tourism and economic development evidence from mexico s coastline tourism is a fast growing services sector in developing countries this paper combines a rich collection of mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to study the long term economic consequences of tourism both locally and in the aggregate we find that tourism causes large and significant local economic gains relative to less touristic regions that are in part driven by significant positive spillovers on manufacturing in the aggregate however these local spillovers are largely offset by reductions in agglomeration economies among less touristic regions so that the national gains from trade in tourism are mainly driven by a classical market integration effect

the equalization of factor prices in general equilibrium when commodities outnumber factors abstract the likelihood of factor price equalization is analyzed in a full general equilibrium model which incorporates the demand side and commodity market clearance a method is developed to actually derive the cone of factor price equalization in a general equilibrium model with many commodities and two factors this cone is then used to analyze the actual likelihood of equalization as a function of the underlying primitives such as endowment ratios and demand patterns in the economy it can be determined quantitatively how similar endowment ratios should be in order to ensure equalization for different demand patterns

temporary import and export quotas and the current account abstract this paper provides a comprehensive analysis of temporary import and export quotas in a two period optimization model imposing much weaker restrictions on preferences and production technologies than in the existing literature we demonstrate that under net substitutability the imposition of a temporary quota which reduces imports by a small amount improves the current account and causes an appreciation of the real exchange rate if the initial equilibrium is quota restricted the effects of tightening the quota are ambiguous by contrast under substitutability a tightening of export quotas necessarily leads to a current account deficit regardless of the nature of the initial equilibrium

does tourism influence economic growth a dynamic panel data approach on average tourism specialized countries grow more than others this is not consistent with the core of modern economic growth theory that suggests that economic growth is linked to sectors with high tech intensity and large scale in this article we use appropriate panel data methods to study the relationship between tourism and economic growth in general we show that tourism is a positive determinant of economic growth both in a broad sample of countries and in a sample of poor countries however contrary to previous contributions tourism is not more relevant in small countries than in a general sample this is a fully modified version of a working paper co authored by one of the authors

specialisation versus diversification a simple model for tourist cities abstract by developing a simple general equilibrium structure this paper compares the welfare effects of tourism specialisation and economic diversification in tourist cities we discovered that tourist cities with limited carrying capacity easily suffer from side effects particularly dutch disease when faced with rapid tourism growth therefore such cities should actively use revenue that is generated from the booming tourism sector to pursue economic diversification for the sake of sustainable urban development

determinants of the equilibrium real exchange rate n b professor neary was based at university college dublin and queen s university ontario canada when this article was first published the full text of this article is not available in ora at this time citation neary j p 1988 determinants of the equilibrium real exchange rate american economic review 78 1 210 215

a dynamic approach to the measurement of waste in an open economy abstract the paper develops a methodology for evaluating the cost of distortions within the production sector of a small open growing economy quadratic approximations to the loss of output are developed the main new result is that the dynamic loss due to distortions generally exceeds the discounted sum of static type losses due to distortions at least to the second order another new result derives a quadratic approximation to the output loss that can be calculated using information on the size of the distortions and on producer substitution matrices evaluated at an observed distorted equilibrium rather than at a hypothetical undistorted equilibrium

necessary and sufficient conditions for factor price equalization although models with factor price equalization are used frequently in both theoretical and applied research in international economics only sufficient conditions for factor price equalization have been presented in the literature in this paper the authors present necessary and sufficient conditions for factor price equalization under quite general assumptions about the technologies of different countries the necessary and sufficient conditions they derive are consistent with joint production decreasing returns to scale and substantive differences in the technologies and endowments of different countries the authors results enable them to reconcile the classical approach and the integrated equilibrium approach to factor price equalization

tourism welfare and de industrialization in a small open economy this paper investigates the effects of an expansion of tourism on welfare output and factor prices in the host country using a general equilibrium international trade model in the absence of taxes foreign ownership and distortions an increase in foreign visitors will increase welfare only if the price of nontradables increases factor mobility and foreign ownership tend to reduce the gains from tourism while commodity taxes tend to increase them conditions under which an increase in tourism can lead to deindustrialization are also discussed copyright 1991 by the london school of economics and political science

