perishable inventory theory a review this paper reviews the relevant literature on the problem of determining suitable ordering policies for both fixed life perishable inventory and inventory subject to continuous exponential decay we consider both deterministic and stochastic demand for single and multiple products both optimal and sub optimal order policies are discussed in addition a brief review of the application of these models to blood bank management is included the review concludes with a discussion of some of the interesting open research questions in the area

intertemporal price speculation and the optimal current account deficit reply and clarification abstract in the model of obstfeld 1983 a country hurt by a temporary shift in its terms of trade whether the shift is infinitesimal or not always runs a temporary current account deficit temporary rises in relative export prices always cause surpluses in the model this note derives these results within an analysis that clarifies how temporary terms of trade shocks affect the consumption based real interest rate on external debt and hence the current account

the outlook for us oil dependence abstract oil dependence is defined as a dynamic problem of short and long run market power the potential monopoly power of an oil cartel depends on its market share and the elasticities of oil supply and demand while the economic vulnerability of oil consuming states depends most directly on the quantity of oil imported and the oil cost share of gross domestic product gdp of these factors only the market share of the organization of petroleum exporting countries opec cartel and the rate of growth of world oil demand are clearly different than they were 25 years ago opec still holds the majority of world oil and in the future will regain market share a hypothetical 2 year supply reduction in 2005 2006 similar in size to those of 1973 1974 or 1979 1980 illustrates the potential benefits to opec and harm to the us economy of a future oil price shock opec s revenues are estimated to increase by roughly 0 7 trillion while the us economy loses about 0 5 trillion strategic petroleum reserves seem ineffective against a determined multi year supply curtailment increasing the market s price responsiveness by improving the technologies of oil supply and oil demand can greatly reduce the costs of oil dependence each element of this interpretation of the oil dependence problem is well supported by previous studies this paper s contribution is to unite these elements into a coherent explanation and to point out the enormously important implications for energy policy

structural adjustment and the construction sector abstract this paper adds a construction sector to a dynamic dependent economy model equipped with consumer tradeables and non tradeables sectors the model is used to study the response of the production structure relative prices and the trade balance to a favorable terms of trade shock under the benchmark assumptions of perfect intersectoral factor mobility a perfect international capital market and no adjustment costs for realistic relative capital intensities the model predicts a boom in the construction and consumer non tradeables sectors a contraction of the tradeables sector and no relative price changes the implications of relaxing those benchmark assumptions are discussed separately

monetary policy exchange rates and investment in a keynesian economy abstract this paper embeds in an otherwise conventional macroeconomic model the assumption of rational investment decisions in a world in which investment goods can be imported expansionary monetary policy will lead to a reduction in domestic investment if i the share of imports in total investment expenditure is high enough and ii keynesian nominal price rigidities vanish slowly enough expansionary fiscal policy tends to crowd in domestic investment

opec retrospective and prospects 1973 1990 abstract using a relatively simple economic model of the world oil market we review what has happened since the price quadrupling of 1973 1974 comparing the model s results with actual historical data we also make projections through 1990 assuming that opec s real price is either held constant or determined by a target capacity utilization pricing rule

intertemporal price speculation and the optimal current account deficit abstract the paper studies the effects of terms of trade fluctuations in an infinite horizon optimizing model of a small open economy while the current account response to a transitory terms of trade shock is in part explicable by intertemporal smoothing an important additional factor is the effect of anticipated future terms of trade shifts on the ral value of the external debt in terms of the home consumption basket when foreign borrowing is indexed to the import good a temporary worsening of the terms of trade creates the expectation of a decline in the real value of external debt this fall in the relevant real interest rate leads households to increase consumption while export prices are low and to decrease consumption sharply once the terms of trade recover if an adverse price shock is of sufficiently brief duration instantaneous utility will rise initially

