the early history of modern ecological economics abstract this paper provides a historical perspective for the discussion on ecological economics as a special field of research by studying the historical background of ecological economics the present discussions and tensions inside the field might become easier to understand and to relate to the study is inspired by other studies of the emergence of new research areas done by sociologists and historians of science and includes both cognitive and social aspects macro trends and the role of individuals the basis for the paper is a combination of literature studies and interviews with key researchers from the field the story opens with the emergence of the new environmental agenda in the 1960s which was influenced by the scientific development in biology and ecology then it is outlined how the environmental challenge was met by economics in the 1960s around 1970 the basic ideas of ecological economics were given modern formulations but it took a long gestation period from the beginning of the 1970s to the end of the 1980s before ecological economics took shape during this gestation period the personal relationships between the actors were formed and the meetings that were decisive for the formal establishment of ecological economics took place

foreign aid tariffs and nontraded private or public goods abstract the possibility of transfer paradoxes or immiserizing growth in tariff ridden small open developing countries with a nontraded goods sector is analysed in four models a short run sector specific factor model a dual economy model capital is mobile between some but not all sectors a long run model factors are mobile between all sectors and a model with public goods several results of the received literature on transfer paradoxes and or immiserizing growth in distorted small open economies are generalized to nontraded private and public goods allowing for intersectoral factor mobility or immobility

x efficiency in australian banking an empirical investigation this paper empirically investigates the x eaciency technical and allocative in australian banks a non parametric method of data envelopment analysis dea has been used to arrive at the eaciency scores banks in this sample were found to have low levels of overall eaciency compared with the banks in the european countries and in the us the results indicate that as a source of overall ineaciency the technical component was more important than the allocative component thus the ineaciency in australian banks can be attributed to wasting of inputs technical ineaciency rather than choosing the incorrect input combinations allocative ineaciency domestic banks were found to be more eacient than foreign owned banks the study has important implications such as guiding the government policy regarding deregulation and mergers since the study pinpoints the sources of ineaciency it would also help banks with strategic planning 2001 elsevier science b v all rights reserved

banking technology and the existence of a consistent output aggregate abstract this paper addresses the question of the existence of a consistent output aggregate in banking specific necessary and sufficient conditions for output aggregation are developed and tested in the context of a second order approximation to any arbitrary multi product bank cost function the analysis provides evidence that a composite aggregate measure of output fails to provide a proper representation of banking technology and therefore previous studies that used aggregate output measures may well be subject to specification errors

estimation of economies of scale in banking using a generalized functional form this paper addresses four issues that arise in the estimation of economies of scale in the commercial banking industry first a common assumption underlying many of the studies of economies of scale in banking is the assumption of a cobb douglas production function with exogenous input prices the use of a cobb douglas production function facilitates the estimation of the output elasticity of cost however there does not appear to be any other reason a priori for such an assumption this paper utilizes a box cox hereafter b c generalized functional form methodology to directly test the assumption of an underlying cobb douglas production function second if the assumption of a cobb douglas production function is inappropriate as a description of the production process of the financial firm estimates of the output elasticity may be biased the sensitivity of the estimates of this elasticity to the choice of functional form can also be examined through the use of a generalized functional form methodology third no general consensus has been reached regarding the appropriate definition of bank output thus a diversity of measures of bank output have been employed in previous estimates of economies of scale in banking the sensitivity of the estimated output elasticity of cost to the selection of several alternative measures of output is examined through the use of the generalized functional form methodology finally the b c estimates of the cost function for commercial banks can be used

banking costs generalized functional forms and estimation of economies of scale and scope recently researchers have claimed that the primitive cobb douglas production technology captures banking cost functions adequately these findings rule out scope economies and u shaped cost curves the rejection of the generalized flexible form postulated by the above authors is a necessary but not a sufficient condition to justify a cobb douglas specification using restricted generalized functional forms the authors find that the composite output cobb douglas specification is an inadequate description of banking cost technology translog specifications with multiple products capture the data best suggesting the presence of both scope and scale economies copyright 1989 by ohio state university press

an index number approach to measuring bank efficiency an application to mergers abstract the current wave of bank mergers has resulted in an interest in the measurement of consequent efficiencies previous studies have generally focused on the measurement of merger induced cost efficiencies in this paper we turn to the production side and examine the change in relative productivity arising from bank mergers after deriving our superlative multilateral productivity index we compute the indexes for our entire sample of banks approximately 2 000 banks in each of the years 1984 1988 and for a cohort of 160 banks that merged in 1986 we find that acquiring banks achieve no gains in efficiency and this finding supports those of other studies on the other hand we find that our acquiring banks are consistently more productive than the sample as a whole by implication if mergers can be generally characterized as the acquisition by a relatively more productive bank of a relatively less productive bank an empirically valid supposition then industry performance should improve as a result of these mergers

multiproduct short run hospital cost functions empirical evidence and policy implications from cross section data economists and policymakers have been interested in hospital costs and the structure of hospital technologies for several decades now early interest was focused on the possibility of scale economies which implied increased efficiency for larger hospitals 6 8 12 13 18 20 while more recent interest has been stimulated by the inflationary spiral of hospital costs 1 15 17 22 as hospital costs have risen important policy questions concerning the impact on costs of the hospitals diagnostic case mix the hospitals admitting physicians the hospitals size and the hospitals efficiency have emerged and researchers have attempted to deal with these issues within the context of increasingly complex econometric models 1 2 5 24 27 however in attempting to analyze these important policy issues researchers have been forced to make two major types of compromises on the one hand appropriate data are often not available for estimating a well specified cost function e g information on admitting physicians and diagnostic case mix are often missing so that problems of specification error often plague the econometric results conversely in using imaginative ways to deal with data problems e g weighting in patient and out patient care to form a single index of hospital services 1 27 or estimating separate cost functions for each department in the hospital 2 researchers sometimes place unrealistic and unnecessary constraints on their econometric models the purpose of this study is to analyze the impact of several of the primary hospital characteristics mentioned above on the short run costs of hospitals within a theoretically consistent framework in the following discussion we also develop the theoretical

