optimal ordering and transfer policy for an inventory with stock dependent demand abstract this paper deals with an ordering transfer inventory model to determine the retailer s optimal order quantity and the number of transfers per order from the warehouse to the display area it is assumed that the amount of display space is limited and the demand rate depends on the display stock level the objective is to maximize the average profit per unit time yielded by the retailer the proposed models and algorithms are developed to find the optimal strategy by retailer numerical examples are presented to illustrate the models developed and the sensitivity analysis is also reported

evaluating unemployment policies what do the underlying theories tell us the paper surveys unemployment policies for advanced market economies and evaluates them by examining the predictions of the underlying macroeconomic theories the basic idea is that for the most part different unemployment policy prescriptions rest on different macroeconomic theories and our confidence in the prescriptions should depend at least in part on theories ability to predict some salient stylized facts about unemployment behavior the paper considers four types of policies laissez faire demand management policies supply side policies and structural policies copyright 1995 by oxford university press

on optimal two stage lot sizing and inventory batching policies abstract a recent paper considered the two stage lot sizing problem with finite production rates at both stages the problem was classified according to whether the production rate at the first stage is greater or less than that at the second stage whether the production batch size at the first stage is greater or less than that at the second stage and whether the transfer from the first stage to the second stage is continuous or in batches the objective of this note is to offer an alternative more direct and intuitive way to derive and present essentially similar results and also to extend the analysis by relaxing one of the assumptions

wages and labor management in african manufacturing using matched employer employee data on 10 african countries this paper examines the relationship beween wages worker supervision and labor productivity in manufacturing wages increase with rm size for both production workers and supervisors we develop a two tier model of supervision that can account for this stylized fact and we t the structural model to the data employee data is used to derive a rm speci c wage premium that is purged of the effect of worker observables we nd as trong effect of both supervision and wages on effort and hence on labor productivity labor management in sub saharan africa appears problematic with much higher supervisor to worker ratios than in morocco and a higher elasticity of effort with respect to supervision

government intervention efficiency wages and the employer size wage effect in zimbabwe abstract this paper uses matched employer employee data from a survey of 201 manufacturing firms and 1609 of their workers conducted in zimbabwe in the summer of 1993 the results indicate that there is a substantial premium associated with employment in larger firms and that this premium cannot be explained by differences in worker quality and job characteristics nor is it eliminated by controlling for unionization minimum wages or other forms of government intervention the size premium is much larger for white collar than for blue collar workers these differentials are also found to be substantially larger than those estimated for other developed and developing countries the analysis uses the data about firm characteristics to explore a number of efficiency wage based explanations of the size differential and finds results which are consistent with but not conclusive proof of hiring turnover and morale based notions of efficiency wages

domestic and foreign disturbances in an optimizing model of exchange rate determination abstract this paper analyzes the effects of various disturbances of domestic and foreign origin in a small open economy under imperfect capital mobility in which the behavioral relationships are divided from optimization by the private sector in this model the domestic economy jumps instantaneously to its new equilibrium following a change in either the domestic monetary growth rate or domestic fiscal policy in response to a disturbance in either the foreign interest rate or inflation rate the economy undergoes an initial partial jump towards its new equilibrium which it thereafter approaches gradually the implications of these results for exchange rate adjustments and the insulation properties of flexible exchange rates are discussed

using evidence of household income diversification to inform study of the rural nonfarm labor market in africa abstract the labor market literature in developing countries has seldom drawn on the studies of rural household income diversification this paper draws on such studies to inform future study of the rural nonfarm labor market in africa the review of evidence provides some surprising departures from traditional images of nonfarm activities of rural households among the most striking is the dominant importance in the majority of case study areas of nonfarm wage labor as compared to self employment of nonfarm sector earnings as compared to farm sector wage earnings and of local nonfarm earnings as compared to migration earnings the most worrying finding was the poor distribution of nonfarm earnings in rural areas despite the importance of these earnings to food security and farm investments this poor distribution implies significant entry barriers and market segmentation it is probable that this will lead over time to an increasingly skewed distribution of land and other assets in rural africa

the structure of worker compensation in brazil with a comparison to france and the united states abstract we employ comprehensive linked employer employee data for brazil to analyze wage determinants and compare results to abowd et al 2001 for french and u s manufacturing while returns to human capital in brazilian manufacturing exceed those of the other countries occupation and gender differentials are similar the worker characteristics component accounts for much of the greater wage inequality in brazil but the establishment fixed component has scant explanatory power thus firm or industry level factors offer little scope for explaining the differences in wage inequality brazil s wage structure resembles that of france a country with some similarity in labor market institutions

