political determinants of government loans in japan abstract this paper examines the political determinants of government banks lending decisions using prefecture level panel data on japan s government loans from 1975 to 1992 it finds that the size of government loans is positively correlated with two political factors 1 the electoral vulnerability of politicians who belong to the ruling liberal democratic party ldp and 2 their seniority these political effects are statistically robust to the inclusion of prefecture fixed effects year fixed effects and other socioeconomic factors and more important are present only in government loans and not in private loans these results suggest that self interested ldp members ab used government loans for political purposes as implied by the political view of government banks

real rigidities and the non neutrality of money rigidities in real prices are not sufficient to create rigidities in nominal prices and real effects of nominal shocks and by themselves small frictions in nominal adjustment such as costs of changing prices create only small non neutralities but this paper shows that substantial nominal rigidity can arise from a combination of real rigidities and small nominal frictions the paper shows the connection between real and nominal rigidity given the presence of nominal frictions both in general and for two specific sources of real rigidity one arising from goods market imperfections and the other from labour market imperfections

the international competitiveness of ceec agriculture the paper surveys the price competitiveness of agricultural production in central and east european countries ceecs it draws together empirical work conducted by the authors and other studies that have estimated domestic resource cost drc ratios for agriculture in various ceecs the paper identifies that in general ceec crop production is more internationally competitive than livestock farming during the mid1990s wheat production in bulgaria the czech republic hungary romania and slovakia was internationally competitive in contrast during the same period milk production was not internationally competitive however there is also a considerable degree of variation from country to country very little of slovenia s agricultural production is internationally competitive in the livestock sector the greatest problems lie where large herds have been broken up resulting in fragmented production this has particularly affected beef and milk production considering variations in drcs by farm type larger private farms in hungary and the czech republic are more internationally competitive than smaller private farms in crop production if ceec producers faced average eu prices for their traded inputs and output most could be price competitive however the conclusions should be treated with caution due to sensitivity of drc ratios to changes in international prices and the choice of the shadow prices for non tradable inputs

banking activities and local output growth does distance from centre matter ozyildirim s and onder z banking activities and local output growth does distance from centre matter regional studies in this paper the relation between local banking activities and local output growth is empirically studied in turkey during the period 1991 2000 although there is no legal restriction against regional banking the banking sector is spatially concentrated in turkey in this institutional structure the distance between headquarters and the local branches is argued to affect the role of financial intermediation in the development of provincial prosperity empirical findings suggest that banking activities have a significant positive impact on the per capita local output growth of regions especially on those that are distant from the financial centre however when bank loans are adjusted to the size of the local economy provincial gross domestic product gdp the relation between banking activities and the output per capita is found to be negative suggesting that these loans are us

the efficiency cost of protective measures in climate policy despite recent achievements towards a global climate agreement climate action to reduce greenhouse gas emissions remains quite heterogeneous across countries energy intensive and trade exposed eite industries in industrialized countries are concerned on stringent domestic emission pricing that puts them at a competitive disadvantage against producers of similar goods in other countries with more lenient emission regulation this paper focuses on climate policy design in the united states of america us and compares the economic implications of four alternative protective measures for us eite industries i output based rebates ii exemptions from emission pricing iii energy intensity standards and iv carbon intensity standards using a large scale computable general equilibrium model we quantify how these protective measures affect competitiveness of us eite industries we find that protective measures can improve common trade related competitiveness indicators such as revealed comparative advantage or relative world trade shares but at the same time may lead to a decline in the output value for eite industries because of negative income effects the economy wide cost of emission abatement under protective measures increase as compared to uniform emission pricing stand alone such that the gains of protective measures for eite exports may be more than compensated through losses in domestic eite demand

