are higher levels of inflation less predictable a state dependent conditional heteroscedasticity approach milton friedman proposed that there is a positive relationship between inflation and uncertainty about the future path of inflation in contrast to previous studies of this hypothesis we find strong statistical evidence that higher levels of inflation are less predictable although innovations in inflation are somewhat better predictors of future volatility than the actual level of inflation we argue that previous failures to find an inflation uncertainty relationship are due to two factors first none of the previous work directly tested friedman s hypothesis by including the level of inflation in the model of the conditional variance second these studies also used symmetric models which appears inconsistent with friedman s hypothesis our results are robust to different sample periods and to assumptions about the presence of a unit root in inflation to test the inflation uncertainty hypothesis we use state dependent models sdm s of conditional moments to estimate the time varying conditional v

does size matter reassessing the relationship between aquaculture and poverty in bangladesh abstract aquaculture has long been promoted by development institutions in bangladesh on the understanding that it can alleviate poverty most of this attention has focused on forms of the activity commonly referred to as small scale this article draws on concepts from the literature on agricultural growth and elaborates a typology of aquaculture based on relations of production which suggests that in bangladesh quasi capitalist forms of aquaculture may possess greater potential to reduce poverty and enhance food security than the quasi peasant modes of production generally assumed to do so the implications of this conclusion are explored

conditional asymmetries in real gnp a seminonparametric approach two critical assumptions are often made in empirical research regarding the relationship between economic variables and economic disturbances linearity and gaussianity together these two assumptions place strong restrictions on the time series behavior of a model most important these restrictions imply conditional symmetry using seminonparametric snp techniques this article presents evidence that real gross national product growth displays conditional asymmetry although these results confirm related results of brock and sayers sichel and hamilton the snp approach is novel in that it emphasizes the relationship between common modeling assumptions and the restrictions that these assumptions place on data

impact of pension system structure on international financial capital allocation abstract recent findings indicate that pension system structure affects private savings and through them the aggregate foreign asset position of a country we present a two country overlapping generations model that explores the relationship between the magnitude of pension guarantees and the resulting portfolio choices of workers the existence of a pay as you go pension system lowers the wealth of the young workers who consequently borrow from abroad to supplement their current consumption and lowers the overall riskiness of their lifetime wealth prompting them to invest in risky equity financed by the selling of safe bonds in particular we are able to replicate and explain the venture capitalist positive net equity accompanied by negative net debt portfolio profile of the united states more broadly we find empirical support for our results in a cross country analysis using data from 110 economies greater amounts of pension spending are associated with international indebtedness long equity positions and short debt positions

further evidence on the asymmetric behavior of economic time series over the business cycle evidence has recently been presented by salih neftci to support the hypothesis that recessions in economic activity tend to be steeper and more short lived than recoveries in economic activity that evidence however was confined to the behavior of the unemployment rate in the united states in this paper it is shown that when neftci s methods are applied to analyze the behavior of real gross national product investment and productivity in the united states or when they are used to analyze industrial production abroad the asymmetry hypothesis seems to be less compelling

trade liberalization and wage inequality abstract this paper studies empirically the link between trade liberalization and wage inequality in chile within the context of the heckscher ohlin samuelson hos model we use cointegration techniques to estimate the long run relationship between the skill premium in chile and product prices openness and factor endowments we find that the fall in the relative price of labor intensive goods helps explaining the increase in wage inequality in chile during the last two decades the increase in proportion of the labor force with college degree on the other hand tends to reduce wage inequality in chile openness measured as the volume of trade over gdp widens the wage gap between skilled and unskilled labor we offer some hypothesis on the elements that are behind this positive relationship between wage openness and inequality but no empirical work is done this area may be an interesting subject of research

modelling business cycle nonlinearity in conditional mean and conditional variance some international and sectoral evidence this paper tests for the presence of output mean and variance nonlinearities in international industrial production and uk and us sectoral production growth rates using armagqarch bilinear bl and joint bl gqarch models arma gqarch models confirm the presence of asymmetric variance effects in italian uk and us industrial production and in all sectors other than us nondurables and such that the conditional variance of output is increased following negative shocks bl models are identified for german italian and us industrial production and us manufacturing while bl gqarch models of joint nonlinearity in both conditional mean and conditional variance are also found to hold for us industrial production and manufacturing moreover with the exception of italy all bl and bl qarch models provide superior out of sample mean forecasts relative to forecasts from both naive models and models of the arma gqarch class

