should developing countries use currency depreciation as a tool of balance of payments adjustment a review of the theory and evidence and a guide for the policy maker the use of currency depreciation as a means of strengthening the balance of payments has long been a contentious issue amongst developing countries especially in their negotiations with the imf this article reviews the various ways in which depreciation might exert its impact a study of the empirical evidence suggests that it may be both an effective and cost effective instrument in many developing countries even though exceptions do exist compared with alternative balance of payments policies use of the exchange rate emerges as possessing many advantages it is concluded that greater emphasis should be placed on the exchange rate in the context of imf programmes than has perhaps been the case in recent years

partial exposure in large games abstract in this work we introduce the notion of partial exposure in which the players of a simultaneous move bayesian game are exposed to the realized types and chosen actions of a subset of the other players we show that in any large simultaneous move game each player has very little regret even after being partially exposed to other players if players are given the opportunity to be exposed to others at the expense of a small decrease in utility players will decline this opportunity and the original nash equilibria of the game will survive

pollution claim settlements under private information abstract the classical problem of resolving a nuisance dispute between a pollution generating firm and nearby residents is modelled here as a mechanism design problem we assume that the designer of the mechanism is the firm that it is uncertain about the actual losses suffered by residents and that the initial assignment of property rights is one where each resident is entitled to prevail we derive a profitmaximizing scheme under the individual rationality and incentive compatibility constraints and examine its properties it is shown that the outcomes it yields are sometimes inefficient moreover when many residents are affected by pollution and the degree of uncertainty with respect to the losses they suffer is large these inefficiencies become rampant

copyright protection standards and authors time allocation for centuries it was necessary for performers to be present in real time to supply their services such as music dance or drama labor time and human skill and capital were inextricably related reproducibility the ability to make copies of human services that are adequate substitutes for live performance has meant performers need not be present to supply their services which can be recorded and supplied with economies of scale consumers do not need the live performer to be present to obtain their services demand for performers has therefore fallen the same is of course true for non performing authors such a scenario must have altered the balance of incentives for authors for how they ultimately decide to spend their time the choices between working on producing copyrighted material which will earn them income through royalties over the duration of the copyright working for spot wages either in related or in unrelated activities and to take leisure must be closely related to the ability of copyright law to guarantee future income from copyrights this article considers this situation in terms of a formal model of time allocation copyright 2006 oxford university press

the economics of rising stars this paper analyzes an occupation in which there is substantial uncertainty about individual performance and past performance is correlated with future outcomes in equilibrium only the young enter the occupation and only the successful stay on the young are numerous and earn incomes well below what their current alternative o ffers success is rare and rewarded highly the implied distribution of earnings must have positive skewness copyright 1988 by american economic association

implementation in differential information economies abstract we consider the problem of implementation of social choice correspondences in differential information economies we provide necessary conditions for implementation and slightly stronger conditions which are sufficient to guarantee implementation

public goods with congestion abstract i consider the problem of the efficient provision of a congested limited capacity public good in a setting with asymmetric information i show in particular that when the capacity of the good is limited in a wide class of economies it is possible to construct an incentive compatible mechanism that always produces the good at the efficient level balances the budget and satisfies voluntary participation constraints this result is in contrast with the corresponding impossibility result for pure public goods due to mailath and postlewaite rev econ stud 57 1990 351 359 and rob j econ theory 47 1989 307 333

aid and dutch disease in the south pacific and in other small island states abstract the impact of aid on the macro economy is ambiguous aid that increases expenditure may cause real exchange rate appreciation however if the capital stock in the traded goods sector rises then output might not contract and if investment in the non traded goods sector is relatively productive then real exchange rate appreciation could be avoided we examine aid inflows in 10 pacific island states and find them to produce a variety of outcomes applying our model to other small island states around the world we analyse the country specific characteristics that determine the macroeconomic impact of aid and draw policy conclusions

aid and growth in sub saharan africa the recent experience abstract this paper presents some quantitative evidence on the relationship between foreign aid and economic growth in the low income countries of sub saharan africa two key findings are presented first aid is positively and significantly correlated with investment and economic growth in africa second fix capital formation contributed to the rate of growth this result which emerges from analyzing time series data is somewhat surprising given the disappointing performance of african countries since the early 1970s

the efficiency of competitive mechanisms under private information we consider the efficiency properties of exchange economies where privately informed traders behave strategically specifically a competitive mechanism is any mapping of traders reports about their types to an equilibrium price vector and allocation of the reported economy in our model some traders may have non vanishing impact on prices and allocations regardless of the size of the economy although truthful reporting by all traders cannot be achieved we show that given any desired level of approximation there is n such that any bayesian nash equilibrium of any competitive mechanism of any private information economy with n or more traders leads with high probability to prices and allocations that are close to a competitive equilibrium of the true economy in particular allocations are approximately efficient a key assumption is that there is small probability that traders behave non strategically

stability in large bayesian games with heterogeneous players bayesian nash equilibria that fail to be hindsight or alternatively ex post stable do not provide reliable predictions of outcomes of games in many applications we characterize a family of large bayesian games with many players in which all equilibria are asymptotically hindsight stable and discuss the consequences of this robustness property in contrast to earlier literature we establish hindsight stability in a class of games in which players are not anonymous and type spaces and action spaces can be infinite