strategic complementarity in business formation aggregate fluctuations and sunspot equilibria the extent to which changes in beliefs can be important factors in initiating economic fluctuations has been a prominent area of investigation for macroeconomists the notion that beliefs about the future influence current decisions is a property of almost all dynamic economic systems the more challenging task is identifying economic environments in which changes in beliefs alone influence current choices in such a way that the variations in beliefs are self fulfilling because the resulting fluctuations arise in the absence of variations in fundamental variables such as preferences and technology they are often termed sunspot equilibria apart from suggesting that instability of expectations may be a distinct source of cyclical volatility sunspot equilibria may also explain why apparently small disturbances in fundamentals lead to large change in macroeconomic aggregates in this study we demonstrate the possibility of sunspot equilibria in an overlappinggenerations economy characterized by a plausible form of strategic complementarity as more agents enter as producers in any particular sector of the economy they create an incentive for agents to enter as producers into other sectors as well 2 the basis for this

bank ownership and lending behavior this paper examines whether bank ownership public versus private domestic versus foreign is correlated with bank lending behavior over the business cycle the paper finds that state owned banks may play a useful credit smoothing role because their lending is less responsive to macroeconomic shocks than the lending of private banks the paper investigates whether this differential behavior is due to an explicit objective of stabilizing credit or to the presence of lazy public bank managers evidence is found in support of the former hypothesis in the case of foreign owned banks the paper finds that the results are less clear cut and argues that this finding is in line with existing theoretical models

does eu enlargement increase agro food export duration this paper examines the impact of eu enlargement on agro food export performance across 12 new eu member states and five newly independent states in the eu markets covering the period 1999 to 2007 the performance is examined by duration of export and hazard model we find larger duration for the agro food exports from the new eu member states the results confirm gains from the eastward eu enlargement and governance on export increases and longer duration for exporting higher value added specialized consumer ready food and more competitive niche agro food products

behavioural heterogeneity under evolutionary pressure macroeconomic implications of costly optimisation a model is developed in which a continuum of agents makes interdependent output decisions in a stochastic environment characterised by strategic complementarity two groups are distinguished naive agents follow a costless adaptive expectations rule while sophisticated agents incur an optimisation cost to achieve self fulfilling expectations the paper studies the dynamics generated as the population composition evolves under pressure of differential payoffs sophisticated agents are favoured if optimisation is cheap or the stochastic environment highly variable but naive agents generally persist a higher long run share of sophisticated agents is associated with greater output variability and low output persistence several attempts have been made in the recent macroeconomic literature to explore the implications of allowing for behavioural heterogeneity among economic agents typically the standard postulates of unbounded rationality are held to apply only to a subset of the population while the remainder is assumed to behave in accordance with some alternative specification the nature of which depends on the situation being analysed akerlof and yellen

expectation calculation and macroeconomic dynamics the authors establish a framework wherein agents make expectation revision decisions subject to a specified calculation technology and preferences over forecast errors the technology endows agents with correctly specified economic models but the cost of expectation calculation using these models leads to gradual and incomplete adjustment to long run rational expectation equilibrium the rational expectations hypothesis emerges as a special case of the equilibrium paths obtained in the authors framework in a natural rate model of monetary policy calculation technology gives rise to long run nonneutrality and hysteresis effects and incomplete adjustment of forecast rules causes output fluctuations to be amplified copyright 1992 by american economic association

complementarities of trade advantage and trade competitiveness measures the complementarities of trade advantage and trade competitiveness measures for agro food trade of five central european ce 5 countries with the european union are analysed the stability and duration of the trade measures over time is investigated by the survival analysis using the nonparametric kaplan meier product limit estimator and the consistency test between the trade measures is conducted by the stratified cox proportional hazard model the ce 5 countries experienced a greater number of products with relative trade disadvantages and greater significance of one way imports unlike the czech republic poland slovakia and slovenia hungary experienced relative trade advantages rtas for bulk raw commodities processed intermediates and horticulture with the greatest significance of successful quality competition and one way exports and the lowest significance of unsuccessful price and unsuccessful quality competition the duration of rtas is longer than the duration for the successful trade co