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

absorbing a windfall of foreign exchange dutch disease dynamics abstract the permanent income rule is seldom the optimal response to a windfall of foreign exchange such as that from a resource discovery absorptive capacity constraints require domestic investment and investment in structures requires non traded inputs the supply of which is constrained by the initial capital stock this particularly when combined with intra sectoral capital immobility delays adjustment and creates short run dutch disease symptoms as the real exchange rate sharply appreciates and overshoots its long run value optimal revenue management requires investing in the domestic non traded goods sector and a slow build up of consumption accumulation of foreign assets adjusts to accommodate the time paths of domestic consumption and investment

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

a money demand system for euro area m3 in order to assess the importance of monetary and financial developments for key macroeconomic variables in the euro area a money demand system for m3 is estimated adopting a structural cointegrating var approach while maintaining a good statistical representation of the data long run relationships are based on economic theory by using generalized response profiles the dynamics of the money demand system is investigated without any further identifying assumptions error bounds of the profiles are derived using bootstrap simulations

wage convergence and trade we examine differences in wage rates across countries for workers employed in the same industry distinguishing workers in the low medium and high skill groups these differences are large and show persistence over time we ask nonetheless whether there is evidence of convergence much as is done in studies of convergence in per capita income across countries with our focus on the micro level we expect convergence to reflect at least in part the degree of integration of a country or industry into the world economy and examine particularly the role of market integration and trade our results show strong evidence of convergence in a diverse sample of 39 countries which includes most large economies whether rich or poor the estimated convergence rate over the period from 1995 to 2008 is about 4 per year for workers in all skill groups higher in the more integrated economies of the eu than in other economies without such open borders and lower in industries supplying services rather than manufactures also we find evidence that the rate of growth of domestic output impacts positively on the growth of wages in an industry providing a source for ongoing deviations from the convergence prediction

an applied general equilibrium analysis of the economic effects of tourism in a quite small quite open economy a computable general equilibrium model is used to project the effects of tourism on the industrial and regional structures of the australian economy the most striking conclusion is that queensland usually thought to be the most tourism oriented of the australian states would be a net loser from an economy wide expansion of tourism as well as having a relatively large share of its gsp accounted for by tourist oriented activities queensland is also relatively heavily dependent on agriculture and mining traditional export sectors which are crowded out by the expansion of international tourism

simple analytics of productive consumption productive consumption adds to utility and income at the same time the shadow price of a productive good is equal to its money price less its marginal product as more of the good is consumed its shadow price rises because of diminishing productivity and the consumer s full income also rises because the marginal product is positive this paper uses a simple method to derive the comparative statics of the demand system when shadow prices and full income are endogenous the direction of the overall bias induced by endogenous prices and income is found to be determinate we demonstrate that the demand for productive goods tends to be relatively unresponsive to exogenous changes in prices and income we also show that labor supply will be relatively unresponsive to wage and unearned income if market work causes fatigue

measuring and forecasting regional environmental and economic efficiency in italy abstractenvironmental and economic efficiency has being receiving growing attention among researchers in general terms this concept is related to the capability of the economic systems to employ natural resources efficiently so as to increase economic and human wealth this clearly implies that both the economic and ecological aspects of decisions ought to be considered bearing this in mind this article considers economic and ecological performance together by applying data envelopment analysis and the malmquist productivity index to investigate the efficiency of the 20 italian regions from 2004 to 2011 the results reveal that the northern regions have been more efficient than the southern ones highlighting the strong geographical differences between the two furthermore this article uses the grey system theory to forecast regional economic and environmental efficiency the results of the forecasting analysis show that the north south duality remains strong and will possibly increase since the r

