the simple macroeconomics of north south interaction recently there has been an upsurge of interest in macroeconomic linkages between the developed countries the north and less developed countries the south there are several reasons for this first it is partly a response to the recent ldc debt crisis and its possible consequences for northern financial markets and southern growth prospects second the effects of northern macroeconomic policies on primary commodity prices and hence on northern inflation and output and on southern debt are of interest for the world economy third the study of international interdependence in the context of the northern economies has highlighted a missing link the southern economies that are not modeled in detail in existing models of north north interactions analysis of these issues may well prove to be significantly influenced by the behavior of the missing bloc comprising the south what is so particular about north south interactions two asymmetries are normally held to represent the key differences between the economies of developed and developing countries these have to do with the workings of goods and financial markets and are captured in the following simple stylized way 1 northern production consists of industrial goods the output of which is endogenous and the market for which clears through changes in the volume produced by contrast southern production consists of agricultural goods the output of which is exogenous and the market for which clears through changes in the price of agricultural goods relative to industrial goods the association of industry with the north and agriculture with the south is clearly an oversimplification 2 the north has developed capital markets with endogenous interest rates that affect expenditure but in the south credit markets are imperfect the only financial effect on expenditure is a wealth effect that reduces southern expenditure as indebtedness in the south arises we have recently contributed to three surveys of the modeling and policy issues involved in studying interactions between these two rather different kinds of economies see d currie et al 1988 currie v muscatelli and vines 1988 muscatelli and vines 1988 the present paper attempts to distill that work and to model in the simplest possible way some of the key processes at work we concentrate on two important policy issues in global macroeconomics i the effect on the south of reaganomics in the north and ii the effect of debt relief for the south and aid to the south

institutions and progress an insistent theme in richard nelson s work is that of capitalism as an engine of progress in this paper i explore this idea through a sequence of his writing distinguishing progress as outcome from progress as instituted process this leads to a deeper issue within this nelsonian theme namely the incompatibility between progress and equilibrium i argue that evolving systems are ordered and coordinated but they are never in equilibrium capitalism is restless it always generates change from within and the proximate source of this progressive tendency is the uneven accumulation of knowledge capitalism is restless because knowledge is restless copyright 2001 by oxford university press

earnings inequality among males in the united states trends and the effect of labor force growth we analyze the variance of log earnings within labor force cohorts of u s males with particular attention to the influence of labor force growth rates estimates with data from the 1968 79 current population surveys reveal increases in earnings inequality within labor force cohorts even after we control for the level of education experience and unemployment a model of human capital investment is used to analyze differences among cohorts in the life cycle profile of the variance of log earnings it is shown that a pattern of sharply increasing and then declining labor force growth rates will tend to raise the return on human capital investment and thereby increase the variance of postschooling investment and log earnings early in the life cycle this positive effect on relative earnings inequality should decline with experience and possibly become negative because of the post world war ii baby boom and baby bust recent labor force entrants have faced just such a pattern of actual and projected labor

a comparison of determinants of urban rural and farm poverty in costa rica abstract the lack of progress on reducing poverty in third world countries and its growth during the 1980s show that one of the fundamental goals of development has not been met addressing the renewed concern with poverty requires knowledge about the factors affecting poverty this paper uses logistic regression analysis to estimate the effects of variables on urban rural farm and nonfarm poverty among households in costa rica results show the complexity of the issue and imply policies to expand education through the secondary level to create more opportunities for rural off farm employ

poverty and public policy the problem of poverty is particularly acute in india with 14 of the world s population we have the misfortune of having almost twice as large a share of the world s poor indeed as i shall presently underline the question of poverty and its amelioration has been at the center of our concerns from the beginning of our planning efforts almost four decades ago little therefore can be said on it that some distinguished indian economist has not already said in some ways therefore to talk on the design of public policy for poverty to an indian audience is to carry coal to newcastle or as the old saying goes to teach your grandmother how to suck eggs nonetheless i hope to provide a fresh perspective by putting the problem into an explicit analytical framework that permits alternative policy designs to be sharply defined and contrasted i also intend to draw on international experience to put our efforts and problems into both historical and comparative perspectives

