Aiding self‐employed car‐washers in the informal sector in Durban

In the past year, the South African Government has committed itself to ‘developing’ the informal sector as a strategy to ease the unemployment crisis and to aid the underemployed. In this paper, the author examines both the lives of self‐employed car‐washers and car‐washing as an activity within the informal sector. He argues that many ‘marginalised’ people who eke out a subsistence in the lower echelons of the informal sector in South Africa regard themselves as lumpenproletariat (or ‘wage‐labourers‐in‐waiting') and not dynamic entrepreneurs. These people expect the Government to intervene in the process of their transition to proletarianism. Further, activities such as car‐washing offer no prospects for self‐advancement.     

Target prices,market prices,and economic efficiency in agriculture in the United States

This paper looks at one aspect of current United States agricultural policy. This concerns the attempt by the federal government to support commodity prices and income of farmers. This is accomplished through the deficiency payments program. Unfortunately, the program is inherently economically inefficient. Moreover, alternatives (short of eliminating the program altogether and not replacing it) also are not economically efficient.

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Zusammenfassung In der amerikanischen Agrarpolitik spielen Preis- und Einkommenssubventionen für Farmer eine wichtige Rolle. Der Beitrag behandelt die Wirkungen des seit 1985 bestehenden Systems von Ausgleichszahlungen für landwirtschaftliche Erzeugnisse. Diese Zahlungen errechnen sich als Differenz zwischen dem Subventionspreis für ein bestimmtes landwirtschaftliches Erzeugnis und seinem Marktpreis.Die bei den Landwirten eintretenden Wirkungen sind meist positiv, hingegen werden die Konsumenten bei Lebensmitteln mit Preiserhöhungen belastet. Seit die Marktpreise in den USA über den Weltmarktpreisen liegen, sind zusätzliche staatliche Subventionen notwendig, um landwirtschaftliche Erzeugnisse auf dem Weltmarkt verkaufen zu können. Auch dafür werden die Konsumenten in ihrer Rolle als Steuerzahler belastet. Die Kosten des Systems betragen für jeden Steuerzahler jährlich etwa 413$.Die Ausgleichszahlungen führen zu Verzerrungen bei wirtschaftlichen Anreizen und dadurch zu einer Fehlallokation von Ressourcen. Deshalb wird diese Politik vom Autor als ineffizient beurteilt. Er diskutiert Alternativen, die darauf abzielen, die gewünschten politischen Ziele zu erreichen. Doch keine dieser Alternativen geht ernsthaft das Problem der wirtschaftlichen Ineffizienz an, das mit Subventionen verbunden ist.

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Noel D. Uri is a Supervisor Agricultural Economist in the Resources and Technology Division, Economic Research Service, U.S. Department of Agriculture, 1301 New York Avenue, N.W., Washington, DC 20005, USA. The views expressed are those of the author and do not necessarily represent the policies of the U.S. Department of Agriculture or the views of other U.S. Department of Agriculture staff members.     

Heteroskedasticity in Stock Return Data: Volume versus GARCH Effects

This paper provides empirical support for the notion that Autoregressive Conditional Heteroskedasticity (ARCH) in daily stock return data reflects time dependence in the process generating information flow to the market. Daily trading volume, used as a proxy for information arrival time, is shown to have significant explanatory power regarding the variance of daily returns, which is an implication of the assumption that daily returns are subordinated to intraday equilibrium returns. Furthermore, ARCH effects tend to disappear when volume is included in the variance equation.     

Regional Cooperation in the Use of Irrigation Water: Efficiency and Income Distribution

The paper presents an analysis of the economic potential of regional cooperation in water use in irrigation under conditions characterized by a general trend of increasing salinity. Income maximizing solutions for the region are derived and the related income distribution schemes are solved for, with the aid of cooperative game theory algorithms and shadow cost pricing. Distinction is made between distribution policies with and without side payments. The reasonableness and the acceptability of these schemes is later critically evaluated. The Nash-Harsanyi approach seems to be the most appropriate for the conditions studied.