the public private wage differential in a poor urban economy the occupational structure of wages is generally more compressed in high than in low income countries the role of non market forces in determining the structure of wages is of interest for reasons of allocative efficiency as well as for distributional concerns this paper considers how wage differentials may be generated between the public and private sectors of a developing economy data from a 1971 household survey of the tanzanian urban wage labor force are used to determine the pattern of wage differences across employer groups after standardizing by worker characteristics public sector employees are found to have earned a substantial wage premium over workers employed in the private sector the non market character of these differentials is examined in light of a number of hypotheses on public sector wage determination

managing technological development lessons from the newly industrializing countries this survey looks at the technological development of the newly industrializing countries to draw some important lessons for firms and governments in other developing countries first inventing products and processes is not at the center of the technological development needed for successful industrialization it is at the fringe what is at the center is acquiring the capabilities needed for efficient production and investment second some countries have overemphasized the drive for technological self sufficiency and paid a high price in poor productivity what makes the best economic sense is to combine foreign and local technological elements and to do this in a way that progressively develops local capabilities in areas where they can be more efficient third the acquisition of technological capability does not come merely from experience though experience is important fourth the economic environment through its influence on the technological efforts of firms is very important in determining the productivity of a country s resources

developing technological capabilities in agro industry ghana s experience with fresh pineapple exports abstract this article examines the emergence and trajectory of a new agro industry in ghana the pineapple export industry using the technological capabilities approach it explains the limited expansion of the industry and its declining competitiveness in the face of new competition by looking at how ghanaian exporters developed technological capabilities initially and the incentives and disincentives to building on those capabilities the article argues that at the heart of the industry s crisis was an inability to further develop technological capabilities the crisis had systemic features that have broader implications for developing new agro industries in ghana as well as other african countries

technology imports and r d efforts of korean manufacturing firms abstract this paper analyzes the relationship between technology imports and r d efforts of korean manufacturing firms by a two stage method in the first stage using a sample representing the whole population of firms the paper shows that firms importing technology tend to commit themselves to r d efforts through having formal r d institutes in the second stage it shows that among firms with formal r d institutes technology imports have non complementary relationship with r d efforts moreover when technology imports are considered interactively with international inventive activity they turn out to have rather a substitutive relationship with r d efforts

the politics of housing consumption renters as flawed consumers on a master planned estate master planned estates offer package dreams of homeownership to those wanting to live among others who share their lifestyle aspirations yet we show in this paper how divisions can arise between housing tenure types with owner occupiers constructing private rental tenants as a problem extending bauman s concept of the flawed consumer using rose s writings on ethopolitics we show how renters are viewed as failing in three domains of social life aesthetics ethics and community by undermining the aesthetic value of the neighbourhood and by failing to demonstrate an ethic of care for themselves and others as a result the homeowners in this study try to avoid living among rental properties and are disappointed to find that contrary to expectations moving to a master planned estate does not guarantee this

pricing stock and bond options when the default free rate is stochastic we derive formulas for the valuation of call options on stocks and bonds when the defaultfree rate is stochastic the formulas highlight the role of the correlation between the unanticipated returns on the underlying security and the changes in the short term rate in determining the options value our numerical analysis indicates that option prices predicted by the proposed formula differ from those predicted by the black and scholes formula when this correlation is relatively large and the short term rate s instantaneous variance is relatively large as well moreover the proposed formula predicts higher lower stock option prices than those predicted by the black and scholes formula for correlation values that are lower higher than some positive critical value

the distributional and efficiency effects of increasing the minimum wage a simulation the generally accepted goal of minimum wage laws is to alter the distribution of income in favor of low income households however since a minimum wage will also disrupt low wage labor markets causing inefficiencies and imposing costs on some of the same workers the law is intended to help an evaluation of the policy requires a weighing of the distributional benefits against the efficiency costs quantification of these benefits and costs is clearly important to this evaluation while much effort has been devoted to estimating the employment effects of minimum wage laws relatively little work has been done to estimate the distributional benefits our simulations focus on this efficiency equity tradeoff by developing estimates of the impact of an increase in the minimum wage on the level and distribution of real income across households previous work has concluded that minimum wages are not as beneficial in their distributional impact as generally supposed

exact solutions for futures and european futures options on pure discount bonds this paper provides closed form solutions for futures and european futures options on pure discount bonds under the ornstein uhlenbeck normal process a significant difference between black s model 1976 and the model in this paper for futures options is discussed