macro economic aspects of the effectiveness of foreign aid on the two gap model home goods disequilibrium and real exchange rate misalignment we construct an open economy disequilibrium model to assess the welfare effects of aid in different macroeconomic regimes aid is shown to have different effects in different unemployment regimes because it increases the social costs of wage price rigidities in the classical regime but decreases them in the keynesian unemployment regime a link is made with the two gap model but we highlight the role of real exchange rate misalignment failure to clear the nt goods market

labor market adjustment in small open economies the case of micronesia abstract the paper uses the bertram poirine four sector framework to examine the labor market effects of a decline in external aid in a small open island economy it provides empirical evidence drawn from the federated states of micronesia to reject the notion that aid supported public expenditure crowds out opportunities for indigenous private sector development instead the paper argues that the future development of small island economies will depend on their access to overseas job markets and the continuation of aid inflows and remittances

foreign aid economic structure and dependence abstract an inflow of foreign capital leads to structural changes in the economy by lowering the relative price of tradable to non tradable goods it induces a decline of the relative share of tradables in the country s production the effect on consumption shares is less obvious since price and income effects may tend to be offsetting the existence of foreign aid also establishes a dependence of the economy on the outside world estimates of the degree of such dependence through the use of national accounts aggregates would be biased by the afore mentioned effect on relative prices hence specifically estimates of time tends based on the use of current prices may lead to different conclusions from those which employ constant prices for comparison the inferences of this paper are derived in a simple two sector small country model the concreteness and probable relevance of the main propositions are then demonstrated by empirical illustrations

exchange rates trade liberalization and aid the sri lankan experience abstract in 1977 the sri lankan government embarked on an extensive program of liberalization an important element of which was devaluation to ensure a competitive real exchange rate the 1980s were however marked by an increasing divergence between the real and nominal exchange rates the depreciation of the latter not being matched by similar movements of the former this paper presents an econometric model of real exchange rate behavior in sri lanka among other things it is shown that increased aid inflows have made a significant contribution to the failure of the real exchange rate to match the depreciation in the nominal rate

pivotal players and the characterization of influence a player s influence relative to a mechanism and opponents strategies is the maximum difference his action can make in the expected value of a collective outcome a player is pivotal if his influence exceeds a threshold we provide tight bounds on the number of pivotal players and on average influence these bounds are uniform over all mechanisms and action profiles and are achieved at mechanisms that take the form of a majority rule we illustrate our analysis with an example of provision of a public good where each individual compares the private cost of his contribution with its influence on the collective outcome journal of economic literature classification numbers d62 d89 h41

agricultural tradables and economic recovery in uganda the limitations of structural adjustment in practice abstract uganda s economic reform program has been widely regarded as a success story for structural adjustment nevertheless a large trade deficit persists shored up by inflows of aid and private remittances the poor performance of the agricultural tradables sector is presented as the key explanation for this trade imbalance two main reasons for this poor performance are found to be the failure to liberalize producer prices quickly and the failure to overcome early institutional resistance to reforms of marketing arrangements uganda s recovery is therefore much less impressive than it appears and the sustainability of the now heavily aid dependent economy must remain in serious doubt

voter participation and strategic uncertainty the paradox of not voting is examined in a model where voters have uncertainty about the preferences and costs of other voters in game theoretic models of voter participation under complete information equilibrium outcomes can have substantial turnout even when voting costs are relatively high in contrast when uncertainty about preferences and costs is present only voters with negligible or negative net voting costs participate when the electorate is large

aid the real exchange rate and why policy matters the cases of morocco and tunisia abstractevery form of foreign exchange inflow including aid can potentially cause real exchange rate appreciation with adverse consequences for the production of tradables dutch disease whether it does so depends on the policy response to the inflow this paper investigates the issue for morocco and tunisia over 1980 2009 we find that aid led to a real appreciation in morocco but had no effect on tunisia s real exchange rate this confirms the importance of the macroeconomic framework in which aid is provided and the key role for infrastructure and other supply side improvements in determining the final real economy impact of aid and other inflows

the macroeconomic impact of development aid a critical survey the early literature explained aid s macroeconomic impact in the context of the dual gap model showing a clear link between aid and growth many now believe that the empirical evidence shows there to be no such relationship this paper critically reviews the different theoretical perspectives the dual gap model the savings debate recipient fiscal response and aid as dutch disease and the empirical debates on aid savings and growth the basis for denying a relationship between aid and growth is shown to be weak though more recent areas of research offer promising directions for future work

the welfare implications of unauthorized reproduction of intellectual property in the presence of demand network externalities this paper finds that unauthorized reproduction of intellectual property in the presence of demand network externalities can not only induce greater firm profits relative to the case where there is no copying it can lead to a pareto improvement in social welfare ceteris paribus when network externalities are present firms have a greater incentive to expand output because marginal revenue is higher and or they may wish to create preemptive installed bases this paper suggests that unauthorized copying can be a relatively efficient means of achieving this by allowing the firm in effect to price discriminate among different classes of consumers copyright 1994 by blackwell publishing ltd