exchange risk political risk and macroeconomic equilibrium with the advent of increased exchange rate flexibility the role of policy and the transmission of economic disturbances under flexible rates have become topics of considerable interest j marcus fleming 1962 and robert mundell 1963 in their early analysis of the theory of policy in open economies emphasized the importance of the degree of capital mobility subsequently a number of authors have analyzed the implication of the degree of capital mobility for exchange rate and income determination in open economies see for example pentti kouri and michael porter 1974 william branson 1975 1979 lance girton and dale henderson 1976 and turnovsky 1976 the polar case of perfect capital mobility has received most attention capital is perfectly mobile when investors consider domestic bonds denominated in domestic currency and foreign bonds denominated in foreign currency to be perfect substitutes two factors may cause perfect substitutability to break down one is exchange risk the values of the two bonds are defined in terms of different currencies and the exchange rate at the date of maturation is uncertain the second is default risk investors may perceive that foreign bonds are more subject to the risk of default than are domestic bonds for one thing in the event of default the investor must pursue his claim through a foreign legal system which is likely to be costly robert aliber 1973 terms differences in default risk arising from the foreignness of assets as political risk where domestic and foreign securities are assumed to be only imperfect substitutes it is important to distinguish the degree of imperfection due to each of these sources of risk while this distinction has been noted in optimal portfolio models developed by authors such as kouri 1976 and michael alder and bernard dumas 1977 it has not been brought out in the current macro literature the objective of the present paper is to investigate the macroeconomic consequences of this distinction and to show how it may be crucial in assessing the effects of various macroeconomic disturbances under varying degrees of capital mobility we find that well known results about the effects of increased capital mobility on the efficacy of monetary policy are correct when the increased mobility is due to a reduction in exchange risk but not necessarily so when it is due to a reduction in default risk section i formulates a general equilibrium macroeconomic model which embodies the distinction between these two sources of risk we assume that the economy is small so that it treats certain characteristics of the foreign economy as parametric section ii carries out certain comparative static exercises with this model specifically it considers some important relationships between the available policy instruments and endogenous variables and shows how these are affected by the degree of capital mobility in the two senses in which this term is defined in particular we show that as long as there is a possibility of default there exists an independent role for forward market intervention in the limiting case of no default risk yale university and university of illinois respectively see peter kenen 1965 for an early analysis of the forward market incorporating potential default political risk may derive from the threat of exchange controls as well as from the threat of outright debt repudiation in either case the risk may not be the loss of the total net worth of the investment when the threat derives from exchange controls the expected value of net worth may even be preserved but if payment is delayed forward cover obtained for the investment will no longer be appropriate for our purposes it is the risk that repayment not occur on the date for which the forward cover is arranged thereby exposing the investor to exchange risk that is relevant our analysis could easily be modified to incorporate a preservation of some or all net worth in the event of default see eaton and mark gersovitz 1981 for a model in which the probability of default is endogenous

the single vendor single buyer integrated production inventory model with a generalised policy abstract this note considers a more general type of policy for the single vendor single buyer integrated production inventory model than has hitherto been presented based on successive shipments to the buyer within a single production batch increasing by a fixed factor

persistent wage dispersion and involuntary unemployment it is costly for firms offers to workers to be turned down both because firms must make additional offers and making offers is costly and because capital is underused or unused provided that workers apply to at least two firms for jobs there will be wage dispersion in equilibrium and some workers will randomly fail to receive any wage offers firms in the same industry with access to the same technology may nevertheless choose different levels of capital intensity firms using capital intensive technologies will pay higher wages

on some international parity conditions an empirical investigation abstract this paper investigates weak semi strong and strong forms of the following international parity conditions a uncovered interest parity b the hypothesis of equal ex ante real interest rates and c ex ante purchasing power parity the main results are as follows using data which roughly cover the 1975 1984 decade we find little evidence in favor of the strong form of the parity conditions under consideration however most test results are consistent with the weak forms finally regarding the semi strong forms the results are mixed

equilibrium wage dispersion and interindustry wage differentials this paper develops a search theoretic explanation of interindustry wage differentials given coordination problems in the labor market the probability of filling a vacancy is an increasing function of the wage offered in equilibrium firms that find vacancies more costly will offer higher wages the model thus explains the persistence of interindustry wage differentials and their correlation with industry average capital labor ratio and profitability additionally the model predicts that high wage firms will receive more applications per job opening and that wages in the labor market will behave as strategic complements

optimal two stage lot sizing and inventory batching policies abstract this paper extends previous studies of two stage lot sizing problems with finite production rates we develop various lot sizing and inventory batching i e operation unit batching oub and unit unit batching uub models under different system characteristics and lot sizing and inventory policies the analysis of the optimality of the lot size ratio between the two stages reveals 1 that both non increasing and non decreasing lot sizing policies can be optimal in both oub and uub 2 that a non integer lot size ratio can be optimal in oub and 3 that an integer lot size ratio is always optimal in uub we present a simple easy to implement optimal solution approach to the two stage lot sizing and inventory batching problem along with examples

