a critical assessment of some neo marxian trade theories the neo marxian unequal exchange literature has been largely bypassed in mainstream discussions of theories of comparative advantage during the 1970s in so far as the unequal exchange literature attempts to explain international factor price non equalisation for labour the problems addressed are of more general relevance in my work on this topic i have attempted to distinguish between studies within a classical marxian tradition some of which have been recently written and those neo marxian writers whose work is more broadly compatible with the sraffa or neo ricardian analysis of comparative advantage the purpose of this paper is to survey the latter sub set of the neo marxian literature not only because of its importance in many discussions of third world issues but also because of its own intrinsic merits

pricing free bank notes abstract during the pre civil war period us banks issued distinct private monies called bank notes a bank note is a perpetual risky non interest bearing debt claim with the right to redeem on demand at par in specie this paper investigates the pricing of this private money taking into account the enormous changes in technology during the period namely the introduction and rapid diffusion of the railroad a contingent claims pricing model for bank notes is proposed and tested using monthly bank note prices for all banks in north america together with indices of the durations and costs of trips back to issuing banks constructed from pre civil war travelers guides evidence is produced that market participants properly priced the risks inherent in these securities suggesting that wildcat banking was not common because of market discipline

the gender gap fertility and growth changes in fertility have long been recognized as important correlates of economic growth with the relationship between the level of fertility and the level of income per capita being one of the strongest observable correlations in cross country data this paper examines the linkages between fertility and growth theory the structure of the model is presented in sections on production couples decision making system dynamics and steady state equilibria the first component of the model is that increases in capital per worker raise womens relative wages since capital is more complementary to womens labor input than to mens the second component is that increasing womens relative wages reduces fertility by raising the cost of children more than household income finally lower fertility raises the level of capital per worker a positive feedback loop generates demographic transition a rapid decline in fertility accompanied by accelerated output growth

trade liberalization and factor price convergence abstract this paper examines the effects of trade liberalization on international disparities in factor real returns in a model with more factors than goods existing trade interventions are assumed to be restricting trade we find that any bias for or against factor price convergence depends on the underlying source of comparative advantage where trade is based on differences in factor endowments trade liberalization has a bias towards factor price convergence where trade is based on technology differences biases are more difficult to detect but if they exist they are likely to work against factor price convergence

the relationship between factor endowments and commodity trade abstract the paper establishes general propositions concerning the relationship between a nation s factor endowments and its pattern of commodity trade in a multi factor multi product context inequality relationships between endowments and autarky prices autarky and free trade prices and between autarky prices and free trade net exports are established using a general model of trade attention is then restricted to a multi product multi factor version of the heckscher ohlin samuelson model of trade from an initial autarky equilibrium a comparative statics analysis yields the effect on net exports of a change in one nation s endowment a bilinear inequality between the changes in endowments and net exports is established it is also shown that if a good were to be exported imported when endowments changed and world prices were held fixed then it will continue to be exported imported when world prices have adjusted to re establish free trade equilibrium

from drafts to checks the evolution of correspondent banking networks and the formation of the modern u s payments system 1850 1914 checks remained local payments instruments throughout virtually the entire nineteenth century their significant use in interregional transactions dates only to the 1890s we explain their lagged spatial diffusion by the evolution of centralized payments institutions to coordinate transactions among myriad banks not real technological changes to annihilate distance the pivotal institutions were large correspondent banks especially in new york after the civil war new york funds constituted a national settlement medium and the concentration of bankers balances in new york yielded liquidity and other externalities smoothing the flow of check payments