capital goods imports the real exchange rate and the current account conventional aggregate models of open economies typically rule out trade in capital goods but capital goods account for a major share of the world trade in 1990 they represented more than 40 percent of u s merchandise exports and more than 30 percent of its imports in the same year capital goods imports represented an average of roughly 30 of total imports for 82 industrial and developing countries and almost 9 percent of their gdp this report shows that the presence of imported capital goods greatly changes the short and long run effects of macoreconomic policies and external shocks on key macroeconomic variables using a rational expectations aggregate model with intertemporally optimizing agents and with trade in both consumption and capital goods it finds that the long run equilibrium of the economy displays a negative relationship between the real exchange rate and real output that is a real appreciation is associated with an increase in long run output and the capital stock with investment subject to adjustment costs the response to unanticipated permanent disturbances involves a changing real exchange rate and a non zero current account the author analyzes the macroeconomic consequences of changes in fiscal policy and of transfers of wealth from abroad he show that both have well defined long run effects on the capital stock and real output fiscal expansion in particular may have a long run crowding in effect on investment by constrast the impact of disturbances on the current account is ambiguous the author shows that it depends critically on the degree of intertemporal substitutability in both consumption and investment with the latter measured by the magnitude of investment adjustment costs

aggregate spending and the terms of trade is there a laursen metzler effect this paper investigates the spending and current account effects of terms of trade shifts in a model where households maximize utility over an infinite planning period in the framework developed here an economy specialized in production must experience a fall in aggregate spending and a current surplus as a result of an unanticipated permanent worsening in its terms of trade the paper s model thus provides a setting in which the current account deficit predicted by laursen and metzier harberger and others fails to materialize

imported input price and the current account in an optimizing model without capital mobility abstract this paper analyses the effect of an oil price increase in an economy which cannot borrow in the international capital markets current account surpluses and deficits are matched by reserve changes at the central bank it is shown in an optimizing setup that an unanticipated oil price increase worsens the current account and lowers the real interest rate contrary to models which assume perfect capital markets

the terms of trade and the current account the harberger laursen metzler effect the paper examines the effect of terms of trade changes on a small country s spending and current account assuming optimizing behavior in an intertemporal framework with perfect international capital mobility a temporary future terms of trade deterioration implies a deterioration improvement of the trade balance whereas a permanent terms of trade deterioration has an ambiguous effect depending on the rate of time preference nominal and real variables are considered via exact price indexes two periods and an infinite horizon are examined

the impact of terms of trade shocks on a small open economy a stochastic analysis abstract the impact of a change in the terms of trade on the economic performance of a small economy is analyzed both the effects of unanticipated shocks and changes in the mean and variance of the probability distributions generating these disturbances are discussed in all cases the key element determining the adjustment is the effect on the rate of growth of real wealth to which in equilibrium all other real quantities are directly tied conditions for the harberger laursen metzler effect to hold are considered the impact of these changes on economic welfare as measured by expected discounted utility of the representative agent is also addressed jel f41 f43

cartel formation and oligopoly structure a new assessment of the crude oil market while economic theorists regard opec as a perfect example of a long lasting cartel energy economists strongly deny such view applying the ideas of new empirical industrial organization a market description is derived cartel theory and empirical evidence fit together well stable long lasting cartels can be explained only for subclasses of market models and exactly such type of model is obtained here a variety of different market models is tested opec and the market for crude oil is best described by a price leader model

terms of trade disturbances and fiscal policy in a small open economy this paper examines the dynamic and steady state effects of shifts in the terms of trade and the level of government debt in a small open economy the study is based on a simulation model that is loosely calibrated to the canadian economy there are three goods in the model nontradables importables and exportables consumers optimize over their expected lifetime and do not care about the well being of future generations so ricardian equivalence does not hold profit maximizing firms use inputs of capital labor and an intermediate good and face costly adjustment of capital copyright 1993 by royal economic society