is the investment uncertainty relationship nonlinear an empirical analysis for the netherlands we examine the investment uncertainty relationship for a panel of dutch non financial firms the system generalized method of moments gmm estimates suggest that the effect of uncertainty on investment is nonlinear for low levels of uncertainty an increase in uncertainty has a positive effect on investment while for high levels of uncertainty an increase in uncertainty lowers investment this result is in line with a number of theoretical studies but has never been documented empirically

how does globalisation affect regional inequality within a developing country evidence from china developing countries are increasingly concerned about effects of globalisation on regional inequality this paper develops an empirical method for decomposing the contributions of two major driving forces of globalisation foreign trade and foreign direct investment fdi on regional inequality and applies it to china even after controlling for many other factors globalisation is still found to be an important factor contributing to the widening regional inequality the paper ends by investigating the role of factor market segmentations in aggravating the distributional effect of changing regional comparative advantages in the process of globalisation

optimal monetary policy exchange rate misalignments and incomplete financial markets abstract recent literature shows that when international financial trade is restricted to autarky or a single bond there are internal and external welfare trade offs that imply optimal monetary policy in principle deviates from inflation targeting in order to offset real exchange rate misalignments this paper develops a more realistic model of incomplete markets where there is international trade in multiple assets the analysis shows that the presence of multiple assets creates a potentially powerful interaction between monetary policy and household portfolio allocation this interaction is by definition not present when there is financial autarky or a single tradeable bond and this paper shows that the interaction with portfolio allocation can imply that optimal monetary policy generates a quantitatively much more significant stabilisation of the real exchange rate gap than implied by simpler models of financial market incompleteness

globalisation and unequalisation what can be learned from value chain analysis although many have gained from the process of globalisation there remains a stubbornly large number of people living in absolute poverty and a rise in inequality within and between countries the issue is thus not whether to participate in the global economy but how to do so in a manner which provides for sustainable and equitable income growth this study shows how value chain analysis can be used to chart the growing disjuncture between global economic activity and global income distribution and to provide causal explanations for this outcome in so doing value chain analysis provides valuable insights into policy formulation and implementation

urban biased policies and rising income inequality in china since the start of economic reforms in 1978 china has experienced the largest increase in income inequality of all countries for which comparable data are available according to the world bank 1997 china s gini coefficient increased from 28 2 in 1981 to 38 8 in 1995 based on official survey data another study that used internationally standard definitions for incomes estimated china s gini ratio at 38 2 in 1988 and 45 2 in 1995 a level that already surpassed many developing economies in asia azizur khan and carl riskin 1998 are these income inequality changes the consequence of institutional reforms that replaced egalitarian rewards with work incentives employment contracts and labor mobility this paper uses household survey data collected by china s state statistical bureau ssb to investigate the sources and causes of this rising inequality by analyzing gini ratios and generalized entropy measures i decompose the overall inequality into three sectoral components i inequality within rural areas ii inequality within urban areas and iii sectoral disparity the data indicate that increases in rural urban income differentials have been the driving factor behind the rising overall inequality in china i argue that urbanbiased policies and institutions including labor mobility restrictions welfare systems and financial policies of inflation subsidies and investment credits to the urban sector are responsible for the long term rural urban divide and the recent increases in disparity

finance and income inequality in kazakhstan evidence since transition with policy suggestions abstractkazakhstan gained independence in 1990 and has undergone significant changes in economic social and trade conditions since then we analyse the effects of financial development on income inequality in kazakhstan incorporating economic growth foreign investment education and the role of democracy as the drivers we establish that income inequality in kazakhstan is impaired by financial development in summary we send three messages for policy purposes first strengthening financial sector is necessary to close the gap between haves and have nots second attracting fdi beyond the hydrocarbon sector is necessary to alleviate inequality finally adaptation of education system to the new social and economic environment would help in improving income distribution