unilateral climate policy and competitiveness economic implications of differential emission pricing unilateral emission reduction commitments raise concerns on international competitiveness and emission leakage that result in preferential regulatory treatment of domestic energy intensive and trade exposed industries our analysis illustrates the potential pitfalls of climate policy design which narrowly focuses on competitiveness concerns about energy intensive and trade exposed eite branches the sector specific gains of preferential regulation in favour of these branches must be traded off against the additional burden imposed on other industries beyond burden shifting between industries differential emission pricing bears the risk for substantial excess cost in emission reduction as policy concedes too low carbon prices to eite industries and thereby foregoes relatively cheap abatement options in these sectors from the perspective of global cost effectiveness we find that differential emission pricing of eite industries hardly reduces emission leakage since the latter is driven through robust international energy market responses to emission constraints as a consequence the scope for efficiency compared to uniform pricing is very limited only towards stringent emission reduction targets will a moderate price differentiation achieve sufficient gains from leakage reduction to offset the losses of diverging marginal abatement cost

banks regional development disparity and growth evidence from turkey in this paper we analyse the impact of credits provided by banks on provincial growth in turkey where state owned banks have an implicit role of reducing disparity by allocating loans in underdeveloped regions that are ignored by private banks we find a paradoxical effect of state owned banks on regional development their credits contribute significantly to the growth of more developed provinces whereas they fail to encourage the well being of less developed provinces on the other hand credits provided by private banks in general positively impact the per capita real gross domestic product gdp in both developed and less developed provinces contrary to their purpose of existence our results suggest that state owned banks did not reduce economic disparity among turkish provinces in the trade off between growth and income disparity our results suggest that state owned banks should improve their lending behaviour especially in the less developed regions in order to broaden their development role to the whole economy copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

chronicle of a deflation unforetold suppose the nominal money supply could be cut literally overnight by say 20 what would happen to prices wages output the answer can be found in 1720s france where just such an experiment was carried out repeatedly prices adjusted instantaneously and fully on one market only that for foreign exchange prices on other markets such as commodities as well as prices of manufactured goods and industrial wages fell slowly over many months and not by the full amount of the nominal reduction coincidentally or not the industrial sector as represented by manufacturing of woolen cloths experienced a contraction of 30 when the government changed course and increased the nominal money supply overnight by 20 prices responded much more and the woolen industry rebounded

examining political connections to study institutional change evidence from two unexpected election outcomes in south korea we argue that the analysis of multiple political connections in an event study framework can improve the study of institutional change based on a unique data set of multiple political relationships of 4 936 south korean board of director members we show that the large business conglomerates the chaebol did not benefit from the unexpected conservative election victories in the 2012 south korean parliamentary and presidential elections personal connections to the presidential candidates and to the opposition party were relevant for the stock returns of small firms our findings suggest that korea s political economy has evolved into a hybrid regime in which the political power of large multinational corporations is limited but political connections still matter for smaller firms the corruption scandal that led to the impeachment of president park in 2017 and the long term development of market capitalisation appear to be congruent with the results of our study

a near rational model of the business cycle with wage and price inertia this paper presents a model in which insignificantly suboptimal behavior causes aggregate demand shocks to have significant real effects the individual loss to agents with inertial price wage behavior is second order in terms of the parameter describing the shock while the effect on real economic variables is first order thus significant changes in business activity can be generated by anticipated money supply changes provided that some agents are willing to engage in nonmaximizing behavior which results in small losses

empirical relevance of the hillman condition for revealed comparative advantage 10 stylized facts the theoretically necessary and sufficient condition for the correspondence between revealed comparative advantage and pre trade relative prices derived by hillman 1980 is analysed empirically for virtually all countries of the world over an extended period of time this yields 10 stylized facts including that i violations of the hillman condition are small as a share of the number of observations but substantial as a share of the value of world exports ii violations occur relatively frequently in the period 1970 1984 and more rarely in the period 1985 1997 and iii violations occur foremost in primary product and natural resource intensive sectors and for countries in africa the middle east latin america and central and eastern europe an additional bonus of verifying the hillman condition in empirical research is its ability to identify erroneously classified trade flows

