comparative statics and asset substitutability complementarity in a portfolio model a dual approach this article uses a dual approach to investigate the properties of an n asset portfolio model the indirect expected utility and expenditure functions are used to provide an extremely simple derivation of slutsky equations by obtaining results similar to roy s identity and shephard s lemma the substitutability complementarity relations among assets are investigated and a number of empirically testable implications are deduced from the properties of the expenditure function

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

theory of the firm and structure of residual rights abstract this paper develops a general equilibrium model with consumer producers economies of specialization and transaction costs to investigate the emergence of firms from the division of labor and the function of a structure of residual rights it is shown that the institution of the firm can be used to get intangible intellectual property involved in the division of labor while avoiding its direct pricing and marketing so that the division of labor can be promoted by saving on transaction costs

estimation of moments and production decisions under uncertainty the purpose of this paper is to examine production decisions under output price uncertainty using a nonparametric estimation technique to estimate the first four moments of the unknown price distribution and applying duality we provide a simple empirical framework for the analysis of supply and demand decisions under price uncertainty the model is used to examine the importance of higher moments in the firm s production decisions and to investigate underlying attitudes toward risk

estimation of input oriented technical efficiency using a nonhomogeneous stochastic production frontier model technical inefficiency can be modeled as either input oriented io or output oriented oo however in the estimation of parametric stochastic production frontier models which use maximum likelihood method only the oo measure is used in this article we consider a simple nonhomogeneous production function and estimate it with both io and oo specifications a sample of 80 spanish dairy data 1993 1998 is used to estimate both models we consider one output liters of milk and four variable inputs viz number of cows kilograms of concentrates hectares of land and labor measured in man equivalent units we find that returns to scale rts and technical efficiency results derived from these models are different because either estimated technologies are different or they are evaluated at different points using a monte carlo analysis we show that if rts is close to unity differences in the estimates of rts and technical efficiency are smaller this holds true for estimates of both rts and technical efficiency

testing the scale effect predicted by the fujita krugman urbanization model abstract this paper tests the scale effect predicted by the fujita krugman fujita m krugman p 1995 when is the economy monocentric von th nen and chamberlin unified regional science urban economics 25 505 528 urbanization model which implies a monotonically positive relationship between the average firm size and the degree of urbanization given that population and fixed cost do not decrease empirical data from seven oecd countries are examined and the fujita krugman model is tested the results suggest that the prediction in the fujita krugman model is incompatible with empirical observation the evidence in the paper seems to support the alternative classical urbanization theory proposed by xenophon gordon b 1975 economic analysis before adam smith macmillan london and william petty petty w 1683 another essay on political arithmetics in hull c h ed economic writings of sir william petty augustus m kelly new york p 947 reissued in 1963 and formalized by yang yang x 1991 development structure change and urbanization journal of development economics 34 199 222 yang and rice yang x rice r 1994 an equilibrium model endogenizing the emergence of a dual structure between the urban and rural sectors journal of urban economics 25 346 368 and sun and yang sun g yang x 2002 agglomeration economies division of labor and the urban land rent escalation a general equilibrium analysis of urbanization australian economic papers 41 164 183

a micro macroeconomic analysis based on a representative firm in this paper i develop a method of analysis incorporating elements of micro and macroeconomics as well as general equilibrium in order to examine the effects of economy wide changes in demand costs expectations etc it focuses on the microeconomics of a representative firm1 but takes account of the effects of macroeconomic variables aggregate demand aggregate output and the price level on the demand and cost functions of the firm it thus goes beyond a partial microeconomic analysis but stops short of a fully general equilibrium analysis of the arrow debreu type it deals with aggregates and averages but with the microeconomic foundation built into the analysis our method is based on a number of simplifications some essential some purely for simplicity outlined below if we view the method as using the response of the representative firm to approximate the response of the whole economy the simplifications involved seem reasonable in the spirit of positive economics whether the approximation is acceptable can be settled only by empirical testing of the conclusions of the theory by way of conclusions our method not only provides strong qualitative results but in some cases also quantitative results summarized into the four propositions below since our method can be used either for the whole economy or for an industry on which see ng 1981a it has significance for both macro and microeconomic problems

preferences estimation without approximation we devise an estimation methodology which allows preferences estimation and comparative statics analysis without a reliance on taylor s approximations and the indirect utility function