openness and wage inequality in developing countries the latin american challenge to east asian conventional wisdom the experience of east asia in the 1960s and 1970s supports the theory that greater openness to trade tends to narrow the wage gap between skilled and unskilled workers in developing countries in latin america since the mid 1980s however increased openness has widened wage differentials this conflict of evidence is probably not the result of differences between east asia and latin america instead the conflict is probably the result of differences between the 1960s and the 1980s specifically the entry of china into the world market and perhaps the advent of new technology biased against unskilled workers

rationality testing under asymmetric loss abstract this paper shows that if agents have an asymmetric loss function standard empirical tests for the rationality of their expectations are in general invalid we further show that under a popular class of asymmetric loss functions the linex family a valid test can be carried out by estimating an appropriate arch in mean model the contrast between the standard test and our arch m test is illustrated using the goldsmith nagan forecasts of us treasury bill yields

trade subsidies export bans and price stabilization lessons of bangladesh india rice trade in the 2000s abstract during the world food price crisis of 2007 08 rice importing countries suffered through a sharp increase in international rice prices and disruptions in supply as several rice exporters restricted trade to mitigate their domestic price increases perhaps no country was more affected by these disruptions than bangladesh our analysis shows that prior to the 2007 crisis when bangladesh imported an average of nearly 1 million tons of rice per year from india domestic wholesale prices of rice in bangladesh were co integrated with import parity prices of subsidized below poverty line bpl rice when in mid 2007 india sharply curtailed exports rice prices surged in bangladesh model simulations show that a relatively small increase in private consumer stocks equivalent to about 2 weeks of normal consumption could account for the large surge in domestic prices in bangladesh and that an additional 300 000 tons in addition to approximately 700 000 tons of net rice distribution that actually occurred would have been sufficient to stabilize prices in the november 2007 april 2008 period the bangladesh analysis thus shows that in spite of the uncertainty in international markets careful planning timely interventions and openness to trade can substantially reduce requirements for public stockholding

market failure and control of labour power towards an explanation of structure and change in indian agriculture part 1 1 although existing approaches do on occasion shed light on certain specific aspects of indian agriculture in general they run into problems of methodology or content or more frequently both in particular it is misleading to treat indian agri culture in peasant economy no markets or neoclassical perfect market terms and problematic to view it as semi feudal markets subordinate to extra economic factors 2 analysis of the relationships between farm size land productivity sharecropping and mechanisation suggest the need for an integrated model which emphasises both the unemployment and poverty of poor peasants and the problems of supervision and control of wage labour and tenants 3 proper appreciation of the interlinked role of these factors can help to explain the system s inability to combine the abundant labour of the poor with resources owned largely by the rich it can also go on to explain institutional responses like sharecropping as partial solutions to the problem of intensifying labour use and technological ones such as mechanisation as a means of delinking large farm growth from the need to intensify labour use 4 the tensions and choices between these responses underlie both the problem of stagnation and the phenomenon of switches from sharecropping to mechanisation 5 for associated reasons more rapid growth in indian agriculture is unlikely without major institutional changes to create much new employment and is likely to be more capital intensive than is usually assumed

oil prices and the terms of trade abstract the combination of substantial terms of trade variability and unstable correlation patterns of trade prices with output and trade volumes has led some to suggest a break in the link between trade volumes and prices we find that oil accounts for much of the variation in the terms of trade over the last twenty five years and its quantitative role varies significantly over time and since our dynamic general equilibrium model predicts that the economy responds differently to oil supply shocks than to other shocks changes in their relative importance helps to account for the unstable correlations in the data

demographic pressure technological innovation and welfare the case of the agriculture of bangladesh in the early years of its introduction the hyv technology was widely regarded as a technical breakthrough that would bring about rapid agrarian progress and a revolutionary improvement in the standard of living of the farm population three decades later the promise of the new technology remains unfulfilled this article argues that the adoption of the hyv technology in the agriculture of bangladesh was determined mainly by an acute demographic pressure since the non agricultural sectors did not expand sufficiently rapidly there was a tremendous pressure on agriculture to accommodate the additional workforce the imperative to employ a larger workforce and feed a rising population forced the farmers to adopt the labour intensive land augmenting hyv technology the welfare of the farmers did not show any secular increase with the switch to the new technology