the effect of transport costs on housing related financial stress in australia housing related financial stress or housing stress is usually measured on the basis of income and direct housing costs such as mortgage repayments and rents one cost that is not included in calculations of housing stress but which may be important is the difference made by transport costs this paper shows how a measure of housing stress that incorporates transport costs can give a different picture of housing stress from a measure that ignores transport costs the result shows that in capital cities bringing transport costs into a housing stress measure particularly affects households with children it is also found that the impact of transport costs is even greater outside capital cities and that access to public transport may play a role in determining the spatial pattern of housing stress and hence the impact of transport cost on housing stress

an intertemporal general equilibrium model of asset prices this paper develops a continuous time general equilibrium model of a simple but complete economy and uses it to examine the behavior of asset prices in this model asset prices and their stochastic properties are determined endogenously one principal result is a partial differential equation which asset prices must satisfy the solution of this equation gives the equilibrium price of any asset in terms of the underlying real variables in the economy in this paper we develop a general equilibrium asset pricing model for use in applied research an important feature of the model is its integration of real and financial markets among other things the model endogenously determines the stochastic process followed by the equilibrium price of any financial asset and shows how this process depends on the underlying real variables the model is fully consistent with rational expectations and maximizing behavior on the part of all agents our framework is general enough to include many of the fundamental forces affecting asset markets yet it is tractable enough to be specialized easily to produce specific testable results furthermore the model can be extended in a number of straightforward ways consequently it is well suited to a wide variety of applications for example in a companion paper cox ingersoll and ross 7 we use the model to develop a theory of the term structure of interest rates many studies have been concerned with various aspects of asset pricing under uncertainty the most relevant to our work are the important papers on intertemporal asset pricing by merton 19 and lucas 16 working in a continuous time framework merton derives a relationship among the equilibrium expected rates of return on assets he shows that when investment opportunities are changing randomly over time this relationship will include effects which have no analogue in a static one period model lucas considers an economy with homogeneous individuals and a single consumption good which is produced by a number of processes the random output of these processes is exogenously determined and perishable assets are defined as claims to all or a part of the output of a process and the equilibrium determines the asset prices our theory draws on some elements of both of these papers like merton we formulate our model in continuous time and make full use of the analytical tractability that this affords the economic structure of our model is somewhat similar to that of lucas however we include both endogenous production and

housing investment and the private rental sector in australia over the past two decades the private rental sector has changed its role within the australian housing system as it has moved from being a tenure of transition comprised principally of young households saving to enter home ownership to a tenure of long term occupancy rising real house prices soaring interest rates changes in the nature of paid work and an increase in the number of household deaths through divorce or separation has seen an increasing proportion of households either unable to enter home purchase or unable to maintain their position within this tenure in addition access to publicly provided housing has declined this paper considers the changing environment for private rental housing in australia and examines the nature of investors and the size of their investment in the housing stock as well as the impact of their investment strategies on the operation of the housing market

the effects of financial liberalization on savings and investment in uruguay the following sections are included introductionfinancial reforms financial deepening and financial crisisstylized outcomes savings investment and growthfinancial liberalization savings and investmentfinancial resource allocation at the micro levelconclusions

interest rate management in ldc s the mckinnon argument that higher time deposit rates raise output and lower inflation in the short run and increase medium term growth by raising the savings rate are shown to depend crucially on the assumption that portfolio shifts into td s come out of an asset providing less intermediation than the banking system we show that if instead the shift is out of an asset providing more intermediation e g loans on a curbmarket raising td rates is contractionary in the short run may have negative impacts on growth and can lead to more rather than less inflation in the short run

some international evidence on the stochastic behavior of interest rates abstract this paper examines the stochastic behavior of short term interest rates in eleven countries following chan et al 1992a we consider eight stochastic models of short term interest rates all of which are nested within a discretized approximation to a differential equation we use the generalized method of moments to estimate the model the empirical results show that no single model can satisfactorily describe the stochastic structure of interest rates for all countries on balance if we classify the sample countries according to the size of the elasticity of variance of short term interest rates france holland and the usa belong to the group of high elasticity in comparison australia belgium germany and japan belong to the group of medium elasticity while canada italy switzerland and the uk belong to the group of low elasticity