aid and sectoral growth evidence from panel data this article examines empirically the proposition that aid to poor countries is detrimental for external competitiveness giving rise to dutch disease type effects at the aggregate level aid is f

can megamergers improve bank efficiency abstract this paper uses a fitted multiproduct translog cost function to simulate mergers between pairs of us commercial banks with assets exceeding 1 billion and studies the predicted impact of such mergers on total costs thick frontier analysis reveals that variations in x efficiency dominate scale product mix and branching efficiencies ex ante financial data imply that costs could potentially be reduced in nearly half of the possible mergers except those between banks each larger than 10 billion most cost efficient mergers are across state lines apparently a result of variations in product mix

economic specialization versus ecological diversification the trade policy implications of taking the ecosystem approach seriously abstract the author contrasts the economic principle of specialization found in trade theory with the ecological principle of diversification that underlies the ecosystem approach to natural resource use he argues that current ecosystem decline is a consequence of the over extension of the principle of specialization from the factory setting to nature when the specialization principle is applied wholeheartedly to natural systems to speed up their delivery of desired commercial products it leads to ecosystem simplification loss of integrity and stress this occurs for example in modern approaches to forest management when clearcutting and replanting with genetically modified seeds occurs with heavy inputs of fertilizers herbicides and pesticides what is required is a re balancing of the application of the principle of specialization with the principle of diversification as occurs when forests are managed according to an ecosystem based approach this re balancing occurs at the level of production however not at the level of trade consequently the focus of environmental reform must be production policy not trade policy

economies of scale and scope in the securities industry abstract economies of scale and scope for the securities industry are estimated for the first time using previously unavailable survey data and employing the translog multiproduct cost function model the results reveal economies of scale for smaller specialized firms and diseconomies of scale for larger more diversified firms economies of scope do not appear to be important in the industry if the glass steagall restrictions are relaxed the results suggest that banks can enter the securities industry with a brokerage division of moderate scale of about 30 million in revenues the five million in new equity required suggests that only banks with assets over 1 billion and over 60 million in capital can enter the industry with a relatively modest investment there are however a substantial number of banks with over 1 billion in assets who can be considered as potential entrants

how do banks respond to shocks a dynamic model of deposit taking institutions abstract this paper proposes a dynamic model of the optimal choices of a bank that benefits from market power and takes into account the impact of the deposit generation process interbank lending borrowing emerges as a buffer that assists the bank in smoothing intertemporal adjustments in interdependent loan and deposit choices the bank smooths the impact of interest rates shocks on its customers to minimize the adjustments over time of the stocks of deposits and loans it does not however provide insurance against negative shocks of real origin that increase its expected default costs the predictions of the model help to shed light on the available empirical evidence and to analyze some recent developments of the banking industry

measuring economies of diversification a frontier approach the purpose of this article is to improve the statistical analysis of multiproduct firm behavior specifically we are interested in modeling and estimating multiproduct technology focusing on size and product line variation thus we offer a new empirical technique that can be used to directly analyze issues such as subadditivity expansion path subadditivity economies of scope and economies of diversification although applied papers employ a wide variety of theoretical multiproduct cost concepts previous work uses nonfrontier estimation techniques we show how to introduce frontier approaches to multiproduct cost analysis that can be applied to any of these concepts and improve the statistical analysis specifically we introduce an empirical test using frontier techniques that allows for direct measures of economies of diversification at the firm specific level

an empirical analysis of scale and scope economies and technical change in an irish multiproduct banking firm abstract in contrast to most empirical investigations of the efficiency of multiproduct financial institutions which either estimate scale and scope economies with a given state of technology or only analyse technical change in the presence of overall scale economies this study estimates overall scale economies product specific scale economies and scope economies in the presence of both neutral and non neutral technical change also in contrast to most other empirical studies in this area standard errors are computed for all relevant statistics the findings indicate diseconomies of scope overall diseconomies of scale product specific economies are decreasing for investments and increasing for loans in addition to substantial neutral technical change biased technical change is labour and capital saving and deposits using in character

global and local scale characteristics in convex and nonconvex nonparametric technologies a first empirical exploration the purpose of this contribution is to empirically implement and supplement the proposals made by podinovski 2004b to explore the nature of both global and local returns to scale in nonconvex nonparametric technologies in particular we both propose a simplified method to compute the global returns to scale and employ some secondary data sets to investigate the frequency of the special case of global sub constant returns to scale furthermore when determining global returns to scale using both convex and nonconvex technologies we verify how often the resulting information is concordant or conflicting finally besides comparing the fdh and dea evolution of ray average productivity for some typical individual observations we introduce in the literature two original methods for the determination of local returns to scale in nonconvex technologies

resilience in the dynamics of economy environment systems the ecological concept of resilience has begun to inform analysis of change in economy environment systems the linkages between resilience and the stability of dynamical systems are discussed along with its role in understanding of the evolution of such systems particular linkages discussed include those between resilience biodiversity and the sustainability of alternative states recent developments in modelling the resilience of joint economy environment systems suggest the advantages of analysing change in the system as a markov process the transition probabilities between states offering a natural measure of the resilience of the system in such states it is argued that this emergent property of the collaboration between ecology and economics has far reaching implications for the way we think about model and manage the environmental sustainability of economic development

