the allocation of inventory risk in a supply chain push pull and advance purchase discount contracts while every firm in a supply chain bears supply risk the cost of insufficient supply some firms may even with wholesale price contracts completely avoid inventory risk the cost of unsold inventory with a push contract there is a single wholesale price and the retailer by ordering his entire supply before the selling season bears all of the supply chain s inventory risk a pull contract also has a single wholesale price but the supplier bears the supply chain s inventory risk because only the supplier holds inventory while the retailer replenishes as needed during the season examples include vendor managed inventory with consignment and drop shipping an advance purchase discount has two wholesale prices a discounted price for inventory purchased before the season and a regular price for replenishments during the selling season advance purchase discounts allow for intermediate allocations of inventory risk the retailer bears the risk on inventory ordered before the season while the supplier bears the risk on any production in excess of that amount this research studies how the allocation of inventory risk via these three types of wholesale price contracts impacts supply chain efficiency the ratio of the supply chain s profit to its maximum profit it is found that the efficiency of a single wholesale price contract is considerably higher than previously thought as long as firms consider both push and pull contracts in other words the literature has exaggerated the value of implementing coordinating contracts i e contracts that achieve 100 efficiency such as buy backs or revenue sharing because coordinating contracts are compared against an inappropriate benchmark often just a push contract furthermore if firms also consider advance purchase discounts which are also simple to administer then the coordination of the supply chain and the arbitrary allocation of its profit is possible several limitations of advance purchase discounts are discussed

democracy and economic growth a meta analysis despite a sizeable theoretical and empirical literature no firm conclusions have been drawn regarding the impact of political democracy on economic growth this article challenges the consensus of an inconclusive relationship through a quantitative assessment of the democracy growth literature it applies meta regression analysis to the population of 483 estimates derived from 84 studies on democracy and growth using traditional meta analysis estimators the bootstrap and fixed and random effects meta regression models it derives several robust conclusions taking all the available published evidence together it concludes that democracy does not have a direct impact on economic growth however democracy has robust significant and positive indirect effects through higher human capital lower inflation lower political instability and higher levels of economic freedom democracies may also be associated with larger governments and less free international trade there also appear to be country and region specific democracy growth effects overall democracy s net effect on the economy does not seem to be detrimental

the behavior of prices in the nikkei spot and futures market abstract we examine the relation between the prices of japanese stocks traded on the tokyo stock exchange tse as reflected in the nikkei stock average nsa stock index and the prices of the nsa futures contract traded on the singapore international monetary exchange simex since the inception of trading in september 1986 the nsa futures contract has generally sold at a discount relative to its theoretical value trading restrictions and transaction costs may explain some of this mispricing which has been declining over time as in the u s markets

sources of stagnation in sub saharan africa abstract this paper investigates the sources of economic stagnation in sub saharan africa during the 1970s several policy variables are considered as well as a set of environmental variables which include climate violence export prices and other exogenous factors the paper uses statistical analysis in an attempt to identify the relative importance of the policy variables and the environmental variables taken as groups it also seeks to identify particular policy variables which seem to have been most significant in determining growth outcomes the technique employed for investigation is reduced form econometric estimation in a preliminary analysis the impact of the international trade environment on average economic performance in africa during the period since independence is investigated the results suggest an extremely close relationship between movements in export prices and average performance throughout the 20 year period a second econometric exercise investigates the joint impacts of environmental and policy variables on growth in a cross section of african states since 1970 the spirit of the approach is exploratory and a relatively large number of variables are constructed and tested through multivariate analysis a primary finding is that the environmental variables seem to have had more impact on growth as a group than the policy variables this finding must be qualified however by the continuing lack of some important policy variables agricultural price data have not yet become available in sufficient quantity for cross section analysis nor have several important human resource variables and indices of the use of resources in the public domain among the policy variables which have been used for the analysis those identified with retrenchment during periods of declining commodity prices seem most significant primary among these are the real effective exchange rate and some measures of effectiveness in foreign exchange reallocation during periods when imports must contract severely in the final section of the paper the cross section results are used for a counterfactual analysis of the growth experiences of individual african states measures of growth opportunity cost are constructed which suggest the degree to which errors in management and uncontrollable circumstances have held states below their potential growth paths the results suggest that some success stories may owe much to good luck while some failures may well be due less to bad management than to adverse circumstances

