war debt moral hazard and the financing of the confederacy this paper develops a formal model of war spending and external borrowing and quantifies this model for the case of the american confederacy our proximate objective is to determine why the confederacy undertook little external borrowing we find that the moral hazard associated with war debt seems to have had little effect on the amount of external borrowing that the confederacy undertook rather because the confederacy began the war with large mobilizable resources relative to its expected postwar resource endowment it required little external borrowing to accomplish the optimal amount of consumption smoothing but our results also suggest that unimportance of the moral hazard associated with war debt is not a generic property of war finance copyright 1996 by ohio state university press

the demand for money in developing countries assessing the role of financial innovation traditional specifications of money demand have commonly been plagued by persistent overprediction implausible parameter estimates and highly autocorrelated errors the authors argue that some of these problems stem from the failure to account for the impact of financial innovation they estimate money demand for ten developing countries using various proxies for financial innovations they also assess the relative importance of this variable finding financial innovation can be better modeled as a stochastic random walk trend rather than a deterministic time trend financial innovation plays an important role in determining fluctuations of the demand for money the importance of this role increases with the rate of inflation

effects of financial innovations on the money demand function a canadian evidence a money demand function for the candian economy has been estimated to explore if recent financial innovations have caused any significant change in the structural relationship between the demand for money and its determinants two sets of estimation results have been analysed the first set is obtained by estimating a standard money demand function for several overlapping sample periods and the other set is obtained by estimating a modified version which included a dummy or a ratchet variable to capture the effects of innovations the estimated equations have been used to generate ex post simulations and forecasts the results suggest that innovations have displaced the money demand function in the early 1980s it also appears that the incorporation of approriate innovation variables improves the predictive performance of the money demand function

money still makes the world go round the zonal view many leading monetary economists have come to regard the monetary aggregates as obsolete measures of the monetary policy stance this critique has led some to view money as having lost its central role in the conduct of monetary policy we say to those advocating excising money from monetary policy not so fast to better understand the potential role for money we develop a zonal view of monetary policy which reflects the historical regularity for the relative informativeness of the quantitative measures of monetary policy such as the monetary aggregates and real interest rates to depend on the inflation zone in which a central bank finds itself the zones range from high inflation zone 1 to deep deflation zone 5 with intermediate zones of moderate inflation zone 2 low inflation zone 3 and low deflation zone 4 we find considerable support for this view in the historical data which stretches back to the 19 th century seen from this perspective the past experience of central banks casts doubt on the singular importance often attributed to the short term real interest rate as an indicator of the stance of monetary policy this applies especially in the current low inflation environment in which many central banks find themselves the zonal view has far reaching implications for monetary policy frameworks for the analytical efforts to understand the monetary policy transmission mechanism and for central bank communication strategies this paper was prepared for the 21 st congress of the european economic association held in vienna on august 27 2006 the views expressed in the paper are solely those of the authors

suppressing asset price inflation the confederate experience 1861 1865 i introduction the absorption of treasury notes by the funding process is progressing favorably and will counteract the tendency to a further depreciation of our currency arising from the heavy issues since the 1st of january last richmond dispatch 15 april 1863 during the civil war commodity prices rose in the confederacy while the gold value of confederate currency and bonds declined the rate of asset price inflation lagged behind commodity price inflation however and there was a greater than 2 1 divergence at the time of two confederate financial reforms aimed at encouraging exchanges of currency into bonds these exchanges raised the demand for bonds and boosted bond prices while supporting the gold value of the currency as the supply of money was reduced but the period between the announcement and implementation of these reforms saw upward surges in commodity prices with no matching depreciation in the value of the currency against gold this suggests that the reforms may have channeled inflationary pressures into commodity markets and that an examination of both asset and commodity markets is needed to assess the effectiveness of confederate monetary policy just as bernanke and gertler 1999 criticize the bank of japan for focusing on asset price inflatio n at the expense of the general price level in the 1989 97 period so too may confederate monetary policy have been directed too much toward stabilizing asset markets with less favorable consequences for the prices of other goods and services the bursts of commodity price inflation after the reforms were announced suggest that individuals exchanged money for goods as well as for bonds in the run up to the deadline a real balance effect seems to have operated whereby decreased demand for the old money created excess cash balances that were translated at least in part into an excess demand for goods even after the financial reforms reduced the total money supply the initial surges in commodity price inflation were never fully reversed there was in fact a boost to wealth holdings when the reforms took effect insofar as the stocks of money being retired were exchanged for bonds at par even though these bonds were then trading at a premium in this way consumption expenditures may well have been fueled by the gains on the bonds when the exchange occurred despite uncertainty as to the relative weights that should be attached to bond holdings and money balances as components of private sector net financial assets as discussed for example by pa tinkin 1965 289 90 the changes in the level and market value of bond holdings surely cannot be ignored in the confederate case this is especially so given the existence of a ready market for the bonds received with no restrictions on reselling from the outset confederate currency and bond markets were linked by the fact that note holders enjoyed an imbedded call option on confederate government bonds noninterest bearing confederate treasury notes were issued with the proviso that holders could at their pleasure exchange these notes for 8 government bonds at par this call option would naturally become increasingly valuable if the bonds rose above par and implied that noteholders would be able to participate fully in any bond market rally even while keeping their funds in the form of highly liquid currency the 8 bonds issued under the 1861 100 million loan authorized by the act of 19 august 1861 with a minimum denomination of 100 generally traded at or below par during 1862 however with no deadline for the exercise of the option there was no incentive for holders of confederate treasury notes to actually convert their money into bonds at that time in an attempt to induce and ultimately force early conversion of money into bonds the government instituted three funding acts that limited the time period over which treasury notes could be exchanged for the higher yielding 8 bonds