the generalized theory of transfers and welfare bilateral transfers in a multilateral world paul samuelson s 1952 1954 classic papers on the transfer problem addressed two separate analytical issues the positive effect of a transfer on the terms of trade and the welfare effect of the transfer on the donor and the recipient since then a considerable body of literature has grown up on the positive analysis while samuelson 1954 himself had extended the 2 x 2 x 2 free trade analysis to allow for tariffs and transport costs subsequent writers have analyzed other extensions of the model for example to allow for nontraded goods as with leisure in samuelson 1971 or general nontraded goods in john chipman 1974 and ronald jones 1970 1975 remarkably however the welfare analysis of transfers has not paralleled these developments since wassily leontief 1936 produced an example of immiserizing transfer from abroad and samuelson 1947 argued that the example required market instability the proposition that has monopolized attention has been that a transfer in the conventional 2 x 2 x 2 model in its free trade version cannot immiserize the recipient or enrich the donor as long as world markets are stable in the walras sense interestingly samuelson 1954 who did extend the positive analysis to include tariffs did not go on to ask whether immiserization of the transfer recipient and hence symmetrically enrichment of the donor in a two country model could now arise consistent with market stability recently the welfare analysis of transfers has been extended in two different directions both apparently unconnected and both yielding the conclusion that transfers from abroad can be immiserizing and that the donor may improve its welfare despite market stability one route to this conclusion has been the introduction of a third economic agent or country that is outside of the transfer process in the appendix of his 1960 paper analyzing the interaction between trade policy and income distribution harry johnson discussed the possibility of welfareparadoxical redistribution between two factor income classes capital and labor in an open economy thereby providing what can be interpreted as a treatment of the threeagent transfer problem for the case in which donor and recipient are both completely specialized in the ownership of a single different factor an independent analysis of the three agent transfer problem using a restrictive model with given endowments of goods and fixed coefficients in consumption was also undertaken in an important paper by david gale 1974 2 brecher and bhagwati bhagwati department of economics columbia university new york ny 10027 brecher department of economics carleton university ottawa on kis 5b6 hatta department of political economy the johns hopkins university baltimore md 21218 we thank the national science foundation grant no 524718 for partial financial support of the research underlying this paper the paper was written when brecher and hatta were visiting columbia university 1981 82 gratefully acknowledged are helpful comments and suggestions from john chipman avinash dixit jacques dreze robert feenstra jacob frenkel ronald jones murray kemp andreu mas colell michael mussa john riley lars svensson and robert willig from anonymous referees and from seminar participants at berkeley harvard minnesota rochester chicago and the university of california los angeles after the present paper was submitted for publication and following its presentation at rochester our attention was drawn to this appendix which was noticed by a student of ronald jones subsequently we learned from makoto yano that motoshige itoh had pointed out an important related paper by ryuotaro komiya and t shizuki 1967 whose condition 11 for the johnson case anticipated our equation 12 below we are grateful for having both of these references brought to our attention 2 gale constructs an example in which the donor is enriched along with the recipient furthermore this immediately implies that a reverse transfer will immis

maturity intermediation and intertemporal lending policies of financial intermediaries this paper considers the maturity intermediation and intertemporal lending decisions of risk averse financial intermediaries in particular the maturity mismatch problem and the fixed versus variable rate lending decision are modeled when the major source of risk involves uncertain future interest rates the results imply that the strategy of matching the maturity of assets and liabilities is not generally optimal or even minimum risk this is due primarily to the built in hedge that the intermediary has as a result of rolling over short term loans while continuing to finance long term loans intertemporal dependencies between loan demand and costs or both also have an effect on the optimal degree of maturity mismatching and provide one rationale for making loans at rates below current marginal cost

the dominance of inefficiencies over scale and product mix economies in banking abstract this study measures and analyzes inefficiencies for all u s banks in 1984 inefficiencies are measured relative to a thick frontier cost function and are found to dominate measured scale and product mix economies most inefficiencies are operational in nature involving the overuse of physical inputs rather than financial involving overpayment of interest also technical inefficiencies proportionate overuse of all inputs dominate allocative inefficiencies improper mix of inputs these results suggest that competitive pressures in banking from deregulation will be focused primarily on banks that do not control costs rather than on those of a particular size or product mix

scale and scope economies in the multi product banking firm abstract the multi product nature of the banking firm is examined utilizing the translog cost function this analysis indicates that contrary to conventional wisdom natural monopoly scale economies and product specific decreasing costs are not robust characterizations of the banking industry there is however evidence that the cost function is characterized by economies of scope the implications of these results are discussed and extensions of this approach suggested

multiproduct technology and market structure a recent line of research has exposed some technological determinants of the structure of industries that produce more than one good the analyses of both multiproduct perfect competition and natural monopoly require a generalized notion of average cost and in addition several newly identified technological characteristics pertinent only to joint production this paper provides an overview of these new results and suggests a unifying framework in which the theory can be further developed

the role of fixed costs and cost complementarities in determining scope economies and the cost of narrow banking proposals narrow banking proposals would separate insured deposits from most types of bank lending using data from large u s banks the authors examine the extent to which narrow banking proposals are likely to result in increased production costs production costs will rise for nonjoint provision of deposit and loan services if there are cost complementarities in producing the two outputs jointly or if joint production enables banks to spread their fixed costs more effectively unlike standard cost function approaches the authors methods allow them to estimate the fixed cost and cost complementarity effects separately they find the net production cost consequences of narrow banking to be negligible copyright 1993 by university of chicago press

economies of scale in building societies this paper presents new measurements of economies of scale in the building society industry by estimating a translog total cost function jointly with the derived input cost share equations it differs from previous building society studies by defining total cost to include the interest cost of borrowed funds as well as the operating costs of employing labour and capital services in addition to the usual elasticity three further scale economy measures are developed and estimated input specific economies of scale augmented economies of scale and augmented input specific economies of scale

scale economies and cost complementarities in commercial banks on and off balance sheet activities abstract bank off balance sheet obs activities have grown dramatically and have become significantly important especially at large banks we investigate whether failure to incorporate obs products may lead to a misspecification problem models that exclude deposits from the output specification suggest economies of scale which vanish when deposits are included we find that inclusion of obs products has little effect on the scale economies measures with only a few exceptions the results provide no evidence of cost complementarities in joint production the tremendous growth of bank obs activities in the 1980s may be explained by the very small approximately zero pecuniary cost of these activities