climate policy under factor mobility a differentiated case for capital taxation abstract in a general equilibrium model with two periods and a finite fossil resource i analyze the non cooperative climate policies of symmetric countries that are in competition for mobile factors of production capital and fossil energy the paper shows that countries that want to slow down climate change but are also concerned about tax revenues from mobile tax bases have a rationale to supplement environmental taxes on fossil fuels with source based capital taxes or subsidies more specifically countries find it beneficial to subsidize capital in period one and tax it in period two the first period subsidy on capital facilitates a higher environmental tax by counteracting its adverse effects and increases national and global welfare in equilibrium by contrast the capital tax in period two induces inter and intratemporal distortions that lead to lower welfare the rate of resource extraction is inefficiently high in equilibrium no matter which tax portfolio is at the governments disposal furthermore unintended green paradox effects of demand side policies are shown to arise even in general equilibrium with factor mobility finally factor mobility does not necessarily lead to a higher rate of extraction and lower welfare compared to autarky

income effects of adjustment to a terms of trade disturbance and the demand for adjustment finance abstract this paper shows that when economic adjustment is costly and therefore takes place gradually it is optimal to seek external finance in response to permanent as well as transitory shocks while at the same time adjusting to the disturbance sluggish adjustment also creates an asymmetric relationship between permanent changes in the terms of trade and optimal foreign borrowing that is while a permanent deterioration in the terms of trade generates a demand for foreign loans so would an improvement the paper presents suggestive evidence that the effects may be empirically significant though they arise from effects that are technically second order of magnitude

current account norms in natural resource rich and capital scarce economies abstract the permanent income hypothesis implies that frictionless open economies with exhaustible natural resources should save abroad most of their resource windfalls and therefore feature current account surpluses resource rich developing countries rrdcs on the other hand face substantial development needs and tight external borrowing constraints by relaxing these constraints and providing a key financing source for public investment resource windfalls might then be associated with current account deficits or at least low surpluses in this paper we develop a neoclassical model with private and public investment and several pervasive features in rrdcs including absorptive capacity constraints inefficiencies in investment borrowing constraints and capital scarcity we use the model to study the role of investment and these frictions in shaping the current account dynamics under windfalls since consumption and investment decisions are optimal the model also serves to analyze current account norms benchmarks we apply the model to the economic and monetary community of central africa and discuss how our results can be used to inform external sustainability analyses in rrdcs

the price of oil lower and upper bounds abstract the magnitude of the recent dramatic fall in oil prices has once again like the rises of 1973 and 1979 taken most energy analysts and oil industry participants by suprise creating even greater uncertainty about future developments in the oil market in this paper we suggest that a return to first principles is appropriate at this time in order to help clarify the outlook two simple hotelling type models of the oil market are described one of the perfectly competitive market the other of a purely monopolistic market these two models are used to derive lower and upper bounds on oil prices a reinterpretation of the history of the oil market over the last 25 years is suggested with some implications for the future course of oil prices

mexican investment after the tequila crisis basic economics confidence effects or market imperfections abstract this study provides an empirical investigation of the determinants of the growth of investment in mexico especially after the tequila crisis the paper uses the generalized method of moments estimator to determine if investment can be explained with a standard investment function the model predicts well the recovery of investment the tradable sector has an accelerator effect that exceeds that of the non tradable sector domestic real interest rates and real exchange rate volatility are also significant results support the hypothesis of a confidence effect during the 1982 1983 crisis but not during the tequila crisis there is also evidence of credit rationing

deterioration of the terms of trade and capital accumulation a reexamination of the laursen metzler effect abstract this paper analyzes the effect of both a permanent and a temporary deterioration in the terms of trade on a small open economy the model based on intertemporal optimization emphasizes the labor leisure choice and the role of capital accumulation the transitional dynamics is shown to depend upon the long run response of the capital stock to the terms of trade shock this consists of a negative substitution effect together with a positive income effect whether or not the laursen metzler effect holds depends upon whether the income effect dominates the substitution effect

