expectations the exchange rate and the current account abstract a critical examination is undertaken of the relationship between the exchange rate and the current account in a small open economy theoretically the correlation between the exchange rate and the current account seems to be ambiguous in particular the association between movements in the exchange rate and the current account is likely to depend in an essential manner on the nature of exogenous disturbances affecting the two variables simultaneously lastly the question of the role of an optimal monetary policy and the choice of an exchange rate regime in an uncertain environment is raised

a theory of current account and exchange rate determinations abstract the purpose of this paper is to construct a two period two country model that derives the current account the exchange rate the terms of trade and real interest rates from optimal behavior principles this is done by constructing a model that uses money mainly as a means of exchange where the technology of exchange is flexible due to potential substitutability of time and real balances as a means of coordinating transactions the discussion results in a framework that integrates elements of net saving theories and the monetary approach into a unified structure in which the two approaches are complementary viewpoints

an empirical analysis of life cycle fertility and female labor supply this paper examines us household fertility and female labor supply over the life cycle using data from the panel study of income dynamics the authors investigate how maternal time inputs and market expenditures on offspring as well as the benefits they yield their parents vary with ages of offspring and influence female labor supply and contraceptive behavior the econometric framework combines a female labor supply model and a contraceptive choice index function it also accounts for the fact that conceptions are not perfectly controllable events using longitudinal data on married couples the authors estimate these equations and test alternative specifications of the technologies governing child care the findings suggest that while parents cannot perfectly control conceptions variations in child care costs do affect life cycle spacing of births furthermore the results demonstrate the gains of modeling the linkages between female labor supply and fertility behavior at the household level authors modified

teen motherhood and abortion access it is argued that the net effect of any restriction of abortion access on birth rates is an empirical question this study examines the impact of access to abortion on county teenage birth rates birth rates are expected to decrease by 1 among white adolescents aged 15 19 years for a 25 mile increase in the distance to the nearest abortion provider particularly among in wedlock births data are obtained from 1973 88 national natality local area summary files for counties in the us and four other national sources data did not provide useful information on the empirical relationship between access and birth rate for densely populated urban areas cross sectional findings that had omitted variable bias indicate that an increase of 25 miles in distance to a provider was associated with an additional 1 4 births per 1000 white teenage women or a 3 increase in the average teen birth rate of 45 1000 white teenagers the findings from a county fixed effects model that controlled for omitted variable bias indicate that an increase of 25 miles was associated with a reduction in teen births of 0 5 1000 or about 1 of the mean birth rate both medicaid restrictions and parental consent laws were negative and significant and more negative in poor and more isolated counties the state year effects models did not change findings on distance and medicaid restriction effects the effects of changes in timing of laws suggests that laws followed preexisting trends changes in distance to provider were primarily in the first 2 years following the change out of wedlock births were unaffected by changes in distance to providers the out of wedlock teen birth rate increased with a complete ban on abortions fewer wanted births were associated with small restrictions findings imply that closing of clinics during 1977 88 had an impact on teen birth rates of under one tenth of 1 the 20 increase in teen births was unexplained

affirmative action in higher education how do admission and financial aid rules affect future earnings this paper addresses how changing the admission and financial aid rules at colleges affects future earnings i estimate a structural model of the following decisions by individuals where to submit applications which school to attend and what field to study the model also includes decisions by schools as to which students to accept and how much financial aid to offer simulating how black educational choices would change were they to face the white admission and aid rules shows that race based advantages had little effect on earnings however removing race based advantages does affect black educational outcomes in particular removing advantages in admissions substantially decreases the number of black students at top tier schools while removing advantages in financial aid causes a decrease in the number of blacks who attend college

family planning in a life cycle model with income risk several us states have recently restricted the access to abortions we study fertility intentions and how family planning and abortions are used as mechanisms to control fertility among couples facing income risk we formulate and estimate a life cycle consumption saving model with uninsurable income risk and imperfect contraceptive control that matches fertility behavior in the british household panel survey bhps well we use the estimated model to investigate how family planning and abortions are used to control fertility in our model our simulations suggest that income risk affects family planning and that abortion is used to control fertility due to the presence of income risk this indicates that the availability of abortions might play a role as an insurance mechanism

optimal retailer investments in green operations and preservation technology for deteriorating items abstract this paper examines the impact of dynamic retailer investments in green operations while considering the reference price effect a replenishment problem based on joint pricing dynamic investment in green operations preservation technology and optimal replenishment times for deteriorating items is considered as a way to maximize retailer profit in this problem the demand rate depends on the sales and reference prices as well as green concern level optimal control theory is employed to obtain a dynamic investment rate and a simulated annealing algorithm is used to find the solution of the nonlinear constraint optimization problem which determines the price preservation technology investment and replenishment cycle time in addition computational simulations and sensitivity analyses are carried out to offer managerial insights the findings suggest that continuous investment in green operations and preservation technology can significantly improve the retailer s financial performance the consumer reference price is an important influence on the retailer s decision to invest in green operations furthermore results show that the higher price sensitivity of the market always discourages the retailer from investing in green operations the retailer needs to invest more in green operations for products with relatively high unit value