openness to international markets and the diffusion of standards compliance in latin america a multi level analysis abstract this study contributes to the debate on the role of openness to international markets for the diffusion of compliance with international standards in developing countries relying upon aggregated data for 1995 2005 as well as upon firm level and secondary data from the chilean salmon farming industry the determinants of iso 9000 and iso 14001 diffusion at country industry and firm level in latin american are analysed our evidence suggests that openness to international markets acts at different levels at both the country and industry level it creates awareness and access to new knowledge therefore providing economic incentives or penalisations for evaluating certification this effect competes and complements the deliberated efforts and policies in explaining diffusion of certification at firm level however openness to international markets alone does not provide sufficient opportunities to acquire the knowledge required to comply with these standards in this case standards compliance depends on firm s capability to use relational and search assets as well as on national and industrial efforts and policies to spread standards usage

classifying technology policy from an evolutionary perspective abstract for the classification of technology policy in an evolutionary framework the taxonomy of mission and diffusion oriented policy design introduced by ergas ergas h 1987 the importance of technology policy in dasgupta p stoneman p eds economic policy and technological performance cambridge univ press cambridge is useful however ergas indirect method of identifying the respective policy style is only able to give a first and rough insight in the technology policy of a specific country to improve on that we developed a so called direct method aiming at a sound characterization of single policy measures and giving a more detailed picture about policy orientation to demonstrate the basic procedure of the suggested approach it is applied empirically on the german technology policy of the last 2 decades

north south growth and the terms of trade a model on kaldorian lines this paper examines equilibrium growth and stability in the world economy using a north south model in which there is assumed to be surplus labor in both the north and south at an exogenously determined level of real wages the model allows for substitution in consumption between primary commodities and industrial goods in the north and treats the cases of both surplus and scarce land in the south in the case of an exogenous shock to the model the north south terms of trade may overshoot its equilibrium value and or converge to this value along a cyclical path there is no guarantee that the adjustment path is stable

slipping into and out of poverty the dynamics of spells this paper examines the dynamics of poverty previous analyses have examined either fluctuations in the male heads earnings or the frequency of poverty periods over a fixed time frame our approach depends on a definition of spells of poverty using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty the methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads earnings while 60 percent of the spells end when the heads earnings increase thus researchers must focus on household formation decisions and on the behavior of secondary family members there has been a dramatic resurgence recently of discussion of the underclass the discussion is reminiscent of debates about poverty during the 1960s when the notions of a culture of poverty particularly as popularized by michael harrington s other america 1962 dominated both intellectual and policy thinking the idea of an underclass seems inconsistent however with much of the research on the dynamics of poverty during the 1970s that research using new longitudinal data seemed to show that the bulk of the poor were poor for only a few years the research also showed that the poor were a very heterogeneous group including a small minority of persistently poor the persistence of poverty is of interest both for understanding the phenomenon and for developing policy claims about dependency and separate life styles among the poor rest on assumptions about the long term nature of poverty questions

differences in income and poverty within brazil regional disparities in living standards within brazil have received increasing attention in recent years this paper indicates that although costs of living adjustments narrow spatial differences large regional disparities remain particularly upon comparing the northeast and the southeast the application of price indices reduces urban rural variations more than regional differences drastically narrowing the urban rural gap in food consumption poverty is nevertheless much more concentrated in the rural areas than in the urban areas although regional differences in its incidence are more striking than the urban rural divergencies this paper has not primarily concerned the policy implications of these income differentials but tries to highlight the importance of measuring cost of living differences and thus obtaining more accurate measures of income and poverty levels

social security and extreme poverty in latin america abstract this article argues that although social security has had a significant impact in preventing a considerable number of people from falling below the extreme poverty level in latin america it has not played an important role in reducing current extreme poverty in the region the analysis is done focusing on three social security objectives protection of the needy affected by social risks progressive income redistribution and promotion of savings investment to reduce inflation and enhance development the author discusses a series of recommendations for achievement of the three cited objectives in order to diminish critical poverty in the future