economic gains and environmental costs from china s exports regional inequality and trade heterogeneity abstract as the world s factory processing exports comprise a remarkable share of china s total exports by fully taking the special characteristics of processing trade into account this paper comprehensively investigates the unbalanced distribution of trade related economic benefits and environmental costs across different regions in the years of 2007 and 2012 we find a serious regional mismatch between trade related pollutions and economic gains with the coastal region gaining more economically but emitting less whereas the inland regions gain less but emit more we also conclude that trade related value added and air pollutions would be overestimated significantly if trade heterogeneity was not correctly captured processing exports are cleaner but result in greater regional inequality in terms of trade related economic gains and environmental costs although the regional inequality induced by processing exports presented a decreasing trend over the period 2007 2012 the electricity generation sector plays a dominant role in this outcome coastal regions should transfer more trade related economic gains to help sustainable development in inland regions

is the business cycle characterized by deterministic chaos abstract tests are conducted on u s macroeconomic data for the presence of low dimensional deterministic chaos where deterministic chaos is defined as in grandmont s 1985 walras bowley lecture or in brock 1986 the idea is to test for evidence of endogenous instability causing the business cycle low order autoregressions are hard to reject with our methods evidence of chaos is weak but our tests may be too weak to detect it evidence of nonlinearity is present in employment 1950 i to 1983 iv unemployment 1949 i to 1982 iv monthly post war industrial production and pig iron production 1877 1937

the non linear dynamics of output and unemployment in the u s this paper studies the joint dynamics of u s output and unemployment rate in a nonlinear var model the nonlinearity is introduced through a feedback variable that endogenously augments the output lags of the var in recessionary phases sufficient conditions for the ergodicity of the model potentially applying to a larger class of threshold models are provided the linear specification is severely rejected in favor of our threshold var however in the estimation the feedback is found to be statistically significant only on unemployment while it transmits to output through its cross correlation this feedback effect from recessions generates important asymmetries in the propagation of shocks a possible key to interpret the divergence in the measures of persistence existing in the literature the regime dependent persistence also explains the finding that the feedback from recession exerts a positive effect on the long run growth rate of the economy an empirical validation for the schumpeterian macroeconomic theories

measuring asymmetry and persistence in conditional volatility in real output evidence from three east asian tigers using a multivariate garch approach we search for evidence of conditional volatility in the quarterly real gross domestic product gdp growth rates of three east asian tigers singapore hong kong and taiwan the widely accepted exponential generalized autoregressive conditional heteroscedasticity egarch type model is used to capture the existence of asymmetric volatility and the potential structural break points in the volatility we find evidence of asymmetry and persistence in the volatility of gdp growth rates it is noted that the structural breakpoints of volatility correspond reasonably well to the historical economic and political events in these economies policy implications from our findings are discussed

are business cycles asymmetric a correction neftci 1984 proposed a nonparametric test procedure for determining whether business cycles are asymmetric in the sense that contractions are steeper than expansions he found evidence of this type of asymmetry in postwar quarterly u s unemployment variables this comment identifies a probable error in neftci s empirical work that reverses the significance of his results for the unemployment rate and it suggests that this test may have low power and be sensitive to measurement error

a simple dynamic general equilibrium model abstract we analyse a single sector economy with h 1 infinitely lived agents that operate in a continuous time framework utility functions are recursive but not additive both efficient and perfect foresight competitive equilibrium allocations are considered the existence and stability of such allocations are investigated locally i e in a neighbourhood of steady state allocations the model is shown to be useful for explaining the distribution of wealth and consumption across agents and for analysing the way in which wealth redistribution can affect the dynamics of aggregate economic variables

