drift in the relative price of primary commodities a case where we care about unit roots the evidence for the prebisch singer hypothesis of a downward drift over time in the relative price of primary commodities is considered the apparent strength of that evidence appears to depend to a substantial degree on whether the time series of relative prices is assumed to be trend stationary or integrated of order one moreover the usual econometric tests are relatively uninformative on this question these conclusions emerge whether or not a structural break in the series is permitted

explaining business cycles in small open economies abstract this paper analyzes the role of world price shocks fluctuations in the prices of capital intermediate and primary goods and in the world real interest rate in the generation and propagation of business cycles in small open developing countries i construct a stochastic dynamic multi sector small open economy model the model is a variant of the specific factors model and reflects the major structural characteristics of developing economies i utilize variance decomposition methods to quantitatively evaluate the impact of world price shocks the results indicate that world price shocks account for a significant fraction of business cycle variability in developing countries

the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

from the classical economists to empiricists a review of the terms of trade controversy contrary to the classical position the works of prebisch and singer in the middle of the last century launched the controversial hypothesis of a long term decline in the terms of trade of primary products vis a vis manufactured goods and a corresponding decline in the terms of trade of developing countries vis a vis advanced ones the present study traces the origin and evolution of the hypothesis and reviews the related statistical debate it also reviews the theoretical support for the prebisch singer hypothesis it is an exercise in the history of economic thought to trace how the controversies surrounding the terms of trade have evolved over time specifically noting that with the development of the field of econometrics the central thesis of the argument got lost somewhere in the realm of hi tech statistical debates

terms of trade shocks and the balance of trade there is a harberger laursen metzler effect abstract according to the harberger laursen metzler hlm effect an exogenous increase in the terms of trade faced by a small open economy leads to an improvement in that country s trade balance in this paper structural vector autoregression techniques are used to investigate whether there is any systematic pattern in the responses of the trade balance to terms of trade shocks for a large number of small open economies two important results emerge first there is strong support in the data for the existence of an hlm effect second the response of the trade balance and real income to a terms of trade shock implied by the structural vector autoregression model are strongly consistent with those reported by mendoza 1995 from simulating a particular dynamic stochastic equilibrium model of a small open economy

tenure security and urban squatting while recent studies have shown that up to 35 of the total urban population of the third world live in squatter settlements there is a dearth of economic analysis on the phenomenon of squatting this paper attempts to fill this gap the equilibrium model argues that the difference in unit housing prices between the non squatting formal sector of a city and its squatting informal sector reflects the premium associated with a secure tenure status the empirical portion of this paper uses hedonic price techniques to derive the average premium on tenure security in a medium sized philippine city davao results show that formal sector unit dwelling prices are about 18 renters to 58 owners more than in the informal sector these equilibrium price differentials were found to be greater for lower income groups larger household sizes and households with older heads for renters and younger heads for

the identification of monetary policy disturbances explaining the liquidity puzzle abstract this paper examines recent work on the identification of monetary policy disturbances its main finding is that the empirical anomalies found in the literature reflect a failure to properly address the federal reserve s policy of accommodating reserve demand shocks a new method of identifying monetary policy using nonborrowed reserves is proposed using this specification policy has a strong persistent liquidity effect regardless of subsample policy granger causes output even in the presence of interest rates explaining approximately 49 of the variance in output at a two year horizon and the residual explanatory power of interest rates for output is negligible

the effects of volatility in the terms of trade on output growth new evidence abstract this paper examines the empirical evidence for the hypothesis that there is a negative relationship between terms of trade volatility and output growth it finds a statistically significant link between income terms of trade volatility and lower growth rates when the degree of volatility in the income terms of trade is decomposed into its components fluctuations in real exports are of a magnitude similar to those in the relative price of tradables similarly the volatility in the net barter terms of trade is equally affected by variations in the price of exports and of imports any policies aimed at stabilizing the terms of trade or any of its components need to take account of this