before microfinance the social value of microsavings in vincentian poverty reduction the purpose of this article is to present and discuss the values and limits of microfinance within the context of poverty reduction international development and community empowerment the main thesis is that microfinance requires a more complex strategy than simply the provision of credits the development of financial capital depends on the increase in human capacity and social capital microfinance is revisited under the ethical lenses of global responsibility for alleviating poverty and developing community sustainability through a critical review of the literature and case studies from the philippines the author suggests a value based vincentian approach to integrate microfinance into community empowerment in connection with the main thesis the author argues that the achievement of economic self reliance through microfinance is contingent upon the development of capacity building social capital and empowerment at the individual collective and systemic levels

general equilibria in large economies with endogenous structure of division of labor abstract we study a general equilibrium model with specialization and division of labor the market coordinates all individuals decisions in choosing their patterns of specialization in order to utilize positive network effects of division of labor net of transaction costs we establish the equilibrium existence theorem the first and second welfare theorems and the core equivalence for a family of general equilibrium models with both possible increasing returns and transaction costs using an analytical framework with consumer producers economies of specialization and transaction costs we resurrect the spirit of the classical economics of the division of labor in a modern body of mathematical formalism

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

the commercialization of the microfinance industry is there a personal mission drift among credit officers recent research suggests that many microfinance institutions increasingly focus on financial performance at the expense of the social component of their dual objectives existing studies typically assume that capital providers and managers mainly drive this so called mission drift in this study we investigate whether personal mission drift at the credit officer level can further explain the reduced emphasis on poorer clients among microfinance institutions we present both qualitative and quantitative evidence that more experienced credit officers tend to serve fewer vulnerable clients specifically we show that all else being equal credit officer experience is negatively correlated with the provision of small loans loans to young clients and loans to clients with disabilities our qualitative analysis suggests that perceived client risk and preferences for increased time efficiency mainly drive more experienced credit officers relative neglect of more vulnerable clients this drift appears to be reinforced by the industry s incentive schemes therefore credit officer incentives and training should be designed to prevent this mission drift which is observed at the microfinance institution level but is actually initiated at the credit officer level

comparative statics effects independent of the utility function when do we act the same way under risk abstract to date comparative statics effects analyzed in the context of expected utility depend on the decision maker s utility function this paper presents a methodology that allows comparative statics effects to be obtained independent of the utility function for a general family of problems in other words we provide a set of conditions under which all decision makers act the same way such a methodology can be applied to relevant problems in the related literature such as the portfolio choice and the competitive firm under price uncertainty with or without the existence of a forward futures market with regards to such specific cases we show and analyze the most relevant effects produced by the variation of two or more parameters regardless of the decision maker s preferences and attitude towards risk some of these effects are illustrated numerically

putting risk in its proper place this paper examines preferences toward particular classes of lottery pairs we show how such concepts as prudence and temperance can be fully characterized by a preference relation over these lotteries if preferences are defined in an expected utility framework with differentiable utility the direction of preference for a particular class of lottery pairs is equivalent to signing the nth derivative of the utility function what makes our characterization appealing is its simplicity which seems particularly amenable to experimentation

symmetry restrictions in the analysis of the competitive firm under price uncertainty this paper shows that if the production function is appropriately restricted some symmetry reciprocity results that hold for a competitive firm under certainty continue to hold under price uncertainty for any strictly concave utility function in contrast earlier analyses have established these symmetry relations by imposing restrictions on the utility function the present analysis uses the envelope theorem the indirect utility function and the duality between production and cost copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

immiserizing growth in a closed economy we develop a model with three key features a factor market distortion monopoly power in the product market and indivisibilities in consumption in this setting multiple equilibria arise one with high and the other with low equilibrium wages incomes and output it is also shown that even in a closed economy growth may be immiserizing and finally that redistribution could be a rich man s game

the new keynesian economics preface 1 from keynesian to new keynesian economics 2 keynesian microfoundations in historical perspectives part i real rigidities 3 the labour market and real wage rigiditry 4 credit rationing and imperfect capital markets 5 real rigidities in the goods market part ii nominal rigidities introduction 6 rational models of irrational behaviour 7 price setting with adjustment cost 8 real and nominal price rigidity further issues part iii coordination failures and hysteresis 9 coordination failures 10 hysteresis conclusions

the efficiency wage hypothesis a mesoeconomic analysis abstract in this paper we apply the mesoeconomic approach to examine the efficiency wage hypothesis with the traditional formulation of the efficiency wage hypothesis we show that under certain conditions the economy has a continuum of equilibria and that nominal shocks can have real effects depending on the firms expectations with a modified formulation of the efficiency wage hypothesis and increasing return to scale we capture the weak positive correlation between real wage and employment and show that nominal shocks may have real effects in an economy without a continuum of equilibria