disaggregated capital flows and developing countries competitiveness summary attracting capital and foreign exchange flows is crucial for developing countries yet these flows could lead to real exchange rate appreciation and may thus have detrimental effects on competitiveness jeopardizing exports and growth we investigate this dilemma by comparing the impact of six types of flows on real exchange rate behavior in a sample of 57 developing countries covering africa europe asia latin america and the middle east the results reveal that portfolio investments foreign borrowing aid and income lead to real exchange rate appreciation while remittances have disparate effects across regions foreign direct investments have no effect on the real exchange rate contributing to resolve the above dilemma

demand for money in sri lanka during the post 1977 period a cointegration and error correction analysis this paper investigates the long run demand for money and short run dynamics of the long run money demand function for sri lanka during the post 1977 period while m1 is cointegrated with real income nominal interest rate short term foreign interest rate and real effective exchange rate m2 is not this suggests that monetary authorities should emphasize the narrow definition of money for monetary control the one year fixed deposits rate is cointegrated with m1 indicating the opportunity cost of holding money although the inflation rate is not cointegrated with m1 it seems to be an important determinant of the demand for m1 in the short run results also suggest that the short term foreign interest rate and the exchange rate can have important implications for the effectiveness of monetary policy monetary authorities must consider the response of domestic money demand to these external factors when formulating future monetary policies

foreign trade and economic development sri lanka s experience abstract in the nearly 40 years since independence sri lanka has gone through three major trade policy phases in the first following independence the economy was relatively open in the second which commenced in 1960 a trade regime biased against exports was initiated this continued until 1977 when a strong liberalization effort was made thus sri lanka provides an interesting story of an individual country s experience relating choice of a trade regime to resource allocation and growth a number of important lessons can be drawn from this experience

provision of a public good with bounded cost abstract we provide a sufficient condition for the expected aggregate contribution to a public good to be bounded independently of the size of the population

do large capital inflows hinder competitiveness the dutch disease in ethiopia this article investigates whether large inflows of foreign aid and remittances have had a damaging impact on the ethiopian real exchange rate rer we improve the current empirical literature by i compiling a unique quarterly dataset to provide a larger sample size and enable the modelling of important intra year dynamics which should lead to better model specifications ii providing a new empirical approach unobserved components uc to test the dutch disease hypothesis and iii using several cointegration approaches to further test the robustness of our conclusions our results suggest that there are two main long run determinants of the rer in ethiopia trade openness is found to be correlated with rer depreciations while a positive shock to the terms of trade tends to appreciate the rer foreign aid is not found to have a statistically significant impact while there is only weak evidence that remittances are associated with rer appreciations the lack of empirical support for the dutc

copying and indirect appropriability photocopying of journals creators and owners of intellectual properties are alarmed by the growth of technologies that ease the tasks of copying these properties this paper however shows that the unauthorized copying of intellectual properties need not be harmful and actually may be beneficial the empirical impact of photocopying on publishers of journals is examined in an attempt to discover if publishers can indirectly appropriate revenues from users who are not original purchasers the evidence indicates that publishers can indirectly appropriate revenues from users who do not directly purchase journals and that photocopying has not harmed journal publishers 18 references 1 table

asymmetric information bargaining problems with many agents a yes or no decision must be made about some issue all agents must agree the coase theorem asserts that the efficient outcome will always result suppose the value positive or negative that an individual attaches to an affirmative decision is privately known to that individual it is proved under very mild conditions that with independent types as the number of agents increases the probability of an affirmative efficient decision goes to zero an example in which it is common knowledge that an affirmative decision is efficient and yet the probability of such a decision goes to zero is given

information appropriability and the generation of innovative knowledge four decades after arrow and nelson an introduction this introduction sets in context the works that follow which are meant to take stock of the theoretical advances and also historical changes since the seminal arrow 1962 and nelson 1959 first we summarize some of the original arrow nelson insights second we map the subsequent developments shorthanded as the stanford yale sussex synthesis a particularly controversial issue concerns the relationships between notional opportunities of innovation private appropriability of return from innovating and realized rates of innovation hence third we briefly offer a framework for its discussion in general and with reference to the private appropriation of scientific knowledge copyright 2006 oxford university press

public good provision with many participants for a nonexcludable public good with benefit and cost functions independent of the number of participants this paper studies second best allocations under bayesian interim incentive compatibility and interim individual rationality as the number of participants becomes large second best provision levels converge in distribution to first best levels if the latter are bounded second best provision levels become large in absolute terms but small relative to first best levels if benefit and cost functions are isoelastic in contrast for an excludable public good the ratio of second best to first best levels is bounded away from zero

efficiency of large double auctions we consider large double auctions with private values values need be neither symmetric nor independent multiple units may be owned or desired participation may be stochastic we introduce a very mild notion of a little independence we prove that all nontrivial equilibria of auctions that satisfy this notion are asymptotically efficient for any alpha 0 inefficiency disappears at rate 1 n 2 alpha