the dynamic effects of fiscal and monetary policies under bond financing a theoretical simulation approach to crowding out abstract this paper uses simulation methods to analyze the effectiveness of fiscal and monetary policy within a reasonably rich dynamic macroeconomic model characterized by secular inflation the most clear cut result to emerge is that fiscal expansion specified as being an increase in government expenditure leads to instability this finding confirms the conclusions obtained from more formal analyses of simpler systems in most of the sample sets considered the instability takes the form of crowding out whereby the initial expansion creates subsequent recessionary pressures however in a minority of cases the nature of the instability is reversed and takes the form of an explosive boom

foreign direct investment and economic growth a comparative study among east asian countries abstract in the past two decades there was a major shift in the degree of foreign direct investment fdi in east asian countries fdi as a tool for technology transfer can contribute to economic growth but this would depend on the economic environment of the host economy this studyexamines the effect of fdi on the economic growth of 15 east asian countries for the analytical purpose the countries are classified by their economic conditions i e levels of human capital investment on infrastructure and trade openness the panel cointegration analysis with endogenous growth model is used to observe the effect the analysis is based on time series data from 1990 2009 the results show that fdi does not necessarily enhance economic growth fdi had a positive effect on the economic growth only in the countries that have the appropriate economic conditions east asian countries including thailand need to invest more on fundamental infrastructure and human capital and increase their degree of trade openness in order to gain more from fdi keywords foreign direct investment economic growth east asia countries endogenous growth model jel classification c33 f21 f43

parastatal pay policy in africa abstract public enterprises have grown to represent a significant share of modern sector employment in many african economies with wage and employment issues near the top of the policy agenda in africa attention should be given to public enterprise compensation and employment policies after describing the institutions which govern public enterprise pay in a number of sub saharan countries the paper considers the policy dilemma in choosing between the two basic alternative pay setting regimes for public enterprise enterprise wage autonomy versus unified salary scales with the civil service

female wage labor in rural zimbabwe abstract research on rural women in africa including zimbabwe has tended to emphasize women s role as farmers or food producers research conducted by the author suggests however that a significant portion of rural women including many of the poorest should not be considered as farmers at all but as wage workers while some women often aided financially by men who worked away were able to operate rural businesses and large farms many women were confined to daily paid temporary labor to meet their cash needs it is suggested that rural women do not comprise a homogenous group with identical economic and political goals nor do female headed households female only households where there was no referent male working away were notable for their poverty and lack of access to any means of agricultural production many women heading such households were casual workers with all or the bulk of their income derived from wage labor

a selectivity model of employer size wage differentials this article investigates wage differentials for employees of different size firms utilizing an econometric methodology that allows the size of employer to be treated as endogenous in the context of discrete ordered employer size data as a result we are able to estimate i employer size wage gaps which are corrected for selectivity bias and ii the magnitude and direction of the selection bias decompositions of the resulting wage differentials are computed with comparisons of the conditional on sorting across employer size and unconditional wage gaps

how small enterprises in ghana have responded to adjustment ghana is often cited as an african country that has undertaken major macroeconomic reforms with generally positive results for economic growth within ghana s industrial sector the effects of structural adjustment policies have differed among subsectors and firms little is known however about the impact of adjustment on smaller firms a survey of small scale enterprises sses was carried out in november 1989 to learn more about the impact of the adjustment program on their operations to evaluate their potential contribution to dynamic industrial recovery and to identify appropriate measures that would accelerate the growth of sses in numbers size and productivity specific objectives of the survey were to 1 learn more about the characteristics of small firms and their owners 2 analyze how policy changes have affected small firms highlighting entrepreneurs strategies for adapting to their new environments and 3 identify constraints to the future growth of small firms results show that adjustment policies have forced the sses to become more competitive to survive and that significant structural changes are taking place across subsectors and within firms the overall business environment has generally improved during the adjustment program although shortcomings remain uncertainty about political and economic stability and lack of finance appear to be the most immediate restraints on investment