putting responsible finance to work for citi microfinance this paper develops an ethical framework for responsible finance and then applies it to citigroup citi a major financial actor in the microfinance sector to see whether it meets with such obligations the framework consists of two categories of responsibility the first category is the special social responsibility of financial institutions and the second is the fundamental principles of ethical behavior in financial services from citigroup s microfinance model scope of business and multiple roles in the market the company seems to be fulfilling its responsibility in inclusive finance however judged in term of the principles of integrity objectivity fairness professionalism and diligence it falls short of its ethical responsibility in view of this shortcoming citigroup should recall its obligation to avoid conflicts of interest to provide responsible advice to protect clients from over indebtedness and most importantly to act with integrity

should access to credit be a right discussion on financial ethics increasingly includes the problem of exclusion of the poorer segments of society from the financial system and access to credit this paper explores the ethical dimensions surrounding the concept of a human right to credit if access to credit is directly instrumental to economic development poverty reduction and the improved welfare of all citizens then one can proclaim as nobel prize laureate m yunus has done that it is a moral necessity to establish credit as a right arguments both supporting and opposing the concept of a right to credit are presented while there may be general agreement that access to financial services may provide a pathway out of poverty granting a universal right could induce perverse effects such as overindebtedness bearing in mind the ultimate goal of proponents of this right as well as the potential harmful consequences this paper offers a new perspective on the question of access to credit based on a goal right system

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

development structural changes and urbanization abstract this paper constructs an equilibrium model by formalizing a trade off between the gains from trade based on increasing returns to specialization and transaction costs the relationship between development structural changes and urbanization is investigated in addition the function of a free market in searching for the efficient market structure is explored

unions wages and skills studies uniformly conclude that union wage effects are largest for workers with low measured skills longitudinal analysis using 1989 90 1994 95 cps matched panels produces union premium estimates equivalent across skill groups following appropriate sample restrictions and control for worker specific skills nlsy evidence on aptitude scores confirms that union workers with high measured skills have relatively low unmeasured skills differential selection by skill class and skill homogeneity in union workplaces result from employer and employee sorting in response to wage standardization union organizing where skills are homogeneous and unionized employers reluctance to hire the most as well as least able workers

technological change and the boundaries of the firm the authors examine a firm s decision either to produce an essential input itself or to hire a subcontractor to produce the input the authors focus on how this decision is affected by technological change in the industry in general cost reducing technological change leads the firm to produce the input itself more often the firm s calculus is shown to depend on whether the subcontractor s skills are idiosyncratic or transferable in the latter case technological progress can even be detrimental to the firm and to society as a whole copyright 1991 by american economic association

optimal assignment of principalship in teams abstract this paper investigates the optimal assignment of principalship in teams we formalize a theory of the firm pioneered by alchian and demsetz am econ rev 62 1972 777 using an approach in the spirit of grossman and hart j pol econ 94 1986 691 our theory makes a distinction between production effort and monitoring effort when it is costly to sign contracts on efforts it may be optimal to let one party purchase the rights to monitor and to direct and claim full residual principalship is the purchase of these rights these rights are limited residual rights of control over actions we have confirmed alchian and demsetz s celeberated conjecture that residual claims should match residual control we have also explored how the optimal assignment of principalship and partnership depends on the interaction between each member s importance in production the effectiveness of monitoring and the degree of teamwork

a microeconomic mechanism for economic growth this paper constructs a dynamic general equilibrium model in which economic growth is explained by the evolution of the division of labor the relationships among the accumulation of human capital the evolution of the division of labor endogenous comparative advantage trade dependence the market structure and economic growth are investigated

formalizing internationalization in the eclectic paradigm the paper presents a simple general equilibrium model that formalizes internationalization in the eclectic paradigm based on a reconfiguration of concepts taken from the new classical economics literature the model enables us to address simultaneously the role of ownership location and internalization advantages and their interaction in the emergence of the multinational enterprise mne through a set of mathematical inequalities our model offers a bridge between the detached perceptions of the mne often held by international trade economists and international business scholars and makes specific aspects of the eclectic paradigm empirically testable

mission drift and ethical crisis in microfinance institutions what matters abstract in recent years financial interests have increasingly influenced microfinance institutions mfis with financial gain overshadowing service to the poor this phenomenon which we can term mission drift has caused apprehension among academicians as well as policy makers for its negation of the fundamental social ethos of mfis and the mandate of sustainable financial inclusion hence this study aims to identify the factors of mission drift with special emphasis on the role of funding sources we collect data from a sample of 169 mfis in bangladesh from the period of 2009 2014 and deploy static and dynamic panel data estimation techniques the results suggest that commercial fund is susceptible to mission drift as average loan size over gni per capita increases when mfis use more commercial fund in their operation the finding also revealed that when mfis focus more on commercial interest return on assets and operational sustainability they tend to depart further from the original aim of serving the poorest of the poor the findings further suggest that mission drift is influenced by other factors such as macroeconomic conditions and regulatory environment this study underscores the importance for policy to ensure that poor people have viable access to financial services from mfis toward promoting long term sustainable development