testing for volatility changes in u s macroeconomic time series we test for a change in the volatility of 214 u s macroeconomic time series over the period 1959 1999 we find that approximately 80 of these series have experienced a break in unconditional volatility during this period even though more than half of the series experienced a break in conditional mean most of the reduction in volatility appears to be due to changes in conditional volatility our results are robust to controlling for business cycle nonlinearity in both mean and variance volatility changes are more appropriately characterized as instantaneous breaks than as gradual changes nominal variables such as inflation and interest rates experienced multiple volatility breaks and witnessed temporary increases in volatility during the 1970s on this evidence we conclude that the increased stability of economic fluctuations is widespread

indeterminacy and increasing returns abstract we investigate properties of the one sector growth model with increasing returns under two organizational structures capable of reconciling the existence of aggregate increasing returns with competitive behavior by firms the first involves input externalities the second involves monopolistic competition we show for parameters in close accord with recent literature on real business cycles that the model displays an indeterminate steady state that can be exploited to generate a model of business fluctuations driven by self fulfilling beliefs in our first class of models growth is generated by exogenous increases in factor productivity in the second class the marginal product of capital is large enough for endogenous growth journal of economic literature classification numbers e00 e3 o40

agricultural wages in bangladesh what the figures really show the impact of the green revolution on poverty has been the subject of much concern and fears that it leads to impoverishment have affected many people in a position to influence agricultural policy real agricultural wages rates have been used as an indicator of poverty in the absence of more direct measurements this article starts by examining two recent studies of the trends and regional variations of real agricultural wage rates in bangladesh both of which argue that agricultural growth has not been favourable to real wage rates one concludes that there has been an alarming downward trend since the mid 1960s and the other that the contribution of technological change to labour demand has not been strong using more recent information and re working the original data it appears that these conclusions cannot be supported

huggett economies with multiple stationary equilibria abstract i obtain a closed form solution to a huggett economy with constant absolute risk aversion cara utility when the vector of individual state variables follows a var 1 process with an arbitrary shock distribution the stationary equilibrium is unique if the income process is ar 1 but not necessarily so otherwise with gaussian shocks i provide general sufficient conditions for the existence of at least three equilibria when the income process is either arma 1 1 ar 2 or has a persistent transitory pt representation with negatively correlated shocks the possibility of multiple equilibria calls for caution in comparative statics exercises and policy analyses using heterogeneous agent models as an illustration i provide an example in which the welfare implication of changing the income risk goes in opposite directions depending on the choice of equilibrium

international risk sharing in overlapping generations models abstract we propose a way to address the backus smith puzzle that instead of relying on extreme parameter values or complex modeling assumptions simply switches the framework from infinitely lived agents to overlapping generations young agents face nondiversifiable wage risk that leads to a low degree of risk sharing within each country subsequently international price movements are not sufficient to achieve the high consumption real exchange rate correlation produced in standard infinitely lived agent dsge models

are economic time series asymmetric over the business cycle it has long been argued that major cyclical variables such as the unemployment rate display an asymmetric behavior over various phases of the business cycle the paper provides a statistical test for this hypothesis using the framework of finite state markov processes i implement a test to see if the behavior of the unemployment rate is characterized by sudden jumps and slower drops it is argued that the framework provided in the paper can also be used to test other sample path properties of economic time series

characterizing nonlinearities in business cycles using smooth transition autoregressive models during the past few years investigators have found evidence indicating that various time series representing business cycles such as production and unemployment may be nonlinear in this paper it is assumed that if the time series is nonlinear then it can be adequately described by a smooth transition autoregressive star model the paper describes the application of these models to quarterly logarithmic production indices for 13 countries and europe tests reject linearity for most of these series and estimated star models indicate that the nonlinearity is needed mainly to describe the responses of production to large negative shocks such as oil price shocks

consumption and real exchange rates in dynamic economies with non traded goods abstract we examine the possibility that non traded goods may account for several striking features of international macroeconomic data large persistent deviations from purchasing power parity small correlations of aggregate consumption fluctuations across countries and substantial international real interest rate differentials a dynamic exchange economy is used to show that non traded goods in principle can account for each of these phenomena in the theory there is a close relation between fluctuations in consumption ratios and those in bilateral real exchange rates but we find little evidence for this relation in time series data for eight oecd countries