premiums to employment in larger establishments evidence from peru abstract examination of the employer size wage effect for males in urban peru suggests the following higher wages in larger establishments do not merely compensate for higher worker quality or inferior working conditions size differences in the use of rising wage tenure profiles cannot provide a market clearing explanation for the employer size wage effect unless workers are extremely impatient thus larger employers appear to pay premiums unionization explains none of the premiums and minimum wage compliance explains at best a small fraction shirking based efficiency wage explanations for premiums are implausible because peruvian job security legislation greatly inhibits dismissals in larger establishments explanations meriting further research involve the use of high wages to reduce turnover and to improve productivity enhancing morale

exchange rate dynamics sticky prices and the current account rational expectations exchange rate models have been of two principal types flexible price models and sticky price models the flexible price models may be further divided into those where current account based wealth effects are an important driving force in exchange rate dynamics and those where such effects are ignored 1 notably the literature includes few sticky price models incorporating current account based wealth effects 2 two reasons for the scarcity of such models are a the belief that current accountbased wealth effects are empirically unimportant for exchange rates and b that a model endogenizing exchange rate movements sticky price movements and current account based wealth effects is relatively difficult to analyze we note though that recent empirical work e g meese and rogoff 1983 has called into question the empirical importance of the standard determinants of exchange rates consequently the criterion of empirical relevance has not yet distinguished among models of exchange rates in connection with reason b note that a rational expectations sticky price exchange rate model where current account based wealth

a selectivity model of employer size wage differentials this article investigates wage differentials for employees of different size firms utilizing an econometric methodology that allows the size of employer to be treated as endogenous in the context of discrete ordered employer size data as a result we are able to estimate i employer size wage gaps which are corrected for selectivity bias and ii the magnitude and direction of the selection bias decompositions of the resulting wage differentials are computed with comparisons of the conditional on sorting across employer size and unconditional wage gaps

incomplete information and the equilibrium determination of the forward exchange rate abstract in the present paper we embed the forward exchange rate in an equilibrium macroeconomic model incorporating rational expectations and portfolio balance and in which the spot exchange rate the forward exchange rate the expected future spot rate and the domestic interest rate are determined simultaneously the purpose is to examine the impact of alternative macroeconomic disturbances on the spot and forward exchange rates and on the bias in the forward rate as a predictor of future spot rates the rational expectations hypothesis plays a key role in the analysis alternative assumptions made about the information available to agents in the economy are shown to have rather dramatic consequences on the answers obtained

risk sharing in labor markets empirical work in labor economics has focused on rent sharing as an explanation for the observed correlation between wages and profitability the alternative explanation of risk sharing between workers and employers has not been tested using a unique panel data set for four african countries authors find strong evidence of risk sharing workers in effect offer insurance to employers when firms are hit by temporary shocks the effect on profits is cushioned by risk sharing with workers rent sharing is a symptom of an inefficient labor market risk sharing by contrast can be seen as an efficient response to missing markets authors evidence suggests that risk sharing accounts for a substantial part of the observed effect of shocks on wages

market power firm performance and real wage growth in zimbabwean manufacturing abstract this paper uses a two year panel of data on 600 zimbabwean manufacturing workers and the employers to examine several aspects of the labor market response to the reforms introduced in the 1991 structural adjustment program the analysis then uses this evidence to explore a number of hypotheses about the functioning of formal urban labor markets in zimbabwe with particular attention to the issue of rent sharing first as one would expect liberalization of trade did indeed act to shift employment from import competing sectors to export sectors although total manufacturing employment was basically unchanged second real wages in manufacturing fell for most workers third the pattern of wage changes across sectors and firms is consistent with a view of labor markets as noncompetitive the evidence provides support for the idea that a rent sharing process of wage determination rather than one based on efficiency wages or government intervention is an appropriate characterization of this labor market

asymmetries in the union wage premium in ghana the article uses a matched employer employee data set for ghana and adopts a quantile regression approach that allows the effects of unionization to vary across the conditional wage distribution it is shown that if there are intrafirm differences in unionization there does appear to be a premium among poorer paid workers in the formal sector although this cannot be given a causal interpretation it suggests important issues about how unions may affect one part of the labor market