competitive monies and the suffolk bank system a contractual perspective in recent years a number of monetary economists have begun to focus research on an old topic the economics of private money or free banking much of this literature is motivated by a sense that competitive markets may well prove superior to government regulation in coping with the problems inherent in a laissez faire monetary system noting this robert king in his recent survey paper suggests that the central focus of future research in this area must be the types of monetary institutions that the private market will deliver 10 123 by monetary institutions king presumably means the contractual mechanisms utilized in production and exchange relationships involving private money this paper examines one mechanism the so called suffolk bank system which the market did deliver in new england from around 1820 to just before the civil war while most historians have looked favorably on the suffolk mechanism almost all have mischaracterized the underlying rationale for the system in particular most analysts have interpreted the establishment of the suffolk bank s note redemption program as a response to gresham s law bad money drives out good money however the conditions of 19th century banking in new england and elsewhere as well prior to the establishment of the suffolk system rule out any application of gresham s law prior studies have also neglected the importance of evolutionary changes in the suffolk bank system over the first five years of its existence what we will label suffolk i was largely unsuccessful both in terms of its profitability and its capacity to control the behavior of the banks participating in the system several contract adaptations introduced in 1824 accounted for a sharp reversal in the fortunes of the suffolk bank system it is suffolk ii which has gained the accolades of bank historians ironically suffolk ii increased the prospects for a gresham s law kind of outcome of the sort emphasized by akerlof 1 however the contract structure of suffolk ii involved properties sufficient to allow that suffolk

redemption costs and interest rates under the u s national banking system interest rates under the u s national banking system 1863 1914 appear to imply that banks failed to exploit an arbitrage opportunity for two reasons yields on government bonds exceeded the tax rate on note issue by approximately 150 basis points and short term interest rates varied seasonally this paper examines whether note redemption costs can explain observed interest rates we present a model in which redemption costs create a spread between the tax rate on note issue and bond yields and in which temporary seasonal fluctuations in currency demand generate seasonal movements in short term interest rates calibration of the model to actual data lends support to the model s implications further interest rates are shown not to vary seasonally when banks do not incur the costs of note redemption the banking system that existed in the united states between 1863 and 1914 the so called national banking system is unique in u s history under this system private commercial banks national banks were permitted to issue payable on demand liabilities banknotes that were required to be fully collateralized by government bonds and that carried an explicit government guarantee against noteholder loss should the issuing bank fail banks were taxed based on the quantity of their notes in circulation and each bani had to redeem its own notes at par in lawful money specie or greenbacks the national banking system gave rise to a national currency because each bank was required to accept the notes of other national banks at par a bank holding notes issued by another bank could redeem those notes at par in lawful money through redemption centers established by the u s treasury with the costs of redemption borne by the issuing bank during the period of the national banking system observed interest rates were characterized by two features first yields on intermediated government bonds ex

on the transformation of theorems abstract professor w ethier 1979 has argued that replacing land by capital in the familiar 2 2 trade model leaves the four basic theorems unaffected with time phasing and a positive interest rate in fact ethier s hos and fpe theorems are different in kind from the traditional ones the traditional theorems predict certain results in terms of trade independent data ethier s theorems describe equilibrium in terms of factor endowments and intensities defined by equilibrium prices hence his theorems do not support his central message that nothing is lost in trade theory by treating capital as if it were homogeneous land

a model of banknote discounts abstract prior to 1863 state chartered banks in the united states issued notes dollar denominated promises to pay specie to the bearer on demand although these notes circulated at par locally they usually were quoted at a discount outside the local area these discounts varied by both the location of the bank and the location where the discount was being quoted further these discounts were asymmetric across locations meaning that the discounts quoted in location a on the notes of banks in location b generally differed from the discounts quoted in location b on the notes of banks in location a also discounts generally increased when banks suspended payments on their notes in this paper we construct a random matching model to qualitatively match these facts about banknote discounts to attempt to account for locational differences the model has agents that come from two distinct locations each location also has bankers that can issue notes banknotes are accepted in exchange because banks are required to produce when a banknote is presented for redemption and their past actions are public information overall the model delivers predictions consistent with the behavior of discounts

evidence of bank market discipline in subordinated debenture yields 1983 1991 we examine debenture yields over the period 1983 1991 to evaluate the market s sensitivity to bank specific risks and conclude that investors have rationally reflected changes in the government s policy toward absorbing private losses in the event of a bank failure although this evidence does not establish that market discipline can effectively control banking firms it soundly rejects the hypothesis that investors cannot rationally differentiate among the risks undertaken by the major u s banking firms an increasingly important issue in the regulation of financial institutions concerns the extent to which market investors can will recognize and control the risks of banking firms although the banking act of 1933 replaced some private risk bearing with federal deposit insurance legislators were reluctant to displace market discipline very extensively flood 1992 by the early 1980s however u s regulators had come to protect virtually all bank liability holders from credit losses most visibly at large banks which were deemed too big to fail sprague 1986 o hara and shaw 1990 this extension of the government safety net largely reflects a skepticism on the part of regulators that normal market forces could adequately identify and control bank risks while u s regulators have recently shown an increased willingness to let some bank investors bear default losses an official suspicion of the efficacy of market discipline remains widespread by contrast some prominent academic economists argue that market investors in bank debentures could provide timely and effective control over banking firms risk exposures and that the social cost of supervising banks would be lower if regulators ceded greater