scale economies in banking a restructuring and reassessment the issue of scale economies in banking has a rich history most earlier studies report modest operating cost scale economies for small institutions those with less than about 50 million of deposits in 1968 dollars but are unclear where these economies might end if at all unfortunately these studies are limited in four important respects first those that were well specified did not measure the total cost of banking operations but concentrated on estimating scale economies for individual banking functions e g demand deposits separately from commercial loans second an average cost curve that could take a u shape over the full range of banks was not fitted either because larger banks were not included or because of the functional form used cobb douglas consequently the optimum or minimum cost size of a bank or office could not be determined third the variables measuring the costs of branching were misspecified fourth the branch

economies of scale and economies of scope in multiproduct financial institutions a study of british columbia credit unions this paper investigates the production technology facing computerized credit unions in canada a full system of translog cost equations is estimated in order to test for economies of scale economies of scope and other production characteristics in a multiproduct context the regression results indicate that most of the credit unions in our sample experience significant increasing returns to scale as they expand their level of output there is also evidence of cost complementarity or economies of scope in their mortgage and other lending activities as a result legislation which limits the ability of credit unions to grow and diversify will likely raise the operating costs of this important group of financial institutions additional structural tests of the most general translog specification suggest that none of the restrictive production conditions commonly imposed by other researchers using cobb douglas and ces specifications provide a valid representation of credit union technology the results of many earlier studies are therefore open to question this paper presents a number of structural tests of the production technology facing large computerized credit unions in canada a full system of translog cost equations is estimated using detailed cross sectional data on british columbia credit unions the parameter estimates obtained from our multiproduct specification allow us to test for economies of scale economies of scope and factor substitution unlike many earlier studies the present paper introduces the various outputs as separate variables instead of crudely proxying them with a single output measure such as total assets the total number of loans or the number of depositors by explicitly recognizing the multiproduct nature of the intermediation process we are able to address more interesting production questions and remove some of the bias caused by misspecification and measurement error in simpler approaches the flexible translog specification allows us to estimate the sensitivity of costs to proportionate increases in all outputs economies of scale as well as the cost savings firms realize by producing several outputs jointly rather than specializing in the production of one economies of scope the test results reported in the latter part of the paper suggest that increasing returns to scale exist in almost all of the credit unions in our sample though

traditional and nontraditional banking an information theoretic approach abstract this paper uses a multiproduct approach to analyze the costs of a sample of large banks where bank outputs are measured to account for the different types of information produced by banks diseconomies of scope are found between traditional banking activities of originating and monitoring loans and nontraditional activities of loan selling and buying this suggests maintaining fire walls between commercial bank functions and investment bank functions after the glass steagall act is repealed will not sacrifice joint production economies it also suggests that arguments for repeal of the act based on the existence of such economies are ill founded

a study on long run inefficiency levels of a panel dynamic cost frontier under the framework of forward looking rational expectations abstract this paper aims to provide a theoretical underpinning of the dynamic efficiency model pioneered by ahn s c good d h sickles r c 2000 estimation of long run inefficiency levels a dynamic frontier approach econometric reviews 19 461 492 in the context of a quadratic loss function this paper formulates a multi period forward looking rational expectations model on the evolution of the technical inefficiency level which correctly produces a dynamic panel data model the model is illustrated using panel data of 112 french banks encouraging evidence of superiority in favor of the model is reached substantial cost inefficiency prevails in this industry where the constituent banks are characterized as having volatile adjustment speeds toward their long run steady states the sample banks exhibit increasing returns to scale and product mix economies

the technical efficiency of us banks abstract the paper uses a non parametric frontier approach to measure the technical efficiency of a sample of u s banks the results indicate that these banks could have produced the same level of output with only 70 of the inputs actually used in addition most of this inefficiency is due to pure technical inefficiency wasting inputs rather than scale inefficiency operating at non constant returns to scale finally regression analysis indicates that the technical efficiency of the banks is positively related to size negatively related to product diversity and not at all related to the extent to which branch banking is allowed

acquisition targets and motives the case of the banking industry findings do not indicate poorly managed firms are more likely to be acquired than well managed firms the analysis uses a sample of 1 046texas banks that existed in 1970 out of which 201 were acqui red during the period 1970 82 a multinomial logit procedure is used to estimate the relationship between the likelihood of acquisition and the characteristics of the target firm and its market additional results suggest that firms with la rge market shares low capital asset ratios and operations in urban areas are r elatively likely to be acquired but not firms with low profits or low growth copyright 1987 by mit press

economies of superscale in commercial banking most previous studies of scale economies in banking have excluded banks larger than 1 billion in assets thus study by contrast estimates cost functions for the 100 largest us commercial banks hedonic terms are incorporated to correct for the aggregated nature of the call report data available for these banks in addition we attempt to quantify the cost benefit of diversification in the model we estimate efficient bank scale to range from 15 billion to 37 billion in total assets a thousandfold increase over some previous findings these results are supported by comparison of actual average costs as well as by casual historical observation and the level of widespread concern over interstate banking our findings suggest some cost incentive or benefit to expansion or consolidation among large regional banks including interstate expansion or consolidation

scale elasticity versus scale efficiency in banking in the early bank cost literature many of the studies found scale elasticities significantly different from unity as a result the authors suggested that changes in industry structure could produce cost savings through increased efficiency recent bank cost studies improved upon previous methodologies by utilizing flexible functional forms accounting for multiproduct production processes estimating scale measures at both the branch and firm level distinguishing between branch and unit bank technologies resulting from regulatory restrictions etc the typical finding from the recent studies is that relatively minor scale economies exist in banking since the scale elasticity measure differs little from a value of unity this reported finding is usually followed by a general statement that banks operate relatively efficiently with respect to the scale of production and that the potential cost gains from exploiting scale advantages via merger or growth activities appear to be relatively minor the implication from the conclusions drawn by the authors of numerous studies is that scale elasticity and scale efficiency are essentially synonymous the derivation of one automatically provides an accurate or approximate value for the other the purpose of this article is to bring attention to a common confusion in the literature between two relatively straightforward concepts scale elasticity and scale efficiency the bank production process is one of the most extensively researched aspects of bank behavior until recently however studies have not typically evaluated scale efficiency instead scale elasticity estimates have been used as a proxy for efficiency and elasticity measures close to 1 0 are taken to imply that scale inefficiency is trivial scale inefficiency is typically assumed to be linearly