the elasticity of derived net supply and a generalized le chatelier principle the marshall 1920 hicks 1963 rules for the elasticity of derived demand for an input which demonstrate how the price elasticity of demand for the input changes as the price elasticity of demand for the product the price elasticity of supply of a competing factor the first factor s cost share and the elasticity of substitution between the two factors change have been generalized to the case where there are n inputs and one output by sato and koizumi 1970 1973 andrieu 1974 and razin 1974 have also generalized the marshall hicks rules to the case where there is one output and three inputs but one of the inputs is fixed however since most real life firms or industries produce a wide variety of products it would appear to be useful to obtain rules for the price elasticity of derived supply for an output where other output and input markets are allowed to adjust to the change in the price of the first output the recent increases in energy prices have perhaps provided a reason for renewed interest in the microeconomic determinants of industry supply in section 5 below we derive analogues to the marshall hicks sato koizumi rules in a multiple output framework in section 2 we list our assumptions on the technology and note some preliminary results from duality theory in section 3 we define the elasticity of derived net supply and we show that it will always be nonnegative in our model we also compare the elasticity of derived supply which takes into account adjustments induced by an increase in the price of the output in other input and output markets with an ordinary price elasticity of supply which holds the prices of the other inputs and outputs fixed we also compare the above two elasticities with intermediate elasticities of derived supply that are obtained by assuming that some input and output prices are fixed but others are not we find that the more markets that adjust to the price increase in the first market the smaller the elasticity of derived supply becomes in the first market we could term this an inverse le chatelier principle since it acts in a manner which is seemingly opposite to the usual le chatelier principle cf samuelson 1947 pp 36 39 which says that the more markets that we allow to adjust to the effects of a price increase in the first market the larger is the elasticity of supply in the first market however the two le chatelier principles are not really opposed as we shall see later our inverse le chatelier principle formally contains samuelson s le chatelier principle as a special case in section 4 we consider the comparative statics effects of an exogenous increase in the price of the first good on a weighted average of other prices as well as on a weighted average of changes in the industry supply of other outputs and changes in the industry demand for other inputs taking into account the general equilibrium repercussions on other markets of the increase in the price of the first good

the japanese deflation has it had real effects could it have been avoided has deflation contributed to the long lasting stagnation of the japanese economy could the bank of japan have stopped deflation by implementing a more expansionary monetary policy tentative answers are probably not to the first question and probably yes to the second question it is found that the total cost of deflation over the period 1995 2003 has been close to a 1 1 rate of lost gdp yet on the basis of statistical significance and robustness to specification choices this evidence is not compelling on the other hand the estimated positive linkage between nominal base money growth and inflation is significant and robust even given current economic conditions however in order to be inflationary monetary policy should have been more expansionary than what actually observed even since the launch of the quantitative easing in 2001

domestic taste differences transportation costs and international trade abstract the implications of taste differences among domestic consumers is investigated and transplantation cost assumptions are found to be crucial to the analysis in a frictionless world crosshauling occurs trade volume is indeterminant and tariffs need not have welfare significance with international transportation costs the traditional equivalence of tariffs and tax subsidy schemes breaks down and consumers are affected differentially by terms of trade changes when domestic transportation costs dominate cross hauling can occur and tariffs will have regional consequences tariffs can change the pattern of international trade and may internalize trade and result in the wasteful use of resources