employment and labour supply effects of the minimum wage some pooled time series estimates from canadian provincial data in this paper the effect of minimum wages on employment and labour supply and hence on unemployment is examined using canadian provincial data for the period 1975 9 the analysis here differs from most previous studies in several important ways for example the minimum wage variable in the regression analysis is the minimum wage rate only rather than a composite of the minimum wage rate and coverage the demand variation variable here is real output rather than the endogenous prime age male unemployment rate and the analysis includes the impact of the minimum wage on the employment and supply of adult age groups as well as teenagers our results show that the minimum wage has a significant negative effect on the employment and labour force levels of most age sex groups and a significant positive effect on the unemployment rates of all age sex groups we conclude that the employment and unemployment effects of the minimum wage are stronger and more broadly felt than was previously realized les effets d emploi et d offre de travail du salaire minimum certaines calibrations a partir d une composition des series chronologiquesprovinciales au canada ce memoire examine a partir de donnees provinciales pour la periode 1975 9 l effet de salaires minima sur l emploi et l offre de travail et donc sur le chomage l analyse differe de celles presentees dans les etudes anterieures de multiples fagons par exemple la variable salaire minimum retenue dans l analyse de regression est le taux de salaire minimum plutot qu une variable composant le taux de salaire minimum et sa couverture la variable qui enregistre la variation de la demande est le niveau de production reelle plutot que le taux de chomage endogene de la population masculine dans la force de l age et l analyse calibre l impact du salaire minimum sur l emploi et l offre de travail tant des groupes adultes que des jeunes gens les resultats montrent que le salaire minimum a un effet negatif significatif sur l emploi et l offre de travail de la plupart des groupes selon l age et le sexe et un impact positif significatif sur le taux de chomage de tous les groupes on conclut que les effets d emploi et de chomage du salaire minimum sont plus forts et plus repandus qu on ne l avait cru this paper is both an extension and abridgement of the authors university of victoria department of economics discussion paper 82 6 entitled an empirical analysis of the employment and labour supply effects of the minimum wage in canada 1975 79 this research has been supported in part by a university of victoria faculty research grant we would like to acknowledge with thanks the research assistance of neil muth mark muth and ingrid strauss and the helpful comments of the editor and two anonymous referees of this journal canadian journal of economics revue canadienne d economique xvi no 1 february f6vrier 1983 printed in canada imprime au canada 0008 4085 83 0000 0086 01 50 1983 canadian economics association this content downloaded from 157 55 39 176 on sat 09 apr 2016 07 05 12 utc all use subject to http about jstor org terms employment and labour supply effects 87

purchasing power parities and phase iv of the international comparison project do they lead to real estimates of gdp and its components abstract this paper analyzes results from phase iv of the united nations international comparison project icp it examines the icp s estimates of real gdp and per capita gdp for 60 countries along with the estimates of detailed components of gdp for india and sri lanka as compared with some industrial countries we conclude that although detailed results are often illuminating levels of per capita gdp tend to be incorrect a systematic bias seems to be present in the icp leading to a strong overvaluation of developing countries gdp icp results therefore as judged also by the statistical commission of the united nations cannot be accepted for policy purposes at the world level

industrial policy changes and firm level technological capability development evidence from northern brazil summary much has been written about the impacts of the policy changes of the 1990s on industrial performance particularly in latin america most of the studies are based on aggregated analyses that argue for or against such reforms in the policy regime this study offers an alternative view to this debate based on a longitudinal empirical scrutiny of technological capability development in 46 local and foreign firms from three sectors in northern brazil there were inter sector and inter firm variations in terms of the manner and rate of capability development for specific technical functions overall the patterns of firm level capability development exhibited a positive response to the structural reforms but such responses were not a mere consequence of trade openness a combination of government policy foreign competition and intra firm capability building efforts proved essential for speeding up capability development in some of the sampled firms thus policies for accelerating industrial technological capability development in a developing area such as the one examined here would involve not only macro level incentives and competition but very importantly measures that facilitate intra firm capability building efforts

technical efficiency market share and profitability of manufacturing firms in cote d ivoire the technology trap this paper investigates the sources of inefficiency of firms in cote d ivoire and exam ines to what extent these effects translate into poor performance a large majority of firms is technically inefficient producing far below the maximum attainable output level major cost savings can also be realised through enlarging the scale of activities of firms efficiency gains and scale advantages translate into a better competitive position and via their impact on market share into higher profitability however severe growth barriers and imperfect markets keep firms from realising these gains and prevent firms from catching up in technology with respect to their larger older and often foreign owned competitors