bridging trade theory and labour econometrics the effects of international migration this paper surveys current theoretical and empirical research on international migration with a particular emphasis on the links between trade theory and labour empirics

banks as secret keepers banks are optimally opaque institutions they produce debt for use as a transaction medium bank money which requires that information about the backing assets loans not be revealed so that bank money does not fluctuate in value reducing the efficiency of trade this need for opacity conflicts with the production of information about investment projects needed for allocative efficiency intermediaries exist to hide such information so banks select portfolios of information insensitive assets for the economy as a whole firms endogenously separate into bank finance and capital market stock market finance depending on the cost of producing information about their projects

factor trade and goods trade world equilibria with trade in both goods and some factors are studied when international factor endowment differences are the cause of trade a generalized heckscher ohlin theorem is presented the goods trade patterns with and without factor trade are compared factor trade and goods trade tend to be substitutes complements if traded and non traded factors are cooperative non cooperative

money and asset prices in a cash in advance economy an asset pricing model with money introduced via a cash in advance constraint is presented the monetary velocity is variable hence money demand does not obey the trivial quantity equation the effects of disturbances in output and money growth on real balances the price level and interest rates are examined monetary policy has effects on real asset prices the fisher relation and the premium on nominal bonds are discussed the precise role of the timing of information and transactions for properties of price levels and interest rates are clarified

has government any role in money abstract recent interest in monetary reform has been sparked by the emergence of a world irredeemable paper money system in light of this interest we review the current validity of four good reasons friedman advanced in 1960 to rationalize government intervention we conclude that the forces that produced government involvement in the past will persist deregulation of financial intermediaries is desirable on grounds of market efficiency though it is an open question whether government should continue as lender of last resort we expect that the present world fiat money standard will neither degenerate into hyperinflation nor revert to a commodity standard

the theorems of international trade with factor mobility abstract this paper addresses the relation between goods trade and international factor mobility in general terms the basic theorems of international trade suitably interpreted are shown to hold in their strong versions if the number of international markets for goods and factors is at least as large as the number of factors the crucial dimensionality issue is hence not the relative number of goods and factors per se but the number of international markets relative to the number of factors only the price version of the heckscher ohlin theorem fails to be essentially preserved by this condition

employers discriminatory behavior and the estimation of wage discrimination this paper considers the linkage of empirical estimates of wage discrimination between two groups introduced by oaxaca 1973 to a theoretical model of employers discriminatory behavior it is shown that conditional on different assumptions about employers discriminatory tastes oaxaca s estimators of wage discrimination can be derived that the approach is more generally useful is demonstrated by deriving an alternative estimator of wage discrimination based on the assumption that within each type of labor e g unskilled skilled the utility function capturing employers discriminatory tastes is homogeneous of degree zero with respect to labor inputs from each of the two groups the estimators are compared empirically in an application to male female wage differentials

technical change and the profit rate a simple proof of the okishio theorem this note presents a simple geometrical proof of okishio s celebrated theorem on the falling rate of profit okishio 1961 my intent is simply to clarify how okishio s theorem works i will thus refrain from comment on the general debate on the falling rate of profit in marxian economics on the limits of the general linear model used here or on the importance and range of applicability of okishio s contribution to those unfamiliar with the general linear model and the frobenius theorems used here i recommend reference to brody 1970 or pasinetti 1977 the essential economic assumptions underlying the following proof are that there are no scarce non produced means of production no land that each industry produces a single product no joint products that labour is homogeneous and that there are no fixed capital goods the period of production of all goods and the turnover time of all capital goods is one period these are okishio s assumptions recent contributions those of roemer 1979 for example have generalized okishio s result somewhat using the usual notation i will let