international capital mobility shadow prices and the cost of protection this paper studies the welfare losses from tariff protection in a small open economy when some factors are internationally mobile our principal result is that international fictor mobility must raise the cost of protection more specifically the welfare loss resulting from a uniform increase in tariffs in a competitive small open economy is greater when tariff induced international factor movements take place than when factors are internationally immobile by contrast an exogen1ous inflow of factors in the presence of tariffs may increase or reduce the welfare loss associated with protection depending on whether or not the protected commodities use the foreign owned factors intensively relative to domestically owned factors these results are proven for a very general specification of the economy s technology in particular no restrictions are placed on the degree of vertical integration in production on the sectors into which factors are internationally mobile or on the number of goods and factors our main result holds whether or not an increase in tariff rates leads the economy to specialise in addition we show how our results relate to earlier work on immiserising capital inflows and on negative shadow prices for factors of production thus synthesizing a number of recent results within a common framework the paper is organised as follows in section 2 we explain our framework and derive expressions for the welfare effects of tariffs when all factors are domestically owned and when some factors are foreign owned but not internationally

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

tourism and economic development the beach disease abstract this paper analyses empirically the danger of a dutch disease effect in tourism dependent countries in the long run data on 134 countries of the world over the period 1970 2007 is used in a first step the long run relationship between tourism and economic growth is analysed in a cross country setting the results are then checked in a panel data framework on gdp per capita levels that allows to control for reverse causality non linearity and interactive effects it is found that there is no danger of a beach disease effect on the contrary tourism dependent countries do not face real exchange rate distortion and deindustrialisation but higher than average economic growth rates investment in physical capital such as for instance transport infrastructure is complementary to investment in tourism

interactive dynamics between natural and man made assets the impact of external shocks abstract this paper studies a two sector economy in which one of the sectors the commodity sector depends in part on the exploitation of a renewable natural resource and examines the issue in an economy wide context where both natural resources and a man made asset change endogenously over time we show that under an open access resource regime i a resource rich capital poor economy may experience a natural resource curse phase and under certain conditions may even follow a non sustainable path leading to complete natural resource depletion ii a labor inflow results in a higher steady state per capita income with unchanged natural resources though it makes the economy more prone to reach a path that converges to resource collapse iii the introduction of a small import tariff or export tax results in larger steady state natural resources and commodity output and renders the economy less vulnerable to resource collapse we also contrast the open access case with the other polar case of perfect property rights showing that in this case the economy experiences neither a resource curse nor a resource collapse

trade in goods and factors with international differences in technology a general model of trade caused by international differences in production technology is developed using techniques of duality theory for the caseof product augmenting differences in technology it is shown that there is a positive correlation between net export and technological superiority such that a country will on average export goods for which the country has superior technolor if some factors are permitted to be internationally traded it is demonstrated via this correlation that the volume of trade must increase thus unlike trade caused by factor endowment differences goods trade caused by product augmenting differences in production technolody is always in this sense complementary with factor trade for factor augmenting technology differences in the absence of factor trade the goods trade pattern is as if it was caused by factor endowment differences with factor trade goods trade and factor trade can then be either complements or substitutes this abstract was borrowed from another version of this item

individual attitudes towards migration a re examination of the evidence recent economic research has highlighted the importance of labor market and welfarestate mechanisms in the explanation of individual attitudes towards immigration by contrast political scientists argue that attitudes are mostly determined by individual cultural values and beliefs this paper takes a fresh look at this debate and contains the following contributions to the literature first we address the problem that unobserved cultural values and beliefs might be correlated with education a potential source of bias in the estimations second we compile a detailed database on the education levels of immigrants and natives and on the degree of fiscal redistribution in european countries third our econometric estimates rely on a simple structural model taking individual heterogeneity with respect to education explicitly into account the structural model enables us to evaluate quantitatively the importance of the labor market and welfare state channels and of other individual factors such as cultural values and beliefs our results show that the labor market and welfare state mechanisms play a significant role in explaining individual attitudes however the quantitative importance of these two mechanisms turns out to be rather limited compared to other individual factors jel classification f22 j61