what does export diversification do for growth an econometric analysis it is frequently suggested that export diversification contributes to an acceleration of growth in developing countries horizontal export diversification into completely new export sectors may generate positive externalities on the rest of the economy as export oriented sectors gain from dynamic learning activities due to contacts with foreign purchasers and exposure to international competition vertical diversification out of primary into manufactured exports is also associated with growth since primary export sectors generally do not exhibit strong spillovers yet there have been remarkably few empirical investigations into the link between export diversification and growth this paper attempts to examine the hypothesis that export diversification is linked to economic growth via externalities of learning by doing and learning by exporting fostered by competition in world markets the diversification led growth hypothesis is tested by estimating an augmented cobb douglas production function on the bas

on the prevalence of trends in primary commodity prices abstract this paper applies new time series procedures to examine the prebisch singer hypothesis of a secular deterioration in relative primary commodity prices specifically we allow for up to two structural breaks in 24 price series covering the 1900 98 period for the majority of commodities it is shown that the trend is not well represented by a single downward slope but instead by a shifting trend that often changes sign over the sample period unlike some recent work that has also allowed for structural breaks these results provide much less support for the prebisch singer hypothesis

growth and trade vs trade and growth in the traditional trade literature there is a well developed area analyzing the effect of growth on trade and its reflection on income growth this literature developed already in the 1950s and 1960s generally speaking an interest in the effects of trade on growth has also existed for many years where trade has often been viewed as an engine of growth cases in point are the east asian tigers and japan which have especially benefited from outward looking policies in this paper we analyze the relationship between economic growth and growth in income terms of trade arguing that income terms of trade is a useful concept in analyses of the link between trade and growth our results suggest that fast growing countries have either specialized in sectors with a relatively favorable development with regard to world market prices or they have managed to successively improve quality within sectors thereby avoiding falling terms of trade in spite of large increases in export volumes

long run prices of primary commodities and oil prices acutely volatile movements in primary commodity prices have drawn considerable interest from empirical researchers exports of these commodities account for the bulk of export earnings of developing countries the traditional demand based framework was unable to explain the marked deterioration in these prices during the 1980s this paper tries to ascertain the role played by real oil prices in explaining the extremely volatile movements in real prices of primary commodities by taking into account oil price shocks over the period 1973 1996 using monthly data real primary commodity prices and real oil prices are cointegrated additionally the error in the cointegrating relation stimulates real commodity price adjustment not real oil price adjustment

developing countries terms of trade in manufactures 1967 87 a note terms of trade relating only to manufactured exports and imports are calculated for a sample of 37 industrialised and developing countries over the 1967 to 1987 period it is found that the terms of trade movements were significantly more favourable for higher income countries this result highlights the importance of export diversification as part of a development strategy

where do property rights matter more explaining the variation in demand for property titles across cities in mexico this paper examines the variation in the value of property rights to housing in mexico focusing specifically on differences between urban housing markets roughly 30 of owner occupied houses in mexico do not have a proper deed houses with no deed are estimated to be five percent less valuable than otherwise similar houses with a full deed yet this premium varies widely across cities i match data from the 2012 and 2014 national survey of household incomes and expenditures to different sources of city level data in order to examine hypotheses explaining this variation in a multilevel regression framework i find that deeds are valued more in cities with more highly educated residents more political competition and more voting measures of local economic activity degree of informality and the regulatory bureaucracy are not associated with higher value to full property rights additionally i find that more educated households value deeds more and having a deed is more valuable for larger houses in neighborhoods with less vacancy and higher infrastructure quality based on these results i suggest funds to subsidize titling should be redirected to places where titles are worth more more broadly i suggest policymakers reconsider framing property titling programs as poverty alleviation low income households would benefit more from subsidies for improvements to housing and residential infrastructure at the same time the federal government should further push to reduce the costs of transferring property

interpreting the macroeconomic time series facts the effects of monetary policy existing theory and evidence on the effects of monetary policy are reviewed substantial room for disagreement among economists remains new evidence based on multivariate time series studies of several countries is presented while certain patterns in the data consistent with effective monetary policy are strikingly similar across countries others particularly the tendency of interest rate increases to predict high inflation are harder to reconcile with effective monetary policy