tariffs and the current account the role of initial distortions from an initial position of laissez faire temporary tariffs have been shown to improve the current account however if tariffs are initially positive as in many actual economies temporary tariffs will magnify an existing distortion and therefore lower real income during protectionist periods optimizing agents may wish to smooth the path of consumption relative to income by foreign borrowing if the intertemporal elasticity of substitution is sufficiently low temporary tariffs may actually worsen the current account

terms of trade shocks and optimal investment another look at the laursen metzler effect conventional analyses of the effect of terms of trade shocks provide a misleading view of their impact on investment and the current account because capital goods imports are excluded from the analytical framework the author argues that such an exclusion is both arbitrary and unrealistic the author reexamines the consequences of permanent and transitory changes in terms of trade in a rational expectations model of a small open economy with intertemporally optimizing agents and with trade in both consumption and capital goods in this framework the responses to a permanent terms of trade improvement in unambiguous the long run capital stock and thus investment must rise and the current account must deteriorate exactly the opposite of the laursen metzler effect a transitory improvement in the terms of trade raises saving but has an uncertain effect on investment so the impact on the current account is generally ambiguous and is shown to depend on three factors the import contents on consumption and investment the duration of the windfall and the degree of intertemporal substitutability in both consumption and investment

the harberger laursen metzler effect under capital market imperfections abstract this paper re examines the effects of a permanent terms of trade change on a dynamic small open economy facing an imperfect world capital market as studied in obstfeld 1982 aggregate spending and the terms of trade is there a laursen metzler effect quarterly journal of economics 97 251 270 which assumes that the economy faces a downward sloping bond curve the novelty of the present paper is that a saddle path stable steady state comes into existence under the assumption that households subjective discount rate is a decreasing function of instantaneous utility the harberger laursen metzler hlm effect is shown to hold unambiguously i e an unanticipated permanent terms of trade deterioration leads to an increase in aggregate expenditure and a current account deficit this result is in stark contrast to those obtained in obstfeld 1982 aggregate spending and the terms of trade is there a laursen metzler effect quarterly journal of economics 97 251 270 and many other studies in the literature

saving and investment in an open economy with non traded goods the authors examine a model of a small open economy in which there is free international mobility of financial capital investment in capital goods and a nontraded good such an environment is rich enough to explain several phenomena that are inexplicable in other models the authors explain why a high saving country may nonetheless borrow from abroad to finance investment they suggest an explanation of why saving and investment may be correlated even with no restrictions on trade in assets the authors also provide an optimizing model of stages in the balance of payments copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

food losses in food service institutions examples from sweden lowering food losses is a potential measure to overcome hunger and reduce the ecological side effects from the food system however few observations of food losses have been reported in the liter

a note on opec market power and oil prices a static model of opec as a cartel with a fringe group of competitive producers is used to define short and long run monopoly price curves as a function of opec s market share a static model is used on the grounds that oil as adelman has argued is not a depletable resource in the sense of the hotelling theory but is more like a normal good that can be produced with application of labour capital resources and technology a rational cartel will choose prices that lie between the two curves the shapes of the curves depend on the world price elasticity of demand for oil and on the supply response rate of competitive oil producers as opec s market share increases the distances between the two curves increase rapidly this could lead to an unstable market since any price between the two curves would be obtainable in the short run in the long run prices above the long run price curve will result in a loss of market share for the cartel except in a growing market reducing the cartel s market power future work will extend the model to consider dynamic pricing strategies as a function of the cartel s discount rate and world market response rate

the saving investment correlation puzzle is still a puzzle abstract a number of simulation studies claim to have solved the feldstein horioka puzzle by demonstrating that a high time series correlation between saving and investment naturally arises from business cycle shocks this paper uses panel data of saving and investment controlled for business cycle shocks to empirically test the significance of cyclical shocks productivity fiscal and the terms of trade shocks in explaining a high saving investment correlation the estimation results reveal that conventional aggregate shocks only partially explain the high saving investment correlation moreover country differences in the size of the gnp and the non traded sector do not significantly affect the saving investment correlation the saving investment correlation puzzle remains a puzzle after all