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

casino tourism economic inequality and housing bubbles abstract potential linkages among tourism inequality and housing are addressed for an integrated analysis in this paper with macao treated as a typical case casino tourism albeit performing as a major key to local economic growth is ultimately vulnerable to external shocks to gambling demand as evidenced by the current sharp downturn in macao we find that faster gaming growth leads to higher income inequality while at the same time both factors are responsible for soaring housing bubbles which constitute the very source of social tensions as in macao casino tourism if not well managed may not be a panacea for all development goals the implication for policy derived from this study is that macao must deal with underlying issues rather than apply palliative measures its market failures may necessitate government interventions to ensure social equity and sustainable tourism

coping with poor public capital abstract despite recent successes in stabilization and structural reforms in many developing countries the private investment response to date has been mixed even among the strongest reformers this disappointing result can be partly explained by the continued poor provision of public capital and services we test this hypothesis using unique firm level data on investment and provision of public infrastructure services the results suggest that poor complementary public capital significantly reduces private investment however firms can substitute for deficient public services by investing in complementary capital themselves but this comes at a cost less productive capital will be installed

the price stability oriented monetary policy of the ecb an assessment the definition of price stability adopted by the ecb has recently been criticized in the literature particularly for being unable to fully anchor inflation expectations and creating a deflation risk in the paper empirical evidence is provided against these claims despite the unfavourable macroeconomic conditions for the euro area since 2001 monetary policy management has lead to the setting of the policy rate at levels compatible with trend inflation the long run inflation forecast in the range 1 3 and therefore without affecting negatively the inflation outlook

a formalisation and test of the factor productivity explanation of international differences in service prices this paper extends and integrates previous models of the determinants of international differences in the prices of services relative to tradable commodities the authors provide a model capable of identifying the effects of differences in total factor productivity on service price differences separately from the effects of factor endowment differences they propose a method for measuring these factor productivity difference effects and apply this to a sample of sixty countries in 1980 the authors results provide support both for the endowment difference and productivity difference explanations suggesting that in this context at least the two hypotheses are complements rather than competitors copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

regional factor price convergence across four major european countries w ebber d j and w hite p 2003 regional factor price convergence across four major european countries reg studies 37 773 782 neo classical growth models predict that the free movement of goods and factors will result in the spatial convergence of output and an ensuing convergence of factor prices based on distribution free statistics this paper presents an empirical examination of average factor prices for labour across 58 regions of the eu over the period 1980 94 using methods of concordance and discordance that identify the presence of switching persistence stratification and convergence between individual and groups of regions our results suggest swings in the trend between factor price convergence and factor price divergence while switching persistence and stratification characterize the sample s evolution w ebber d j et w hite p 2003 la convergence re gionale des prix des facteurs a travers quatre grands pays europeens reg studies 37 773 782 les modeles de croissance neo

oil prices tourism income and economic growth a structural var approach for european mediterranean countries abstract in this study a structural var model is employed to investigate the relationship among oil price shocks tourism variables and economic indicators in four european mediterranean countries in contrast with the current tourism literature we distinguish between three oil price shocks namely supply side aggregate demand and oil specific demand shocks overall our results indicate that oil specific demand shocks contemporaneously affect inflation and the tourism sector equity index whereas these shocks do not seem to have any lagged effects by contrast aggregate demand oil price shocks exercise a lagged effect either directly or indirectly to tourism generated income and economic growth the paper does not provide any evidence that supply side shocks trigger any responses from the remaining variables results are important for tourism agents and policy makers should they need to create hedging strategies against future oil price movements or plan for economic policy developments

the welfare effects of foreign investment in tariff distorted economies abstract the welfare effects of foreign investment in the presence of large tariffs are examined in models where capital is endogenously mobile capital flows induced by large tariffs may be welfare improving a numerical example is provided

tourism and economic development a survey this article surveys the literature on tourism and economic development identifying the contribution that tourism can make to development including foreign currency income and employment and the costs that it entails single equation and system of equations models for estimating tourism demand are provided indicating developing countries potential to benefit from increasing expenditure on tourism but their susceptibility to deterioration in price competitiveness the main sectors of tourism supply transportation tour operators travel agents and accommodation are examined and the importance of cross country integration between firms is highlighted the article argues that many of the problems associated with the use of environmental resources for tourism stem from market failure and it considers methods for increasing sustainably the returns from them