globalisation and factor returns in competitive markets abstract the standard competitive trade model extended to include many goods and factors is used to analyze the effect of goods and factor market integration on average international disparities in the real returns of internationally immobile factors it is shown that goods market integration decreases international real return differentials for all factors we derive sufficient conditions for this result to hold for the subgroup of internationally immobile factors as well while there is a presumption for similar results to hold with international factor market integration we show that this is true for international migration but in general not for international investment

the commodity pattern of trade and the heckscher ohlin theorem in the presence of aggregate and commodity specific factor intensity reversals abstract theoretical analyses of the h o theorem s prediction of the commodity pattern of trade in the multicommodity two factor model tend to assume away factor intensity reversals but the empirical literature has investigated whether reversals between individual goods technologies are prevalent phenomena with the evidence then being presented as bearing upon the h o theorem since the consequence of a factor intensity reversal for the theorem is well defined in the 2 2 2 model we establish via aggregation over individual goods technologies an analogue 2 2 2 setting for the multicommodity model the implications of factor intensity reversals in commodity specific technologies for the reversal behavior of the aggregate technologies and for the h o theorem are examined commodity specific reversals such as are the focus of the empirical studies are shown to have no direct bearing upon the theorem

potential and realized trade patterns the case of sweden observations of the trade pattern between countries have been used as a method to infer in what industries or commodities a country has comparative advantage the method was introduced by balassa 1965 and named the revealed comparative advantage rca approach the approach arose from difficulties in measuring an industry s actual comparative advantage in production and trade given the difficulties in 1 accounting for all the factors which influence an industry s comparative advantage and 2 actually measuring and comparing these factors between countries and industries balassa argued that the revealed performance of an industry s trade pattern would serve as a reasonably adequate indicator of that industry s comparative advantage more specifically the rca approach argues that if a country s share in world exports of a particular good is greater than its overall share in total world exports then the country has a revealed comparative advantage in exporting that good such a revealed comparative advantage should also appear as a tendency towards a positive trade balance for that good that is an export import ratio in excess of unity balassa argued that export import ratios would be more influenced by protectionist measures than relative export shares and hence the latter would be more reliable indicators of comparative advantage balassa consequently gave more weight to relative export shares as measures of comparative advantage since balassa 1965 this method has been used by e g hirsch 1974 parry 1975 donges riedel 1976 and balassa 1977 it should be obvious that the theoretical foundation of the approach is less satisfactory in the international trade literature there exist several definitions of the concept of comparative advantage it seems that the most adequate definition for theoretical purposes is that a country has compara

labor market discrimination against hispanic and black men h ispanic american men have lower average wage rates than white non hispanics in 1975 the average white non hispanic male wage earner in the united states earned 5 97 an hour mexican men earned 4 31 72 as much as white non hispanics puerto rican men earned 4 52 76 as much and cuban men earned 5 33 89 as much as white non hispanics by way of comparison black men s average wages in 1975 were 4 65 78 of the white male wage several possible reasons for the hispanics lower wages come to mind among them are age and education geographic location immigration language difficulties and discrimination for example as shown in table 1 mexicans and puerto ricans are younger on average than the white non hispanic population and earnings tend to rise with age hispanics have lower average levels of education than white non hispanics and wages are positively associated with education many mexican americans live in the southwest where prices are relatively low moreover hispanics are more likely to be recent immigrants and to lack fluency in english than white non hispanics and so to be at a disadvantage in the labor market in addition there is a widespread belief that hispanics suffer from employment discrimination and cannot obtain the wages that their human capital would command if they were non hispanic whites how much of the wage differentials described above are due to each of these factors and to other inter group differences in wage related characteristics in particular how much impact does labor market discrimination have on the average hispanic man s wage and how does this compare with discrimination against blacks this paper provides answers to these questions a few other efforts have been made to analyze the relative earnings of hispanic and white nonhispanic men using 1960 and 1970 census data fogel 1966 poston and alvirez 1973 poston alvirez and tienda 1976 long 1977 and gwartney and long 1978 we use more recent data from the 1976 survey of income and education this data set enables us to measure wage rates more accurately and to specify the wage function more completely than does the census unlike previous analysts in estimating the wage function we take account of possible selectivity bias due to the distinction between average wage offers and average observed wages thus we hope to obtain a more accurate and up to date measure of labor market discrimination against hispanic men section ii explains the method used to separate the minority white non hispanic wage differential into the portions due to differences in average characteristics and the portion due to differences in unobserved factors and discrimination taking into account the possibility of selectivity bias in the observed wage sample section iii describes the data used in the study and the specification of the wage equation the breakdown of the observed wage differentials into components due to differences in participation in the wage and salary sector local price levels average characteristics and discrimination are presented in section iv section v summarizes our findings and discusses their implications for efforts to improve the economic situation of hispanics in the united states