a utility based analysis of the wage subsidy program abstract because the poverty line is usually defined in terms of income two families may be classified as having poverty level incomes even though their hours of work and therefore their utilities may be very different this paper compares a government income support program that defines the poverty line in terms of utility with several other support programs that define the poverty line in terms of income through the use of the wage solution of the indirect utility function we find the amount of wage subsidy required to raise a subpoverty line family to the poverty line as defined by the utility function this subsidy is compared with wage subsidies based on directly observable quantities such as income

distributional implications of macroeconomic policy theory and applications to el salvador abstract this article offers a theoretical framework for designing macroeconomic strategy for el salvador that will both respect stabilization and structural adjustment needs and enhance social equity after outlining the largely negative distributional implications of the orthodox policies followed by el salvador in recent years we argue that stabilization and efficiency could actually be improved by increased equity and sketch out the elements of an alternative approach that would be distributionally sensitive and thereby help consolidate the peace

enterprise restructuring and embeddedness a policy and systems perspective this paper presents a dynamic analysis of technological and industrial policies directed to business sector restructuring in increasingly knowledge based economies it simultaneously considers policies which are aimed at promoting restructuring directly and policies aimed at influencing the facilitating structure of largely non business institutions and organizations this paper also offers an explicit analysis of the changing portfolio of policies recognizing the complementarity of both incentives and institutional development and the likelihood of having to adopt under a broad set of circumstances a changing portfolio of horizontal and target incentives policies programs copyright 2000 by oxford university press

economic crisis adjustment and living standards in mexico 1982 85 abstract this paper presents an estimate of the impact of economic crisis and adjustment on the living standards of the mexican population between 1982 and 1985 the analysis is based on information on wage and nonwage incomes unemployment functional income distribution changes in public expenditures and social indicators the specific questions addressed are what happened to agricultural and nonagricultural wage and nonwage incomes how did unemployment and the composition of employment change what was the impact of fiscal cuts on social expenditures and food subsidies were social services affected by declining resources did social indicators worsen in addition households strategies in response to declining incomes are briefly discussed finally conjectures are made regarding which population groups were hurt most by the crisis the results indicate that the crisis and adjustment process left mexico with a relatively impoverished middle class and with rising poverty

estimating earnings poverty in 1939 a comparison of orshansky method and price indexed definitions of poverty official poverty lines do not exist for the united states for years prior to 1959 in this paper a poverty line comparable to the seminal line is constructed for 1939 using the orshansky method poverty rates are then calculated using the earnings data of the 1940 public use microdata sample of the u s census a comparison with similar work by ross et al 1987 demonstrates the degree to which continual price indexing of the poverty line results in inappropriate estimates a trend of increasing incidence of poverty among female headed households prior to 1960 is also revealed

work and welfare as determinants of female poverty and household headship this paper formulates and estimates a model of the determinants of female household headship headship responds to variations in the levels of well being a woman can expect if she marries or if she heads her own household the authors measure the opportunity cost of female headship and the effects of welfare benefits and womens work in the market on female headship and poverty they find that if welfare benefits were reduced there would be small reductions in the proportion of women heading households for whites and nonwhites but a substantial increase in poverty for nonwhites they also find that wives work in the market reduces poverty and female headship for nonwhites and reduces poverty but increases headship for whites the study is based on 1975 u s data excerpt

import compression and export performance in developing countries the debt crisis that began in 1982 forced a number of developing countries that had relied on external financing into rapid adjustment of their current account positions in many of these countries external adjustment mainly took the form of import reduction or what has been termed import compression to generate trade balance surpluses necessary to service the existing stock of foreign debt while the effects of import compression on consumption and growth have been discussed in the literature there has been little concern expressed with regard to the direct effects such a policy can have on export performance this paper develops a model that takes explicit account of the feedbacks between imports and exports that arise through the effects of imported inputs on exports and the availability of foreign exchange on imports empirical tests of this model for 34 developing countries tend to confirm both these hypotheses these results point clearly for additional foreign financing to reduce the need for import compression and its attendant negative effects on the supply of exports