participating in african monetary unions an alternative evaluation abstract this paper complementary to that of devarajan and de melo deals with the development strategies and performances of 12 franc zone african countries 11 of them gathered in two monetary unions during 1960 1981 beside the actual rate of growth the relative growth performance is considered this performance measured as a residual of a regression on exogenous factors factors independent of economic policy appears to be close to the average performance of other developing countries and better than that of other african countries the results are explained by the direct influence of the foreign exchange regime of the zone and by its impact on economic policy economic policies of individual countries show however some substantial degree of autonomy

international stock market linkages evidence from the pre and post october 1987 period abstract this paper uses recent developments in the theory of cointegration to provide new methods of testing the linkage and dynamic interactions among stock market movements our findings are in sharp contrast with previous research which discovered strong interdependence among national stock markets prior to october 1987 for the post october 1987 period however our results show that the degree of international co movements among stock price indices has increased substantially with the nikkei index the only exception furthermore the us stock market is found to have a considerable impact on the french german and uk markets in the post crash period we also find the response of the french german and uk markets to us stock market innovations to be consistent with the view of cross border informationally efficient stock markets finally we find the japanese equity market performance to have no links with both the us stock market and the stock markets in france germany and uk during the pre and post october crash period

coordination of supply chains by option contracts a cooperative game theory approach manufacturer retailer supply chains commonly adopt a wholesale price mechanism this mechanism however has often led manufacturers and retailers to situations of conflicts of interest for example due to uncertain market demand retailers prefer to order flexibly from manufacturers so as to avoid incurring inventory costs and to be able to respond flexibly to market changes manufacturers on the other hand prefer retailers to place full orders as early as possible so that they can hedge against the risks of over and under production such conflicts between retailers and manufacturers can result in an inefficient supply chain motivated by this problem we take a cooperative game approach in this paper to consider the coordination issue in a manufacturer retailer supply chain using option contracts using the wholesale price mechanism as a benchmark we develop an option contract model our study demonstrates that compared with the benchmark based on the wholesale price mechanism option contracts can coordinate the supply chain and achieve pareto improvement we also discuss scenarios in which option contracts are selected according to individual supply chain members risk preferences and negotiating powers

analysis of supply contracts with quantity flexibility this paper explores a class of supply contracts under which a buyer receives discounts for committing to purchases in advance the further in advance the commitment is made the larger the discount as time rolls forward the buyer can increase the order quantities for future periods of the rolling horizon based on updated demand forecast information and inventory status however the buyer pays a higher per unit cost for the incremental units such contracts are used by automobile and contract manufacturers and are quite common in fuel oil and natural gas delivery markets we develop a finite horizon dynamic programming model to characterize the structure of the optimal replenishment strategy for the buyer we present heuristic approaches to calculate the order volume in each period of the rolling horizon finally we numerically evaluate the heuristic approaches and draw some managerial insights based on the findings

reducing the cost of demand uncertainty through accurate response to early sales traditionally fashion products have incurred high losses due to stockouts and inventory obsolence because long lead times coupled with a concentrated selling season force all or at least most production to be committed before demand information is available under a quick response system lead times are shortened sufficiently to allow a greater portion of production to be scheduled in response to initial demand we model and analyze the decisions required under quick response and give a method for estimating the demand probability distributions needed in our model we applied these procedures with a major fashion skiwear firm and found that cost relative to the current informal response system was reduced by enough to increase profits by 60 relative to the cost that would have been incurred if no response were used optimized response reduces cost by enough to roughly quadruple profits