welfare aspects of the transfer problem using the standard trade model with three countries and allowing for substitutability in both production and consumption this paper demonstrates that a country may gain by giving a transfer that the receiver may lose and that these two phenomena may appear at the same time this result is an extension of gale s example in a fixed coefficient model where he shows both transferer and transferee may become better off harming the third country and it is contrasted with the traditional welfare proposition whereby a giver is immiserized and a recipient is enriched

aid the public sector and the market in less developed countries a reply the article in this journal by mosley et al i987 concludes its analysis of aid effectiveness as demonstrating inability of development aid over more than twenty years to provide a net increment to overall growth in the third world p 636 this note purports to show that this conclusion which is ostensibly distressing as the authors claim is not warranted the section of the study which is the basis of the conclusion cited and the subject of this note is a cross section regression analysis full details of which are shown in mosley et al table 3 the note is concerned with the relation between the dependent variable specified as the growth rate of real gdp per cent per annum hereafter gdp and aid specified as a percentage of gdp hereafter aid the aid results with only two significant positive coefficients in one subsample certainly give no basis for claiming aid effectiveness in terms of gdp growth the intention in this note is to interpret the results which are assumed to be valid this is made possible by the fact that the authors have helpfully provided the full input set of mean values derived from the raw data from this it is possible to calculate the gdp aid relationship for each country for the second and third period the procedure for deriving these relationships is as follows for each country the mean values of the time series of gdp and aid are extracted from the data for i 960 70 and for i 970 80 using i 960 70 as the base the signs of the change in the levels of the gdp and aid mean values between periods are recorded this is repeated for i980 4 with i970 80 mean values as the base the relationship between the two signs is an indication of the effect of aid on gdp in the period in which the change in levels is effected thus in the case of an increase in aid being combined with a decrease in gdp the latter must have fallen relatively to the former and aid effectiveness is negative mutatis mutandis for the other three sign combinations thus generating the appropriate gdp aid relationship for each country in each period a frequency distribution of the four sign combinations relating to the full sample is presented in table i since the signs of the changes in the levels of gdp and aid are derived by making explicit the arithmetic relationship implicit in the data they form a valid base from which to draw conclusions without requiring any test of

comment on scale economies cost efficiencies and technological change in federal reserve payments processing the david hume quotation at the beginning of this paper advises us that payment systems determine as much as any other market institution how smoothly an economy operates however unlike the other papers presented at this conference it is not hume s oil that interests bauer and ferrier but rather how well the machines of payments processing are themselves lubricated the authors estimate cost functions for each of the three payment services produced and sold by federal reserve banks check processing automated clearing house services ach and wire transfers the fedwire based on the parameters of these cost functions the authors construct measures of scale economies cost efficiency and technological progress their results lead them to three fundamental conclusions a significant scale economies suggest that the production of ach and fedwire services should be consolidated into fewer sites within the federal reserve system b ach and fedwire processing sites have reduced costs over time by exploiting technological advances and c divergent expense levels at individual federal reserve check processing ach and wire transfer sites may indicate inefficient operations at these sites

an examination of cost structure and production performance of commercial banks in singapore abstract this paper uses a parametric approach in the framework of a translog cost function and a non parametric approach in the framework of linear programming to examine production performance and cost structure of a sample of singaporean commercial banks the results of the parametric methodology suggest that the average cost curve of these banks is u shaped and there are economies of scale for small and medium size banks further analysis provides evidence of economies of scope for all banks regardless of their size the non parametric results indicate that the singaporean banks could have reduced cost by 43 had they all been overall efficient the sources of this cost inefficiency seem to be caused equally by allocative and technical inefficiencies

a multiproduct cost study of savings and loans this paper investigates the cost structure of savings and loans most studies of financial institutions have failed to take into account the multiproduct nature of these institutions using the multiproduct approach the existence of subadditivity multiproduct global and product specific economies of scale and scope and substitutability between inputs is investigated a translogarithmic cost function is estimated using 1982 data on california savings and loans restrictive functional forms also estimated are rejected standard errors for the statistics calculated are estimated and various statistical tests are conducted previous authors have not calculated standard errors for these statistics no evidence of subadditivity in the industry is found in order to investigate the impact of deregulation on the financial services industry it is necessary to know the cost structure of the industry optimal firm size and product mix can be determined once the structure is known the presence of scale economies would imply that smaller firms or entering firms that operate at a small scale would be at a cost disadvantage compared with larger established firms a finding of economies of scope i e economies of joint production would imply that firms that were specialized would be at a cost disadvantage and that regulations that restrict the outputs a firm is allowed to produce may lead to inefficient production

economies of scale in the us savings and loan industry 1973 83 the question addressed in this research is whether or not there exist economies of scale in the us savings and loan sl b that from 1979 to 1983 the minimum efficient scale for associations declined c that a substantial change has occurred in operating costs and the estimated augmented elasticity

aid nontraded goods and the transfer paradox in small countries this paper constructs a model of the transfer paradox for a small open economy with nontraded goods it demonstrates that increased production of nontraded goods can change their domestic price so as to offset the otherwise beneficial effect of aid and under certain conditions to create a transfer paradox even in a small country the model is estimated with time series data for 44 aid dependent countries for the period 1970 90 the results support the model and show that the nontraded goods expansion effect is more likely to cause immiserization than harry g johnson s 1967 tariff distorting export displacement effect