current account dynamics in a finite horizon model abstract this paper examines the response of the current account in a small open economy to a permanent change in the price of imported intermediate goods to do so it extends blanchard s 1985 open economy model to incorporate the capital stock with adjustment costs a la hayashi 1982 a price increase in imported intermediate goods can be viewed as a combination of transfer payments abroad and capital taxation the former effect leads to a current account deficit and the latter leads to a current account surplus the overall effect depends on the relative magnitude of these effects

the competitive price of oil some results under uncertainty abstract the recent weakness of the world oil price has led to speculation concerning the forces that are acting to keep the price well above the cost of production in this paper we investigate the strength of concerns about depletion by calculating the price of oil in 1983 as it would have been in a competitive market the simplicity of our model allows the effects of uncertainty in the input variables to be explored model parameters are entered as subjective probability distributions solving the model gives a probability distribution of the competitive oil price in 1983 the competitive price is found to have an 80 chance of lying between 3 and 11 1983 bbl with an expected value of 7 bbl the difference between these prices and the actual price of oil in 1983 gives an indication of the strength of forces other than concern about depletion principally the action of the opec cartel in keeping the oil price high

structural adjustment to a terms of trade disturbance the role of relative prices abstract this paper investigates the impact of a terms of trade disturbance on a small economy which responds gradually to changes in relative prices the key intertemporal link is as in dornbusch 1983 between the price of nontraded goods the real interest rate savings and the current account if the traded and nontraded goods are bad substitutes in consumption then an improvement in the terms of trade leads to a transitory current account surplus and conversely international capital mobility reduces the impact of a terms of trade disturbance on relative prices and also reduces the speed with which the economy adjusts to the disturbance

are windfalls a curse abstract a puzzling feature of temporary terms of trade booms is that some countries have responded to such windfalls by running current account deficits furthermore those countries that ran current account deficits failed to attain greater post boom growth rates indicating the deficits were consumed or invested in low quality projects the point we make is that the structure of the fiscal process is critical in determining outcomes if fiscal control is unitary then the consumption smoothing effect is operative and representative agent models of the current account have predictive power however if control is divided among several fiscal claimants a voracity effect appears which counteracts the consumption smoothing effect leading to a deterioration of the current account in response to a positive temporary shock we model the interaction among fiscal claimants as a dynamic game and show that in equilibrium aggregate appropriation increases more than the windfall itself this results in a deterioration of the current account we also show that all the windfall is dissipated with the country experiencing no increase in welfare 1998 elsevier science b v

real exchange rate uncertainty private investment in ldcs this paper examines empirically the link between real exchange rate uncertainty and private investment in developing countries using a large cross country time series data set the paper builds a garch based measure of real exchange rate volatility and finds that it has a strong negative effect on investment after controlling for other standard investment determinants and taking into account their potential endogeneity the effect of uncertainty is not uniform however there is some evidence of threshold effects so that uncertainty only matters when it exceeds some critical level in addition the negative effect of real exchange rate uncertainty on investment is significantly larger in economies that are highly open and in those with less developed financial systems

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

optimal production planning utilizing leftovers for an all you care to eat food service operation abstract food service operations in an all you care to eat environment need to consider two conflicting objectives a desire to reduce overproduction food waste and its corresponding environmental impacts and an aversion to shortfalls in which some customer demands go unsatisfied a particular challenge in such buffet style operations is the absence of any lost marginal revenue associated with lost sales that can be used to measure the shortfall cost complicating any attempt to determine a minimum cost solution this research presents a multi criteria optimization approach to identify the efficient frontier of points lying between the minimum waste and minimum shortfall solutions in particular we identify optimal production adjustments relative to demand forecasts demand thresholds for utilization of leftovers and percentages of demand to be satisfied by leftovers considering two alternative metrics for overproduction waste mass and greenhouse gas emissions to account for the embodied chemical usage during farming transportation and landfill decomposing of overproduced food waste a statistical analysis of the changes in decision variable values across each of the efficient frontiers can then be performed to identify the key variables that could be modified to reduce the amount of wasted food at minimal increase in shortfalls or alternatively to reduce the amount of shortfalls at minimal increase in waste we illustrate our approach with an application to empirical data from campus dining services operations at the university of missouri our analysis suggests that targeted production level modifications rather than blanket increases or decreases can allow food service providers to reduce overproduction food waste without significant increases in demand shortfalls