poverty income distribution and child welfare in latin america a comparison of pre and post recession data abstract the traditional and external dependency of most latin american economies and their recent pattern of growth has made them particularly vulnerable to the unexpected and severe changes of the world economy that began in 1979 1980 even those countries with less open economies have been forced to seek adjustments to the new world situation that are both in nature and consequences essentially different from those of the interdependent industrial economies this paper attempts to evaluate the impact of these recent economic changes on the living conditions of the populations of chile colombia costa rica panama and venezuela it is based on household data and is limited to those aspects of household living conditions that can be observed through the variables included in labour surveys it analyses changes in overall income distribution the movement of different socio economic groups within the income pyramid and changes in these groups livelihood strategies

market stimulating technology policies in developing countries a framework with examples from east asia abstract this paper proposes an analytical framework for technology development based upon evolutionary approaches and drawing upon asian development strategies the analysis rests on the concept of market stimulating technology policies comprising a broad array of policies to promote industrial and technological development some market and others government determined these policies may be functional horizontal or vertical and can be analyzed at three levels national strategic and specific the paper suggests that strategic choices are involved at all stages that cannot be resolved entirely by recourse to free markets

below the line poverty in latin america abstract despite gains in basic welfare indicators poverty remains prevalent in latin america this paper surveys existing data on poverty in the region and discusses the relationship between growth inequality and poverty given the inequality of income distribution in latin america and the slow growth of output policies to overcome poverty must involve more efficient allocation of government resources redistribution and foreign aid

third world debt and macroeconomic interactions between the north and south in this article the authors examine three issues the causes of the south s debt crisis the nature of the macroeconomic linkages between the north and south and some of the debt rescheduling programmes the crisis was due not only to domestic policies in the south but also to the macroeconomic linkages between the south and the oecd economies these linkages may also play an important part in its cure debt adjustment with growth for the south needs a package of measures including greater co operation on macroeconomic policies and trade issues between north and south and a commonly agreed position on outstanding debt

what stopped the inflation unemployment or commodity prices the main object of this paper is to argue that most of the deceleration of inflation in the oecd countries in general including britain that took place between i980 and i982 should be attributed not to the direct impact of higher unemployment on the labour market but to the fall in commodity i e primary product prices from i980 to i982 following their very sharp rise accompanying the second oil shock between i978 and i980 this led to a dramatic turn round of about 50 60 in the prices of primary products imported into the oecd countries from the rest of the world and from other oecd countries which in turn can account for the deceleration of about 20 25 in the import prices for the average industrialised country and our econometric estimates show that the pace of wage inflation is closely correlated with import prices by contrast our estimates for a variety of model specifications and choice of data do not show statistically significant correlations between aggregate unemployment and wage inflation we have not attempted to establish statistically that the turn round in commodity prices was caused mainly by the strength and duration of the posti979 recession in the industrialised countries as a whole but like most commentators we assume that this is the case given this assumption therefore our results imply that the recession in the industrialised world did not as is widely believed slow down the inflation by acting directly on the labour market e g by crushing the unions or bringing a new breath of realism into wage negotiations instead it worked by inducing a collapse of commodity prices or in the case of oil inducing a slight fall by comparison with the preceding sharp rise insofar as our results are valid there are various obvious implications for some central topical economic debates first if there is no stable direct relationship between unemployment within any country and its own rate of wage inflation then there would be no nairu and no clearly identifiable phillips curve as some other investigators have found hence debates as to whether and how far individual economies have unemployment rates above or below their nairus and so on are irrelevant in the conclusions we summarise what seem to be the main policy implications for individual countries but secondly insofar as levels of demand in the industrialised countries taken as a whole influence commodity prices which feed back on wage inflation via

evaluating the econometric evaluations of training programs with experimental data this paper takes the results of an employment and training program thatwas run as a field experiment in which the participants were randomlyassigned into a treatment or a control group and compares these results to the estimates that might have been produced by an econometrician who evaluated the program using the same econometric procedures that have been used in the program evaluation literature this comparison shows that many of these econometric procedures fail toreplicate the experimentally determined results and suggests that researchers should be aware of the potential for specification errorsin other nonexperimental evaluations copyright 1986 by american economic association