currency and financial crises in turkey 2000 2001 bad fundamentals or bad luck this paper attempts to explore the underlying causes of twin crises experienced by turkey in november 2000 and february 2001 we study an extensive set of leading indicators of crises that are drawn from the existing literature our results identify three sets of vulnerabilities in the turkish economy in triggering the financial crisis and bringing about the collapse of the turkish lira these are first the weak external position caused by excessive debt burden combined with the loss of competitiveness second the weak fiscal position resulting from the record levels of interest payments on domestic borrowing and most importantly third weaknesses in the financial and banking sector given these observations we argue that the success of financial sector reform is instrumental not only for putting the economy on a sustainable recovery path but also for reducing the likelihood of similar crises in the future the general lesson to be drawn from this experience is that a sound financial system is a pre condition for the successful operation of a fixed exchange rate regime

do lenders favor politically connected firms rent provision in an emerging financial market corruption by the politically connected is often blamed for economic ills particularly in less developed economies using a loan level data set of more than 90 000 rms that represents the universe of corporate lending in pakistan between 1996 and 2002 we investigate rents to politically connected rms in banking classifying a rm as political if its director participates in an election we examine the extent nature and economic costs of political rent provision we nd that political rms borrow 45 percent more and have 50 percent higher default rates such preferential treatment occurs exclusively in government banks private banks provide no

trade liberalisation the effects of free trade agreements on the competitiveness of the dairy sector in recent years preferential trade agreements ptas free trade agreements ftas in particular have proliferated while wto negotiations have stagnated this paper contributes to the literature on trade liberalisation and the agricultural sector by analysing the effects of ftas on the competitiveness of the dairy sector across 76 countries and over a 20 year period from 1990 to 2009 with a longitudinal econometric model the results demonstrate that when a country has a revealed comparative advantage in the dairy sector ftas positively influence several indicators of competitiveness in the dairy sector such as production market share and trade balance the results also indicate that multilateral ftas are more beneficial than bilateral ftas there is strong empirical evidence that ftas are more beneficial to developed countries than to developing countries there is no statistical evidence to support the hypothesis about a relationship between ftas and farm gate price

revealed comparative advantage and competitiveness in hungarian agri food sectors we examine the competitiveness of hungarian agriculture and food processing in relation to that of the eu based on four indices of revealed comparative advantage using highly disaggregate data for the period 1992 to 1998 consistency tests suggest that the indices are less satisfactory as cardinal measures but are useful in identifying the demarcation between comparative advantage and comparative disadvantage hungary is shown to have a comparative advantage in a range of agri food products including animals and meat this complements the findings of those studies that have used price and cost based approaches in identifying competitiveness in cereals and crops results indicate that the rca indices when interpreted as a binary measure have remained surprisingly stable during the period of transition although there is evidence of a weakening in the level of comparative advantage as revealed in the balassa index

imperfect competition underemployment equilibria and fiscal policy it is often claimed that the demand externality created by imperfect competition can provide an analytical basis for keynesian fiscal policy prescriptions here this demand externality is embedded in a model of monopolistic competition where saving and employment are determined by optimizing choices it turns out that underemployment equilibria do exist that there is scope for fiscal intervention but that keynesian fiscal prescriptions are turned on their head thus demand externalities among imperfect competitors do not provide a general theoretical basis for these prescriptions unless supplemented by other deviations from the walrasian standard in the labor or capital market copyright 1990 by royal economic society

limited rationality and strategic complements the implications for macroeconomics this paper considers the implications of heterogeneity in information processing abilities for macroeconomic models that exhibit strategic complements the latter is the same concept that has received much attention in the recent macro literature under the headings keynesian coordination problems and positive trading externalities we consider environments in which agents vary in terms of their ability to form expectations and ask whether it is the sophisticated agents or the naive agents who have a disproportionately large effect on macroeconomic equilibrium we find that if macroeconomic interaction exhibits strategic complementarity then it is the naive agents who have a disproportionate impact

cost efficiency in bangladesh banking does financial reform matter abstractthis article estimates the cost efficiency of the commercial banks of bangladesh in the context of financial reform employing the single stage stochastic frontier analysis sfa model the study uses a unique balanced panel data set comprising bank level annual data from the dominant commercial banks in bangladesh for the period 1983 2012 the results show that bank cost has fallen due to financial deregulation our results from the data envelopment analysis do not vary significantly that we obtained from the sfa in addition the presence of politically linked directors on the bank board has an adverse effect on efficiency these findings suggest that further reforms aiming at removing all sorts of political influence should continue to ensure competitive environment in order to achieve cost efficiency in the financial sector of the country