the commodity terms of trade unit roots and nonlinear alternatives a smooth transition approach market price dynamics for north american oriented strand board markets are examined specifically the role of transactions costs are examined vis a vis the law of one price weekly data for the january 3rd 1995 through april 14th 2006 period are used in the analysis nonlinearities induced by unobservable transactions costs are modeled by estimating smooth transition autoregressions stars results indicate that nonlinearity is an important feature of these markets and that the parity relationships implied by economic theory are generally supported by the star models implications for the efficiency of spatial market linkages are examined by estimating generalized impulse response functions

testing for trends in the terms of trade between primary commodities and manufactured goods abstract this paper joins the statistical debate on the terms of trade between primary commodities and manufactured goods by contributing to the methodological discussion and presenting new evidence using data series covering almost the whole of the 20th century using statistical tests that take into account breaks in the series it is found that over the 20th century the relative prices of primary commodities dropped to nearly one third of their level at the beginning of the century in two installments when random shocks led to structural breaks and not in a gradual way as implied by either a deterministic or stochastic trend possible reasons for the structural breaks and their policy implications are discussed

floating exchange rates and inflation in germany are external shocks really irrelevant abstract german prices and u s short term interest rates are cointegrated while short term interest rates in both countries are not therefore moving to flexible exchange rates in 1973 has not completely isolated germany from external shocks

primary commodity prices and inflation primary commodities are products which have been only minimally processed agricultural foods which may either be directly consumed or form an input into the food processing industries industrial raw materials which may either be agricultural e g natural rubber or mineral mainly metals and most of important of all petroleum and petroleum products primary commodity prices are variable section ii and in part this variability is the result of macroeconomic fluctuations in the industrial ized countries rises in commodity prices will to a greater or lesser extent feed through into inflation

manufactured exports and terms of trade of developing countries evidence from sri lanka terms of trade implications of diversification into manufactured exports in a traditional primary exporting country are examined in the light of the sri lankan experience over the past two decades the empirical analysis focuses on trends in both commodity and income terms of trade employing a methodology which takes care of the spurious regression problem the results suggest that contrary to the new terms of trade pessimism export diversification has brought about significant terms of trade gains for the sri lankan economy overall the study casts doubt on the robustness of results coming from analyses of price trends in aggregate manufactured exports and calls for systematic time profile analyses of the countries which have achieved significant export diversification in order to inform the policy debate

squatting as rent seeking and pressure group competition a south african case study a new squatting phenomenon in south africa is analysed from a rent seeking pressure group perspective while such squatting may play an expanded role in privatising publicly and even privately held land and in redistributing wealth over the near future in the longer term its expansion will tend to be limited by rent protecting and counter innovation as long as this rent seeking competition stays within the bounds set by constitutional government

commodity and developing country terms of trade what does the long run show recently the debate surrounding the commodity net barter terms of trade and the terms of trade of developing countries has entered a new phase in this journal spraos i980 presents evidence of a stable declining commodity terms of trade and sapsford i985 although fl nding instability in the work of spraos argues in support of the stable declining terms of trade hypothesis grilli and yang i988 henceforth gy also provide evidence supporting this view and state the implications of this finding for developing country terms of trade a major contribution of gy is a published set of data on the main price indices with a high degree of consistency for the whole century 1 however cuddington and urzua i989 in thisjournal illustrate that the hypothesis of a secular deterioration in the commodity terms of trade is not robust to the alternative claim that there was a once and for all shift in commodity prices in the period i920 i after taking this shift into account these authors find little evidence to support the view of a secular decline 2 this debate has important implications for the prebisch singer hypothesis of a stable declining commodity terms of trade see for instance prebisch i 950 it also has implications for both development and stabilisation strategies adopted by commodity dependent developing countries a central issue in this analysis is the order of integration of the commodity terms of trade a time series is said to be integrated of order o i o if its mean and variance are constant or roughly speaking if the series is stationary a time series is said to be i n if the series requires first differencing n times before a stationary series is obtained alternatively if adding a time trend is sufficient to induce stationarity the series is termed trend stationary a trend stationary series implies that the variable in question simply adjusts around a constant growth path but an i i series is truly non stationary and displays very different properties a commonly cited example of an 1 i series is the random walk the order of integration of a single time series is related to the idea of cointegration of a number of time series consider two variables x and y that are not themselves i o but are of the same order of integration if the residuals from regressing x on y or vice versa are i o or roughly speaking if the residuals are stationary it can be concluded that the two variables are cointegrated in turn this implies that there is some form of equilibrium