the impact of changes in job security regulations in india and zimbabwe employment laws in india and zimbabwe require employers to obtain permission from the government to retrench or lay off workers the effect of these laws on the demand for employees in 64 manufacturing industries is examined using time series data little evidence is found indicating slower adjustments in employment levels and hence retardation in any structural adjustment following the new laws however in both countries a substantial decline in the demand for employees other things equal followed the new legislation in zimbabwe it is difficult to be precise about a causal connection between the drop in the demand for labor allowing for concurrent increased wages and the new legislation because enactment occurred simultaneously with independence however the current economic climate induced high levels of investment in capital but not investments in long term commitments to employees but in india further evidence supports a causal connection larger establishments covered by the job security regulations tended to experience a decline in the demand for labor while smaller uncovered enterprises in the same industries did not moreover the decline in demand for employees across industries in india was larger where the private sector predominates where larger establishments covered by the new laws are important and where a smaller proportion of employees are union members thus in both countries the policy implemented to protect jobs may bave resulted infarfewerjobs upon achieving independence in 1980 the government of zimbabwe passed a new employment act requiring employers to obtain permission from the ministry of labor to fire or lay off workers comparable regulations were imposed in india by the industrial disputes amendment act of 1976 requiring that written permission be obtained normally from the relevant state government either to close a plant or to retrench workers the immediate goal of these items of legislation was to protect the livelihood of workers and to maintain jobs any addition to economic security in the lives of workers is clearly a laudable goal in its own right but the question addressed in this article is whether these particular job security regulations have had undesirable side effects which may even have thwarted the original goals of the legislation india and zimbabwe are

policy changes and external disturbances in a small open economy stability and dynamic responses the dynamics of open economy models embodying the assumption of perfect foresight have attracted a great deal of attention in the literature over recent years a familiar conclusion to emerge from earlier analyses of dynamic monetary models under perfect foresight is that these models typically exhibit saddlepoint instability see for example burmeister and dobell 1970 nagatani 1970 black 1974 one approach around this instability problem introduced by sargent and wallace 1973 is to assume that following any exogenous shock the system would jump to a stable path which converges to the new equilibrium this procedure has been adopted by a number of authors for example dornbusch 1976 gray and turnovsky 1979 dornbusch and fischer 1980 and burmeister flood and turnovsky 1981 2 an implication of the jump is that at the point in time in which it occurs the assumption of perfect myopic foresight does not hold however as gray and turnovsky 1979 argued this can be justified on the grounds that when a given shock is completely unanticipated it seems excessively stringent to require that expectations be perfectly accurate at the instant that the shock impinges on the system similar justification can be made in the case of pre announced or anticipated policy changes as considered by wilson 1979 boyer and hodrick 1982 as well as gray and turnovsky 1979 in this case the initial jump occurs at the time of announcement and the system remains on a continuous new equilibrium path at the time of policy implementation further empirical evidence provides some support for the assumption that a system embodying the rational expectations hypothesis or its deterministic analogue perfect myopic foresight will not arch away from the new equilibrium along a divergent path see flood and garber 1980 this paper deals with an economy operating under a flexible exchange rate and with perfect myopic foresight in expectations of the inflation rate and the rate of

wages profits and rent sharing the paper suggests a new test for rent sharing in the u s labor market using an unbalanced panel from the manufacturing sector it shows that a rise in a sector s profitability leads after some years to an increase in the long run level of wages in that sector the paper controls for workers characteristics for industry fixed effects and for unionism lester s range of wages is estimated for rent sharing reasons alone at approximately 24 per cent of the mean wage

wages equal productivity fact or fiction using a matched employer employee data set of manufacturing plants in three subsaharan countries i compare the marginal productivity of different categories of workers with the wages they earn in each country i observe approximately 135 firms and an average of 5 5 employees per firm under certain conditions the wage premiums for worker characteristics should equal the productivity benefits associated with them i find that equality holds strongly in zimbabwe the most developed country in the sample but not at all for tanzania the least developed country results for kenya are intermediate differences between wage and productivity premiums are most pronounced for characteristics that are clearly related to human capital such as schooling training experience and tenure moreover where the wage premium differs from the productivity benefit general human capital tends to receive a wage return that exceeds the productivity return and the reverse holds for more specific human capital investments schooling tends to be over rewarded even though most of the productivity benefit comes from job training wages tend to rise with experience even though productivity is mostly increasing in tenure sampling errors nonlinear effects and non wage benefits are rejected as explanation for the gap between wage and productivity effects localized labor markets and imperfect substitutability of different worker types provide a partial explanation department of economics university of toronto 150 st george street toronto on m5s 3g7 canada jovb chass utoronto ca seminar participants at the university of illinois kellogg school of management and catholic university of louvain provided useful suggestions funding by the connaught foundation is gratefully acknowledged