multilateral agricultural trade liberalisation the contrasting fortunes of developing countries in the doha round an applied general equilibrium model is used to assess the impact of multilateral trade liberalisation in agriculture with particular emphasis on developing countries we use original data and the model includes some specific features such as a dual labour market applied tariffs including those under preferential regimes and regional agreements are taken into account at the detailed product level together with the corresponding bound tariffs on which countries negotiate the various types of farm support are detailed and several groups of developing countries are distinguished simulations give a contrasted picture of the benefits developing countries would draw from the doha development round the results suggest that previous studies have neglected preferential agreements and the binding overhang in tariffs as well as domestic support and have treated developing countries with a high level of aggregation and been excessively optimistic about the actual benefits of multilateral trade liberalisation regions like sub saharan africa are more likely to suffer from the erosion of existing preferences the main gainers of the doha round are likely to be developed countries and cairns group members

consistency tests of alternative measures of comparative advantage the commodity pattern of comparative advantage across countries is a central concept in international trade theory since the concept is based upon autarkic prices which are not observable in post trade equilibria its use in empirical research is most difficult the literature reports numerous alternative indices that purport to measure comparative advantage this paper examines the extent to which various measures are consistent using a large sample of trade flows the results have important implication for judging empirical studies based upon particular choices of a measure for comparative advantage

relative export competitiveness of agricultural commodities and its determinants some evidence from india abstract in this paper we derive time varying relative export competitiveness rec of india s top agricultural exports rice wheat cotton and sugar against india s share of world agricultural exports rec wa and world exports rec we from 1961 to 2012 we reveal that india s exports of all four commodities became relatively competitive over time but these were not as competitive as the top or selected emerging exporters of the four commodities we also examine the determinants of rec in these four commodities focusing on factors including crop specific and aggregate factor endowments domestic price export prices and gdp per capital preferential trade agreements export restrictions and bans and india s green revolution the regression analysis was mainly confined to the 1981 2012 due to data constraints we find that the time series regression results are similar in sign and significance for rec we and rec wa our key findings suggest the rec in wheat rice and cotton deteriorated as a result of export restrictions capital had negative effects on cotton rec labor and farm size did not influence the rec in the commodities the green revolution improved the rec in rice and cotton in phase 3 the wto had a positive effect on the rec in rice the south asian free trade area safta agreement adversely affected the rec in wheat and rice but strengthened the rec in cotton and sugar higher domestic price reduced the rec in cotton higher per capita income strengthens the rec in wheat with a lag we explain these results and suggest policy implications

determinants of the export structure of countries in central and eastern europe the growth in exports from central and eastern europe to western markets suggests that entrepreneurs have responded to changed incentives by restructuring their production to capture new markets the absence of change in the structure of exports however suggests that these restructuring efforts have not been significant this article analyzes the magnitude of the change in export structure across the central and eastern european countries in 1990 95 focusing in particular on trade with the european union it finds that imports of intermediate inputs and machinery are an important determinant of the changes in export structure sourcing of inputs from abroad is a major factor underlying the expansion of exports to the european union outward processing subcontracting arrangements and foreign direct investment have a smaller impact except for poland inflows of foreign direct investment are statistically insignificant or negatively associated with measures of revealed comparative advantage this suggests that foreign investors have chosen sectors in which the central and eastern european countries were not relatively specialized under central planning

a model of imperfect competition with keynesian features the recent literature on the reappraisal of keynes has viewed keynesian equilibria as arising when prices are fixed and effective demands and supplies are equilibrated through the adjustment of quantities one problem with this approach is that it lacks a theory of price determination in particular of why prices are fixed in the present paper we show that a number of keynesian features arise in a model in which prices are fully flexible but where agents have some monopoly power one advantage of this approach is that it provides a theory of the determination of both prices and quantities