use of interest bearing currency in the civil war the experience below the mason dixon line this paper examines the case of interest bearing notes in the confederate states of america which were not legal tender but which were said to circulate like other known episodes the confederate experiment does not support the legal restrictions theory of the demand for money there is no evidence that these instruments circulated readily and some evidence that their limited circulation fell short of that of competing noninterest bearing notes characteristics inconsistent with legal restrictions theory the episode displays other characteristics inconsistent with or not encompassed by the major competing explanations of why interest bearing notes do not circulate

how does exchange rate policy affect manufactured exports in mena countries this paper shows that during the 1970s and 1980s mena economies were characterized by a significant overvaluation of their currency this overvaluation has had a cost in terms of competitiveness to determine the degree of overvaluation of the mena currencies an indicator of misalignment was developed based on the estimation of an equilibrium exchange rate edwards exchange rate misalignment in developing countries the johns hopkins university press baltimore 1988 the empirical work was based on a panel of 53 developing countries ten of which are mena economies although overvaluation decreased in the 1990s probably due to flexibilization of the exchange rate regime in some mena countries and to better macroeconomic management in others misalignment remained higher than in other regions this may be explained by the mena countries delay in adopting more flexible exchange rates as well as in reforming their economies in terms of competitiveness the estimation of an export equation has shown

inflation is always and everywhere a monetary phenomenon richmond vs houston in 1864 on april 1 1864 the confederate currency reform act reduced the money supply in the eastern confederacy by one third the delayed implementation of the reform west of the mississippi provides a counterfactual view of what may have happened in the east had the reform not been enacted this episode is a natural experiment illustrating the relative importance for prices of war news vs the quantity of money in circulation our analysis of the major eastern and western gold markets richmond and houston strongly suggests that money matters more than war news in the post reform period this abstract was borrowed from another version of this item

the changing global geography of low technology labor intensive industry clothing footwear and furniture summary a basic approach to the geographic investigation of low technology labor intensive industries is sketched out by invoking notions of industrial organization locational agglomeration and spatial divisions of labor the distribution of the clothing footwear and furniture industries across the contemporary world is described on the basis of detailed published statistics special emphasis is accorded to similarities and contrasts in the geography of production between more developed and less developed countries i show that no matter what the level of development agglomeration tends to be a pervasive though not universal feature of these three industries global trading patterns in the three industries are subjected to extended investigation i examine international flows of finished products as well as production sharing activities involving various kinds of subcontracting arrangements between high wage and low wage countries i then attempt to demonstrate in theory how spatial agglomeration and international commodity flows function as mutually reinforcing phenomena via the play of increasing returns effects the significance of low wage low technology industries for processes of economic development is also stressed in the conclusion i suggest that the global geography of production is tending more and more to assume the form of a far flung mosaic of competing and collaborating agglomerations at various levels of productive capability and development