monetary co operation and economic growth in africa comparative evidence from the cfa zone countries this article compares economic growth performance of ten african countries all members of the cfa monetary zone with that of 23 non zone sub saharan african ssa countries our descriptive results suggest that overall african economies have experienced similar growth trends which are higher in the 1970s than the 1980s however contrary to previous studies disaggregated comparison of the cfa with the ssa indicate that no significant growth differences exist between these economies moreover our empirical findings suggest that monetary expansion and capital formation have positive impacts on output growth whereas inflation and government spending show negative effects in sum although participating in a monetary union has not necessarily resulted in faster output growth it has enabled the cfa countries to better control price fluctuations and monetary expansion

the relationship between the rate of inflation and its unpredictability in high inflation latin american countries pourgerami and maskus pm 1987 find three difficulties in our analysis of the relationship between the rate of inflation p and its unpredictability pf in latin american countries the first of these is a point very well taken namely that the positive relationship we hypothesized might well be offset by a negative one arising because higher rates of inflation could be expected to induce the relevant economic agents to invest more in generating the relevant information in utilizing it efficiently and in developing the instruments capable of hedging against inflation however since any such adjustments would be institutional in nature and take time to be carried out it is obvious that this consideratipn would not be relevant for short run analysis involving year to year or especially quarter to quarter changes in inflation rates as in our analysis the other difficulties namely that quarterly observations are more relevant than annual ones in testing such relationships and that rational expectations re models of the type employed by pm are preferable to adaptive expectations models of the type we used are criticisms more relevant to the short run relation between inflation and its predictability but as we shall presently demonstrate are not persuasive nevertheless since the results presented by pm as they have noted show the relationship between pi and p to be considerably weaker than was indicated in earlier results including our own the substantial difference in results deserves explanation since their time coverage frequent of adjustment of expectations model of esprct ltions and to some extent countr coverage were all different than ours it is not possible to learn from their results the reason for the difference by employing the same time and country coverage as in pm and also an estimation procedure hildreth lu which corrects for autocorrelation and continuing to use a modified version of our adaptive expectations model mae but varying the duration of the periods the results presented in table 1 shed light on the source of the difference as can be seen the use of quarterly instead of annual data does not have a large effect on the results thereby suggesting that pm s use of quarterly data is not the source of their weaker results indeed note that in six of the seven high inflation countries the slope coefficient is larger and more significant when quarterly data are employed than when annual data are employed the largest differences are between the results obtained from our own mae model estimated with quarterly data and those obtained by pm with their re model with the same data in all seven cases the pm estimate of is significantly lower than our own corresponding estimate which estimate is more reliable even if one were to agree in principle with pm that re models are superior to ae models of price expectations the particular re model employed by pm can hardly be considered acceptable let alone superior to our mae model with their 20 right hand side variables i e four lags of each of five different explanatory variables relative to our four right hand side variables it is not surprising that pm havq been able to increase the explained variation of p correspondingly reduc

a further analysis of the lead lag relationship between the cash market and stock index futures market the intraday lead lag relation between returns of the major market cash index and returns of the major market index futures and s p 500 futures is investigated empirical results show strong evidence that the futures leads the cash index and weak evidence that the cash index leads the futures the asymmetric lead lag relation holds between the futures and all component stocks including those that trade in almost every five minute interval evidence indicates that when more stocks move together market wide information the futures leads the cash index to a greater degree this suggests that the futures market is the main source of market wide information article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

pre season stocking and pricing decisions for fashion retailers with multiple information updating abstract motivated by the industrial practice we investigate in this paper the pre season inventory and pricing decisions for fashion retailers before the selling season a retailer can place orders for a seasonal fashion product from her supplier at two distinct stages via two different delivery modes market information from the sales of a pre seasonal product is collected and used to update the demand forecast of the seasonal product at the succeeding stages by using bayesian approach we formulate a dynamic optimization problem and obtain the optimal stocking policy after the ordered seasonal product has arrived and just before the start of the selling season the retailer can determine the optimal selling price of the product with respect to the latest demand information and the amount of product on hand we study the pricing policy under different objectives sensitivity analysis is carried out and the features of the policies are revealed managerial insights are generated

on a multi period supply chain system with supplementary order opportunity abstract this paper considers a supplementary supply order system in a multi period situation in each period the buyer first places an initial order based on the demand prediction he has the opportunity to place a supplementary order with the supplier after the demand of that period is realized the supplier maintains an inventory and decides the quantity to be produced and the quantity to be provided for the supplementary order in each time period we formulate the problem as a multi period inventory game and derive the optimal production and order policies for the supplier and buyer respectively the existence and uniqueness of nash equilibrium is proved in the generalized multi period setting and the closed form nash equilibrium solution is obtained when the parameters are stationary numerical study is performed to reveal more managerial insights we find that the supplementary supply order mechanism if designed properly can effectively improve the multi period supply chain performance

selling to the newsvendor with a forecast update analysis of a dual purchase contract we consider a supply chain in which a manufacturer sells to a procure to stock retailer facing a newsvendor problem with a forecast update under a wholesale price contract the retailer waits as long as she can and optimally places her order after observing the forecast update we show that the retailer s wait and decide strategy induced by the wholesale price contract hinders the manufacturer s ability to 1 set the wholesale price and maximize his profit 2 hedge against excess inventory risk and 3 reduce his profit uncertainty to mitigate the adverse effect of wholesale price contract we propose the dual purchase contract through which the manufacturer provides a discount for orders placed before the forecast update we characterize how and when a dual purchase contract creates strict pareto improvement over a wholesale price contract to do so we establish the retailer s optimal ordering policy and the manufacturer s optimal pricing and production policies we show how the dual purchase contract reduces profit variability and how it can be used as a risk hedging tool for a risk averse manufacturer through a numerical study we provide additional managerial insights and show for example that market uncertainty is a key factor that defines when the dual purchase contract provides strict pareto improvement over the wholesale price contract

common volatility in international equity markets in this article we take advantage of the time varying structure of stock returns variances to investigate whether two international stock markets share the same volatility process we use a test recently developed by engle and kozicki this test is also used to assess the validity of a one factor autoregressive conditional heteroscedasticity model we find that some international stock markets have the same time varying volatility

asymmetric volatility transmission in international stock markets abstract the transmission mechanism of price and volatility spillovers across the new york tokyo and london stock markets is investigated the asymmetric impact of good news market advances and bad news market declines on volatility transmission is described by an extended multivariate exponential generalized autoregressive conditionally heteroskedastic egarch model using daily open to close returns we find strong evidence that volatility spillovers in a given market are much more pronounced when the news arriving from the last market to trade is bad a before and after october 1987 crash analysis reveals that the linkages and interactions among the three markets have increased substantially in the post crash era suggesting that national markets have grown more interdependent

the relationship between daily u s and japanese equity prices evidence from spot versus futures markets abstract the daily and overnight transmission of equity prices between the u s and japan is examined in this paper this study documents that the use of the opening value of an equity index to represent equity prices at the open is unlikely to be reliable and the calculated opening values of the nikkei 225 and especially the s p500 indexes mostly reflect prior days closing prices unlike prior studies this paper accounts for this problem of non synchronous trading at the open and finds that u s equity prices do not lead japanese equity prices as both u s and japanese opening equity prices reflect overnight price changes in the other market

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

optimal replenishment for a periodic review inventory system with two supply modes abstract in this paper we study periodic inventory systems with long review periods we develop dynamic programming models for these systems in which regular orders as well as emergency orders can be placed periodically we identify two cases depending on whether or not a fixed cost for placing an emergency order is present we show that if the emergency supply mode can be used there exists a critical inventory level such that if the inventory position at a review epoch falls below this critical level an emergency order is placed we also develop simple procedures for computing the optimal policy parameters in all cases the optimal order up to level is obtained by solving a myopic cost function thus the proposed ordering policies are easy to implement

evaluating participation in african monetary unions a statistical analysis of the cfa zones abstract thirteen african nations are engaged in two monetary unions with france often referred to as the cfa zone despite the acknowledged benefits of zone membership a convertible currency pooled resources and greater monetary and fiscal discipline several observers have questioned whether particular aspects of the zone such as the lack of autonomy of the two central banks and the surrender of the exchange rate as a policy instrument have impeded its members growth this paper addresses that question by testing whether cfa zone countries had different gnp growth rates from selected comparator countries during 1960 1982 results show that cfa countries grew significantly faster than comparator sub saharan african countries but usually slower and often significantly so than the whole sample of developing countries when the comparison is made by subperiod before and after 1973 cfa countries performance vis a vis that of their comparators improved during the 1973 1982 period casting further doubt on the claim that the monetary union is not functioning adequately

perspectives and problems of development in sub saharan africa this paper analyzes the initial conditions for development facing post colonial african nations outlines alternative development strategies followed by different groups of countries and assesses the consequences for growth and poverty alleviation on the basis of this diagnosis the paper outlines a number of policy priorities for the future including greater research extension and infrastructure support for smallholder agriculture an improvement in the overall structure of incentives in favor of agriculture a more realistic urban formal sector wage structure to reduce rural urban migration and foster a more internationally competitive manufacturing sector and greater emphasis on surplus generation through government budgets and parastatal enterprises

price instability and inflation the latin american case abstract this paper provides empirical evidence substantiating the existence of an over time relationship between inflation and price variability for 23 latin american countries by employing a novel measure of price instability based on price expectations

the quantity flexibility contract and supplier customer incentives consider a supply chain consisting of two independent agents a supplier e g a manufacturer and its customer e g a retailer the latter in turn serving an uncertain market demand to reconcile manufacturing procurement time lags with a need for timely response to the market such supply chains often must commit resources to production quantities based on forecasted rather than realized demand the customer typically provides a planning forecast of its intended purchase which does not entail commitment benefiting from overproduction while not bearing the immediate costs the customer has incentive to initially overforecast before eventually purchasing a lesser quantity the supplier must in turn anticipate such behavior in its production quantity decision this individually rational behavior results in an inefficient supply chain this paper models the incentives of the two parties identifying causes of inefficiency and suggesting remedies particular attention is given to the quantity flexibility qf contract which couples the customer s commitment to purchase no less than a certain percentage below the forecast with the supplier s guarantee to deliver up to a certain percentage above under certain conditions this method can allocate the costs of market demand uncertainty so as to lead the individually motivated supplier and customer to the systemwide optimal outcome we characterize the implications of qf contracts for the behavior and performance of both parties and the supply chain as a whole

the effects of inflation on the predictability of price changes in latin america some estimates and policy implications abstract this paper argues that the relationship between price variability and inflation in high inflation countries should be estimated on a frequent basis and that rational expectations are the appropriate formulation for predicting inflation analysis of seven latin american countries taking these factors into account suggests that higher inflation contributes to the difficulty of predicting price changes the impact is more moderate than that found in previous studies however indicating that less concern may be warranted about the possible stagflationary effects of expansionary policies

economic growth in africa abstract this paper draws on the recent endogenous growth methodology to study the factors behind differences in per capita growth rates across africa the results indicate that various economic factors including initial conditions investment population growth trade orientation inflation financial development and the growth of the government sector contribute significantly to economic growth in addition to economic variables we find the degree of political freedom to be a significant contributor to economic growth finally we find some evidence that economic growth by the members of the cfa franc zone has not fared well in comparison to other african countries

government expenditure and economic growth a cross country study this paper examines the relationship between the share of government consumption expenditure in gdp and the rate of growth of real per capita gdp the work of the u n international comparison project has recently made available new estimates for over 100 countries of both per capita gdp and the share of government consumption these new estimates are based on direct price comparisons rather than exchange rate conversions as a result the statistics for different countries are more comparable and cross country studies will be more reliable

common volatility in major stock index futures markets abstract the main objective of this paper is to investigate whether the us uk and japanese stock index futures markets have a similar volatility process for this purpose the common feature analysis proposed by engle and susmel 1993 is applied to 1988 1991 data after first removing price innovations using vector autoregression the results suggest that the three markets have a single common factor generating volatilities among markets