the general validity of the heckscher ohlin theorem despite a number of attempts to extend it the heckscher ohlin theorem remains woefully restricted in terms of the generality of the assumptions needed for its proof in its traditional form as a statement about the commodity composition of trade the theorem is valid only in the highly abstract environment of the two factor two good twocountry model that has been the mainstay of trade theory for half a century a weaker version of the theorem involving the factor content of trade rather than its commodity composition has been proved for any number of factors goods and countries but this generality has so far been bought only at the cost of other and perhaps equally restrictive assumptions 2 the purpose of this paper is to provide statements and proofs of the heckscher ohlin h o theorem that are more general than those currently available the approach taken is similar to that used in my 1980 article for an extension of the theory of comparative advantage in terms of correlations between autarky prices and trade in section i i lay out the assumptions on which the analysis is based these assumptions provide the outlines of a reasonably general model in which there may be any numbers of goods and factors and in which factor prices may be equalized or not trade impediments in the form of tariffs or export taxes are permitted though transportation costs are not 3 in section ii i discuss the difficulty of inferring the factor content of trade in a world of unequal factor prices and i provide several alternative definitions of that concept for use later in the paper these together with the assumptions of section i are used in section iii to prove a theorem on the value at autarky prices of the factor content of trade in section iv this theorem is used to prove a first corollary that makes a more direct statement about the pattern of trade it says that worldwide there must be a negative correlation between the factor content of trade by factor and country and the corresponding autarky factor prices it is precisely these autarky factor prices that constitute the ohlin measure of factor scarcity therefore the corollary provides a formal statement of the general idea that countries tend to export the services of those factors which they have in relative abundance and it may be regarded as a generalization of the factor content version of the h o theorem finally a generalization of the commodity version of the theorem is proved in section v the concept of a covariance is generalized university of michigan i have benefitted greatly from the comments of paul degrauwe wolfgang mayer michael mussa carl simon and robert stern as well as others who participated in seminars at the universities of michigan chicago and cincinnati and at the national bureau of economic research an anonymous referee also made valuable comments with additional goods and factor price equalization the theorem runs afoul of the indeterminacy of production and trade noted by paul samuelson 1953 and james melvin 1968 without factor price equalization trade impediments and intermediate production can cause reversals of the pattern of trade as shown in my 1979 article if additional factors and countries are also added it becomes difficult even to state the theorem let alone to prove it 2melvin stated such a theorem for the three good two factor case and jaroslav vanek 1968 proved it for the general case but only by assuming factor price equalization trent bertrand 1972 and jon harkness 1979 were able to drop the factor price equalization assumption but replaced it with restrictions on consumption of either goods or factors by country of origin it is unclear to me however that these restrictions can ever be met in a model that is otherwise plausible harkness 1978 has also used the factor content version of the theorems as the motivation for a regression equation relating commodity trade to factor intensities this bears some resemblance to my analysis below in section v see however james anderson 1981 and edward leamer and harry bowen 1981 who have criticized his result with a reply by harkness 1981 3for ease of exposition i do not allow here for transportation costs these were included in an earlier version of this paper following the technique in my 1980 article

monopoly power and uneven development baran revisited baran examined the implications of the rise in monopoly power in advanced economies for the underdevelopment in poor countries and the process of uneven development on a world scale this article examines his work critically and then presents a north south model which defines uneven development in a precise manner and analyses the mechanism by which the rise in monopoly power leads to such uneven development it is shown that the process can work even without reference to imperialism which is a central but controversial element in baran s analysis

the resource cost of irredeemable paper money since 1971 no major currency has a formal link to a commodity for the first time in history every currency is wholly irredeemable not as a temporary expedient but as a permanent matter monetary economists have generally treated irredeemable paper money as involving negligible real resource costs compared with a commodity currency to judge from recent experience that view is clearly false as a result of the decline in long term price predictability a key question for the future is what if any substitute for a commodity standard will emerge as a long term anchor for the price level