political connection bank credits and growth evidence from turkey the pervasive existence of government owned banks in emerging economies is often justified by their provision of access to credit in remote and underdeveloped regions that are ignored by private banks this paper analyses whether credits provided by government owned and private banks have a significant role in regional growth and whether this role changes in politically connected areas in turkey our findings imply that private banks significantly improve the economic well being in all turkish provinces regardless of their development level or their political connection with the ruling party however credits by government owned banks are found to be positively related to the per capita growth rate only in the less developed provinces that are advocates of the ruling political party and also developed but not politically connected provinces these results suggest that government owned bank credits as implied by the political view are used for funding politically desirable projects or politically connected borrowers

bounded rationality and strategic complementarity in a macroeconomic model policy effects persistence and multipliers motivated by recent developments in the bounded rationality and strategic complementarity literatures we examine an intentionally simple and stylized aggregative economic model when the assumptions of fully rational expectations and no strategic interactions are relaxed we show that small deviations from rational expectations taken alone lead only to small deviations from classical policy ineffectiveness but that the situation can change dramatically when strategic complementarity is introduced strategic complementarity magnifies the effects of even small departures from rational expectations producing equilibria with policy effectiveness output persistence and multiplier effects

strategic complementarity slows macroeconomic adjustment to temporary shocks i introduction starting with the work of diamond 1982 hart 1982 and bryant 1983 a number of authors have employed models which use potential coordination failure to show that many features of the keynesian framework can be captured in models consistent with the microfoundations approach 1 for example in the context of a search model diamond demonstrates the existence of equilibria with too low a level of aggregative activity hart captures this feature and the simultaneous existence of multipliers in a model of monopolistic competition while technological interactions are the crucial element of bryant s analysis one reason to refer to these seemingly diverse set of papers as a single literature is that all the models are in fact driven by the presence of the same factor strategic complementarity a macroeconomic model which exhibits strategic complementarity is simply one where the larger is aggregate production the larger is the incentive for any particular agent to produce cooper and john 1988 first demonstrated that the presence of strategic complementarity is a characteristic of all of the models mentioned above and persuasively argue that this is the critical feature which lies behind the finding of keynesian type results in this paper we argue that strategic complementarity is also important in understanding the dynamic response of economies to temporary shocks in particular we find that strategic complementarity is potentially an important factor in understanding why an economy may return only slowly to steady state behavior after a temporary shock that is given the presence of any of a variety of factors which would cause the economy not to instantaneously return to full employment after a temporary shock e g adjustment costs associated with changing the capital stock the speed with which the economy returns to steady state behavior is negatively related to the degree of strategic complementarity in the environment related analyses are those of haltiwanger and waldman 1989 bomfim and diebold 1992 and baxter and king 1990 the first two papers consider models wherein some agents are characterized by adaptive or regressive expectations while others am characterized by rational expectations among other findings these analyses demonstrate that the speed with which the economy returns to steady state behavior after a temporary shock is negatively related to the degree of strategic complementarity in the economy 2 we argue that the relationship between strategic complementarity and the dynamic response to temporary shocks is more general than is suggested by these papers in their analyses temporary shocks have long term effects because some of the agents make systematic mistakes when forming expectations here it is argued that given any of a variety of factors which would cause temporary shocks to have long term effects there is a negative relationship between adjustment speed and the degree of strategic complementarity baxter and king consider a world where because of productive externalities the economy exhibits increasing returns at the economy wide level using simulation techniques they show first that the presence of increasing returns serves to increase the output volatility exhibited by the economy in response to shocks and second that after a one time shock the return to steady state behavior is slower in a world characterized by increasing returns baxter and king do not discuss their results in terms of strategic complementarity however it is easy to show that one way of introducing strategic complementarity is to assume that the economy exhibits increasing returns at the economy wide level our paper suggests that what is central in baxter and king s study is not the introduction of increasing returns per se but rather that the introduction of increasing returns is one way of introducing strategic complementarity that is baxter and king s findings can be thought of as a manifestation of the central point of the current paper