tied aid and the paradoxes of donor enrichment and recipient impoverishment it is part of received doctrine that in a two country world without hindrance of commodity taxes or other distortions and with market stability assured international transfers necessarily harm the donor and benefit the recipient 2 however in the case of most non private international aid those conditions fail donors often require that aid be spent in a manner not closely related to private preferences in the recipient countries indeed not closely related to any well behaved preferences and they normally finance the aid by means of distorting taxation hence one cannot rule out by appeal to standard theorems the possibility that aid perversely leaves the donor better off and or the recipient worse off let us say that aid is tied in the recipient if it is spent inefficiently in terms of individual preferences and that aid is tied in the donor if it is financed inefficiently thus whether aid is tied is a question of how it is spent or financed it is not a question of the numeraire in terms of which aid is accounted nor of the form in which it is offered 3 evidently the definition of tying is uncommonly broad for example aid may be tied in the recipient not because the donor attaches strings but because the government of the recipient is incompetent or unrepresentative moreover the definition is relevant however the aid is applied whether to private or public goods whether to consumption or investment goods we follow the literature on the transfer problem in assuming that aid is spent on private consumption goods like hospital services and powdered milk this is a matter of convenience and continuity only 4 in the present note we seek to rework the economics of foreign aid under novel assumptions in particular allowance will be made for the possibility that aid is tied in whole or in part in the donor or in the recipient it will be verified that the donor may benefit and the recipient suffer and that these outcomes are com

living to spend another day exploring resilience as a new fourth goal of ecological economics abstract the three main goals of ecological economic theory seek to predict and prevent system breakdowns however chaos theory and human uncertainty ignorance guarantee that shocks breakdowns and catastrophes like covid 19 will increasingly occur due to converging environmental resource crises the challenge then is designing a resilient safe fail economy that can endure adapt to and successfully recover from breakdowns and avoid collapse to date little attention has been paid in ecological economics to the implications of resilience for broader economic decisions affecting the design of global civilization this paper provides a general introduction to resilience and an argument for why it should become a much larger focus of ecological economic research going forward five arguments are advanced for why resilience should not be subsumed under an existing goal including that efforts to build resilience have the potential to both complement and contradict the other three goals especially efficiency the resilience alliance s adaptive cycle highlighting the cost to resilience of increasing scale and complexity meshes readily with ecological economist s own critiques of growth encouraging increased collaboration between these transdisciplines the need to further study these tensions provides justification for adding resilient design as a distinct fourth policy goal to core ecological economic theory

the dynamic implications of foreign aid and its variability abstract the paper examines the effects of aid and its volatility on consumption investment and the structure of production in the context of an intertemporal two sector general equilibrium model calibrated using data for aid dependent countries in africa a permanent flow of aid mainly finances consumption rather than investment consistent with the historical failure of aid inflows to translate into sustained growth large aid flows are associated with higher real exchange rates and smaller tradable sectors because aid is a substitute for tradable consumption aid volatility results in substantial welfare losses providing a motivation for recent discussions of aid architecture stressing the need for greater predictability of aid these results are also consistent with evidence from cross country regressions of manufactured exports presented later in the paper

an examination of cost subadditivity and multiproduct production in large u s banks this paper examines the subadditivity of costs for a sample of the largest commercial banks in the u s we introduce into the bank production literature the grid approach developed by evans and heckman 1984 we estimate two models of the bank cost function one where deposits are treated as outputs while in the other deposits are treated as inputs the models are estimated using the commonly used translog and the more flexible miniflex laurent viewed narrowly the findings imply that cost complementarities are not the raison d etre for multiproduct production in the largest commercial banks subadditive costs however are sufficient but not necessary for multiproduct production it is quite possible for multiproduct production to be optimal when output are produced independently levy and haber 1986 and teece 1980 1982 it is only required that inputs be shareable as opposed to joint copyright 1990 by ohio state university press

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

technical scale and allocative efficiencies in u s banking an empirical investigation a nonparametric frontier approach is used to calculate the overall technical pure technical allocative and scale efficiencies for a sample of 322 independent banks the sample was drawn from the federal deposit insurance corporation tapes on the reports of condition and reports of income call reports for the year 1986 the results indicated a low level of overall efficiency the main source of inefficiency was technical in nature rather than allocative separate efficiency frontiers were constructed to test the effect of branching however the distributions of efficiency measures for branching and non branching banks were not found to be different

aid and trade this paper surveys the recent theoretical and empirical literature that explores the relations between aid and trade and asks about the complementarity or substitution effects at work we distinguish between the effects of aid on trade flows and on trade policies of the donor as well as the recipient countries special focus is given on trade facilitation or aid for trade

bank regulation and monetary policy the depository institutions deregulation and monetary control act 1980 and the garn st germain depository institutions act 1982 are the two most significant pieces of bank legislation since the 193os their significance stems from the fact that they have sought to roll back a number of the regulations and restrictions imposed on bank activity and competition in the 1933 80 period among the important provisions of these acts are a gradual elimination of regulation q ceilings on time and savings deposits by march 1986 the amelioration of state imposed usury ceilings on loans the nationwide provision of interest bearing transaction type accounts negotiable order of withdrawal now and super now accounts permission for thritts to expand into bank like products such as commercial and industrial loans consumer loans and credit cards and the development of new types of savings accounts such as mmdas l in addition to legislative deregulation we have also witnessed homemade deregulation as banks have sought to exploit often with great success loopholes in the bank holding

a quest for the economics of sustainability and the sustainability of economics abstract this paper briefly reviews key insights from natural resource and environmental economics ecological economics and industrial ecology in an effort to identify the major contributions of these fields to the understanding and promotion of sustainable development each is based on overlapping worldviews methods and tools their synthesis and extension subsumed under the rubric of natural economics is suggested as a new thrust in environmental research offering valuable guides to policy making an early illustration of the application of natural economics in new zealand is presented