financial innovation and the demand for liquid assets note introduction recent innovations in the banking and finance sector have caused great difficulties for the conduct of monetary policy shifts in monetary aggregates unexplained by interest rate behavior when there are financial innovations make it difficult for the monetary authorities either to use an asset demand function in the conduct of monetary policy or to distill information from the behavior of monetary aggregates while the monetary authorities may know the specific innovations they generally do not know how these innovations will affect particular aggregates clearly such knowledge is important and essential since then the monetary authorities can more accurately interpret growth rates of the monetary aggregates and reduce policy mistakes especially when the growth rates of various aggregates differ substantially and the authorities must determine which aggregate is more reflective of general monetary conditions hester 1981 freedman 1983 and pierce 1984 among others have documented and discussed many of the specific financial innovations for the united states and canada as outlined by pierce these innovations generally can be divided into three types i those innovations which have lowered transactions costs for asset purchases and sales ii the emergence of previously unavailable assets and iii those innovations which allow institutions to avoid reserve requirements hester has theoretically analyzed the last of these this paper focuses on the other types of innovations primarily the first transactions or transfer costs are an important aspect of asset demands since most near money assets possess approximately equivalent risk characteristics the two most important features of competing assets are return and liquidity liquidity can be defined as the cost of transfer to an acceptable means of payment over the last decade both relative and absolute transfer costs and thus liquidity have varied dramatically and have generally been reduced this has caused substitutions between assets and thus shifts in monetary aggregates unexplained by macroeconomic variables such as income and interest rates it is such unexplained shifts over the last decade which have caused concern over the appropriate definitions of monetary aggregates

economic geography and wages abstract this paper estimates the agglomeration benefits that arise from vertical linkages between firms we identify the agglomeration benefits off the spatial variation in firms nominal wages u

a note on the temporal variability of canadian financial services stock returns abstract we show that financial services stock returns in canada are covariance nonstationary with respect to any benchmark variable and vary negatively with interest rate levels we find that the conditional correlation between financial services stock returns and the market returns varies directly and monotonically with market volatility this result is robust to monetary regime shifts and other sources of high volatility these findings combined with those of kane and unal 1988 for the u s cast considerable doubt on the constant coefficient two index model and its variants to provide reliable estimates of usual risk measures

turning points in the u s civil war views from the grayback market this paper introduces a new high frequency time series of confederate money prices taken from the newspapers of richmond and leading cities in the eastern confederacy the new grayback series is tested for turning points the empirical analysis suggests that turning points in the confederate grayback market were different from those identified in the union greenback market by willard et al 1996 it appears that war did not always have symmetric effects on northern and southern money prices jel codes n20 n40

can interest bearing money circulate a small denomination arkansan experiment 1861 63 legal restrictions theory suggests that dominance of non interest bearing currency is possible only because legal impediments prevent financial institutions from offering interest bearing alternatives a viable interest bearing medium must be issued in denominations low enough for day to day use however and without historical examples of small denomination interest bearing issues we cannot properly test whether interest bearing currency will circulate as legal restrictions theory predicts civil war arkansas offers a rare instance where large quantities of small denomination interest bearing money were actually issued mostly below 5 the results of this arkansan experiment show that small denomination interest bearing issues can indeed function as the primary medium of exchange

lessons of the recession the recession of 1981 82 was the worst since the 1930s the cyclical decline was sharper and deeper in canada than in the united states this paper presents an appraisal of the roles of business cycles abroad and macro economic policies in canada during the recession and the subsequent recovery based on simulations with a macro econometric model the operation of the automatic fiscal stabilizers over this cycle is also examined the extent to which monetary policy and changes in the tax structure can mitigate the effects of deficit reduction measures over the medium term is considered levons de la recession la recession de 1981 82 a e la pire depuis les annees 1930 le cycle s est creuse plus fortement et plus profondement au canada qu aux etats unis ce m6moire evalue a partir de simulations a l aide d un modele macro econometrique les r6les respectifs des cycles economiques dans le reste du monde et des politiques macro economiques au canada dans la conformation de la recession et de la relance qui a suivi on examine le fonctionnement des stabilisateurs fiscaux automatiques tout au long du cycle l auteur examine jusqu a quel point la politique monetaire et les changements dans la structure de la fiscalite peuvent attenuer a moyen terme les effets des mesures adoptees pour reduire le deficit

portfolio redistribution impacts within the narrow monetary aggregate a number of important monetary and financial changes occurred in the 1980s a rising question among monetary economists is whether the character of m1 has changed substantially as a result in particular a frequent contention is that interest bearing checkable deposits behave as a savings type asset thus subjecting m1 to portfolio redistribution effects in the modern era this research examines the elasticities of substitution for a variety of financial assets pre and post 1980 results indicate that m1 subcomponents do show significant substitution with savings type assets however the portfolio redistribution impacts are not confined to the interest bearing checkable deposits further results indicate that this behavior is not unique to the 1980s copyright 1992 by ohio state university press

the redistributive effects of inflation and the shape of money demand abstract i quantify the distributional effects of expected inflation in a sample of oecd countries using a microfounded model of money where agents differ in their consumption risk against which they can insure using money and government bonds the model is calibrated using harmonized wealth microdata from the luxembourg wealth study i find that the inflation tax is progressive for low inflation levels but it becomes regressive as inflation increases cut off points vary across countries and depend on discount factors and heterogeneity in consumption risk across agents moreover i find that the magnitude of inflation s distributional impact depends not only on wealth distribution but also and importantly on the curvature and height of the money demand curve indeed a higher and less elastic money demand leads to more regressive effects of inflation thus implying such effects are not necessarily stronger in a country with a more unequal wealth distribution

financial innovations and the interest elasticity of money demand in canada abstract using canadian data for the period 1934 86 the paper empirically tests the gurley shaw hypothesis that innovations in the financial markets raise the interest elasticity of money demand the results provide sufficient evidence to reject the gurley shaw hypothesis in canada

derivative securities and cash market stability this study investigates the effect of introducing interest rate futures and options on the price variances in related financial cash markets standard research approaches to this issue relate cash price stability before the introduction of futures and options trading to cash price stability after trading in the derivative security begins however controlling for the additional factors that may also effect cash markets is difficult the approach employed here to deal with this obstacle is motivated by recent theoretical research relating cash and futures markets but hitherto not operationalized to empirically test for a relationship between the markets varying parameter models of 1 the demand for short term treasury securities 2 the demand for large time deposits and 3 the supply of large time deposits are specified such that changes in the parameters imply changes in the volatility of the cash price these parameters are modelled as functions of the trading volume of interest rate futures and o

seigniorage legal tender and the demand notes of 1861 i introduction shortly after the onset of hostilities at fort sumter the lincoln administration asked congress to authorize the first large scale issue of federal paper currency officially labeled as united states notes they were popularly known as the demand notes of 1861 the administration s action is unremarkable the extraordinary revenue requirements of long and costly wars are often met in part by issuing paper money more surprising and not widely recognized is that this initial issue of paper money carried provisions that largely prevented it from yielding sustainable revenue seigniorage these provisions were largely omitted for the successor currency to the 1861 notes also known as united states notes but popularly as greenbacks as a result its seigniorage potential was greater although seigniorage was limited by other provisions in modern software jargon the greenbacks might be viewed as 1861 notes version 2 0 a version better suited to sustain a flow of seigniorage however the government was unable to replace the latter with the former very quickly resulting in an extended period during which two paper currencies with different properties circulated side by side both with each other and with gold coin this somewhat untidy situation provides an interesting and heretofore underexploited experiment for economists these alternative monies circulated widely with market determined exchange rates for a substantial period during which the amounts of both paper currencies in circulation greatly increased before the 1861 notes were removed from circulation we have collected daily data on these exchange rates and report them as differing gold premiums for the competing paper monies below these data are exploited to calculate the seigniorage cost of the various provisions of the 1861 notes and to provide evidence on alternative theories of expectations formation during this period our paper has three sections the first presents a more extensive discussion than has been previously available of the 1861 notes in the second a simple analytical framework is used to demonstrate and where possible estimate the seigniorage costs of the provisions attached to these notes the third section analyzes the market relationship between gold and the simultaneously circulating 1861 notes and greenbacks prior to the all but complete retirement of the former in 1863 the paper concludes with a summary ii the demand notes of 1861 the major focus of this paper is on the demand notes of 1861 the first large scale federal experiment with paper money 1 we concentrate on these notes for two reasons first little has been written about them mitchell 1902 in his pioneering work on civil war finance devotes only 7 pages to them while devoting 17 pages to fractional currency and minor coins during the war in addition most of his discussion concerns the period prior to suspension more recently calomiris 1988a 1988b 1992 makes reference to the 1861 notes but only as a part of his discussion of greenbacks second the paradox of issuing largely seigniorage free paper money to help finance a war has not been well recognized and hence largely unexplained this conflict between means and ends is interesting in its own right and illuminates some of what is puzzling in the sequence of monetary events over the first half of the civil war as a part of our discussion of the 1861 notes we challenge or extend the existing literature in three ways first we demonstrate that the conclusion of studenski and krooss 1963 141 144 that these notes were only used by the government to pay salaries and hence in their words were a pseudomoney is mistaken examination of the financial press of the day suggests that these notes were not only popular but also circulated widely as money a convincing claim can be made that they were indeed a national currency

gunboats reputation and sovereign repayment lessons from the southern confederacy abstract many states that formed the southern confederacy defaulted on sovereign debt sold in international capital markets during the 1840s the confederacy also elected president jefferson davis who openly advocated the repudiation of u s states debts while a member of congress despite its poor credit record the confederate government managed to float cotton bonds in england that constituted under 2 of its expenditures the bonds were largely issued to settle overdue debts with gun contractors who had cut off trade credit the south serviced the bonds as late as march 1865 a time of domestic hyperinflation and weeks before the fall of richmond although the confederate experience shows that trade sanctions can promote debt repayment the gunboat model can only account for a small amount of lending a reputation or another type of sanction would be necessary to support higher levels of lending in international capital markets

understanding the costs of sovereign default american state debts in the 1840 s the defaults of u s states in the 1840s provide a powerful test of competing models of sovereign debt the eleventh amendment to the u s constitution prevented foreign creditors from obtaining payment in the federal courts moreover because the defaulting states were part of a large and economically integrated nation creditors could not enforce payment by imposing military or trade sanctions in spite of the lack of sanctions however most states eventually repaid in full it appears that the states repaid in order to maintain access to capital markets much as in reputational models of sovereign debt copyright 1996 by american economic association

learning to forecast the exchange rate two competing approaches this paper compares two competing approaches to model foreign exchange market participants behavior statistical learning and fitness learning these learning mechanisms are applied to a set of predictors chartist and fundamentalist rules we examine which of the learning approaches is best in terms of replicating the exchange rate dynamics within the framework of a standard asset pricing model we find that both learning methods reveal the fundamental value of the exchange rate in the equilibrium but only fitness learning creates the disconnection phenomenon and only statistical learning replicates volatility clustering none of the mechanisms is able to produce a unit root process but both of them generate non normally distributed returns

corporate tax rates and foreign direct investment in the united states a significant research effort has been directed at establishing the determinants of foreign direct investment fdi with taxation policy identified as an important factor however the empirical literature has been limited in several respects with most work focused exclusively on host country tax regimes this paper seeks to extend the boundaries of fdi empirical inquiry by using a panel of nine investing tax exemption and tax credit countries over the period 1982 2000 constituting more than 85 of total us fdi inflows and incorporating home country tax rates to analyse two as yet unanswered questions first are corporate income tax rates an important determinant of fdi in the us secondly do investors from tax credit countries differ significantly in their tax response relative to those from tax exemption countries

financial innovations and the interest elasticity of money demand some historical evidence note 1 lntroduction a number of investigations into the difficulties of estimating short run money demand functions recently have suggested that the trouble is linked to changes in the financial market e g see garcia and pak 1979 goldfeld 1976 and simpson and porter 1980 it is argued that these financial innovations have led to a deterioration in the marginal relationship between real money balances and interest rates arguments that financial innovations affect the link between interest rates and money demand are not new indeed this contention is the cornerstone of the much debated theories of gurley and shaw 1960 where a proliferation of money substitutes is hypothesized to increase the interest elasticity of money demand the consequence is a lessening of the fed s ability to affect economic conditions through open market operations since the most dramatic changes in the payments mechanism have occurred during the past twenty years the interest elasticities estimated from recent data should be larger relative to earlier sample period estimates l this finding would support the gurley shaw hypothesis and buttress recent claims that financial innovations have produced a much more interest elastic money demand function unfortunately little empirical work has been done to specifically examine the temporal nature of money demand s interest elasticity the purpose of this paper therefore is to provide empirical evidence on this question 2 we compare the shortand longrun interest elasticities from a money demand equation estimated across the l915 i 1979 iv period 3 our results indicate that the interest elasticity of money

unstable money demand and the monetary model of the exchange rate in this paper the authors investigate the importance for the monetary model of exchange rate determination of j frankel 1979 of allowing unrestricted dynamics and of accounting for shifts in the demand for money due to financial innovation based on estimation and simulation results for the canada u s bilateral exchange rate over the 1970 85 period the aut hors find strong evidence in favor of a generalized approach to dynamic specification but find that the shif t adjustment of official money supply data has only minor implications for the empirical results moreover neither modification is sufficient to generate a monetary model that is well supported by the data

the demand for money in brazil what happened in the 1980s abstract some of cardoso s 1983 money demand specifications are used here the estimates are based on quarterly data for the period 1966 1985 it is shown that due to financial innovation the money demand function shifted downwards in the 1980 s also a comparison is made between the actual demand for money and that predicted by the model during the period in which the economic reforms of the cruzado plan were in force

income velocity of money in agricultural developing economies t he response of income velocity of money to economic growth has implications for monetary planning in a developing economy velocity is the ratio of nominal income to money stock and decreases only if money stock rises at a faster rate than nominal income a well known hypothesis in this context is that of friedman 1959 which states that in countries experiencing a secular rise in real income per capita the stock of money generally rises over long periods at a decidedly higher rate than does money income i e velocity declines ezekiel and adekunle 1969 and melitz and correa 1970 in their international crosscountry comparisons have found evidence largely in favour of the friedman hypothesis this in its turn has strengthened the hope for active growthoriented monetary planning the extent of resources that can be transferred for investment purposes through non inflationary monetary expansion increases as development proceeds cross section studies involving developed and developing economies do not provide satisfactory indications of what happens to velocity over time in any individual developing economy firstly velocities have not behaved uniformly in all the developing economies secondly international cross country comparisons do not adequately explain why velocity changes in any individual economy is it because money is a luxury good i e income elasticity of demand for money is greater than unity to the agents in the economy is it because economic development brings about structural changes in the economy which lead to the observed behaviour of velocity is it because monetary habits change in a systematic way it is important to have time series analyses of developing economies to provide answers to such questions for example in a study of malaysia and singapore short 1973 found that though velocity did move inversely to per capita income this negative impact was overpowered by the change in monetary habits which the increase in bank offices caused the aim of this paper is to analyse the temporal behaviour of income velocity of money in agricultural developing economies in the literature on velocity and demand for money in developing economies attention is focussed mainly on three issues i the incomeelasticity of demand for money and in particular whether money is a luxury good or not ii the growth of monetisation and changes in monetary habits and iii the effect of the cost of holding money one important factor which has suffered total neglect is the role of sectoral differences in money demand behaviour and the structural shifts in the sectoral composition of income that accompany development money demand behaviour may vary across sectors this is true not only in developing economies but also in developed economies for example goldfeld 1976 has found that the business sector and the household sector in the united states have different money demand functions an implicit specification error is committed in the aggregative money demand or velocity equation whenever the sectoral income composition factor is omitted on a priori grounds this factor should have special significance in developing economies where sectoral shares in national income change over time in the absence of flow offunds accounts and adequate data on sectoral money holdings for most of the developing economies direct estimation of sectoral demand functions is not possible thus an aggregative specification which incorporates the sectoral income composition factor is necessary to analyse the behaviour of velocity

patterns and strategies of foreign direct investment the case of japanese firms this paper is to study globalization motives and strategies of japanese manufacturing industries by analyzing the causes and patterns of foreign direct investment fdi of japanese manufacturing firms we use regression analysis to determine internally driving out factors and externally inducing factors japanese fdi strategy has gone through three different stages from natural resource seeking investment in the 1950s and 1960s to market expansion investment in the 1970s and 1980s and to a combination of cost reducing low cost labor seeking investment and market penetrating investment in the 1990s our findings show that japanese fdi in asia and other developing countries tends to be in labor intensive sectors where japanese firms are losing their comparative advantages at home the main motive for fdi into these regions is low cost resource seeking on the other hand japanese fdi in the us and europe tends to be knowledge intensive sectors where japanese firms attempt to internalize transaction and i

impacts of business environment changes on global manufacturing in the chinese greater pearl river delta a supply chain perspective business operating conditions have changed substantially in the chinese greater pearl river delta gprd due to the chinese currency appreciation rising labour costs highly volatile oil prices and new processing trade policies such changes have triggered manufacturers to rethink their global operations this article studies potential global manufacturing trends from a supply chain perspective a mixed integer programming model suggests that these changes have negatively affected the region s competitive advantages as its labour intensive production mainly targets at the mass market and competes on low costs three production relocation trends are affirmed i e the relocation to lower cost areas within china lower cost asian countries and areas near end markets however it is also discovered that the gprd region still attracts businesses with its formation of industrial clusters the enhanced comparative advantage against competing regions in inland china or asian lower cost countries under high oil

the effects of rising labour costs on global supply chains the case of china s cotton yarn industry abstractrapid economic growth in china and india has resulted in rapidly rising labour costs in those countries in this study a muth type model is used to assess the potential effects of this deve

explaining the demand for free bank notes abstract this paper explains why the risky notes of banks established during the free banking era 1837 1863 were demanded even when relatively safe specie gold and silver coin was an alternative free bank notes were demanded because they were priced to reflect the expected value of their backing the empirical evidence supports this explanation specifically in new york wisconsin and indiana the expected value of backing was sufficient for free bank notes to circulate at par which they did in minnesota the backing for notes was very poor they exchanged well below par being treated as small denomination securities

turning points in the civil war views from the greenback market in early 1862 the united states government began issuing greenbacks a legal tender currency that was not convertible into gold the government promised to redeem the greenbacks in gold eventually but speculators understood that the probability of redemption depended on union army military fortunes and political developments that affected the total cost of the war to serve the speculative interest in gold a market emerged for the purpose of trading greenbacks for gold dollars because the market price of a greenback reflected the public s perceptions of future war costs the movement of these prices provides unique insights into how people at the time perceived various events we use daily quotations of the gold price of greenbacks to identify a set of dates during the civil war that market participants regarded as turning points in some cases these dates coincide with events familiar from conventional historical accounts of the war in other instances however market participants reacted strongly to events that historians have not viewed as very significant this abstract was borrowed from another version of this item

the emancipation proclamation confederate expectations and the price of southern bank notes we examine the behavior of a semimonthly series of the confederate dollar price of bank notes these notes traded at par with confederate dollars from october of 1861 until november 5 1862 we use a model of the demand for two currencies to argue that this departure from par results from altered southern expectations after the 1862 congressional elections assured the enactment of the emancipation proclamation previously southerners believed a win or a negotiated settlement would allow a return to the union intact when these expectations changed bank notes appreciated against confederate dollars in addition our empirical work shows that notes appreciated following northern victories

china s role in world cotton and textile markets a joint computable general equilibrium partial equilibrium approach under the uruguay round s agreement on textiles and clothing atc the quotas inherited from the multifibre arrangement were gradually phased out between january 1995 and 31 december 2004 this study estimates the impact of the atc s implementation on china s textile industry and china s cotton sector the study finds that assuming equilibrium levels of income and exchange rates the adoption of atc are expected to increase china s net apparel exports textile production cotton consumption cotton production and cotton imports however this study fails to support the hypothesis that the adoption of the atc results in china supplanting the textile industries of the rest of the developing world the impacts on cotton are also smaller than indicated by previous studies these outcomes are somewhat sensitive to estimates of expected efficiency gains around the world

price inertia and policy ineffectiveness in the united states 1890 1980 this paper introduces a new approach to the empirical testing of the lucas sargent wallace lsw policy ineffectiveness proposition which compares the lsw hypothesis with an alternative that states that prices respond fully in the long run but only gradually in the short run to nominal aggregate demand disturbances the empirical equations estimated for a new set of quarterly data extending back to 1890 exhibit uniformly high responses of real output and low responses of price changes to anticipated changes in nominal gnp the paper compares and tests three alternative methods of introducing persistence effects into the lsw framework

an integrated location production distribution and investment model for a multinational corporation abstract we present a mixed integer linear formulation that extends published models on multinational corporation facility location decisions by including exogenous variables such as exchange rates and tariff rates and incorporating production distribution and investment decisions the model provides insights on production levels facility configurations distribution strategies and levels of investment needed at these facilities and explores factors that influence the facility s configuration decisions several scenarios are considered based on various facility configurations and levels of exchange and tariff rates the results obtained from these show that the model s performance and results are in complete agreement with accepted economic theories