A Measure of Trade Induced Adjustment in Volume and Quality Space

In this paper we contribute to the literature on the measurement of international trade flows. Specifically, we combine changes in the volume and quality in matched trade changes to present a simple new index together with a geometric framework that can be used to visualise changes in quality and volume simultaneously. We illustrate the usefulness of our simple extension with data for trade between Malaysia and China between 1994 and 2004.     

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.     

Bank Lending Channel of Monetary Policy: Dynamic Panel Data Study of Malaysia

This paper aims to investigate the relevance of bank-lending channel (BLC) of monetary policy in a small-open economy, i.e. Malaysia by using disaggregated bank-level data. A dynamic panel data method namely generalized method of moments (GMM) procedure has been used in estimating the dynamic of banks' loan supply function. The empirical evidence revealed that the banks' loan supply is significantly and negatively influenced by monetary policy shocks, and therefore has supported the existence of BLC in Malaysia. Several bank-characteristics variables namely bank liquidity and bank capitalization (capital adequacy ratio) are also statistically significant in influencing the banks' loan supply.     

Corporate Acquisitions and the Operating Performance of Malaysian Companies

We report improvements in long run operating performance for a sample of Malaysian companies that made acquisitions over the period 1988–1992. As the sample selected consists of acquisitions of private target companies, the analysis allows us to focus on the possibility of changes arising from non-disciplinary sources. The reported improvements do not appear to have been achieved by sacrificing the long-term viability of the combined firms in pursuit of shortterm objectives. However, as the target companies in the current study were previously privately-owned businesses, researchers and policy makers should be wary before generalising from these results.     

Co-operation in Risky Environments: Evidence from Southern Ethiopia

The semi-arid and arid rangelands of Sub-Saharan Africa arecharacterised by high variability and by heavy reliance of herderson access to common resources, predominantly pasture and water.In these systems, the capacity of the community to co-operateover resource management is critical and the effectiveness ofmanagement has a direct impact on exploitation rates and landallocation patterns. In this paper, we develop a model to capturethe impact of climatic variability on capacity to co-operateand on resulting land use and allocation patterns, and applythe model to data collected from communities located on theBorana Plateau in southern Ethiopia. Results indicate that rainfallvariability has a negative impact on stock densities, consistentwith risk-averse producer behaviour, but has no statisticallysignificant impact on land allocation patterns in this marginalarea. Furthermore, co-operation has a direct negative impacton stock densities and land allocated to private pastures. Theresults support the hypothesis that individual incentives toovergraze and encroach on common pastures can be mitigated incommunities with high co-operative capacity.     

Cigarette and Alcohol Expenditures in Malaysia: Implications for Anti‐Smoking and Drinking Policies*

A number of studies have examined alcohol and cigarette consumption, but none have explored demand for both products simultaneously even though consumption decisions are likely often related. The present study uses microdata from the 2009/2010 Malaysian Household Expenditure Survey. A novel bivariate Tobit model that accounts for error heteroscedasticity is used to estimate Malaysian consumers' decisions to purchase cigarettes and alcohol and amount spent for each. The results indicate that household income and regional location, and the age, gender, education level and occupation type of the household head are associated with consumption decisions and expenditure levels, with some variation by ethnic group, suggesting the importance of these characteristics in policy deliberations to reduce consumption.     

Patterns of employment relationships: the association between compensation policy and contractual arrangements

Firms respond differently to labour market regulations and develop an employment relationship accordingly. We use linked employer–employee data to examine the relationship between compensation policies and contractual arrangements in large-sized firms in Portugal. In this country, the wages are regulated through minimum wage and collective agreement, while employment is protected by stringent employment legislation. The empirical analysis starts with a fuzzy clustering to identify typical compensation policies. Three major segments emerge from this analysis: Competitive, Internal Labour Markets and Incentive. The first segment comprises low-wage firms, which are highly responsive to market conditions. The other two reveal properties of internal labour markets, although the incentive-based firms reinforce the use of discretionary power to differentiate the workforce. Subsequently, we estimate a regression model to examine how the compensation policy interacts with contractual arrangement. Empirical evidence confirms the segmentation predictions, i.e. low, flexible wages and flexible contracts prevail in the same firms. Furthermore, vulnerable categories like young workers and female workers are over-represented in Competitive firms, while high-wages are associated with incentive devices benefiting white-collar employees. Apparently, firms foster inequality among segments of workers and often penalise or favour the same category of workers.