foreign informational lobbying can enhance tourism evidence from the caribbean there exist legal channels for informational lobbying of u s policymakers by foreign principals foreign governments and private sector principals frequently and intensively use this institutional channel to lobby on trade and tourism issues this paper empirically studies whether such lobbying effectively achieves its goal of trade promotion in the context of caribbean tourism and suggests the potential for using foreign lobbying as a vehicle for development panel data are used to explore and quantify the association between foreign lobbying by caribbean principals and u s tourist arrivals to caribbean destinations a variety of sensitivity analyses support the finding of a strong association the policy implications are obvious and potentially important for developing countries

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

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

do central banks act asymmetrically empirical evidence from the ecb and the bank of england the paper attempts to exploit whether monetary authorities have a different behaviour during recession and expansion to this end a multivariate extension of hamilton markov switching model is adopted first regime dependent taylor type rules are estimated for the euro area and the united kingdom in order to capture the systematic behaviour of central banks then impulse response functions that account for the different phases of the business cycle are analysed in addition a comparative analysis concerning the estimated rules as well as the different reaction of real economy to monetary shocks is implemented the study strongly suggests that central banks cannot neglect the regime where the monetary action takes place it follows that the phase of business cycle is an important matter in monetary policy decision process

firless firwoes how preferences can interfere with the theorems of international trade abstract an example is presented of a two country two factor four good trade model in which free trade causes factor prices to be drawn farther apart than they were in autarky the example is equivalent to a two good model with a double factor intensity reversal fir and thus demonstrates that the problems associated with firs can arise in many dimensions without them these problems include the undermining of other trade theorems as well and can be avoided only by making some assumption about demand as well as about technology for example the model becomes well behaved if preferences and technology are both cobb douglas

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

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

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

output the stock market and interest rates this paper develops a simple model of the determination of output the stock market and the term structure of interest rates the model is an extension of the is lm model and borrows from it the assumption that output is determined by aggregate demand and that the price level can only adjust over time to its equilibrium value however whereas the is lm emphasizes the interaction between the interest rate and output this model emphasizes the interaction between asset values and output asset values rather than the interest rate are the main determinants of aggregate demand and output current and anticipated output and income are in turn the main determinants of asset values it is this interaction that the model intends to capture its goal is to characterize the joint response of asset values and output to changes in the environment such as changes or announcement of changes in monetary and fiscal policy as the above brief description makes clear anticipations are central to the story the assumption made in this paper will be one of rational expectations the paper is organized as follows section i describes the model and sections ii iv characterize the behavior of the economy under the extreme but convenient assumption that prices are fixed forever sections v and vi extend the analysis to the case where prices adjust over time to their equilibrium value

the sufficiency of the lens condition for factor price equalization in the case of two factors factor price equalization fpe is a central theme in trade theory for which dixit a k norman v 1980 theory of international trade cambridge university press london establish the necessary and sufficient condition the dixit norman condition deardorff a v 1994 the possibility of factor price equalization revisited journal of international economics 36 167 175 provides a more intuitive condition the lens condition and establishes its necessity in general as well as its sufficiency for the case of two countries in this paper i prove that the lens condition is sufficient for fpe in the case of two factors this theorem has implications for empirical work 2001 elsevier science b v all rights reserved