changes in the cost of intermediation the case of savings and loans the minimum cost output configuration for a firm may change as the result of a variety of factors including changes in market structure in this paper we test this structural change hypothesis with savings and loan data we find support for the hypothesis that separable constant returns to scale production functions characterize the average savings and loan in our sample in 1983 this is in contrast to the cost complementarities found in 1978 we argue that this result may be the result of regulatory changes that allowed savings and loans to alter their production mix to fully capture the benefits of joint production it seems reasonable to assume that the cost minimizing configuration of a multiproduct firm is potentially subject to nonstationarity during periods of structural change in input and or output markets the late 1970s and early 1980s represent such a period of turbulence for many markets in the financial services industry volatile interest rates combined with technological and regulatory changes may have caused firms in this industry to alter their output mixes in an effort to capture cost complementarities from joint production the purpose of this paper is to test this hypothesis of structural change in the savings and loan industry using both a translog and minflex laurent translog mlt specification of the production function we have chosen to investigate savings and loans s ls during the late 1970s and early 1980s for two reasons first s ls provide an ideal vehicle for testing our hypothesis because they were restricted almost exclusively to mortgages and securities as outputs before the passage of the depository institutions deregulation and monetary control act of 1980 and the garn st germain act of 1982 moreover there were also market changes with respect to both the pricing and mix of inputs i e deposits our second rationale involves the fact that there is a large and growing body of literature in the area of what is now called the

mergers and technical efficiency in spanish savings banks a stochastic distance function approach abstract the aim of this paper is to test the temporal variation of technical efficiency of spanish savings banks during the period 1985 1998 furthermore we test whether merged and non merged firms have different levels and temporal patterns of technical efficiency a stochastic output distance function r w shephard theory of cost and production functions princeton university press princeton nj is employed to accommodate multiple output technology the distance function provides the advantage that it does not need information about prices so it can accommodate the multi product nature of the financial sector only using the quantities as data an important point when the assumptions about perfectly competitive markets are unlikely to be met the temporal variation of efficiency is modeled extending the battese and coelli journal of productivity analysis 3 1992 153 169 approach in two ways relaxing the monotonicity of the temporal variation pattern of the efficiency term and allowing for different patterns of efficiency change between merged and non merged firms

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

evaluating the cost efficiency of the italian banking system what can be learned from the joint application of parametric and non parametric techniques abstract research on bank efficiency has developed in two separate streams econometric studies and data envelopment analysis a linear programming technique these two branches of literature have developed quickly but separately in this paper these two approaches have been tested on a common panel of 270 italian banks and this has suggested the following i econometric and linear programming results do not differ dramatically when based on the same data and conceptual framework ii when differences arise they can be explained by going back to the intrinsic features of the models moreover some findings on italian banks may be of interest also to the international reader i efficiency scores show a high variance ii the banking system is split in two between northern and southern banks iii there is a direct rather than inverse relationship between productive efficiency and asset quality iv the efficiency of italian banks did not increase over the period 1988 1992

eco localism and sustainability abstract economic sustainability is best secured by the creation of local or regional self reliant community economies this is the central argument of eco local economic theory drawing on the experience of local currencies community corporations regional food economies and other locally oriented efforts eco local theory presents a new analysis of the economy of place it focuses on locally symbiotic capital positive externalities of self reliance and negative externalities of long distance trade and its specific concepts and analyses of the economy efficiency and economies of scale and consumption and welfare given its specific values and assumptions it is an economic theory of the social economy that is compatible with but distinct from ecological economics

returns to scale and input substitution for large u s banks the united states commercial banking industry has experienced significant changes in recent years the recent wave of mergers and the near term prospects of interstate banking suggests that the industry is moving toward much larger average banking organizations rhoades 1985 will a more concentrated banking industry result in lower costs due to scale economies we address this question by examining the cost function for large banks numerous studies of economies of scale in banking exist generally tracing their roots to the classic papers by benston 1965 and bell and murphy 1968 a good review of the most recent studies can be found in clark 1988 the majority of the papers uses samples of smaller banks that is under 1 billion in deposits finding generally that economies of scale are quickly exhausted and that further increases in bank size occur at constant or possibly increasing cost the extrapolation of previous findings for samples of smaller banks to large banks may be problematic especially in the current environment first large banks service a different mix of markets and customers than small banks suggesting that large and small banks probably face different cost structures second the process of deregulation may have rendered the results of prior studies moot since the data pertain to periods before significant deregulation since we

international comparison of bank production characteristics and technological change in this paper we conduct an international comparison of bank production and technological characteristics the comparison is performed using novel evidence on changes in labour demand over the period 1980 89 for banks headquartered in canada france west germany italy japan and the united states the results suggest that there is relatively low substitutability of labour for capital in the production process of these banking organizations significant scale economies were found with regards to the expansion of output and the concomitant increase in labour in addition technological change operated to lower the quantity of inputs needed to produce a given level of outputs and increased the minimum efficient size bank over the sample period many of the production characteristics and technology effects varied significantly across countries these findings imply that intercountry differences in production characteristics and technological change should be explicitly recognized in bank strategic planning

income effects and paradoxes in the theory of international trade every field in economics has its paradoxes phenomena which initially are thought to confound economic sense but ultimately come to be better understood the field of international trade can claim its fair share the examples of the metzler paradox wherein a tariff fails to provide protection or that of immerising growth wherein a country suffers a loss in welfare despite an improvement in production possibilities come easily to mind more recently a reexamination of the transfer problem in the context of many country trade or of tax distortions has revealed possibilities for donor countries to gain or transfer recipients to lose results which would be considered so paradoxical in standard treatments as to be ruled out by stability arguments behind each of the examples just cited lies a rational explanation in which income effects prove crucial in supporting a paradoxical outcome in some situations the potential for paradox rests on the possibility of income redistribution nationally or internationally when tastes differ among the various trading participants paradox becomes impossible if tastes at the margin are identical in other instances income redistribution is not the crucial mechanism and paradoxical outcomes may occur even if all traders possess the same taste patterns all cases share the property that paradoxes can arise only if the terms of trade are sufficiently disturbed substitution effects high values of which serve to dampen the required adjustment of prices to a market disturbance thus work to prevent paradoxical outcomes in the first section of this paper i focus on those issues for which income effects are associated with income redistribution especially the analysis of tariffs and transfers in markets that initially are free of taxes or other distortions in the second section i analyse an issue for which income redistribution is no longer the central ingredient the welfare consequences of growth a standard technique in game theory allows for a reinterpretation of the growth case to reveal the fundamental connection between a wide variety of standard two country results in the theory of international trade and the possibility of paradoxes in the three agent transfer problem i would therefore argue that the three agent transfer literature has wider applicability than is commonly perceived in the final section i analyse briefly the frequently encountered argument that some instances of paradoxical welfare loss can be avoided by optimal tariff policy i wish to thank isaias coelho for helpful conversations makoto yano for stimulating my interest in the transfer problem with many agents and j peter neary for comments on an earlier draft useful suggestions were also received at seminar presentations at the institute for international economic studies in stockholm and the london school of economics research support was provided by the national science foundation grants ses 78o6159 and ses 8309386 i the role of substitution effects in transfer paradoxes with more than two commodities and agents is discussed by de meza 1983