government intervention efficiency wages and the employer size wage effect in zimbabwe abstract this paper uses matched employer employee data from a survey of 201 manufacturing firms and 1609 of their workers conducted in zimbabwe in the summer of 1993 the results indicate that there is a substantial premium associated with employment in larger firms and that this premium cannot be explained by differences in worker quality and job characteristics nor is it eliminated by controlling for unionization minimum wages or other forms of government intervention the size premium is much larger for white collar than for blue collar workers these differentials are also found to be substantially larger than those estimated for other developed and developing countries the analysis uses the data about firm characteristics to explore a number of efficiency wage based explanations of the size differential and finds results which are consistent with but not conclusive proof of hiring turnover and morale based notions of efficiency wages

the dynamic adjustment path for perfectly foreseen changes in monetary policy abstract this paper investigates the real effects of announced or perfectly foreseen changes in monetary policy produced by the mundell tobin effect a particularly good place to study these non neutralities appears to be the period between announcement and implementation of new policies at announcement the economy jumps to a new equilibrium path moving continuously even after implementation all transition paths between announcement and implementation are established to be scalar multiples of each other the path depends upon the structure of the economy and the discounted present value of the change in policy both algebraic and diagrammatical analyses are presented

materials price increases and aggregate adjustment in an open economy a stochastic approach abstract this paper develops a stochastic macroequilibrium frameworks to analyze the differing implications of alternative types of input price disturbances the distinctions between expected and unexpected permanent and transitory nominal and real disturbances are considered the introduction of input disturbances involves a more elaborate modelling of the supply side of the economy both constant returns to scale and decreasing returns to scale technologies are considered the analysis highlights the sensitivity of the macroeconomic impacts of input price shocks to their specific type the analytical results obtained are not unambiguous and are supplemented with numerical simulations

real exchange rate overshooting and the output cost of bringing down inflation implementing a gradualist policy of monetary contraction in an open economy with a freely floating exchange rate but with nominal inertia in domestic labor costs can lead to prompt and substantial changes in the nominal and real exchange rate one of the virtues claimed for such exchange rate overshooting however is its immediate effect on the price level and so on domestic wage and price inflation in this paper we show that in a model which is super neutral and has nominal inertia in both the level of labor costs and their trend or core rate of growth this early overshooting of the exchange rate does not succeed in cutting the output costs of reducing steady state inflation those output and unemployment costs which are initially avoided by over valuing the currency have to be paid later when this overvaluation is corrected relative to other policies which achieve the same effect on steady state inflation exchange rate overshooting brings inflation down more quickly this abstract was borrowed from another version of this item

market power firm performance and real wage growth in zimbabwean manufacturing abstract this paper uses a two year panel of data on 600 zimbabwean manufacturing workers and the employers to examine several aspects of the labor market response to the reforms introduced in the 1991 structural adjustment program the analysis then uses this evidence to explore a number of hypotheses about the functioning of formal urban labor markets in zimbabwe with particular attention to the issue of rent sharing first as one would expect liberalization of trade did indeed act to shift employment from import competing sectors to export sectors although total manufacturing employment was basically unchanged second real wages in manufacturing fell for most workers third the pattern of wage changes across sectors and firms is consistent with a view of labor markets as noncompetitive the evidence provides support for the idea that a rent sharing process of wage determination rather than one based on efficiency wages or government intervention is an appropriate characterization of this labor market