the macroeconomic effects of false announcements suppose that the government were to announce the economy will be booming in six months and this announcement is based on false data what effect would such an announcement have on future aggregate activity this paper employs revisions of the series of leading economic indicators to test the hypothesis that such an announcement would have a positive effect on future activity we find that the evidence is generally consistent with the hypothesis and that for the time period 1976 1988 the expectational shocks measured by these revisions explain over 20 percent of the fluctuation in the quarterly growth rate of industrial production

small menu costs and large business cycles a macroeconomic model of monopoly i introduction the conflict between modern neoclassical and traditional keynesian theories of the business cycle centers upon the pricing mechanism in neoclassical models prices are fully flexible they represent the continuous optimization of economic agents and the continuous intersection of supply and demand in keynesian models prices are often assumed to be sticky they do not necessarily equilibrate all markets at all times one of the reasons for the resurgence of the equilibrium approach to macroeconomics has been the absence of a theoretical underpinning for this keynesian price stickiness this note shows that sticky prices can be both privately efficient and socially inefficient the business cycle results from the suboptimal adjustment of prices in response to a demand shock to the extent that policy can stabilize aggregate demand it can mitigate the social loss due to this suboptimal adjustment in some keynesian models prices are simply exogenously fixed 2 in others agents must set their prices in advance of the transaction date the act of altering a posted price is certainly costly these costs include such items as printing new catalogs and informing salesmen of the new price yet these menu costs are small and therefore generally perceived as providing only a weak foundation for these fixed price models however this inference is flawed small menu costs can cause large welfare losses the claim that price adjustment costs are small does not rebut the claim that they are central to understanding economic fluctuations

responders versus non responders a new perspective on heterogeneity this paper considers the implications of a particular type of heterogeneity one which characterizes a large number of economic environments but that has not received any systematic treatment in the literature the authors refer to this heterogeneity as responders versus nonresponders the paper begins by providing a general framework for the analysis of environments characterized by this heterogeneity and then shows how this framework can be used to help understand a wide variety of economic environments particular applications considered are near rationality network externalities and models of reputation copyright 1991 by royal economic society

organizational distance and use of collateral for business loans abstract this paper examines the effect of organizational distance i e distance between the headquarters of the bank that grants a loan and the location of the borrower on the use of collateral for business loans by spanish banks on the basis of the recent lender based theory of collateral inderst r mueller h m 2007 a lender based theory of collateral journal of financial economics 84 826 859 we find that for the average borrower the use of collateral is higher for loans granted by local lenders than by distant ones we also show that the difference in the likelihood of collateral in loans granted by local lenders relative to distant lenders is higher among older and larger firms than respectively younger and smaller firms we also find that banks use lending technologies that are different for near and for distant firms in response to organizational diseconomies

on integrating theories of international economics in the strategic planning of global supply chains and facility location abstract this paper relates three theories of international economics comparative advantage competitive advantage and competitiveness and formulates the thesis that incorporating them in the form of readily available individual competitiveness indicators in or ms models offers promise to enhance decision support for the strategic planning of global supply chains in general and for locating facilities in particular the purpose of this paper is to relate these theories from the field of international economics to give a roadmap of related measures that are provided by annual competitiveness reports and to pose several research questions as challenges to the or ms community as it seeks to improve models to support the strategic planning process accordingly specific objectives of this paper are to relate each of these theories and to describe their interrelationships to describe measures provided by two well known annual competitiveness reports and to illustrate application of the theories as a means of supporting the thesis of the paper and justifying the research questions we pose for future research while this paper discusses topics relative to the broader background of global supply chain design it illustrates applications associated with facility location a component of the global supply chain design since it has a rich history within the or ms community and since it is central to strategic planning in the global economy

the eu s free trade agreements with developing countries a case of wishful thinking since the middle of the1990s the eu has vigorously pursued a policy of replacing non reciprocal preferences for the developing countries in the mediterranean latin america and with south africa with bilateral free trade agreements this article examines the content of these agreements and the empirical evidence on their likely effects and concludes that they are broad but shallow agreements the static effect are likely to be very small or negative while the potential dynamic gains are problematic especially regarding the concept of a lock in to trade liberalisation unless there are greater commitments to trade related issues by both sides and especially by the eu