manufactured exports from developing countries and their terms of trade a reexamination of the sarkar singer results abstract sarkar and singer 1991 argue that the terms of trade for exports of manufactures from developing countries dcs like that for their primary commodity exports have manifested a long term trend favoring the importing developed countries we contend here that the authors have not paid adequate attention to appropriately adjusting the data and that they have misinterpreted the results when these limitations are taken into account a sound basis exists for the conclusion that through rapid expansion of manufactured exports dcs as a group have achieved significant gains in import purchasing power without generating adverse impact on the net barter terms of trade

manufactured exports of developing countries and their terms of trade since 1965 a comment abstract the results of sarkar and singer 1991 on the trends in the relative unit values of the manufactured exports of developing countries are sensitive to the choice of end year and to fluctuations in the unit values of us exports relative to those of the rest of the world the relative unit values of us exports are highly correlated with movements in the us real exchange rate and there is some evidence to suggest that sarkar and singer s findings primarily reflect changes in the real exchange rates of developing countries

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

foreign direct investment and export upgrading this study presents evidence suggesting that attracting foreign direct investment fdi offers potential for raising the quality of exports in developing countries our analysis relates unit values of exports at the four digit sitc level to data on sectors treated by investment promotion agencies as a priority in their efforts to attract fdi the sample covers 105 countries from 1984 to 2000 the findings are consistent with a positive effect of fdi on unit values of exports in developing countries the evidence for high income economies is ambiguous there is no indication that fdi increases the similarity of export structure of developing and developed economies

urban land and housing markets in the punjab pakistan well functioning urban land and housing markets are critical success factors for achieving robust economic growth this paper provides an overview of urban land and housing market performance in punjab province of pakistan it describes the characteristics of well functioning markets and argues that the punjab s present markets are not performing adequately in fact there exists a range of impediments to efficient urban land and housing market performance excessive public land ownership inadequate infrastructure services weak property rights pervasive public and private sector rent seeking counter productive urban planning policies and regulations costly sub division and construction regulations limited financing for property development and acquisition rent controls and inadequate property tax based revenue generating mechanisms the paper concludes by suggesting that a prioritised comprehensive reform agenda is needed to improve urban land and housing market performance in punjab province the

a reexamination of trends in primary commodity prices this paper conducts a reexamination of the prebisch singer hypothesis by employing the unit root test proposed by lee and strazicich 2003 and lee and strazicich 2004 that allow for up to two structural breaks given the higher power of these tests compared to the zivot and andrews 1992 and lumsdaine and papell 1997 tests rejection of the null can be considered as genuine evidence of stationarity the main findings of this paper are that eleven out of twenty four commodity prices are found to be difference stationary implying that shocks to these commodities tend to be permanent in nature the remaining thirteen prices are found to exhibit trend stationary behavior with either one or two structural breaks most of the commodities that do not exhibit difference stationary behavior seem to contain no significant trends there are fewer cases in relation to past studies of commodities that display negative trends thereby weakening the case for the prebisch singer hypothesis

embodied pollution in trade estimating the environmental load displacement of industrialised countries abstract the present paper sets out to aid in the development of environmental load displacement indicators developing the notion of the environmental memory of physical flows we estimated embodied pollution in trade of 18 industrialized countries with a the rest of the world and b developing countries from 1976 to 1994 we found that in the last years of analysis total imports of japan usa and western europe have entailed in general larger air pollutant emissions than local exports the balance of embodied emissions in trade beet seems to follow an inverted u shape across time in japan and western europe and an n shape in the us in the period of analysis japanese and european environmental terms of trade with developing countries improved from the japanese and european point of view whereas american environmental terms of trade with developing countries deteriorated over time although there is no statistical trend between income and embodied emissions in imports in a cross section analysis there does seem to be a positive relationship between both variables at a national level the results suggest that despite many shortcomings this type of assessment may shed useful insights on the international aspects of sustainable development