the effects of imf programs in the third world debate and evidence from latin america abstract this article reviews the debate about the effects of imf sponsored stabilization programs in the third world after examining recent studies by fund economists results of a new study on a latin american country set are presented in this research imf programs are associated with insignificant changes in the current account significant improvements in the overall balance of payments increases in inflation mixed effects on growth and a strong and consistent pattern of reduction in labor share of income the latter result is incorporated into a distribution oriented critique of fund policy

a catalytic and evolutionary approach to horizontal technology policies htps abstract this paper presents an evolutionary framework for horizontal technology policies htps especially market friendly ones involving project based incentives e g rd and they complement the more specific and well known selective and vertical policies aimed at individual sectors and technologies the analysis is conducted within a learning to innovate framework with emphasis on collective organizational learning search and market building the outcome is a technology policy cycle with distinct infant growth and mature phases proactive generation of a critical mass of projects for efficient learning and diffusion of innovation routines becomes the aim of the infant phase while the mature phase of the policy should focus on policy restructuring including drastic reductions in the support of routi projects and enhanced support of more complex types of innovation the paper also emphasizes the importance of a neutrality component in incentives in the infant phase of increasing selectivity and of building policy capabilities for efficient policy design and implementation

the european monetary system list of figures list of tables preface 1 introduction niels thygesen part i the international environment 2 the european monetary system the dollar and the yen rudiger dornbusch discussion robert triffin discussion charles wyplosz part ii disinflation external adjustment and cooperation 3 monetary discipline and cooperation in the european monetary system a synthesis jacques melitz discussion jose vinals 4 the role of the exchange rate regime in a disinflation empirical evidence on the european monetary system francesco giavazzi and alberto giovannini discussion william branson 5 inflation and the european monetary system susan m collins discussion jean jacques rey 6 economic growth and exchange rates in the european monetary system their trade effects in a changing external environment stefano vona and lorenzo bini smaghi discussion david begg part iii exchange rates capital mobility and monetary coordination 7 exchange rates interest rates capital controls and the european monetary system assessing the track record michael j artis and mark p taylor discussion emil maria claassen and eric peree 8 the stability and sustainability of the european monetary system with perfect capital markets john driffill discussion daniel gros 9 competitiveness realignment and speculation the role of financial markets maurice obstfeld discussion marcus miller discussion herakles polemarchakis 10 interventions sterilisation and monetary policy in european monetary system countries 1979 87 cristina mastropasqua stefano micossi and roberto rinaldi discussion wolfgang rieke 11 monetary policy coordination within the european monetary system is there a rule massimo russo and giuseppe tullio discussion lucas papademos part iv the future of the european monetary system 12 the european monetary system a long term view tommaso padoa schioppa 13 a new phase in the european monetary system exchange rate constraint capital liberalisation and policy coordination a report of the conference panel discussion lamberto dini peter kenen rainer masera wolfgang rieke luigi spaventa and jacques waitzenegger index

afdc benefits and the inter urban variation in poverty among female headed households the percentage of families headed by females in poverty varies widely across metropolitan areas for example 8 37 of all families in albany georgia were female headed and in poverty in 1980 while in sheboygan wisconsin the figure was 1 1 though not as dramatic as this interregional difference intra regional variation can also be significant in detroit michigan 4 90 of families were femaled headed and in poverty and in the closest interstate metropolitan area toledo ohio the figure was 3 77 recent research into the behavior of low income femaleheaded families suggests that state benefit differentials in aid to families with dependent children afdc may in part be responsible in this paper we construct a model that explains an important and overlooked implication of non uniform benefit standards among states the inter urban variation in the size of the potential and actual afdc recipient population particular attention is given to 1 the impact of interurban differences in real afdc payments 2 the potential of afdc to alter the number of female headed families in poverty and 3 the relative importance of other urban characteristics in explaining the size of the potential and actual afdc recipient population the model uses 1980 census data and is estimated for all standard metropolitan statistical areas for which we were able to obtain data

mapping public support for innovation a comparison of policy alignment in the uk and france this paper proposes and tests a three dimensional model of public support design as a framework to compare public incentives for innovation in firms through time and across countries and consequently to compare forms of policy alignment of innovation objectives in an economy using data on 149 french and british policy programmes from the early 1980s to 2002 this paper shows that policy makers implement programmes within a different three dimensional design space in order to align several distinctive objectives and consequently strengthen the impact of governmental measures moreover as the objectives of the national players and policy makers evolved the portfolio of innovation policies also evolved in their separate ways nevertheless some similar trends are also observed