explaining the demand for free bank notes abstract this paper explains why the risky notes of banks established during the free banking era 1837 1863 were demanded even when relatively safe specie gold and silver coin was an alternative free bank notes were demanded because they were priced to reflect the expected value of their backing the empirical evidence supports this explanation specifically in new york wisconsin and indiana the expected value of backing was sufficient for free bank notes to circulate at par which they did in minnesota the backing for notes was very poor they exchanged well below par being treated as small denomination securities

on the decomposition of wage differentials the often used method for decomposing wage differentials into human capital and discrimination components is reformulated so that both t he disadvantage or cost discrimination it imposes on a black or minority wage earner and the advantage or benefit it bestows on a white or majority wage earner can be estimated copyright 1988 by mit press

factor content functions and the theory of international trade this paper introduces the concepts of direct and indirect factor trade utility functions and uses them to derive marshallian and hicksian factor content functions which express the quantities of factors of production embodied in net imports as functions of the exogenous variables facing the economy the properties of these functions are discussed and they are used to derive a number of new results in particular it is shown that in certain circumstances the existence of gains from trade is sufficient for the heckscher ohlin theorem to hold in its factor content form

trade industrialisation and the visible hand the paper examines the neo classical case for the export orientated industrialisation strategy questioning not only its representation of what has occurred in the newly industrialising countries but also raising some doubts about the validity of the analytical model which is implicit in its policy prescriptions an alternative analytical framework and political economy model is then sketched out the experience of south korea and taiwan is used for illustrative purposes highlighting areas where further conceptual and empirical analysis is required to give a fully blown alternative story an appendix offers a brief summary and critique of some recent neo classical work on the relationship between price distortion and growth

the political economy of the us monetary union the civil war era as a watershed recent debates over the monetary clauses of the us constitution raise the basic issue of what constitutes a monetary union the adoption of a common dollar unit of account in 1792 may have been a necessary condition but as historical experience showed its full benefits depended on a central banking payments authority to enforce this standard jane knodell 1998 moreover even the creation of a common currency was not sufficient because of the increasing circulation of bank deposit money through the highly decentralized us banking system james and weiman 2005 2006 what was needed was a more integrated interbank payments network or payments union union fiscal policies during the civil war era paved the way for a tighter payments union by supplying banks with common and highly portable means of settlement us treasury notes legal tender notes greenbacks and bonds by making liquid markets in these assets new york banks spurred their diffusion and acquired a more integral role in the interbank clearing and settlement network our analysis focuses on one segment of the highly decentralized us payments system the domestic exchange market for bank drafts that is checks of banks drawn on their money center correspondents through this lens we detail the significant risks and transaction costs in making long distance payments in the late 1850s and thus the tenuous foundation of the pre civil war monetary union we then present striking evidence of monetary payments system integration beginning in late 1861 several years before the national banking acts created a common bank currency the political economy of the us monetary union the civil war era as a watershed

gender wage discrimination in the thai labor market in thai this paper investigates the presence of gender wage differentials in the thai labor market a two step approach heckman 1979 was applied in estimating wage equations to avoid sample selection bias the wage differential decomposition methods oaxaca 1973 cotton 1988 oaxaca and ransom 1994 were used the data used were obtained from the labor force survey july september 2008 conducted by the national statistical office of thailand the findings indicate that female workers received lower wages than male workers because of their gender not because they are less productive on the contrary the female workers were shown to be more productive than the men the analysis indicates they would have earned higher wages than men this is especially true in the age groups 15 24 and 25 54 years old although the wage gap was partly explained by a lower productivity of workers 55 60 years old wage discrimination played a substantial role wage discrimination was worse in the younger than the older worker groups

the causes of free bank failures a detailed examination abstract in this paper we propose and test a new explanation of bank behavior during the free banking era 1837 1863 arguing against the conventional view that free bank failures were due to wildcat banking we claim they were caused by falling asset prices confronting both explanations with our new and detailed data set developed from state auditor reports we find that the falling asset price explanation of free bank failures explains far more failures than does the wildcatting hypothesis