the contractual nature of the firm for their helpful comments i am grateful to armen a alchian yoram barzel keith leffler john s mcgee and dean worcester 1 ronald h coase the nature of the firm 4 economica 386 1937 the paper however was written several years earlier see note 3 infra 2 the social sciences citation index provides the following information breaking down the period of 1966 80 into three five year periods the total citations of coase s firm paper for each subperiod are 1966 70 17 citations 1971 75 47 citations and 1976 80 105 citations

on the theory of the competitive firm under uncertainty when initial wealth is random since sandmo s seminal paper on the theory of the competitive firm under output price uncertainty there has been considerable research on this topic 2 5 6 10 11 14 in all these studies it is assumed that in the absence of complete contingent markets output price risk is the only source of uncertainty for the firm however this may not be a realistic assumption in particular as argued by kihlstrom et al 7 it appears reasonable to consider the case where some of the initial wealth of the firm is held in risky assets in that case initial wealth is uncertain and should be modelled as a random variable the objective of this paper is to investigate the introduction of random initial wealth in sandmo s theory of the firm under price uncertainty in sandmo s model a number of important comparative static results e g the conditions under which the supply function is upward sloping 14 69 or under which increased price uncertainty reduces supply 5 depends critically on the sign of a particular expression stated in lemma 2 in ishii 5 while sandmo 14 69 shows this expression is non negative under arrow pratt decreasing absolute risk aversion it can be verified that his proof no longer holds when initial wealth is random therefore the comparative static analysis conducted by sandmo 14 batra and ullah 2 and ishii 5 is no longer valid and gives ambiguous results under initial wealth uncertainty the reason is that the arrow pratt measures of risk aversion 1 12 are too weak for making comparisons in situations where there is more than one source of uncertainty 13 then what can be deduced from the theory of the competitive firm in the realistic case where both initial wealth and output price are uncertain we will show here that meaningful results on the behavior of the competitiv firm under uncertainty can be obtained provided that the arrow pratt measures of risk aversion 1 12 are replaced by the ross measures of risk aversion 13 in particular a comparative static analysis of the production decisions using ross characterization of risk behavior is presented a number of new results are derived on the properties of risk responsive supply and input demand functions under both price and initial wealth uncertainty

economic behavior under uncertainty a joint analysis of risk preferences and technology a method is developed to estimate jointly risk preferences and technology under general conditions the approach is illustrated in an application to the analysis of u s corn soybean acreage decisions over time the results provide useful information on the nature of farmers risk preferences and on the influence of price risk and production risk on acreage allocation and farmers welfare copyright 1996 by mit press

best practices in credit accessibility and corporate social responsibility in financial institutions the purpose of this article is to present and discuss some of the best practices of financial industry in three emerging economies colombia ecuador and peru the main thesis is that notwithstanding the importance of certain specific deficiencies such as an inadequate regulatory context or the lack of financial education among the population the main factor that explains the low banking levels in emerging and developing economies affecting mostly lower income segments is the use of inefficient financial service distribution models in connection with this thesis we will try to show that traditional financial institutions both in developing countries and in the advanced economies have a special social responsibility to help create an efficient financial system that makes saving and borrowing instruments available to the greatest possible number of citizens

non parametric estimation of econometric functionals in this paper we have reviewed and explored the non parametric density estimation approach for analysing various econometric functionals the applications of density estimation have been emphasized in the specification estimation and testing problems arising in econometrics some limitations of the non parametric approach are also examined and potential future areas of applied and theoretical research have been indicated

does risk aversion affect bank output loss the case of the eurozone abstract we propose a new model to infer the evolution of bank specific output losses due to the uncertainty in bank output prices losses are based on bank risk aversion with micro foundations tethered to the uncertainty regarding prices our model allows us to measure time varying bank specific output losses and risk aversion while taking into account all bank cross sectional heterogeneity we employ a panel data set to estimate the input and output elasticities with both parametric and non parametric techniques we are the first to document that increasing risk aversion among eurozone banks during the financial crisis resulted in sizable output losses although subdued thereafter losses have been resurging in recent years both conventional and unconventional monetary policy responses by the european central bank ecb mitigated uncertainty in bank output prices though unequally so across countries certain measures of unconventional monetary policy may have even enhanced bank risk aversion and thereby output losses but mainly so for large countries