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

immigration and real wages this paper derives conditions under which immigration may raise nominal and real wages in a small open economy the mechanism for such a paradoxical outcome is a demand induced increase in the prices of labour intensive non traded goods

international factor mobility minimum wage rates and factor price equalization a synthesis this paper examines the behavior of a small open economy facing perfectly elastic supply curves for some of its productive factors in particular the paper derives some comparative statics properties of such economies compares them with the properties of otherwise identical economies in which all factor prices are determined endogenously and investigates the relationship between factor price rigidities factor price equalization and the pattern of specialization among the new results which are proved it is shown that as more and more factor price rigidities are imposed on an economy it comes closer to a state of factor price equalization

investment under uncertainty testing the options model with professional traders abstract an important class of investment decisions is characterized by unrecoverable sunk costs resolution of uncertainty through time and the ability to invest in the future as an alternative to investing today the options model provides guidance in such settings including an investment decision rule called the bad news principle the downside investment state influences the investment decision whereas the upside investment state is ignored this study takes a new approach to examining predictions of the options model by using the tools of experimental economics our evidence drawn from student and professional trader subject pools is broadly consonant with the options model

on market equilibrium analysis in this paper we develop the implications of competitive market equilibrium for production and household behavior when some prices are endogenously determined the properties of market equilibrium functions are explored including the effects of pricing policy a slutsky type equation relating compensated and uncompensated market equilibrium functions is derived implications for multimarket welfare analysis are presented focusing on the effects of pricing policy and technical change

tariffs quotas and voluntary export restraints with and without internationally mobile capital this paper presents a general framework for comparing the effects of tariffs quotas and vers voluntary export restraints both with and without international capital mobility expressions for the shadow price of foreign exchange and the shadow price of capital under each type of trade restriction are derived and it is shown that although international capital mobility raises the welfare cost of tariff protection it lowers the welfare cost of quantitative restrictions in most cases the effects of exogenous shocks in the presence of quotas are intermediate between those in the presence of tariffs and those in the presence of vers tarifs douaniers contingentements et restrictions volontaires d l exportation quand le capital est ou n est pas mobile internationalement l auteur presente un cadre general d analyse qu il utilise pour comparer les effets de tarifs douaniers de contingentements et de restrictions volontaires a l exportation dans des contextes ofu le capital est ou n est pas mobile internationalement l auteur derive le prix fictif du change etranger et le prix fictif du capital sous l un et l autre types de restrictions au commerce et montre que meme si la mobilite internationale du capital augmente le cofut en terme de bien etre de la protection tarifaire elle reduit le cofut en terme de bien etre des restrictions sur les quantites echangees dans tous les cas les effets de chocs exogenes quand des contingentements existent sont toujours dans la fourchette entre ceux qu on observe quand des tarifs douaniers existent et ceux qui prevalent quand des restrictions volontaires i l exportation existent

trade patterns under uncertainty with country specific shocks the helpman razin model of international trade under uncertainty is extended to allow for country specific productivi ty shocks it is shown that for the multiple sector multiple factor case there exists a set of interesting sufficient conditions under w hich it is possible to predict the pattern of international trade in securities goods and factor content on the basis of cross country d ifferences in factor endowments it is shown that under these circum stances some well known empirical tests have to be modified copyright 1988 by the econometric society

using micro surveys to measure and explain corruption summary this paper discusses survey techniques aimed at a better measurement of corruption at the micro level and argues that with appropriate survey methods and interview techniques it is possible to collect quantitative micro level data on corruption public expenditure tracking surveys service provider surveys and enterprise surveys are highlighted with several applications these surveys permit measurement of corruption at the level of individual agents such as schools health clinics or firms they also permit the study of mechanisms responsible for corruption including capture of public funds and bribery 2005 elsevier ltd all rights reserved

destination based vs origin based commodity taxation in large open economies with unemployment we construct a perfectly competitive model of two symmetric countries producing tradable commodities and a public consumption good destination or origin based taxes are levied on the consumption of the tradable goods in both countries a fixed wage leads to involuntary unemployment we derive the nash equilibrium consumption taxes under the two taxation principles with endogenous world prices and compare them to i the cooperative rates and ii the rates when world prices are fixed we demonstrate that with endogenous world prices the induced terms of trade effects cancel out under the destination principle but they prevail under the origin principle of taxation nash equilibrium destination based taxes are inefficiently low when the exporting sector in each country is non labour intensive the nash equilibrium origin based taxes can be either higher or lower than the corresponding cooperative rates

is the bad news principle for real abstract the bad news principle states that only the expected severity of future bad news matters for the decision whether to invest today good news should not matter at all this paper tests this prediction using firm level expectation data

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

two by two international trade theory with many goods and factors this paper adopts a new approach to the problem of generalizing the properties of the two by two heckscher ohlin model asking whether we can obtain results which hold in very general models for dichotomous categories of commodities and factors using duality theory some results of this kind are derived which generalize certain properties of the heckscher ohlin model to models which allow for any number of goods and factors joint production international factor mobility and substitution between primary factors and intermediate inputs the consequences of assuming sector specific factors and equal numbers of goods and factors are also examined

property rights renewable resources and economic development this paper analyzes the role of endogenous property rights in the development of an open resource based economy i incorporate renewable resources and endogenous decisions on property rights into a convex growth model with the formal and informal sectors i find that along the transition path to steady state property rights enforcement is not constant but improves with time as well as involves intermediate property rights specification between open access and perfect property rights international trade and labor market are driving these endogenous changes property rights improve with favorable terms of trade when the economy exports resource services and stronger property rights help maintain the resource stock by deterring illegal harvest this pushes labor away from the informal harvest sector toward greater participation in the formal sector of the economy in turn more labor participation in the formal sector along with capital formation increase the country s output and consumption overall with an open economy and well functioning institutions renewable resources have a positive impact on economic growth

a paradigm shift to a new strategy for small island economies embracing demand side economics for value enhancement and long term economic stability abstract the article answers three interrelated questions pertaining to small island economies and tourism development under the condition of globalization 1 why is tourism relevant for small island economies 2 why is a supply perspective inappropriate for these economies and 3 why is a demand perspective more appropriate for small island economies in the era of globalization empirical realities indicate that small islands have performed well in specializing as tourist destinations despite their size constraints and resulting disadvantage in economic terms the caribbean region is an appropriate proxy for small island economies however globalization may be taking its toll on sectoral specialization in the caribbean as a development strategy the supply side strategy seems to have lost its effectiveness to reverse this trend the study proposes the implementation of new tourism strategies based on a demand focused approach to sustain value enhancement these strategies have important managerial and policy implications

the transhipment problem smuggling and welfare in paraguay abstract this paper studies the effects of contraband on resource allocation and welfare using parguayan data a major portion of exports from this economy involves the transhipment of goods from third countries through paraguay to brazil and argentina to avoid trade taxes both explicit and implicit via quantitative restrictions and multiple exchange rates using international and paraguayan databases for 1990 we calculate that contraband accounted for 58 of exports and 31 of imports finally we estimate that such trade increased welfare by 2 1 of gdp

stochastic trends and economic fluctuations in a small open economy in this paper we describe how restricted vector autoregressions can be employed to examine the sources of macroeconomic fluctuations we show how cointegration restrictions can be used to identify a var system with common stochastic trends subject to transitory and permanent changes in average growth and how we may investigate the system s responses to permanent shocks i e to innovations to the trends theoretical cointegration vectors are derived from a small open economy growth model for terms of trade real gdp real consumption and real investments applying these methods to swedish annual data 1875 1986 we find that permanent real supply shocks account for most of the fluctuations in gdp even in the short run

taxing tourism and subsidizing non tourism a welfare enhancing solution to dutch disease abstract using a combined analysis of a general equilibrium and a partial equilibrium this study models the impacts of a combined policy tool based on taxing tourism and subsidizing non tourism in a tourism dependent destination the results suggest that such a policy tool while widely discussed in economics literature may not be suitable for a tourism destination as it might have adverse effects on local welfare