productivity and industrial development in sub saharan africa abstract this paper considers the current state and prospects for efficient development of the large scale industrial sector in sub saharan africa it is argued that the liberalization of the international trade regime is unlikely to be sufficient for successful development unless the technological ability of firms is increased to allow an elastic supply response alternate modes for improving supply responsiveness are considered

monetary policy exchange rate dynamics and the labour market the large fluctuations of exchange rates since the 1970 s have stimulated theories of exchange rate dynamics two broad classes of models can be distinguished sticky price models e g bilson 1979 dornbusch 1976 gray and turnovsky 1979 mathieson 1977 and witte 1979 with monotonic exchange rate dynamic adjustment and the possibility of overshooting exchange rate dynamics are the result of slowly adjusting prices the other class is flexible price models e g branson 1976 calvo and rodriguez 1977 dornbusch and fischer 1980 driskill 1980 kouri 1976 and niehans 1977 with a richer variety of dynamic paths and almost invariably no overshooting exchange rate dynamics are the result of wealth accumulation through current account imbalances within the class of sticky price models perhaps the most prominent is dornbusch 1976 this model emphasizes the differential speed of adjustment between goods and assets markets as the cause of short run exchange rate overshooting following a monetary expansion using this framework frenkel and rodriguez 1982 show that it is the assumption of perfect capital mobility or perfect asset substitutability which results in overshooting with a low degree of asset substitutability the exchange rate is likely to undershoot its equilibrium value as they stress the speed of adjustment in commodity markets does not seem to be a fundamental factor frenkel and rodriguez op cit p 3 bhandari driskill and frenkel 1984 confirm this result using a stock rather than a flow formulation of the capital account their analysis emphasizes the relationship between the degree of asset substitutability the responsiveness of the trade balance to relative prices and the interest rate semi elasticity of the money demand as the condition for over shooting bhandari 1981 made an early attempt to provide a model in which the role of the degree of asset substitutability and the speed of adjustment of the goods market can be investigated however his analysis suffers from major weaknesses in model specification see gazioglou 1984 the present paper analyses exchange rate dynamics in a model that integrates slowly adjusting prices with wealth accumulation dynamics the aim is to examine the overshooting hypothesis and the nature of the dynamic path that is whether it is monotonic or cyclical following a change in monetary policy henderson 1980 and kawai 1985 have attempted a similar synthesis under perfect asset substitutability and by restricting the choice of assets to domestic and foreign currencies henderson and

global estimates of energy growth nexus application of seemingly unrelated regressions as the world struggles to emerge from a global recession and financial crisis countries are looking for solutions to improve domestic economic performance and put people back to work global energy demand and prices have been resilient during the recession leading policy makers in countries with the potential to produce energy to look to that sector as a potential engine for economic growth the objective of this study is to undertake an empirical study on linkages among energy consumption economic growth fdi relative price and financial development i e broad money supply m2 in low income middle income high income non oecd high income oecd south africa middle east and north africa mena and the aggregate data of the world over a period of 1975 2011 data is analyzed by the im pesaran shin ips test of unit root to find out the order of integration the long run relationship is investigated through the pedroni 37 test of panel cointegration at last the seemingly unrelated regression sur method is used for estimation of the impact of growth factors on energy consumption in these regions the results reveal that each variable seem to have a unit root at level so we could investigate cointegration of the series at level on the basis of pedroni test we can bring to a close that series are cointegrated the results of seemingly unrelated regression sur suggests that gdp per capita has a positive impact on energy consumption in low income middle income south africa mena and aggregate data of the world however in high income oecd and non oecd regions there is no significant relationship been found in both regions fdi plays a pivotal role in increasing energy demand in middle income high income oecd and non oecd region which implies that whatever other benefits may accrue from fdi it should not be expected to generate sufficient energy in south africa mena and the world directly fdi enhancement policies should be supplemented to stimulate growth in those regions broad money supply exerts positive impact on energy demand in low income middle income high income non oecd and mena regions finally relative prices has either a positive impact i e middle income region and or a negative impact on energy consumption i e low income high income oecd and mena region the results conclude that lower energy prices reduce input costs for nearly all goods and services in the regions thus making them more affordable