optimal investment in setup reduction in manufacturing systems with wip inventories abstract a number of models have been proposed to predict optimal setup times or optimal investment in setup reduction in manufacturing cells these have been based on the economic order quantity eoq or economic production quantity epq model formulation and have a common limitation in that they neglect work in process wip inventories which can be substantial in manufacturing systems in this paper a new model is developed that predicts optimal production batch sizes and investments in setup reduction this model is based on queuing theory which permits it to estimate wip levels as a function of the decisions variables batch size and setup time optimal values for batch size and setup time are found analytically even though the total cost model was shown to be strictly non convex

the effect of spending cuts on teen pregnancy in recent years english local authorities have been forced to make significant cuts to devolved expenditure in this paper we examine the impact of reductions in local expenditure on one particular public health target reducing rates of teen pregnancy contrary to predictions made at the time of the cuts panel data estimates provide no evidence that areas which reduced expenditure the most have experienced relative increases in teenage pregnancy rates rather expenditure cuts are associated with small reductions in teen pregnancy rates a result which is robust to a number of alternative specifications and tests for causality underlying socio economic factors such as education outcomes and alcohol consumption are found to be significant predictors of teen pregnancy

non traded goods and the international transmission of fiscal policy abstract this paper looks at the effect of non traded goods on the international transmission of fiscal policy intertemporal movements in the price of non traded goods affect real interest rates differentially between countries the real interest rate effects of a fiscal expansion depend crucially upon both the composition of fiscal spending and the intertemporal elasticity of substitution with a high intertemporal elasticity of substitution in consumption a temporary fiscal expansion on non traded goods will lead consumer real interest rates to move in opposite directions between countries

the lucas critique and the volcker deflation this paper examines in light of the lucas critique the behavior of the phillips curve and of the term structure of interest rates after october 1979 it starts with an informal account of the policy change and then discusses how we might expect these two relations to shift after such a change it finds little evidence of a direct effect of the policy change on the phillips curve at least until 1982 it finds substantial evidence of a direct effect on term structure this abstract was borrowed from another version of this item

the quantitative significance of the lucas critique doan litterman and sims dls have suggested using conditional forecasts to do policy analysis with bayesian vector autoregression bvar models their method seems to violate the lucas critique which implies that coefficients of a bvar model will change when there is a change in policy rules in this article we attempt to determine whether the lucas critique is important quantitatively in a bvar macro model that we construct we find evidence following two candidate policy rule changes of significant coefficient instability and of a deterioration in the performance of the dls method

interest rates and currency prices in a two country world abstract this paper is a theoretical study of the determination of prices interest rates and currency exchange rates set in an infinitely lived two country world which is subject both to stochastic endowment shocks and to monetary instability formulas are obtained for pricing all equity claims nominally denominated bonds and currencies and these formulas are related to earlier closely related results in the theories of money finance international trade

habit persistence and teen sex could increased access to contraception have unintended consequences for teen pregnancies we develop a dynamic discrete choice model of teen sex and pregnancy that incorporates habit persistence habit persistence has two sources here the first is a fixed cost of having sex which relates to a moral or psychological barrier that has been crossed the first time one has sex the second is a transition cost whereby once a particular relationship has progressed to sex it is difficult to move back we estimate significant habit persistence in teen sex implying that the long run effects of contraception policy may be different from their short run counterparts especially if the failure rate of contraception is sufficiently large programs that increase access to contraception are found to decrease teen pregnancies in the short run but increase them in the long run

an exploration in the theory of exchange rate regimes three exchange rate regimes a float a one sided peg and a cooperative peg are evaluated and compared in terms of efficiency and welfare levels the framework of analysis embodies country specific monies with the money of each country being used to transact in its commodity markets and its currency denominated bonds welfare levels depend only on consumption levels in the presence of perfect foresight all equilibrium allocations are pareto efficient in a floating exchange rate regime the perfect foresight equilibrium allocation coincides with an equilibrium of a costless barter economy the same result holds in a one sided peg if the pegging country s exchange rate stabilizing authority breaks even over time in a cooperative peg regime there is a different equilibrium allocation for each combination of exchange rate levels and monetary policies problems of policy coordination and conflicts in desired monetary policies are discussed

