which the annual report has changed over the three decades in response to the supposed change from the assumption that fixed assets and operations were the key driver of value creation to a belief that knowledge and the stock of intellectual assets had become a more powerful explanation of value-added. The paper finds an overall increase in intellectual capital reporting over the 31 years but notes a particular increase in relational capital reporting and a re-ordering of sub-categories over time. Narrative (as opposed to quantitative) reporting has increased and ‘factual’ (as opposed to opinion and judgement) reporting has decreased. The paper concludes that annual report narratives have reflected a wider change in the market for information among investors and other stakeholders. Whilst the exact nature of these market changes was beyond the scope of this paper, it is concluded that changing patterns of ICR reflect the increased complexity of the messages being conveyed in voluntary reporting. The increased reliance on IC in value creation has, we argue, created a need for narrative of less factual certainty and with more ambiguity and circumspection in describing increasingly complex knowledge assets.     

Energy-Driven Economic Growth: Energy Consumption—Economic Growth Nexus Revisited for China

This paper revisits the relationship between energy consumption and economic growth in the case of China using an autoregressive distributed lag (ARDL) bounds testing procedure for the period from 1952 to 2008. The results suggest that energy is one of the engines of growth in China, along with labor, capital, and international trade. In particular, a 1 percent increase in energy consumption leads to a 0.17 percent increase in gross domestic product. In addition to energy consumption, results also suggest that labor, capital, and international trade are also important factors stimulating China’s economic growth.     

A general equilibrium analysis of production subsidy in a Harris-Todaro developing economy: an application to India

Since 1950s India has advocated import substituting industrialization policies to promote its manufacturing sector. The end result was creation of a dual economy: highly favored manufacturing sector with high and rigid wages and neglected agricultural sector with low wages and poverty. Because of the higher wages in the manufacturing sector, the rural laborers migrate to the urban sector, a typical characteristic of the Harris-Todaro developing economy. Realizing this crisis, the Indian government recently initiated policies to boost agricultural production to curb the labor migration and improve the welfare of the rural population. In this study, we develop a computable general equilibrium (CGE) model for India by incorporating Harris-Todaro economic characteristics of unemployment, labor migration, farm dependant population, and labor-intensive agriculture. We use the model to analyze the effects of agricultural production subsidy policies on employment, factor price, output price, output levels, and welfare in agricultural and manufacturing sectors. Our findings show that agricultural production subsidy increases agricultural production, reduces unemployment, raises the wage rate in the agriculture sector, augments the consumption among the rural and urban households, and increases the rental rate for capital in agricultural sector.     

Single Object Auctions With Externalities: A Tractable Model

We consider the single object auction model with allocative externalities in a private valuation and quasi‐linear setting. We model externalities by assuming that every agent has a private valuation (for the object) and a strict ranking of other agents. The utility for an agent when another agent receives the object is the product of his own valuation and a real number that depends on the rank of this agent in his ranking. When the only private information is the valuation of the agents, we characterise the implementable allocation rules and use these to derive the optimal auction. The optimal auction collects payments from agents who do not receive the object.