a model of trade in exhaustible resources what distinguishes exhaustible resources from most other goods is not only their non renewable nature but also a combination of two other important characteristics related to their economic functions in their role as an input resources serve as an esseptial factor in the production of final goods moreover because their usefulness remains intact until they are consumed in the process of production they may also serve as a store of value in the absence of other types of marketable assets this latter characteristic enables the owner of the resource to achieve through optimal resource management his desired time profile of consumption corresponding to these two economic functions are two possible motives for international trade in exhaustible resources first in connection with their role as a productive input trade in resources promotes efficiency in the allocation of factors of production throughout the world economy on the basis of this motive for trade countries with a relatively high per capita endowment of the resource should be expected to export the resource in exchange for final goods second in connection with their asset function trade in resources may be viewed as a means of achieving efficiency in the intertemporal allocation of consumption goods among countries economies with a relatively high rate of time preference desire a relatively high ratio of current to future consumption accordingly impatient countries might be expected to import consumption goods in exchange for the resource in the present and export consumption goods in the future the interaction between these two motives for trade is examined in the present paper within a simple two period two country model traded objects are assumed to be an exhaustible resource and a single consumption good although the possibility of trade in consumption loans is also considered later in the paper the consumption good is produced in both countries with the aid of labor and the resource because the latter has the dual role of being a productive input as well as a store of value in the model international trade is viewed both as a means of reallocating the world s endowment of the resource so as to ensure

oil prices welfare and the trade balance the paper examines welfare effects and the trade balance response to changes in the world oil prices and interest rates for a small oil importing economy the trade balance is mainly seen as the difference between saving and investment and these are derived from intertemporal optimization it is shown that the welfare effects consist of static terms of trade effects intertemporal terms of trade effects and employment effects the trade balance deteriorates for temporary oil price increases whereas its response is ambiguous for permanent oil price increases for a fall in the world interest rate the trade balance deteriorates if the economy is a net borrower

dynamic effects of a terms of trade shock on a small open economy abstract using a neoclassical one sector model extended to include investment installation costs this paper investigates the dynamic responses of consumption and external debt of a small open economy to a negative terms of trade shock in contrast to the existing literature we allow the divergence of the rate of time preference and the world interest rate the instantaneous change of net borrowing depends on the divergence of these rates and the existence of investment installation costs supporting the pattern of movement described by the j curve the instantaneous consumption change depends on whether or not the country is a debtor when the shock occurs

real interest rates home goods and optimal external borrowing the paper investigates the optimal time path of consumption and external borrowing in the dependent economy model the small country faces given world prices and a given world real interest rate the presence of a home goods sector implies that the relevant real interest rate appropriate to consumption decisions depends on the rate of change of the real price of home goods the paper shows how transitory disturbances in output or in the world real interest rate affect the time profile of consumption and the trade balance in particular it is shown that the presence of a home goods sector dampens the consumption effects of changes in the world interest rate

the relation between firm growth and q with multiple capital goods theory and evidence from panel data on japanese firms we derive from a model of investment with multiple capital goods a one to one relation between the growth rate of the capital aggregate and the stock market based q we estimate the growth q relation using a panel of japanese manufacturing firms taking into account the endogeneity of q identification is achieved by combining the theoretical structure of the q model and an assumed serial correlation structure of the technology shock which is the error term in the growth q equation for early years of our sample cash flow has significant explanatory power over and above q the significance of cash flow disappears for more recent years for the heavy industry when japanese capital markets was liberalized the estimated q coefficient implies that the adjustment cost is less than a half of gross profits net of the adjustment cost