health risky behaviour and the value of medical innovation for infectious disease we propose a dynamic framework to study the value of medical innovation in the context of infectious disease we apply our framework to evaluate an hiv treatment breakthrough known as haart the model captures how in lowering both the expected cost and likelihood of hiv infection haart reduced the implicit price of risky sex forward looking agents responded by optimally shifting their behaviour the model also imposes equilibrium constraints explicitly capturing how optimal shifts in behaviour affect equilibrium choices by changing both infection probabilities and the ease of finding partners willing to engage in risky sex using the estimated model we conduct counterfactual simulations to compute the value of haart from the perspective of uninfected agents this includes the option value of the innovation along with value accruing from changes in sex behaviour in response to haart introduction we also calculate the added value of a fully functional vaccine from the perspective of both infected and uninfected agents where infected agents benefit from a vaccine due to resulting shifts in market equilibrium

the paradox of the pill heterogeneous effects of oral contraceptive access the twentieth century saw dramatic increases in nonmarital births concentrated heavily among poor and working class women in this paper we investigate whether the oral contraceptive pill played a causal role in the rise of nonmarital births exploiting exogenous variation in laws governing access to the pill we find that changes in marital access to the pill increased the nonmarital birthrate by between 15 and 18 accounting for about one third of the overall increase in nonmarital births these effects are concentrated almost entirely among women whose fathers did not graduate high school and among minority women we also document that the pill increased spacing between first and second births and lowered the probability that a woman obtained a high school diploma consistent with increases in nonmarital births we find no evidence that postsecondary education levels were influenced by pill access and no evidence that nonmarital births move with male employment patterns our findings add to a growing literature which documents the power of the pill to shape women s lives in broadly heterogenous ways with minority and less well educated women bearing the brunt of the losses a phenomenon we call the paradox of the pill jel j12 j13 i24

real effects of monetary policy in a world economy abstract we present a two country heterogeneous agent model in which changes in a country s monetary policy affect real interest rates relative prices of traded and nontraded goods and real exchange rates nontransitory real effects of monetary policy stem from legal restrictions in the form of country specific reserve requirements without violating the classical assumptions of individual rationality and flexible prices the model s implications seem qualitatively consistent with the u s experience of the 1980s a monetary policy tightening leading to a rise in the real interest rate and to an initial rise in the real value of the dollar which is subsequently reversed

an examination of the effects of government purchases in an open economy this paper examines the effects of permanent and transitory changes in government purchases in the context of a model of a small open economy that produces and consumes both traded and nontraded goods the model incorporates an equilibrium interpretation of the business cycle that emphasizes the responsiveness of agents to intertemporal relative price changes it is demonstrated that transitory increases in government purchases lead to an appreciation of the real exchange rate and an ambiguous change although a likely worsening in the current account while permanent increases have an ambiguous impact on the real exchange rate and no effect on the current account when agents do not know whether a given increase in government purchases is permanent or transitory the effect is a weighted average of these separate effects the weights depend on the relative variances of the transitory and permanent components of government purchases in the past few years a considerable amount of effort has been devoted to examining the effects of macroeconomic policy in an open economy such issues as exchange rate overshooting deviations from purchasing power parity sterilization and monetary control the effectiveness of monetary policy and the choice between alternative exchange rate regimes have been at center stage the models that have been employed to study these issues have run the spectrum from variants of the mundell fleming model such as dornbusch 1976 turnovsky 1981 and kimbrough 1983a to wage contracting and indexing models like bhandari 1982b and flood and marion 1982 to equilibrium models of the business cycle along the lines of bhandari 1982a saidi 1982 and kimbrough 1983b to the closely related intertemporal utility maximization models with money of helpman 1981 and stockman 1980 1983 one common thread that in a sense unifies all of these and other recent contributions is that they are concerned primarily with the effects of alternative monetary and exchange rate policies that the central bank might enact in light of the development and refinement during this period of the monetary approach to the balance of payments and the exchange rate it is not surprising i would like to thank phil brock jeremy greenwood gary zarkin and two anonymous

devaluation fiscal deficits and the real exchange rate this article examines the use of fiscal policies to sustain the effects of a nominal devaluation on the real exchange rate it is shown that the magnitude of the change in the real exchange rate depends not only on the size of the devaluation and the degree of fiscal adjustment but also on the means by which the fiscal deficit is reduced the change in the nominal exchange rate necessary to maintain the depreciation of the real exchange rate will depend on whether the fiscal deficit is eliminated by increasing taxes or by reducing government expenditures on traded and nontraded goods the required depreciation of the domestic currency will be larger if the fiscal deficit is reduced by increasing taxes than it will be if the deficit is cut by lowering government expenditures further the depreciation would be smaller if the cuts in expenditure fell on traded rather than nontraded goods this result implies that the authorities must ensure consistency between exchange rate action and policies to reduce fiscal imbalances in order to achieve a desired level of the real exchange rate necessary to attain balance of payments equilibrium the real exchange rate represents a key relative price in the economy and policies to change it are often the centerpiece of adjustment programs designed to improve international competitiveness and shift resources toward the production of tradable goods consequently it is critical for policymakers to have some idea of the magnitude and time path of the likely response of the real exchange rate to nominal exchange rate action it is a well accepted proposition however that a nominal devaluation will only have a transitory effect on the real exchange rate in the long run domestic wages and prices will rise by the full amount of the devaluation and the real exchange rate will return to its original level to alter the real exchange rate on a permanent basis therefore devaluation has to be supplemented by policies that restrain the increase in domestic factor costs that results from a devaluation generally speaking the effects of a devaluation on the real exchange rate can

a resource portfolio model for equipment investment and allocation of semiconductor testing industry profitable but risky semiconductor testing market has led companies in the industry to carefully seek to maximize their profits by developing a proper resource portfolio plan for simultaneously deploying resources and selecting the most profitable orders various important factors such as resource investment alternatives trade offs between the price and speed of equipment and capital time value further increase the complexity of the simultaneous resource portfolio problem this study develops a simultaneous resource portfolio decision model as a non linear integer programming and proposes a genetic algorithm to solve it efficiently the proposed method is employed in the context of semiconductor testing industry to support decisions regarding equipment investment alternatives including new equipment procurement rent and transfer by outsourcing and phasing outing for simultaneous resources such as testers and handlers and task allocation experiments have showed that our approach in contrast to an optimal solution tool obtains a near optimal solution in a relatively short computing time

entrepreneurship social mobility and income redistribution in south india development economists have been preoccupied with the problem of increasing the size of the gnp pie to the relative neglect of its distribution despite the recent disenchantment with the viewpoint that all classes share in the benefits of industrial growth empirical data on the distribution of income business opportunity and economic power are in short supply many of the studies on entrepreneurship and economic development when they are not apologetics for ruthless capitalist exploitation as paul baran suggests extol the achievements of the capitalist entrepreneur without examining class origins and monopoly advantage joseph schumpeter sees entrepreneurs irrespective of class origin as heroic figures with the dream and will to found a private kingdom to conquer adversity to achieve success for its own sake and to experience the joy of creation for gustav papanek 1967 the private entrepreneur who is frugal diligent far sighted remarkably able and willing to take political risks is in large part responsible for the success of pakistan in achieving rapid industrialization

real exchange rates under alternative nominal exchange rate systems abstract the paper develops an equilibrium model of the determination of exchange rates the relative price of nontraded goods and the current account the focus is on the effects of various real and nominal disturbances and the conditions under which the nominal exchange rate system is neutral with respect to real variables in the economy the model demonstrates an assymetry in the roles of trade and nontraded goods in affecting exchange rates an econometric investigation of the raltion between the exchange rate system and the variability of real exchange rates provides some evidence against the neutrality hypothesis

inventory and investment in setup and quality operations under return on investment maximization in this paper we construct and analyze a return on investment roi maximization model for inventory and capital investment in setup and quality operations under an investment budget constraint specifically we show how such an roi maximization model can be formulated and derive analytical results such as the conditions under which the inventory is reduced and for the determination of the unique global optimal solution in addition by applying the reformulation linearization technique rlt we show via numerical examples how this nonconvex optimization model can be solved effectively and how rlt may produce superior results to those from the conventional cut across the board rule cabr various managerial insights are provided throughout the paper for example as the investment budget increases or decreases a fundamental shift of investment strategies setup cost reduction vs quality improvement may be necessary so as to maximize roi

cointegration tests of purchasing power parity the impact of non traded goods abstract this paper explores the relationship between non traded goods relative prices and the real exchange rate we apply the johansen maximum likelihood procedure to two different data sets of traded and non traded prices first we develop a model which highlights the importance of non traded relative price movements in causing deviations in the real exchange rate away from ppp we find a strong association a rise fall in the domestic relative price of non traded goods is associated with an appreciation depreciation in the real exchange rate while the opposite is true for the foreign relative price we conclude that non traded goods relative price movements are an important determinant of real exchange rate behavior

review of inventory systems with deterioration since 2001 abstract this paper presents an up to date review of the advances made in the field of inventory control of perishable items deteriorating inventory the last extensive review on this topic dates back to 2001 goyal s k and giri b c recent trends in modeling of deteriorating inventory european journal of operational research 134 1 16 since then over two hundred articles on this subject have been published in the major journals on inventory control indicating the need for a new review we use the classification of goyal and giri based on shelf life characteristics and demand characteristics contributions are highlighted by discussing main system characteristics including price discounts backordering or lost sales single or multiple items one or two warehouses single or multi echelon average cost or discounted cash flow and payment delay

preservation technology investment for deteriorating inventory abstract the objective of this study is to develop a deteriorating inventory policy when the retailer invests on the preservation technology to reduce the rate of product deterioration a solution procedure is presented to determine an optimal replenishment cycle shortage period order quantity and preservation technology cost such that the total profit per unit time is maximized a numerical example and sensitivity analysis are presented to illustrate the model

monetary policy arithmetic reconciling theory with evidence empirical evidence indicates that in countries with low inflation rates a permanent decrease in inflation rate either has no impact on capital stock and output superneutrality or causes them to fall moderately existing budget arithmetic models of monetary policy cannot deliver superneutrality in this paper we conduct a budget arithmetic analysis of monetary policy using a money demand specification money in the utility function that is new to this literature we find that one simple assumption about utility from money delivers superneutrality while a more general assumption delivers departures from superneutrality in the direction consistent with the evidence jel classification e60 e13

the capitalization of income streams and the effects of open market policy under fixed exchange rates abstract this paper investigates the long and short run neutrality of open market monetary policy in a world of fixed exchange rates and imperfect substitutability between bonds denominated in different currencies using an illustrative portfolio balance model it shows that when the public discounts the future tax liabilities associated with the national debt and the central bank supports the exchange rate by trading non interest bearing foreign assets open market policy has a short run effect but no long run effect on the domestic price level and interest rate when the foreign exchange intervention assets earn interest that is rebated to and capitalized by the public open market policy loses even its short run efficacy the capital account offset to monetary policy is complete

impact of product pricing and timing of investment decisions on supply chain co opetition abstract in supply chain co opetition firms simultaneously compete and co operate in order to maximize their profits we consider the nature of co opetition between two firms the product supplier invests in the technology to improve quality and the purchasing firm buyer invests in selling effort to develop the market for the product before uncertainty in demand is resolved we consider three different decision making structures and discuss the optimal configuration from each firm s perspective in case 1 the supplier invests in product quality and sets the wholesale price for the product the buyer then exerts selling effort to develop the market and following demand potential realization sets the resale price in case 2 the supplier invests in product quality followed by the buyer s investment in selling effort then after demand potential is observed the supplier sets the wholesale price and the buyer sets the resale price finally in case 3 both firms simultaneously invest in product quality and selling effort respectively subsequently observing the demand potential the supplier sets the wholesale price and the buyer sets the resale price we compare all configuration options from both the perspective of the supplier and the buyer and show that the level of investment by the firms depends on the nature of competition between them and the level of uncertainty in demand our analysis reveals that although configuration 1 results in the highest profits for the integrated channel there is no clear dominating preference on system configuration from the perspective of both parties the incentives of the co opetition partners and the investment levels are mainly governed by the cost structure and the level of uncertainty in demand we examine and discuss the relation between system parameters and the incentives in desiging the supply contract structure

investment policy for multiple product setup reduction under budgetary and capacity constraints abstract this paper investigates the impact of setup cost and time reduction on production batch sizes and the schedule in a batch manufacturing system producing multiple products it is assumed that the system s operating environment is deterministic and there are budgetary and capacity constraints the schedule feasibility of the embedded economic lot scheduling problem is attained by using the common cycle approach the extent of setup reduction attained is treated as a function of capital investment in technology the problem of simultaneously determining the lot sizes as well as the investments made in setup reduction for the different products with the objective of minimizing the total relevant cost is formulated as a non linear constrained optimization model a solution algorithm using the generalized lagrangian approach is developed to solve this problem a heuristic approach is also suggested for cases where the optimization procedure becomes computationally cumbersome the concepts developed are illustrated through a numerical example

an application of tournament genetic algorithm in a marketing oriented economic production lot size model for deteriorating items abstract the goal of this research is to discuss an application of tournament genetic algorithm tga for solving an economic production lot size epl model in this model the production rate of the item is finite and it is assumed to be a decision variable the demand rate is also a deterministic function of selling price and the marketing cost the selling price per unit item is determined by a mark up over the unit production cost the deterioration rate at any instant is a linear increasing decreasing function of time partial backlogging shortages are allowed with a variable rate dependent on the length of the waiting time up to the starting of next production this model is formulated as a highly non linear constrained optimization problem to solve this problem a tga with steady state selection whole arithmetic crossover and non uniform mutation has been developed and applied the model has been illustrated with three numerical examples finally sensitivity analyses have been shown graphically to study the variations of the average profit with respect to the different parameters

a further exploration in the theory of exchange rate regimes in an interesting paper in this journal elhanan helpman 1981 develops a simple two country model to compare the welfare levels that are achieved under different exchange rate regimes in a world characterized by perfect foresight his basic finding is that equilibrium consumption allocations and hence welfare levels are identical under a floating exchange rate system and a one sided peg fixed exchange rate regime this result is due to helpman s assumption that output is determined exogenously which allows a separation of the real and monetary sides of the economy the purpose of this paper is to extend helpman s model by making two alterations in his setup 1 to allow production to be endogenously determined as a function of labor force participation and 2 to allow welfare levels to be dependent on labor service as well as on consumption the main conclusion then obtained is that a country may achieve a higher welfare level under a flexible exchange rate regime than under a fixed exchange rate regime since it is able to choose an optimal rate of inflation or currency depreciation

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

an analysis of out of wedlock childbearing in the united states this paper relates the erosion of the custom of shotgun marriage to the legalization of abortion and the increased availability of contraception to unmarried women in the united states the decline in shotgun marriage accounts for a significant fraction of the increase in out of wedlock first births several models illustrate the analogy between women who do not adopt either birth control or abortion and the hand loom weavers both victims of changing technology mechanisms causing female immiseration are modeled and historically described this technology shock hypothesis is an alternative to welfare and job shortage theories of the feminization of poverty excerpt

import prices export prices and the current account an asymmetry abstract we demonstrate that there is an important asymmetry between the effects of temporary import and export price shocks on the current account that is ignored in theoretical and empirical work this asymmetry is found to hold for u s and u k data

a critique of exchange rate treatment in agricultural trade models comment the influence of the value of the dollar on developments in the u s farm sector is now widely recognized even so considerable controversy remains over the magnitude of exchange rate effects on agriculture while this is largely an issue of empirical measurement there is also a broadly held perception that the conceptual discussion of these effects has been inadequate in part this is due to extensive discussion of these effects based on partial equilibrium often single market analysis the single market framework imposes tight constraints on exchange rate impacts on equilibrium prices and export quantities in particular in a single market partial equilibrium model the exchange rate elasticity of price is always less than unity in absolute value 1 in an important paper chambers and just extended the single market partial equilibrium approach to account for the effects of an exchange rate realignment on all prices in an n good economy their analysis remained partial in the sense that the exchange rate was exogenous and income was held constant nevertheless they concluded that potential cross price effects in excess supply and excess demand functions make it inappropriate to restrict the exchange rate elasticity of any specific price to the closed interval 1 0 the purpose of this comment is to place the analysis of potential exchange rate effects in agricultural markets more firmly in the context of general equilibrium trade theory the approach presented herein follows krueger chipman 1974 and others in drawing a distinction between traded and nontraded goods then the crucial concept is the association of the real exchange rate and movements of disposable income between countries the xchange rate which affects the prices of traded goods vis a vis the prices of nontraded goods and relative prices among traded goods adjust jointly to accommodate the equilibrium induced by a trade imbalance the income movement between countri s is key because it creates a link between exchange rate and price changes that is not considred in a partial equilibrium analysis explicit consideration of this link clarifies the role of the exchange rate in goods markets and provides a clearer rationale for the case of a percentage change in a price exceeding the percentage exchange rate realignment

optimal replenishment policies for non instantaneous deteriorating items with stock dependent demand abstract wu et al 2006 an optimal replenishment policy for non instantaneous deteriorating items with stock dependent demand and partial backlogging international journal of production economics 101 369 384 established an inventory model for non instantaneous deteriorating items with stock dependent demand and obtained the optimal replenishment policy in this paper we first amend wu et al s model by changing the objective to maximizing the total profit secondly we set a maximum inventory level in the model to reflect the facts that most retail outlets have limited shelf space thirdly we relax the restriction of zero ending inventory when shortages are not desirable we then establish the theoretical results and provide an algorithm to find the optimal solution finally we present some numerical examples to illustrate the results

modeling heterogeneity and state dependence in consumer choice behavior in frequently purchased consumer goods markets consumer brand choices exhibit substantial persistence across purchase occasions in this article i estimate a choice model that admits of both heterogeneity in preferences and true state dependence as sources of this persistence using nielsen scanner data on ketchup i find evidence for true state dependence in the choice process even after controlling for a rich heterogeneity structure simulation of the model indicates that the long term effect of a promotion induced purchase on future purchase probabilities is positive but small