economic inequality new methods for new trends two positions dominate the debate over the recent increases in economic inequality in the united states the job skill mismatch thesis attributes rising inequality to growth in the number of high skill high wage jobs that leaves less skilled workers behind the polarization thesis in contrast argues that the service shift generates growth in the number of both high wage and low wage jobs and declines in the middle standard summary measures of distributional inequality cannot discriminate between these depictions of where job growth is occurring we propose new methods for measurement that provide both summary and detailed information about the distributional shifts in earnings and aframework for statistical inference using data from the curent population survey cps on yearly earnings from 1967 to 1987 we show that the trends in distributional inequality vary considerably by race gender and time while the evidence provides more support for the polarization argument this thesis needs refinement if it is to account for the variations in changing inequality observed here

north south interaction and commod control a simple model of north south interaction is presented with a keynesian north producing industrial goods and a classical south producing corn if the terms of trade clear the corn market then commodity price stabilisation can only slightly increase the average value of northern real consumption but if there is real wage resistance in the north then output deflation in the north is necessary to avoid inflationary pressure whenever the terms of trade tend to turn against the north commodity price stabilisation could in such circumstances greatly improve northern welfare the paper also examines whether fiscal policy in the north instead of commodity price stabilisation could provide equally large improvements in northern welfare

innovative opportunity pursuit human capital and business ownership experience in an emerging region evidence from ghana this study explores whether an entrepreneur s ability to assemble and leverage human capital particularly specific human capital relating to prior business ownership experience is associated with seven types of product and work practices innovation in an emerging region namely ghana logistic regression estimation revealed that portfolio entrepreneurs were more likely than novice entrepreneurs to report innovation tried multinomial logistic regression analysis revealed that portfolio entrepreneurs were more likely than other entrepreneurs to report innovation tried and introduced if the goals of policy are to increase the quality of new business start ups and maximize investment returns there is a case to target assistance to portfolio entrepreneurs

employment and economic growth in costa rica abstract costa rica s economic growth in the last 25 years has had favorable labor market and income distribution consequences overall employment growth kept pace with labor force growth the mix of jobs improved real wages rose and relative inequality and absolute poverty fell but during the economic crisis of 1980 1982 when real per capita income plummeted labor market conditions deteriorated markedly unemployment doubled employment composition worsened and real wages fell by 40 growth labor market conditions and income distribution

perspectives on poverty and income inequality in brazil abstract exploratory analysis of the advance tabulations of the 1980 brazilian demographic census suggests the proportion of the population in poverty fell during the decade 1970 1980 the degree of inequality of the distribution of the income of individuals apparently remained about the same from 1970 to 1980 after rising in the 1960s this near constancy of the overall inequality of income distribution resulted from two offsetting changes a narrowing of the gap between rural and urban incomes and greater inequality within the rural sector

the trade off between equality and efficiency this paper uses a 1976 microdata base to estimate the marginal cost of reducing income inequality with a policy that has distributional effects similar to the present tax transfer system the analysis uses a simulation methodology in which only the labor supply effects are evaluated other behavioral effects are ignored the most striking finding is that marginal cost is quite high even for modest labor supply elasticities for example in the benchmark case with a weighted average economy wide uncompensated wage elasticity of 0 2 and compensated elasticity of 0 31 the disposable money income of upper income quintiles of households is depressed by 9 51 for each dollar increase in the disposable money income of lower income quintiles when income equivalent values that take account of the value of leisure are compared the marginal cost for this case is estimated to be 3 49

poverty in eastern europe in the years of crisis 1978 to 1987 poland hungary and yugoslavia eastern europe experienced an economic crisis between 1978 and 1987 declining income led to substantial increases in poverty rates in poland and yugoslavia while poverty in hungary remained at about the same level as before the crisis in all three countries urban poverty increased as the economic condition of state sector workers deteriorated to a much greater extent than that of agricultural and mixed households the increased poverty was entirely explained by declining income because the overall income distribution did not change or in some cases improved