the food waste hierarchy as a framework for the management of food surplus and food waste the unprecedented scale of food waste in global food supply chains is attracting increasing attention due to its environmental social and economic impacts drawing on interviews with food waste specialists this study construes the boundaries between food surplus and food waste avoidable and unavoidable food waste and between waste prevention and waste management this study suggests that the first step towards a more sustainable resolution of the food waste issue is to adopt a sustainable production and consumption approach and tackle food surplus and waste throughout the global food supply chain the authors examine the factors that give rise to food waste throughout the food supply chain and propose a framework to identify and prioritize the most appropriate options for prevention and management of food waste the proposed framework interprets and applies the waste hierarchy in the context of food waste it considers the three dimensions of sustainability environmental economic and social offering a more holistic approach in addressing food waste additionally it considers the materiality and temporality of food the food waste hierarchy posits that prevention through minimization of food surplus and avoidable food waste is the most attractive option the second most attractive option involves the distribution of food surplus to groups affected by food poverty followed by the option of converting food waste to animal feed although the proposed food waste hierarchy requires a fundamental re think of the current practices and systems in place it has the potential to deliver substantial environmental social and economic benefits

intertemporal price speculation and the optimal current account deficit a comment abstract this note shows that contrary to the result of an unambiguous current account deterioration due to a transitory terms of trade deterioration obtained by obstfeld 1983 his model in general implies an ambiguous current account response the note demonstrates that three conditions which are individually sufficient for a current deficit to emerge in response to this transitory price shock are i an intertemporal elasticity of substitution exceeding unity ii a non positive initial asset position and iii no domestic consumption of the exportable the analysis reveals that obstfeld s result remains valid if the focus is on the trade account but needs to be qualified if applied to the current account

terms of trade factor intensities and the current account in a life cycle model this paper examines the effects of terms of trade changes on the external adjustment of a small open economy where each consumer has a life cycle saving function the supply side of the economy is given by the standard two sector model with two primary factors labour and capital it is shown that when both commodities are produced a terms of trade deterioration leads to a current account deficit surplus if the export import sector is more labour intensive

life cycle costs and environmental impacts of production and consumption of ready and home made meals consumption of ready made meals is growing rapidly and yet little is known about their economic and environmental impacts this paper focuses on the economic aspects to estimate the life cycle costs value added and consumer costs of ready made meals in comparison with the equivalent meals prepared at home their life cycle environmental impacts are also considered a typical roast dinner is considered consisting of chicken vegetables and tomato sauce different production and consumption choices are evaluated including sourcing of ingredients chilled or frozen supply chains and types of appliance used by the consumer to prepare the meal the estimated life cycle costs of the ready made meal range from 0 61 0 92 per meal and for the home made from 0 68 1 12 the lowest life cycle costs are found for the chilled ready made meal heated in a microwave 11 below the costs of the best home made option the life cycle costs of the frozen meal are similar to the best home made option the chilled ready made meal has the highest value added 2 01 compared to the frozen 1 22 and the home made meal 0 44 however from the consumer perspective the cheapest option is the home made meal 1 17 while the chilled ready made option is most expensive 2 61 if the meal options are compared on both the life cycle costs and environmental impacts the home made meal is the best option overall these findings can be used to inform both producers and consumers on how their choices influence costs and environmental impacts of food

consumer durables permanent terms of trade shocks and the recent us trade deficits abstract this paper employs an open economy real business cycle model to suggest that part of the 1980s us trade deficits may have been driven by permanent declines in consumer durable import prices we also show that most of the resulting decline in the trade balance is due to wealth effects not substitution effects