a dynamic model of contraceptive choice of spanish couples in this paper we propose a simple dynamic stochastic model of sterilization and contraceptive use and we estimate its structural parameters using a sample of married couples from the 1995 spanish family and fertility survey the estimated structural model improves on previous studies in terms of its ability to rationalize observed behavior the large proportion of women contracepting at parity 0 is interpreted as evidence of precautionary contraceptive behavior allowing for simple forms of permanent unobserved heterogeneity across couples in their ability to conceive has important implications for estimates of utility and cost parameters our estimates of child valuation parameters imply that most spanish couples would have two children but significant deviations from this goal are brought about by imperfect and costly fertility control our simulations suggest that the introduction of sterilization has reduced fertility by an average of 0 2 children per couple and that the availability of more effective reversible contraceptive methods would reduce expected fertility by up to 0 4 children per couple

consumption permanent income and financial wealth in canada empirical evidence on the intertemporal approach to the current account the intertemporal approach to the current account is rejected as a complete explanation of the canadian current account federal government fiscal policy plays an important role in the determination of the current account a private sector agent that treats its holdings of net liabilities of the federal government as net wealth accumulates the sum of these liabilities and the net liabilities of non residents as part of an intertemporally optimal plan this result indicates both fiscal policy and intertemporal considerations are important determinants of current account behaviour consommation revenu permanent et richesse financiere au canada resultats empiriques d une approche au compte courant mettant l accent sur la dimension intertemporelle cet article montre que l approche mettant l accent sur la dimension intertemporelle ne produit pas une explication complte du comportement du compte courant canadien i1 semble que la politique fiscale du gouvernement federal joue un r6le important dans la conformation du compte courant un agent economique prive composite qui traite son portefeuille de dettes nettes du gouvernement federal comme richesse nette va accumuler la somme de ces dettes et des dettes nettes des non residents dans le cadre de son plan intertemporel optimal les resultats montrent que la politique fiscale et des considerations intertemporelles sont des elements determinants du comportement du compte courant

the terms of trade the real exchange rate and economic fluctuations this paper examines the relationship between terms of trade and business cycles using a three sector intertemporal equilibrium model and a large multicountry database results show that terms of trade shocks account for nearly one half of actual gdp variability the model explains weak correlations between net exports and terms of trade the harberger laursen and metzler effect and produces large and weakly correlated deviations from purchasing power parity and real interest rate parity terms of trade shocks cause real appreciations and positive interest differentials although productivity shocks have opposite effects the puzzle that welfare gains of international asset trading are negligible is left unresolved copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

quality improvement and setup reduction in the joint economic lot size model abstract the co maker concept has become accepted practice in many successful global business organizations this fact has resulted in a class of inventory models known as joint economic lot size jels models heretofore such models assumed perfect quality production on the part of the vendor this paper relaxes this assumption and proposes a quality adjusted jels model in addition classical optimization methods are used to derive models for the cases of setup cost reduction quality improvement and simultaneous setup cost reduction and quality improvement for the quality adjusted jels numerical results are presented for each of these models comparisons are made to the basic quality adjusted model results indicate that all three policies exhibit significantly reduced total cost however the simultaneous model results in the lowest cost overall and the smallest lot size this suggests a synergistic impact of continuous improvement programs that focus on both setup and quality improvement of the vendor s production process sensitivity analysis indicates that the simultaneous model is robust and representative of practice

real transfers in fixed exchange rate systems and the international adjustment mechanism abstract fixed exchange rates can be maintained by different types of stabilization schemes this paper takes a look at some alternative institutional settings and shows that there is an inherent redistribution mechanism in some of them that will influence the world allocation of consumption an examination of the global adjustment to monetary disturbances illustrates some interesting implications of the institutional differences between alternative systems the results suggest that the description of the international adjustment mechanism under fixed exchange rates given by the monetary approach to the balance of payments is valid only under quite restrictive assumptions

the effect of medicaid abortion funding restrictions on abortions pregnancies and births this paper considers whether state medicaid abortion funding restrictions affect the likelihood of getting pregnant having an abortion and bearing a child we exploit a natural experiment afforded by supreme court decisions and employ more traditional multivariate models with alternative fixed effect specifications an analysis of 12 years of state level data indicate that restrictions are associated with a reduction in abortions and either no change or a reduction in births implying fewer pregnancies subsequent analysis of the national longitudinal survey of youth nlsy is consistent with these findings and show the response is concentrated among the low income population

on the use of expectations data in estimating structural dynamic choice models despite the importance of expectations in models of decision behavior under uncertainty few empirical economists have made use of subjective expectations data in estimating such models assuming that expectations about future behavior accurately portray optimal future behavior conditional on current information it is shown that such data can provide similar information about the decision process as can data on current or retrospective behavior the value of self reported choice expectations is illustrated by using information on respondents expected future occupation in the estimation of a structural dynamic model of teacher career decisions under uncertainty

expectations and commodity price dynamics the overshooting model monetary policy has important effects on agricultural commodity prices because though they are flexible other goods prices are sticky this paper formalizes the argument by applying the dornbusch overshooting model a decline in the nominal money supply is a decline in the real money supply in the short run it raises the real interest rate which depresses real commodity prices they overshoot their new equilibrium in order to generate an expectation of future appreciation sufficient to offset the higher interest rate these real effects which vanish in the long run also result from a decline in the money growth rate

an economic production and remanufacturing model with learning effects abstract managing inventory in reverse logistics has been receiving much attention in recent years one inventory problem that has been of interest to researchers is the production and remanufacturing model where used items are collected and remanufactured to satisfy customer demand the available models in the literature do not discuss the learning effects in production and remanufacturing processes this may not be true in industries where labour costs and learning costs are expensive by modelling these learning effects management may use established learning models to better utilize capacity manage inventories and coordinate production and distribution throughout the chain this paper extends the production remanufacture and waste disposal model by assuming learning to occur in both production and remanufacturing processes however this paper also assumes that improvements due to learning require capital investment mathematical models are developed numerical examples are provided and results are discussed

production planning for a deteriorating item with stochastic demand and consumer choice abstract this paper concerns inventory control of a deteriorating product with non negligible procurement lead time that perishes after a known number of periods demand for fresh products during each period is represented as a random variable with known probability distribution but only a fraction of this demand is satisfied during any given period due to item deterioration we derive the expected profit function for a two period problem with one production opportunity before the selling season begins and a single product type with two period shelf life for the case in which demand during both periods is uniform independent and identically distributed we identify sufficient conditions for the existence of an optimal solution and present a straightforward procedure for obtaining the solution

the behavioral dynamics of youth smoking individual smoking behavior persists over time but the extent to which we can attribute this repeated behavior to past use or individual heterogeneity is not well understood to address this empirical question we develop a dynamic model of smoking decisions which explicitly accounts for the impact of endogenous previous smoking behavior and allows for observed and unobserved individual heterogeneity the model is estimated using longitudinal data on a representative sample of teens from all 50 united states from 1988 to 1992 we have two main findings first we show that there is a significant causal role for past cigarette consumption even after controlling extensively for observed and unobserved heterogeneity second we find measurable evidence of different sensitivities to cigarette price depending on past use these two findings suggest that a cigarette price increase will have a larger aggregate effect in the long run than in the short run as more individuals accumulate in the price sensitive non smoking group

what to stabilize in the open economy we consider the question how best to maintain price level stability in an open economy and evaluate three possible policy choices a a constant money growth rate rule b a fixed exchange rate and c a policy of explicit commitment to a price level target in each case we assume that policy is conducted by injecting reserves into or withdrawing reserves from the banking system in evaluating the three regimes we adopt the criterion that the best policy should leave the least scope for indeterminacy and excessive economic volatility in a steady state equilibrium the choice of regime is largely irrelevant any steady state equilibrium under one regime can be duplicated by an appropriate choice of the control variable under any other regime however we show that the sets of equilibria under the three regimes are dramatically different when all countries follow the policy of fixing a constant rate of money growth there are no equilibria displaying endogenously arising volatility and there is no indeterminacy of equilibrium under a regime of fixed exchange rates indeterminacies and endogenously arising fluctuations are impossible if and only if the country with the low reserve to deposit ratio is charged with maintaining the fixed rate finally when one country targets the time path of its price level under very weak conditions there will be indeterminacy of equilibrium and endogenously arising volatility driven by expectations

an optimal replenishment policy for deteriorating items with effective investment in preservation technology abstract in this paper considering the amount invested in preservation technology and the replenishment schedule as decision variables we formulate an inventory model with a time varying rate of deterioration and partial backlogging the objective is to find the optimal replenishment and preservation technology investment strategies while maximizing the total profit per unit time for any given preservation technology cost we first prove that the optimal replenishment schedule not only exists but is unique next under given replenishment schedule we show that the total profit per unit time is a concave function of preservation technology cost we then provide a simple algorithm to figure out the optimal preservation technology cost and replenishment schedule for the proposed model we use numerical examples to illustrate the model

macroeconomic policy exchange rate dynamics and optimal asset accumulation the paper develops a model of exchange rate and current account determination for a small economy peopled by infinitely lived utility maximizing households in this setting a central bank purchase of foreign exchange has no real effects when central bank foreign reserves earn interest at the world rate and proceeds are returned to the public in contrast an increase in the monetary growth rate does have real effects even in the long run the model developed here implies that an increase in government spending may lead to a surplus on current account the external adjustment process predicted by the model is one in which consumption real balances and external assets all rise or fall simultaneously