do recessions permanently change output abstract this paper examines whether negative innovations to gnp are more or less persistent than positive innovations we find that once we allow for the impulse response of gnp to be asymmetric negative innovations to gnp are observed to be much less persistent than positive ones in particular the effect of a recession on the forecast of output is found to be negligible after only eight to twelve quarters while the effect of a positive shock is estimated to be persistent and amplified over time our results may therefore help reconcile two antagonistic views about the nature of business cycle fluctuations

international spillovers of quantitative easing abstract this paper develops a two country model with asset market segmentation to investigate the effects of quantitative easing implemented by the major central banks on a typical small open economy that follows independent monetary policy the model is able to replicate the key empirical facts on emerging countries response to large scale asset purchases conducted abroad including inflow of capital to local sovereign bond markets an increase in international comovement of term premia and change in the responsiveness of the exchange rate to interest rate differentials according to our simulations quantitative easing abroad boosts domestic demand in the small economy but undermines its international competitiveness and depresses aggregate output at least in the short run this is in contrast to conventional monetary easing in the large economy which has positive spillovers to output in other countries we also find that limiting quantitative easing spillovers might require policies that affect directly international capital flows like purchasing assets by the small economy s central bank

on the dynamic properties of asymmetric models of real gnp there is now a substantial body of evidence that suggests business cycles are asymmetric however the evidence has been accumulated using a wide array of statistical techniques and consequently is based on various definitions of asymmetry this paper examines several parametric models that have been used to study asymmetries in real gnp although these models capture asymmetries in very different ways their dynamic properties are remarkably similar

cyclical patterns in the variance of economic activity this article models the conditional mean and variance of real gross national product gnp and its components using asymmetric exponential generalized autoregressive conditional hetero scedasticity a model previously applied only to financial variables the results imply that the variance of real gnp is higher following negative innovations than positive innovations and that this asymmetry arises in the cyclically sensitive sectors further evidence links this asymmetry to the phase of the business cycle the conditional variance appears to be largest around business cycle troughs in addition shocks to the conditional variance of gnp and its components typically persist for long periods the evidence of asymmetry in conditional variance is robust to a variety of alternative specifications

population growth and real wages of agricultural labourers in bangladesh a long run negative impact of population growth upon real wages is neither theoretically self evident nor in the case of rural bangladesh empirically clear cut in addition to its negative labour supply effect population growth may have a positive labour demand effect upon wages the latter may help to explain why bangladeshi districts with higher rural population densities have higher agricultural wages and why districts with more rapid population growth in the first half of this century subsequently experienced slower than average real wage declines an investigation of agricultural growth and agrarian structure as mediating variables in the population wage relation indicates that changes in average operational holding size inequality of landholdings and the extent and nature of tenancy contributed to this result

trade elasticity of substitution and equilibrium dynamics abstract the empirical literature provides a wide range of estimates for trade elasticities at the aggregate level recent contributions in international macroeconomics suggest that low implied values of the trade elasticity may play an important role in understanding the disconnect between international prices and real variables however a standard model of the international business cycle displays multiple locally isolated equilibria if the trade is sufficiently low the main contribution of this paper is to compute and characterize some dynamic properties of these equilibria in simulations the presence of multiple equilibria is shown to imply a volatile and persistent real exchange rate

what difference do polarisation measures make an application to china in recent years there has been much discussion of the difference between inequality and polarisation the vast literature on inequality is held to miss out key features of distributional change which are better described as changes in polarisation axioms have been proposed which capture some of these differences and measures of polarisation as distinct from inequality have been suggested the theoretical distinctions proposed in this literature are indeed interesting but do the newly proposed measures of polarisation give different results in comparing societies over time we address these questions for china where dramatic increases in inequality and polarisation have been much discussed in the literature we find that contrary to theoretical expectation the new measures of polarisation do not generate very different results from the standard measures of inequality the paper ends by considering a different approach to polarisation which might better conform to the policy concerns expressed in t

manufacturing stocks expectations risk and co integration the modelling of firms inventory behaviour has been plagued by structural instability and despite a great deal of research effort over recent years little headway has yet been made in producing a structurally stable model of stock levels wallis et al i987 surveyed the main uk models of inventory behaviour and concluded that the tests of predictive failure are particularly powerful when conducted over periods in which data characteristics change and over half the equations we consider are rejected on the basis of their predictive performance in the early i980s this is a surprising result since the poor performance of their predecessors over this period was a prime motivation for the research that has led to the current specifications the similarity in turning points in the forecast errors both for the aggregate stockbuilding equations and for the different categories of stocks suggests the omission of some factor s common to all specifications wallis et al i987 p 144 their analysis was conducted using within sample stability tests and more recent data would undoubtedly find an even higher rejection rate accordingly this paper seeks to identify important omitted components or misspecification in the existing models of inventory behaviour in response to the suggestion in the last sentence of the wallis et al quotation we take as our point of departure a number of recent papers on company sector behaviour which have focused on intertemporal optimisation under rational expectations the seminal work of sargent 1978 on the demand for labour has been followed by a number of studies which seek to treat the firms expectations of future variables in an explicit way this work includes nickell 1 984 and henry and wren lewis i 984 on the labour market and hall et al i986 on the determination of stock levels one common finding amongst these and many other papers is that of a root in the dynamic process under consideration which is close to unity this means that the long run solution for the model is poorly determined and this finding is a cause for some concern recently with the growth of the literature on cointegration see engle and granger 1987 hall i986 this finding takes on an even more serious aspect since a symptom of non cointegration is the lack of a well defined long run solution so the finding of a near unit root may be indicative that earlier researchers were in fact working with sets of variables which failed to cointegrate which would inevitably lead to spurious regression problems in the sense of granger and newbold i 974

escalation of real wages in bangladesh is it the beginning of structural transformation summary using data from multiple sources we show that the real wages in bangladesh particularly in rural areas and for female workers have accelerated in recent years real wage escalation is likely the result of a combination of more job opportunities in the nonfarm sector especially in the manufacturing sector and a greater inflow of remittances primarily from unskilled male workers overseas since physical labor is the most important asset for the poor the escalation in real wages has boosted the poor s earnings helping them improve their livelihood and escape poverty

on the international transmission of technology shocks abstract using vector autoregressions on u s time series and an aggregate of industrialized countries we find that technology shocks appreciate the terms of trade and lower the trade balance they induce an s shaped cross correlation function for both variables the s curve in calibrating a prototypical international business cycle model under complete and incomplete financial markets we find two distinct sets of parameter values while both model specifications deliver the s curve the underlying transmission mechanism of technology shocks is fundamentally different most importantly only in the incomplete markets economy the terms of trade appreciate and thus amplify the relative wealth effects of technology shocks as suggested by the evidence

technology shocks and employment recent empirical work has suggested that in response to a positive technology shock employment shows a persistent decline we show that the standard open economy flexible price model can generate a negative response of employment to a positive technology shock and can also match the negative conditional correlation between productivity and employment quite well if trade elasticities are low while the model also has good overall properties it fails to generate sufficient procyclicality in employment this finding indicates that the rbc model faces a tension between accounting for the negative response of employment to technology shocks and simultaneously maintaining that technology shocks are the major source of business cycle fluctuations

does growth vary over the business cycle some evidence from the g7 countries in this paper we analyse the dynamics of business cycles in the g7 countries our aim is to answer the question of whether growth varies in an absolute sense over the business cycle and hence to examine whether the simple two phase characterization downturn upturn is an appropriate description of the business cycle to study growth over the cycle we estimate single country equations and then a pooled regression that takes into account the important interactions of international business cycles the results confirm the steepness asymmetry of the growth cycles and show that growth varies systematically within upturns and downturns these are consistent with the notion of deepness asymmetry which implies that contractions are more pronounced in the later stages of a downturn whereas expansions are stronger immediately after troughs

some evidence concerning macroeconomic chaos abstract an empirical assessment of a linear stochastic perspective for canadian macroeconomic time series is presented the methods used are based on the mathematics of chaos present evidence suggests that low order deterministic chaos does not provide a satisfactory characterization of the data the absence of significant nonlinear structure for the investment and unemployment series is of particular note in light of past findings with american data the degree to which the use of a time trend can impose a pseudo structure on the data is illustrated

interprovincial disparities in china output and consumption 1952 1987 the flood of economic information from china in recent years has permitted reassessment of the chinese model of development and the extent to which china s own development experience has conformed to it the prevailing consensus of the 1970s concerning the substance of the model itself typically characterized in terms of the chinese leadership s objectives and priorities and its strategy for pursuing them has stood up quite well the same cannot be said about past appraisals of the extent to which china s economic reality has been reshaped to accord with the model s prescriptions one of the most widely remarked elements of the chinese model is the high priority assigned to regional objectives and more specifically to balance in the distribution of productive capacity and equity in the distribution of income and hence consumption during the maoist era i e prior to 1979 the central government pursued regional objectives through such measures as interregional transfers of investment resources effected via the planning system subsidization of health and education expenditures in poor regions and attempts to maintain a safety net of state relief effected largely via control of grain surpluses in short there is little doubt that prior to 1979 the chinese leadership placed an unusually high value on the spread of modern growth and the improvements in welfare associated with it and persistently acted to limit the emergence or widening of interregional disparities although china s post mao leaders have shown greater concern with efficiency and with the potential trade offs between efficiency and such goals as balance and equity their continuation of many redistributive policies indicates that they have not abandoned regional objectives but how successful has china been in achieving these objectives

agricultural wages in bangladesh what do the figures really show using new data and a different model palmer jones 1993 has questioned the conclusions of boyce and ravallion 1991 concerning the evolution over time of agricultural wages in bangladesh i argue that palmer jones s model is unconvincing and that the main conclusions of boyce and ravallion are far more robust than he suggests wages respond sluggishly to rice prices bangladesh s limited agricultural growth has not raised the real wage rate which was on a downward trend for most of the 1960s and 1970s the mid 1980s saw higher real wages though this cannot yet be deemed a reversal of the previous trend

business cycle asymmetry a deeper look this paper distinguishes two types of asymmetry in business cycles deepness and steepness deepness is defined as the characteristic that troughs are further below trend than peaks are above most previous research has focused exclusively on steepness which refers to cycles in which contractions are steeper than expansions a test for deepness is proposed and applied to u s post war quarterly unemployment real gnp and industrial production evidence of deepness is found for unemployment and industrial production while the evidence for real gnp is weaker previous evidence of steepness in unemployment is confirmed

mnes and industrial structure in host countries a portfolio analysis of irish manufacturing ireland has been very successful in attracting foreign mnes in high technology sectors although these sectors exhibit faster growth than the traditional low technology sectors populated primarily by indigenous firms the high technology sectors are also more volatile we use portfolio theory to show that ireland s fdi strategy has led to a more diversified manufacturing sector that exhibits higher growth without a commensurate increase in volatility and risk

unconventional policies and exchange rate dynamics abstract we study exchange rate dynamics under cooperative and self oriented policies in a two country dsge model with unconventional monetary and exchange rate policies the cooperative solution features a large exchange rate adjustment that cushions the impact of negative shocks and a moderate use of unconventional policy instruments self oriented policies nash equilibrium however entail limited exchange rate movements and an aggressive use of unconventional policies in both countries our results suggest that sizable exchange rate depreciations are not always a symptom of beggar thy neighbor policies they could also reflect a desirable process of external adjustment that improves global welfare

plant level nonconvex output adjustment and aggregate fluctuations in most manufacturing industries plant level output is adjusted along three margins of capacity utilization shiftwork weekend work and closing temporarily down due to the discrete and lumpy nature of these margins only a fraction of plants adjust output in response to shocks in a business cycle model calibrated to establishment level observations these nonconvexities make aggregate output less volatile than when plants can adjust smoothly further the mass of adjusting plants is larger in downturns than in upturns leading to counter cyclical volatility of aggregate output and government policy being slightly more effective in recessions than in expansions