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

the formal sector wage premium and firm size abstract we show theoretically that when larger firms pay higher wages and are more likely to be caught defaulting on labor taxes then large high wage firms will be in the formal and small low wage firms will be in the informal sector the formal sector wage premium is thus just a firm size wage differential using data from ecuador we illustrate that firm size is indeed the key variable determining whether a formal sector premium exists

expectations and exchange rate dynamics after a decade of floating abstract dornbusch s model of expectations and exchange rate dynamics has been a theoretical success and an empirical failure the premise underlying this paper is that the price and exchange rate dynamics inherent in his model cannot be captured by single equation methods to capture these dynamics we estimate dornbusch s model using constrained maximum likelihood methods which incorporate cross equation restrictions derived from the structural equations and assumption of rational expectations our central result is that the estimation of dornbusch s model is much more successful than single equation methods have led us to believe

cointegration and exchange rate dynamics abstract we utilize systems methods of estimation which impose the unit root structure to estimate both the long run equilibrium relationship the cointegrating vector and the short run dynamics of an open economy macroeconomic model in which the exchange rate and the domestic price level are endogenously determined for the united states the model is estimated over the flexible exchange rate period and over two sub periods chosen by structural change tests on the exchange rate both rational and theories consistent expectations are utilized the models with theories consistent expectations outperform those with rational expectations

a model of the natural rate of unemployment since the publication of edmund phelps volume the new macroeconomics has treated the labor market as a dynamic process of rational search by unemployed workers for available vacancies wages are viewed as at least potentially flexible though free contracting between workers and firms may lead to fixed wages in the short run imperfect information is a crucial element of the theory for it implies both a need for contracting and a need for rational search rather than simple market clearing in each period a positive rate of frictional unemployment may exist in equilibrium denoted as the natural rate this unemployment is due to the frictions in the search process and imperfections in information rather than to any deficiency in aggregate demand milton friedman defined the natural rate as the level that would be ground out by the walrasian system of general equilibrium equations provided there is embedded in them the actual structural characteristics of the labor and commodity markets including market imperfections stochastic variability in demands and supplies the cost of gathering information about job vacancies and labor availabilities the costs of mobility and so on p 8 this paper reexamines the micro foundations of the natural rate in a model of labor market equilibrium in which turnover flows and imperfect information are explicitly considered workers may quit their current jobs to enter the unemployment pool in order to search among available vacancies for a more preferred position firms economize on turnover by an appropriate wage policy

do smaller firms pay less in the caribbean the case of trinidad and tobago this article constitutes the first study of the employer size wage effect for a caribbean country namely the republic of trinidad and tobago using a rich micro level data set we estimate the firm size wage premium in an empirical model of wage determination despite exploring a variety of theories samples estimation techniques and tests we find that consistent with the empirical literature larger firms in trinidad and tobago pay higher wages than smaller firms for equally productive workers

covered interest parity uncovered interest parity and exchange rate dynamics a number of macroeconomic models of open economies under flexible exchange rate assume a strong version of perfect capital mobility which implies that currency speculation commands no risk premium if this assumption is dropped a number of important results no longer obtain first the exchange rate and interest rate cannot be in steady state unless both the government deficit and current account equal zero not simply their sum as would otherwise be the case second even in steady state the domestic interest rate can deviate from the foreign interest rate by an amount which de ends upon relative domestic asset supplies finally introducing risk aversion on the part of speculators can reduce the response on impact of the exchange rate to changes in domestic asset supplies in this sense rational speculators if they are less risk averse than other agents can destabilize exchange markets this abstract was borrowed from another version of this item

real exchange rate overshooting and the output cost of bringing down inflation implementing a gradualist policy of monetary contraction in an open economy with a freely floating exchange rate but with nominal inertia in domestic labor costs can lead to prompt and substantial changes in the nominal and real exchange rate one of the virtues claimed for such exchange rate overshooting however is its immediate effect on the price level and so on domestic wage and price inflation in this paper we show that in a model which is super neutral and has nominal inertia in both the level of labor costs and their trend or core rate of growth this early overshooting of the exchange rate does not succeed in cutting the output costs of reducing steady state inflation those output and unemployment costs which are initially avoided by over valuing the currency have to be paid later when this overvaluation is corrected relative to other policies which achieve the same effect on steady state inflation exchange rate overshooting brings inflation down more quickly this abstract was borrowed from another version of this item

exchange rate dynamics under gradual portfolio and commodity price adjustment abstract this paper studies exchange rate dynamics within the context of a model that allows for gradual portfolio and commodity price adjustment the model encompasses as a special limiting case the orthodox portfolio balance model wherein portfolio adjustment is instantaneous the focus of the paper is on the process of adjustment to a once and for all open market operation under a bond financed government budget deficit the generalized portfolio balance model which we formulate generates a varied menu of adjustment paths for the exchange rate and the aggregate price level which are more successful than the orthodox instantaneous portfolio equilibrium models in accomodating the divergent experiences of various countries

unobserved heterogeneity and the relation between earnings and firm size evidence from two developing countries abstract large firms in ghana and kenya pay much higher wages than small ones we use panel data to show this is not the result of employing high ability individuals the size effect remains substantial with controls for individual fixed effects