twenty five years of economic development revisited abstract the basic question asked in this essay is do morawetz s findings in twenty five years of economic development hold when extended to a period 1975 1989 of great turmoil in the international economy the record is mixed some of the trends that were observed during 1950 1975 did not carry over to 1975 1989 growth during 1950 1975 now looks exceptional compared to what followed and the balance of payments and debt constraints to growth have come sharply to the fore others especially the divergence in growth among countries and regions and the relationship between growth poverty and inequality foreshadowed longer run trends some of morawetz s conclusions also do not hold when seen in the light of the experience of 1975 1989 for example his pronouncement regarding a socialist and inward alternative to equitable growth and development now appears premature but the most surprising finding is the confirmation of his little noted statement regarding the contribution of political stability and stability of the economic rules of the game and by extension of the nation building process to development performance

a defense of traditional hypotheses about the term structure of interest rates expectations theories of asset returns may be interpreted either as stating that risk premia are zero or that they are constant through time under the former interpretation different versions of the expectations theory of the term structure are inconsistent with one another but i show that this does not necessarily carry over to the constant risk premium interpretation of the theory i present a general equilibrium example in which different types of risk premium are constant through time and dependent only on maturity furthermore i argue that differences among expectations theories are secondorder effects of bond yield variability i develop an approximate linearized framework for analysis of the term structure in which these differences disappear and i test its accuracy in practice using data from the crsp government bond tapes in a well known article in this journal cox ingersoll and ross cir 4 reexamine and find wanting certain hypotheses about the term structure of interest rates a striking feature of cir s re examination is that it is entirely theoretical cir show that different versions of the pure expectations theory of the term structure which traditionally were regarded as equivalent are in fact inconsistent with one another when interest rates are random furthermore in a fairly general continuous time arbitrage pricing framework when interest rates are random all versions of the theory except one are incompatible with equilibrium at first sight cir s results appear to be devastating to traditional empirical work on the term structure they suggest that researchers must specify arbitrage pricing models with a small number of state variables before proceeding to empirical work such models must restrict not only the deterministic components

an exact bond option formula this paper derives a closed form solution for european options on pure discount bonds assuming a mean reverting gaussian interest rate model as in vasicek 8 the formula is extended to european options on discount bond portfolios

choice of technique revisited a critical review of the theoretical underpinnings abstract policy oriented research frequently relies on the assumption that producers select techniques as a function of the relative prices of production factors this assumption has been criticized for lack of realism but has continued to be used because its logical consistency is deemed unassailable the objective of this paper is to identify the origins evolution and shortcomings of the theoretical underpinnings of this assumption the difficulties encountered by neoclassical theory in the proof of the existence and uniqueness of equilibrium and stability analysis affect the choice of technique assumption this paradigm of applied research should be definitely abandoned and policy making should explicitly recognize the limits of the theories considered to be its rational foundation

the relation between forward prices and futures prices abstract this paper consolidates the results of some recent work on the relation between forward prices and futures prices it develops a number of propositions characterizing the two prices these propositions contain several testable implications about the difference between forward and futures prices many of the propositions show that equilibrium forward and futures prices are equal to the values of particular assets even though they are not in themselves asset prices the paper then illustrates these results in the context of two valuation models and discusses the effects of taxes and other institutional factors

the interaction of factor and product market distortions in developing countries this essay will examine distortions in product and factor markets in developing countries and the interaction of these distortions in respect to the development strategies applied the analysis will concentrate on policy imposed distortions where departures from efficient resource allocation result from policy actions these contrast with distortions resulting from market imperfections 1

pricing interest rate options in a two factor cox ingersoll ross model of the term structure solutions are presented for prices on interest rate options in a two factor version of the cox ingersoll ross model of the term structure specific solutions are developed for caps on floating interest rates and for european options on discount bonds coupon bonds coupon bond futures and euro dollar futures the solutions for the options are expressed as multivariate integrals and we show how to reduce the calculations to univariate numerical integrations which can be calculated very quickly the two factor model provides more flexibility in fitting observed term structures and the fixed parameters of the model can be set to capture the variability of the term structure over time article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies