distribution of research gains in multistage production systems research irrespective of the incidence of the levy and benefits no longer is valid we have no disagreement with this important observation but we are concerned about the lack of reliable estimates of the elasticity of substitution building on muth s analysis for which we suggest some changes we explore further the sensitivity of the effects of the distribution of benefits of research to different ways in which research can impact on a multistage production system and to the effects of the elasticities

the dynamics of short and long run capital mobility evidence from a time varying parameter error correction model this article analyses the dynamic evolution of capital mobility in eight organization for economic co operation and development oecd countries over the period 1850 to 1992 we estimate an error correction model of saving and investment that allows to distinguish between short and long run capital mobility the parameters of the error correction model are allowed to be time vary ing and are estimated using the kalman filter and maximum likelihood technique we find that both short and long run capital mobility was very high at the end of the nineteenth century but since then decreased in most countries however the magnitude of changes in long run capital mobility is very small while the absolute change of short run capital mobility is substantial

optimal temporal policies in fluid milk advertising this study develops an approach to obtain optimal temporal advertising strategies when consumers response to advertising is asymmetric using this approach optimal strategies for generic fluid milk advertising in new york city are determined results indicate that pulsed advertising policies are significantly more effective in increasing demand than a uniform advertising policy sensitivity analyses show that the optimal advertising policies are insensitive to reasonable variations in interest rates and the inclusion of milk demand seasonality in the model also less asymmetric responses to advertising are found to result in shorter optimal pulsing cycles and reduced intensity of advertising pulses copyright 2000 oxford university press

marginal analysis of welfare costs of environmental policies the case of pesticide regulation we present a methodology for estimating net social welfare costs and their distribution using only information on price quantities elasticities of supply and demand and estimates of cost and or yield effects of policies provided by natural scientists an application to a case of pesticide regulation demonstrates the importance of equity effects simulations show that redistribution of income among producers becomes the dominant effect of pesticide policies when supply elasticities are higher and demand elasticities are lower with changes in supply elasticity having a greater impact than changes in demand elasticity for crops with significant export markets foreign consumers are shown to bear much of the short run cost many cases now exist of legislation and executive orders mandating the use of benefit cost criteria in policy choice to be useful in policy assessments welfare methodologies must meet certain requirements first they must provide estimates of the efficiency impacts of alternative policies measured by changes in net social surplus second estimates of the

boom bust cycle asymmetrical fiscal response and the dutch disease this paper investigates the changes in expenditure policy in oil exporting countries during boom bust in commodity price cycles and their implications for real exchange rate movements to do so we introduce a dutch disease model with downward rigidities in government spending to revenue shocks this model leads to a decoupling between real exchange rate and commodity export price movement during busts we test our model s theoretical predictions and underlying assumptions using panel data for 32 oil exporting countries over the period 1992 to 2009 results are threefold first we find that changes in current spending have a stronger impact on real exchange rate compared to capital spending second we find that current spending is downwardly sticky but increases in boom time and conversely for capital spending third we find limited evidence that fiscal rules have helped reduce the degree of responsiveness of current spending during booms in contrast we find evidence that fiscal rules are associated with a significant reduction in capital expenditure during busts while responsiveness to booms is more muted this raises concerns on potential adverse consequences of this asymmetry on economic performance in oil exporting countries

how to effectively stabilize china s commodity price fluctuations abstract the bulk commodities are basic goods and their price fluctuations are directly related to the stability of a country s macro economy investigating the main driving forces of the commodity price fluctuations is the key to stabilizing the macro economy ignoring the objective facts that there are a large number of nonlinear relationships between economic variables most of the existing scholars use the linear models to commodity price fluctuations to compensate for the shortcomings of existing research this paper uses the nonparametric additive regression model with data driven features to investigate the main driving forces of china s commodity price fluctuations the results show that exchange rate has an early promotion late inhibition inverse u shaped nonlinear effect on commodity price fluctuations because the renminbi appreciates in the early stages but depreciates in the later stages the nonlinear impact of the real economy also appears an inverted u shaped pattern due to the changes in growth mode of the real economy similarly international oil price produces an inverted u shaped nonlinear effect owing to the rise in international oil prices in the early stages and the decline in the later stages however the money supply has an early inhibition late promotion positive u shaped nonlinear effect on commodity prices therefore government departments should formulate targeted policies over time to effectively stabilize china s commodity prices

theory based measurement of the saving investment correlation with an application to norway i introduction the findings of feldstein and horioka 19c 0 have led to numerous theoretical and empirical papers on the close correlation between domestic saving and domestic investment and its supposed implications for international capital mobility feldstein and horioka 1980 317 state that with perfect world capital mobility there should be no relation between domestic saving and domestic investment saving in each country responds to the worldwide opportunities for investment while investment in that country is financed by the worldwide pool of capital however in a cross country regression using period averaged saving and investment figures for sixteen oecd countries they obtain a significant coefficient close to unity and conclude that capital is rather immobile this result constitutes the feldstein horicka puzzle as it contradicts the widely held perception that capital is highly mobile across countries subsequent empirical work confirmed the close correlation though its implication for the degree of capital mobility is a moot point see tesar 1991 this paper contributes to the understanding of the puzzle on both theoretical and empirical counts first we present a theory based econometric specification for estimating saving investment correlations second we discuss the possible usefulness of the estimates for detecting capital mobility third we provide empirical results for the interesting case of norway we argue that feldstein and horioka s basic idea that the saving investment correlation contains information about international capital mobility is correct but that the interpretation of the estimated correlation value must be altered substantially in view of the results derived from modern macroeconomic models our research is motivated by the observation that various regression equations have been used to measure the saving investment correlation but that none of them has a firm theoretical foundation this in turn raises questions about the interpretation and comparability of the existing empirical results we propose an econometric specification that is founded in intertemporal general equilibrium models in which agents optimize under intertemporal budget constraints we show that time series studies have estimated misspecified equations and that cross section studies are seriously flawed because they neglect dynamics as a result the puzzle may turn out to be an artifact caused by measurement errors however the significance of reliable measurement of saving investment correlations goes beyond solving the feldstein horioka puzzle because they represent stylized facts open economy models should explain norway serves as a suitable example to cement our methodological arguments with empirical evidence thanks to its system of capital controls which were phased out during the 1970s and 1980s the oil discoveries and its small size we demonstrate that the failure to take structural breaks into account seriously distorts the picture making a strong case for careful diagnostic testing our main empirical result is that the feldstein horioka puzzle does not exist for norway the paper proceeds as follows in section ii we briefly summarize the state of the discussion regarding feldstein and horioka s findings in section iii we derive our specification from the theory compare it to the previous specifications and discuss how to make inferences about capital mobility in section iv we sketch major developments in the post war norwegian economy notably the abolition of capital controls and the emergence of the important oil sector section v presents the empirical results section vi summarizes and concludes ii the feldstein horioka puzzle many authors have confirmed feldstein and horioka s result of a high and stable correlation of saving and investment for oecd countries both in cross country studies and in time series studies

tastes and technology in a two country model of the business cycle explaining international trade on international financial markets allows people to insure country specific risk and smooth consumption intertemporally equilibrium models of business cycles with trade on global financial markets typically yield international consumption correlations near one and excessive volatility of investment the authors incorporate nontraded goods in the model and find that the implications for aggregate consumption investment and the trade balance are consistent with business cycle properties of industrialized countries however the model driven by technology shocks alone yields counterfactual implications for comovements between consumption and prices at the sectoral level taste shocks produce price quantity relationships more consistent with the data copyright 1995 by american economic association

on savings and investment dynamics in a small open economy abstract this paper constructs a stochastic overlapping generations two country model of savings and investment under conditions of perfect international capital mobility the focus of the analysis is on the relationship between savings and investment dynamics in a small open economy in response to stochastic variations in domestic and or foreign production technologies the model is simulated under alternative specifications of the stochastic distribution governing both technologies this provides insight into the very complicated nature and rich diversity of possible relationships between savings and investment dynamics

money and financial markets introduction money and financial markets mark p taylor part 1 assessing the literature money demand analysis an outline keith cuthbertson david barlow financial market analysis an outline ronald macdonald and mark p taylor part 2 money demand studies money demand in five major countries estimating and interpreting error correction models james m boughton modelling broad and narrow money a study using cointegration martin brookes et al endogenous financial innovation and the demand for mo peter westaway and david walton money demand in high inflation countries a south american perpsective kate phylakis and mark p taylor the demand for money in four countries in the interwar period a study using monthly data jonathan slow et al part 3 money and financial markets some news on covered interest arbitrage mark p taylor patricia fraser monitoring bank risk a market based approach david miles stephen hall information interest rates and the volatility of asset prices laurence copeland richard c stapleton the decision to disclose research and development expenditure in the presence of a takeover threat jane black ian tonks persistence in stock market returns a disaggregated perspective roanld macdonald david power global capital market integration and the current account michael artis tamim bayoumi financial disorder and the theory of crisis e p davis part 4 new directions in financial market analysis neural networks and asset prices paul ormerod chartists fundamentalists and the transmission of opinion alan kirman

distribution of research gains in multistage production systems comment in a recent paper freebairn davis and edwards hereafter fde have examined an interesting and neglected aspect of the distribution of benefits from research agricultural production is seen to comprise three stages input supply farm production and farm to retail marketing fde have explored the distribution of the benefit stemming from a downwards shift in the supply function at any one of the stages they conclude these benefits are distributed according to the elasticities of consumer demand and supply facing each stage furthermore under the special assumptions they employ this distribution is independent of which of the three supply functions is shifted by research they conclude albeit with due caution that the choice of agricultural research projects should not be limited to farm production research alone especially in view of the cost shares of purchased inputs and marketing services in the retail value of food in fact they argue they farmers may receive greater benefits from off farm oriented research than from farm oriented research p 39 this finding has potentially important implications for agricultural research policy it immediately spurs one to ask whether research funded by the farmer or the fisc might have neglected opportunities for research related to farm inputs or marketing to reach their result fde assume a all supply and demand curves are linear b research induces parallel shifts in supply curves c farmers cannot substitute nonfarm inputs for inputs supplied by farmers in production of the farm product and d marketing firms cannot substitute marketing inputs for raw farm products in the production of retail commodities the purpose of this note is to emphasize the importance of these elasticities of factor substitution in determining the distribution of research benefits between the three stages to do this we use a simple but general two factor model in which we focus attention on the elasticity of factor substitution between marketing services and raw farm products in the third stage marketing this model is not restricted to linear supply and demand curves nor to an elasticity of substitution of zero we maintain the assumptions of parallel shifts of supply curves induced by research and a perfectly elastic supply of marketing services in a revision of fde s application to the u s hog industry the distribution of research benefits is shown to depend crucially on the elasticity of factor substitution their result that such distribution is independent of the stage in which research shifts the supply curve downwards follows only for the special case in which that elasticity is zero this is clearly a restrictive assumption a reexamination of some of the policy issues raised by fde once the assumption is relaxed would seem to be warranted

safety and quality regulation and stage of distribution let 0 denote the level of quality inherent in a food product that is delivered to some terminal market in this paper i characterize allocations over 0 and provide an economic rationale for regulating safety and quality standards in the food system zusman and bockstael investigate the theoretical foundations for imposing standards and stress the importance of providing a tractable conceptual foundation despite a wealth of contributions that are mainly empirical for reviews of these works see respectively caswell and antle there have been relatively few attempts to model formally the linkages between farm and food markets when food quality and consumer safety are at issue here i attempt to provide such a framework building on key contributions in the theoretical literature and linking them in a simple model of quality determination in a vertically related marketing channel the food marketing model is due to gardner spence provides a foundation for pareto improving intervention in a deterministic model of quality provision and leland building on the classic paper by akerlof investigates licensing and minimum standards when the information structure is incomplete linking these ideas in a satisfactory model of the food markets is the main objective of the paper

international capital mobility what do national saving investment dynamics tell us abstract we interpret the relationship between national saving and investment in the long run as reflecting a solvency constraint and interpret the ease with which a country can run current account imbalances in the short run before it has to ultimately reverse the transaction at some future date to satisfy the solvency constraint as being positively related to the degree of international capital mobility we apply panel error correction techniques to data for 20 oecd countries from 1960 to 1999 we find that saving and investment display a long run cointegration relationship that is consistent with the interpretation that a long run solvency constraint is binding for each country over time however deviations from this long run equilibrium relation have become more persistent which suggests that capital mobility has increased

saving investment dynamics and capital mobility in the us and japan abstract this paper points out that a high long run correlation between saving and investment is better interpreted as reflecting the operation of a country s intertemporal budget constraint rather than as an indicator of capital mobility inferences about capital mobility can instead be made from the divergent short run dynamic responses of saving and investment to shocks using post war quarterly data for the us and japan the paper assesses the characteristics of saving and investment behavior under different regulatory environments it finds mixed evidence of changes in the short run dynamics of saving and investment that suggest increased capital mobility in the 1980s

international commodity prices growth and the outbreak of civil war in sub saharan africa to learn more about the effect of economic conditions on civil war we examine whether sub saharan civil wars are more likely to start following downturns in the international price of countries main export commodities the data show a robust effect of commodity price downturns on the outbreak of civil wars we also find that sub saharan countries are more likely to see civil wars following economic downturns in their main oecd export destinations

measuring research benefits in an imperfect market in this paper an imperfect market model is developed for evaluating agricultural research benefits the main finding is that the increases in societal gain and the producer s share of this gain are larger with a monopoly than with a competitive market the paper argues that if the market for an agricultural input or for a commodity is not competitive then use of a competitive model for assessing research benefits could lead to understatements of both producer and total benefits

determinants of the current account balance in the united states this article studies the role of public and private imbalances in the behaviour of the current account balance in the united states in the context of an intertemporal model the estimation evaluates the effects of public and private imbalances on the dynamics of the current account correlation coefficients support the ricardian equivalence higher budget deficit correlates with a reduction in private consumption and an increase in private savings government saving does not vary significantly with macroeconomic variables in the short or in the long run in contrast fluctuations in government investment vary significantly with a number of economic variables in the long and in the short run accordingly fluctuations in the budget deficit are likely to be driven by fluctuations in public investment in contrast to government savings private savings vary significantly with macro variables in the long and in the short run fluctuations in private investment appear less evident compared to that in privat

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

international capital mobility amongst the major industrialised countries too little or too much this paper examines capital flows among the major industrialized countries with a view to assessing m feldstein and c horioka s 1980 claim that international capital mobility is limited it argues that saving investment correlation tests are inherently flawed and proposes an alternative methodology for testing the degree of international capital mobility it finds that capital flows have been excessive in the sense that they are driven by speculative forces rather than by economic fundamentals copyright 1995 by royal economic society

ex ante evaluation of the economic impact of agricultural biotechnology the case of porcine somatotropin advances in biotechnology are leading to the creation of products which are expected to have a significant impact on agricultural production much discussion in the literature has focused on possible impacts of biotechnology on agriculture kalter and tauer hueth and just stallman and schmid but few quantitative estimates of the probable impact exist this paper examines the impact of a new growth hormone porcine somatotropin pst on the u s pork industry our approach is generally useful for ex ante analyses of new biotechnologies where experimental estimates of the impact of the technology are available and where the nature of the commodity produced may be affected by the new biotechnology pst is a naturally occurring somatotropin protein produced in the pig s pituitary supplemental pst has been shown in experimental research to lead to improvement in average daily gain improvement in feed efficiency and change in carcass composition of the pig by converting fat to lean meat the purpose of this paper is to simulate the likely impact of supplemental pst use on prices and quantities of pork at the retail and farm levels and on net benefits of producers and consumers the approach taken here to quantifying the impact of pst is in the spirit of previous ex ante approaches to estimating returns to agricultural research norton and davis this study explicitly takes into account a interrelationships between the domestic hog and pork markets b interrelationships between pork and other meats c interrelationships between the domestic and international mar

optimal generic advertising in an imperfectly competitive food industry with variable proportions abstract this paper determines the impact of food industry market power on farmers incentives to promote in a situation where funds for promotion are raised through a per unit assessment on farm output and food industry technology is characterized by variable proportions specifically building on earlier studies by azzam am j agric econ 80 1998 76 and holloway am j agric econ 73 1991 979 muth s oxford econ papers 16 1965 221 model is extended to consider the farm level impacts of generic advertising when downstream firms possess oligopoly and or oligopsony power and advertising expenditure is endogenous at the market level applying the model to the us beef industry we find that for plausible parameter values market power reduces farmers incentives to promote however the disincentive is moderated by factor substitution and effectively vanishes as the factor substitution elasticity approaches the retail demand elasticity this suggests that the dorfman steiner theorem suitably modified to account for factor substitution suffices to indicate optimal advertising intensity in the us beef sector

investment and saving in angola and the feldstein horioka puzzle this article analyses the relationship between investment and savings for angola using the feldstein horioka puzzle with monthly data from january 2000 to december 2013 integer and fractional integration and cointegration techniques are employed to investigate the relationship between investment and savings several regression specifications are employed concluding that the feldstein horioka puzzle is not validated for the angolan economy policy implications are derived

the farm retail price spread in an imperfectly competitive food industry in a previous article in this journal gardner investigated the effects of three distinct forces affecting food system equilibria shifts in retail demand shifts in farm commodity supply and shifts in marketing input supply he derived comparative static predictions about how the quotient of retail and farm prices the retailfarm price ratio would adjust to changes in each of these exogenous effects the investigation was conducted within a framework that

does trade integration cause convergence abstract using a business cycle model we analyse the conditions for trade integration to produce economic convergence we find large stable economies with integrated structures are likely to diverge but smaller more volatile or less well integrated economies will converge the symmetry of shocks is unimportant

explaining saving investment correlations national saving and investment rates are highly positively correlated in virtually all countries this is puzzling as it apparently implies a low degree of international capital mobility this paper shows that the observed positive correlation between national saving and investment rates arises naturally within a quantitatively restricted equilibrium model with perfect mobility of financial and physical capital the model is consistent with the fact that saving investment correlations are larger for larger countries but are still substantial for small countries further the model is consistent with the finding that current account deficits tend to be associated with investment booms copyright 1993 by american economic association

monitoring banking sector fragility a multivariate logit approach this article explores how a multivariate logit model of the probability of a banking crisis can be used to monitor banking sector fragility the proposed approach relies on readily available data and the fragility assessment has a clear interpretation based on in sample statistics the model has better in sample performance than currently available alternatives and the monitoring system can be tailored to fit the preferences of decision makers regarding type i and type ii errors the framework can be useful as a preliminary screen to economize on precautionary costs

a century of current account dynamics abstract recent globalization trends have refocused attention on the historical evolution of international capital mobility over the long run the issue is examined here using time series analysis of current account dynamics for fifteen countries since circa 1850 the inter war period emerges as an era of low capital mobility and only recently can we observe a tentative return to the degree of capital mobility witnessed during the late nineteenth century the analysis of saving and investment dynamics also helps make sense of the frequently observed high correlation of saving and investment rates in historical data

international capital mobility in the long run and the short run can we still learn from saving investment data the idea to learn about international capital mobility from saving and investment data remains appealing our approach is based on var methods and overcomes some of the problems associated with saving investment regressions when the data are non stationary we propose a new measure of long run capital mobility that can be easily calculated as a by product of the estimation procedure of a cointegrated var in an application to historical us and british data we find long run capital mobility to have been remarkably stable over the century whereas variations in the mobility of capital primarily seem to have affected short run capital flows

intertemporal optimizing models of trade and current account balance a survey abstract this study surveys the intertemporal optimizing models of trade and current account balance that were developed calibrated and empirically tested since they came into vogue in the 1980s the implications of these models often differ from those of static and dynamic conventional non optimizing models the literature on optimizing models has not only grown reasonably fast but has also witnessed significant advances in methodology and these models have culminated into a distinct strand of new open economy macroeconomics the studies conducted until the late 1980s have used deterministic perfect foresight models while several studies conducted since the 1990s relax the perfect foresight and certainty equivalence assumptions and develop stochastic dynamic general equilibrium models to account for uncertainty confronting the optimizing agents the future research needs to explore the possibility of tracing any preferred specification of household preferences model the effect of time varying discount factor on household utility function and intertemporal budget constraint examine the role of costs in international trade place a parallel emphasis on the empirical verifications of theoretical propositions examine the relative performance of optimizing vis a vis non optimizing models and rationalize the extreme propositions of perfect and imperfect capital mobility in the wake of moderately open capital accounts

distribution of gains from research and promotion in multi stage production systems the case of the u s beef and pork industries a producer financed program that leads to either an increase in retail demand from promotion or a decrease in marketing costs from research will generate returns to producers that are generally smaller than returns generated through an equivalent change in producer supply from research the distribution of gains depends on the degree of substitutibility between farm and nonfarm inputs comparative statics of equal absolute changes in demand supply and marketing costs in the u s beef and pork industries show the significance of input substitutibility for distribution of gains and sensitivity of the results to beef and pork demand interrelationships

unemployment insurance and short time compensation the effects on layoffs hours per worker and wages we analyze two unemployment insurance systems in one unemployed workers receive benefits while those on reduced hours do not as in north america at least until recently in the other short time compensation is paid to workers on reduced hours as in europe the first system causes inefficient temporary layoffs for some parameters the latter does not but implies inefficient hours per worker some evidence is presented regarding these effects despite policymakers recent enthusiasm for short time compensation the clear implication of this project is that changes should come on the tax not benefit side of the system

saving and investment in an open economy with non traded goods the authors examine a model of a small open economy in which there is free international mobility of financial capital investment in capital goods and a nontraded good such an environment is rich enough to explain several phenomena that are inexplicable in other models the authors explain why a high saving country may nonetheless borrow from abroad to finance investment they suggest an explanation of why saving and investment may be correlated even with no restrictions on trade in assets the authors also provide an optimizing model of stages in the balance of payments copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

commodity prices and bank lending we analyze the transmission of changes in commodity prices to bank lending in a large sample of developing countries a bank level analysis shows that a fall in commodity net export prices is associated with a reduction of bank lending particularly for commodity exporters and during episodes of terms of trade decline we complement this analysis with loan level data from a credit register which allows us to identify the effect of a commodity price shock on the supply of credit controlling for unobserved factors that could drive borrowers credit demand results show that banks with relatively lower deposits and poor asset quality transmit the changes in commodity prices to lending more aggressively jel f30 f34 g21 q02

domestic saving and international capital movements in the long run and the short run the evidence and analysis in this paper support the earlier findings of feldstein and horioka 1980 that sustained increases in domestic savings rates induce approximately equal increases in domestic rates of investment new estimates for the post opec period 1974 79 imply that each extra dollar of domestic saving increases domestic investment by approximately 85 cents in a sample of 17 oecd countries an explicit analysis of the problems of identification and simultaneous equations bias suggests that the regression estimates are more relevant as a guide to the long run response of international capital flows than to their short run behavior coefficient estimates based on annual variations in savings and investment are subject to potentially severe simultaneous equations bias that is not present when annual observations are averaged over a decade or more and the regression is estimated with a cross country sample of these averages a portfolio model of international capital allocation that is presented in the paper indicates that the short run change in the rate of net foreign investment in response to a sustained increase in domestic saving is likely to be substantially greater than the ultimate steady state response this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

capital mobility and the relationship between saving and investment rates in oecd countries abstract this paper considers tests that use data on saving and investment rates to determine the degree of international capital mobility two types of evidence are presented to show that a high correlation between saving and investment rates across oecd countries can be consistent with a high degree of capital mobility this evidence qualifies the conclusions of previous studies and casts doubt on the usefulness of testing hypotheses about capital mobility with data on saving and investment rates

input substitution and the distribution of surplus gains from lower u s beef processing costs the impact on consumers and input suppliers of allowing substitution between farm and nonfarm inputs in food processing is a controversial issue freebairn davis and edwards 1982 assumed that no substitution between these inputs was possible and concluded that the distribution of surplus gains between producers and consumers is independent of the source of supply shift alston and scobie pointed out that this conclusion depends on the assumption of no input substitution once input substitution is possible farmers can no longer be indifferent about the supply shift since their share of total surplus gains is greater for shifts in farm supply than for marketing input supply furthermore as the degree of input substitution increases the farmers share of surplus gains from a downward shift in the supply of marketing inputs decreases freebairn davis and edwards 1983 replied that while we tend to agree with alston and scobie that the elasticity of substitution in the case of pork is likely to be nonzero we doubt that it is very large and at this stage no satisfactory estimate is available p 357 in this study we obtain a lower bound estimate of the elasticity of substitution and show

cointegration of long span saving and investment abstract we find that saving and investment cointegrate in all or most countries in maddison s research memorandum no 443 1991 long span data set by a variety of time series and panel data tests we interpret our results as reflecting current account solvency and not capital immobility

testing the validity of the feldstein horioka puzzle for australia this article presents the details of an investigation into the relationship between investment and savings in australia over the period 1960 to 2007 using five time series techniques our results reveal that the feldstein horioka puzzle exists in a weak form with a lower saving retention coefficient granger causality tests illustrate that savings granger causes investment both in the short and long runs our results suggest australia could effectively adopt policies that focus on increasing investment through increasing domestic savings

current account solvency and the feldstein horioka puzzle in this paper we suggest an alternative explanation of the high cross section association between shares of saving and investment in gdp which feldstein and horioka 1980 interpret as evidence of low capital mobility in oecd countries saving and investment shares appear to be i i we show that a solvency constraint implies that the current balance is stationary and thus that saving and investment cointegrate with a unit coefficient irrespective of the degree of capital mobility it is this long run relation that the fh cross section regression captures econometric results for 23 oecd countries over the 1960 92 period are consistent with this explanation

a quantitative assessment of the decline in the u s current account low frequency changes in the u s current account can be understood in terms of the influence of differences in productivity growth rates across time and across countries using standard growth theory in particular the secular decline is primarily driven by the increase in the u s tfp growth rate relative to its trading partners differences in population growth rates or fiscal policy have no significant effects on the low frequency changes in the u s current account

an endogenous growth model with expanding ranges of consumer goods and producer durables this paper constructs a growth model with the feature that the range of differentiated consumption goods and the range of specialized producer durables are both endogenously determined the author shows that this feature allows the domestic investment rate to be closely associated with the domestic saving rate even when international financial markets are integrated he also argues that this feature is important in explaining the observed cross country diversity in growth performance and saving behavior copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

does international integration matter for financial development in africa this article analyses the links between international financial and trade integration and financial development in sub saharan african ssa countries it is based on a panel data set using methods that tackle slope heterogeneity cross sectional dependence and nonstationarity the results do not point to a general direct robust link between trade and financial integration and financial development in ssa once we control for other factors such as gdp per capita and inflation the findings may be due to a number of factors including distortions in domestic financial markets relatively weak institutions and or poor financial sector supervision we find some indication that financial integration is more important for financial development in countries with better institutional quality stronger scores in some measures of the quality of banking regulation and supervision are also linked to a positive association between integration and financial development in some of our results thus african policy maker

do commodity price shocks weaken the financial sector this paper investigates the impact of commodity price shocks on financial sector fragility using a large sample of 71 commodity exporters among emerging and developing economies it shows that negative shocks to commodity prices tend to weaken the financial sector with larger shocks having more pronounced impacts more specifically negative commodity price shocks are associated with higher non performing loans bank costs and banking crises while they reduce bank profits liquidity and provisions to non performing loans these adverse effects tend to occur in countries with poor quality of governance weak fiscal space as well as those that do not have a sovereign wealth fund do not implement macroprudential policies and do not have a diversified export base these findings are robust to a battery of robustness checks

are remittances and foreign aid a hedge against food price shocks in developing countries this paper explores the role of remittances and foreign aid inflows during food price shocks the results yield four findings first low income countries and the sub saharan african region are the most vulnerable to food price shocks second remittance and aid inflows dampen the effect of positive food price shock and food price instability on household consumption in vulnerable countries third negative food price shock episodes are associated with a significant increase in household consumption in vulnerable countries fourth a lower remittance to gdp ratio is required in order to fully absorb the effects of food price shocks

commodity prices and growth in africa a frican economies export primary commodities and most export little else policymakers as well as economists and historians of african economic development have seen these exports as both a hope and a curse the following parable tells the story once upon a time a servant of the ruler discovered a miraculous plant which grew readily in that country and whose seeds could be woven into fine cloth so desirable was this fabric that it became prized all over the world and fetched a high price after two score years the plant accounted for most of the country s trade with the world the ruler ordered the peasants to grow the plant paid them only a fraction of its price and he and his nobles became fabulously wealthy because the ruler wished to be remembered as a great ruler and as the father of his country he used his wealth to build a great army and brought machines from foreign countries to make the fine goods that previously could only be obtained from foreign merchants but the machines often broke down and the goods that they made were of poor quality and after the ruler died they were left to rust under the ruler s successor there was a war in a foreign land where the plant also grew so that there was a great shortage and its price increased threefold in only three seasons the new ruler spent his newfound riches on fantastic extravagance while immense sums were expended on public works after the manner of the east and on productive works carried out in the wrong way or too soon not even the threefold increase in prices could support these expenditures and the country soon found itself deeply in debt when the war ended and the price fell the country could no longer pay the interest on its debt or borrow more money even after it had sold its only useful public work to a foreign power so that power sent a mission to the country the publication of whose report from which the above

capital mobility in saving and investment a time varying coefficients approach abstract this paper uses a model with time varying coefficients in order to track changes in feldstein horioka saving retention coefficients over time to the extent that such coefficients measure international capital mobility the main empirical findings are as follows first the stability of the saving retention coefficient is strongly rejected second capital has long been perfectly mobile in canada third capital mobility has never been high in the united states fourth capital was more mobile in japan and the united kingdom at the turn of the 20th century than it has been during the postwar period capital mobility has risen in argentina italy and sweden since around 1970 finally capital mobility for most of the countries considered has not monotonically increased during the postwar period

an intertemporal model of saving and investment this paper characterizes a market economy with infinitely long lived consumers and value maximizing firms which face costs of adjustment for capital the temporary equilibrium of this economy is similar to the short run equilibrium of standard macroeconomic models consumption is a function of wealth investment is related to the value of firms equilibrium between aggregate demand and aggregate supply is achieved by the endogenous adjustment of the sequence of current and future interest rates the dynamic behavior of output consumption and investment in this economy is the same as in an optimal growth model with adjustment costs the paper shows this equivalence and then uses it together with the equivalence of taxes to technological shocks to study the dynamic effects of fiscal policy

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

the macroeconomics outcome of oil shocks in the small eurozone economies in this work we provide an analysis over the period 1999 2015 of the effects of oil shocks on prices and gdp in a group of small euro area economies the group includes austria belgium finland greece ireland italy netherlands portugal and spain we use the structural near var methodology and are thus able to model the joint interaction of area wide macroeconomic variables and national variables we find that under the emu oil price shocks have been important drivers of business cycle fluctuations in almost all these countries moreover an increase in oil prices produces significant recessionary effects in all the countries included in the investigation thus although there are different sizes in the responses of output in the investigated countries our main conclusion is that oil prices still matter for european economies