On the inherent stability of rationally adaptive expectations

This paper analyzes Cagan's model of hyperinflation under the assumption that the stochastic process generating the behavior of the money supply is such as to make adaptive expectations ‘rational,’ in the sense of Muth. The paper shows that when the coefficient of adjustment of expectations has the value implied by the assumption of adjustment of ‘rationality,’ the stability condition of Cagan's model is necessarily satisfied.     

Spatial Comparisons of Poverty and Inequality in Living Standards in Malawi

The paper looks at poverty and inequality across areas in Malawi. The focus is on both monetary (consumption) and non‐monetary (health and education) dimensions of well‐being. Stochastic poverty dominance tests show that rural areas are poorer in the three dimensions regardless of poverty line chosen. Stochastic inequality dominance tests find that the north and south dominate the centre in health inequality, and there is no dominance between the north and south. With respect to education inequality, dominance is declared for the south‐centre pair only. A subgroup decomposition analysis finds that the south contributes the most to consumption and education poverty, while the centre is the largest contributor to health poverty. We establish that within‐area inequalities (vertical inequalities) rather than between‐area inequalities (horizontal inequalities) are the major driver of consumption, health and education inequality in Malawi.     

The Effects of Educational Externalities on Maize Production in Rural Malawi

The paper looks at the existence, nature and form of intra- and inter-household externalities of education on productivity, efficiency and uncertainty of maize production in rural Malawi. Data from the Third Integrated Household Survey are used. I find statistically and economically significant positive intra- and inter-household externalities from education on all three elements, and that intra-household externality effects are larger than inter-household externality ones. Community-level schooling is found to substitute for household-level schooling in the sense that farmers who reside in households where members are not educated nevertheless have relatively higher production and lower production uncertainty, on account of living in communities where some inhabitants are educated. The paper also finds that the intra- and inter-household externality effects are more pronounced for the least efficient farmers, that they are monotonic and that they are largest when average household schooling is relatively low.     

Youth wage employment and parental education in Malawi

This paper looks at the relationship between the likelihood of being in regular wage employment and parental education for Malawian youth. It uses data from the third integrated household survey (IHS3). Only a mother's education is found to have a statistically significant effect on the likelihood of being in regular wage employment for young females and males. It is established that the effect of a mother's education on young males is significantly larger than that for young females. The paper also finds that, regardless of gender, a mother's education complements/reinforces the positive effect of a youth's own education on the probability of being in wage employment. The evidence from this paper points to the existence of an intergenerational poverty trap; with children of uneducated mothers or mothers with low education finding themselves outside regular wage jobs.     

MACROECONOMIC POLICY AND TRADE LIBERALIZATION: SOME GUIDELINES

Appropriate conduct of macroeconomic policy can play a crucialrole in the success of trade liberalization. At a given nominalexchange rate, a trade liberalization that significantly reducestariffs and quantitative restrictions on imports normally impliesa reduction in the general level of domestic prices and wages,especially in the import-competing sector. To diminish recessionaryeffects of domestic price and wage deflation, it is often appropriateto devalue a country's currency in conjunction with a majortrade liberalization. Monetary policy needs to be consistentwith exchange rare policy— avoiding both restrictivenessthat might induce recession and excessive ease that would fuelinflation and force future devaluations. Since trade liberalizationcan induce a short-run deterioration of the government's budgetposition, fiscal policy needs to remain restrained in orderto limit the dangers posed by large government deficits. Wagepolicy should be directed toward facilitating adjustments inrelative wage rates that accompany resource reallocations stimulatedby trade liberalization. Credit policy should assume that adequatecredit is available to finance expansion of export industriesand that difficulties experienced by import-competing enterprisesdo not threaten the financial system. Finally, government policyshould avoid large balance of payments deficits that createdoubt about the government's ability to maintain a liberal tradepolicy.      

Rural–urban differences in parental spending on children's primary education in Malawi

Using Malawian data, this paper answers two interrelated questions: are there rural–urban differences in the factors that influence the probability that a household spends or does not spend on own children's education; and are there rural–urban differences in the factors that affect educational expenditure if a household decides to spend? Computed elasticities indicate that spending on education by rural households is more sensitive to changes in income compared with urban households, suggesting that spending on education in rural areas is a luxury good. In both areas, a mother's employment and education has a larger impact on spending compared with those of a father. Urban households compared with their rural counterparts are more sensitive to the quality of access to primary schools. We find no evidence of gender bias in school spending in urban areas, but rural households exhibit bias in favour of boys.     

欧元vs美元:并非零和博弈

欧元的实行提供了一种更完善的公共产品,它将被证明对欧元区内外的使用者都有利,包括所有在欧元区内和与欧元区有商业往来的部门。欧元具有改善欧元区国家经济表现的作用,从更广泛的意义上,欧元也是合作与和平一体化的标志,从这两方面,所有非欧元区的国家都可以间接得益。     

Adam Smith and the Political Economy of a Modern Financial Crisis

Financial crises have occurred periodically for hundreds of years, and Adam Smith had important insights into their causes. Although by no means all that we know about such crises has been derived from Smith, it is interesting and important to reflect on what he did know and how ignoring his warnings about the creation of excess liquidity has contributed to the current crisis. In addition to the complexity of contemporary finance and the role of central banks and other regulatory institutions, a major difference between Smith's day and ours is the emergence of “moral hazard” as an important policy issue and its corollary, “immoral results.” It is important to realize that the risks of financial crisis, moral hazard, and immoral results cannot be avoided by financial and accounting gimmicks, and that there is no substitute for adequate capital in the creation of liquidity.     

Intrahousehold and Interhousehold Child Nutrition Inequality in Malawi

This paper investigates whether child nutrition inequalities are attributable to differences between households or differences within households in Malawi. Child nutrition is measured using height‐for‐age z‐scores. The empirical analysis uses the 2006 Multiple Indicator Cluster Survey data. We find evidence of within household nutritional differences along gender, age and birth order lines in Malawi. The results for rural and urban areas as well as religious groups show that nutrition inequalities largely stem from differences within households. Both intrahousehold and interhousehold nutrition inequalities are unexplained by observable factors.