branching restrictions and banking costs abstract previous research of banking costs has been limited by the choice of the functional form irregularities in the estimated cost functions and a failure to rigorously examine the difference between banks in branching states and banks in unit banking states this paper addresses these shortcomings banks are modelled as three input three output cost minimizing firms a three equation system is estimated using 1985 functional cost analysis data the findings indicate that banks in unit banking states experience diseconomies of scale banks in branching states experience diseconomies of scale at the bank level but economies of scale at the branch level we also find evidence of economies of scope for branch state banks but not for unit state banks

international redistribution of income summary how do international policies on aid trade and factor movements affect the international distribution of income we calculate the impact by world decile of the actual level of aid flows and the effect on income of merchandise trade restrictions by high income countries we find that aid s distributional impact is equality enhancing extremely small in terms of changes in inequality measures but of some importance for the lowest decile of the distribution we also find that some of this impact is counteracted by lost potential income in the lower deciles from merchandise trade barriers imposed by high income countries

efficiency effects of horizontal in market bank mergers abstract this study conducts tests to determine whether banks involved in horizontal mergers achieve efficiency improvements relative to other firms the analysis covers 898 bank mergers from 1981 to 1986 efficiency is measured by various expense ratios the results based on ols and logit analysis are robust they indicate that during 1981 1986 horizontal bank mergers did not yield efficiency gains notably the findings are based on the mergers believed to be most likely to result in efficiency gains i e they are horizontal mergers the firms exhibit considerable deposit overlap and the acquiring firms are on average more efficient than the acquired

aid non traded goods and growth we examine the effects of foreign aid in a small recipient country with two traded goods one non traded good and two factors learning by doing and intersectoral knowledge spillovers contribute to endogenous growth we obtain two main results first a permanent increase in untied aid raises or lowers the growth rate if and only if the non traded good is more capital intensive or effective labour intensive than the operating traded good second a permanent increase in untied aid raises welfare if the non traded good is more capital intensive than the operating traded good otherwise it may raise or lower welfare jel classification f43 o41

aid dutch disease and manufacturing growth abstract we examine the effects of aid on the growth of manufacturing using a methodology that exploits the variation within countries and across manufacturing sectors and corrects for possible reverse causality we find that aid inflows have systematic adverse effects on a country s competitiveness as reflected in the lower relative growth rate of exportable industries we provide some evidence suggesting that the channel for these effects is the real exchange rate appreciation caused by aid inflows we conjecture that this may explain in part why it is hard to find robust evidence that foreign aid helps countries grow

transfers the terms of trade and capital accumulation in the context of a two sector overlapping generations model it is demonstrated that a steady state transfer paradox may arise under commodity trade with stability and without distortions or bystanders the existence of the paradox is due to the effect of the transfer on world capital accumulation which is shown to always i e for any ranking of factor intensities and savings rates improve the donor s terms of trade transfers may also improve steady state welfare for both donor and recipient and produce paradoxical welfare results along the transition path la litterature en statique du commerce international a conclu que en l absence de distorsions ou de tierces parties les mouvements des termes d echange induits par les transferts ne peuvent pas etre suffisamment importants quand il y a stabilite walrasienne pour engendrer le paradoxe du transfert on a tire la conclusion de modeles dynamiques a un secteur que le paradoxe du transfert est possible mais en comptant sur la mobilite internationale du capital et sur les mouvements dans le niveau mondial du taux d interet plutot que sur les prix et les marches des biens dans un modele dynamique a deux secteurs ou les generations se chevauchent ce qui permet des effets a la fois statiques et intertemporels dans les termes d echange le commerce des biens peut engendrer un paradoxe du transfert en regime permanent quand il y a stabilite walrasienne sans distorsions et tierces parties l existence du paradoxe est attribuable a l effet du transfert sur l accumulation du capital qui toujours pour tout ordre des intensites de facteur et des taux d epargne ameliore les termes d echange du donneur les transferts peuvent aussi ameliorer le bien etre du donneur et du recipiendaire en regime permanent et produire des resultats paradoxaux de bien etre dans le sentier de transition

immiserizing transfers from abroad abstract this paper shows that an international transfer payment may paradoxically immiserize the recipient country or increase the donor country s welfare even when world markets are stable despite the traditional view that such a paradox theoretically requires market instability to demonstrate this paradoxical possibility the paper extends the conventional trade theoretic analysis to admit exogenous distortions created by tax cum subsidies in domestic production or endogenous distortions due to additionality requirements imposed by the donor on the recipient this analysis of immiserizing transfers from abroad immediately suggests significant implications for important policy issues including the evaluation of real benefits from foreign aid

efficiency in the commercial banking industry a production frontier approach 1990 efficiency in the commercial banking industry a production frontier approach applied economics vol 22 no 4 pp 539 551

the structure of technology in a multioutput branch banking firm we formulate and estimate a multioutput bank s cost function amenable for distinguishing between economies of scale and economies of network density we find significant returns to network density especially for smaller banks diseconomies of scale are found for the larger banks whereas the hypothesis of constant returns to scale could not be rejected for the smaller banks