low wage manufacturing and global commodity chains a model in the unequal exchange tradition the institutional setting of subcontracted manufacturing has a profound impact on how the benefits of trade are distributed this paper develops a model that combines insights from unequal exchange theorists and global commodity chain analysis to clarify the distributive dynamics of production networks in which subcontracting and branding are defining features in this framework the ability of productivity growth to increase income from exports is constrained and depends on how the benefits of productivity improvements are captured as lower consumer prices or higher rents for brand name multinationals increasing consumption in affluent consumer markets raises export earnings however developing countries acting alone are constrained in their ability to affect the demand side of global commodity chains instead supply side policies to support industrial upgrading represent a more viable option for raising incomes copyright 2006 oxford university press

trends and cycles in the net barter terms of trade a new approach this study has two objectives first it uses time series techniques including unit root tests to reexamine the classic prebisch singer hypothesis that the relative prices of primary commodities in terms of manufactured goods are characterized by secular deterioration second commodity price movements are decomposed into permanent and cyclical components using the beveridge and nelson 1981 technique the latter information is valuable when assessing the viability of commodity stabilization funds and formulating countercyclical macroeconomic policy responses to commodity booms and busts copyright 1989 by royal economic society

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

the link between increased trade openness and the terms of trade an empirical investigation abstract despite the fairly widespread move towards more open trade policies in developing countries relatively little attention has been paid to the effect of these policies on the terms of trade using a large sample of countries this paper tries to assess empirically the validity of the small country assumption which underlies the washington consensus on development strategies our evidence suggests that there is a sizable group of countries ldcs and non ldcs for which the assumption of exogenous traded goods prices can be rejected one implication is that terms of trade considerations should be included in the assessment of trade liberalization policies these effects might rise considerably when several countries liberalize simultaneously

squatters rights and urban development an economic perspective up to 35 per cent of urban dwellers in third world cities are squatters the characteristics of the squatting phenomenon are both varied and puzzling of particular interest are the observations that 1 landowners often do not collect rent from squatters for use of the land and 2 costly evictions are sometimes used without subsequent development of the land which in many cases is resettled by squatters we present an economic model of landowner squatter interaction which is consistent with these observations this model is then used to enlighten certain aspects of socially optimal land management policy for squatter areas the phenomenon of squatting in third world cities is widespread and growing recent studies have shown that up to 35 per cent of the total urban population of developing countries lives in squatter settlements the current and mostly non economic literature has mixed views regarding whether squatting is a problem or a solution to efficient urbanization attitudes concerning squatter settlements range from disgust concerning living conditions in such illegal or quasi illegal spontaneous settlements to admiration for the resourcefulness of the inhabitants as they provide themselves with at least some shelter using the minimal inputs available the literature has consequently not provided a useful conceptual framework to guide government policy in this paper we develop a formal economic model to understand the various forms of squatting in third world cities we then use the model to address some vexing policy questions do private landowners evict squatters too frequently or too infrequently should any or all squatters be evicted should they be provided with basic infrastructure services should they be given unambiguous property rights to the land they occupy applying the coase theorem to the squatting problem we might conclude that the observed rate of evictions was just right evictions occur only if the value of land use to squatters is less than the sum of the alternative development value to the landowner plus the cost of evictions this economic logic follows since squatters would outbid any competing use of the land if indeed they valued it more thus any policy that gave more property rights to squatters would be a pure transfer from landowners to squatters social welfare would be unaffected however transaction and bargaining costs associated with the transfer of ownership of land to squatters which are likely to be important in the squatting problem can invalidate this simple intuition 2 landowners incur costs when they try to enforce property rights either by collecting rent or evicting collect ing rent formalizes the relationship between renter and landowner the land owner would then have to incur the costs of providing basic services water

forward discount puzzle and liquidity effects some evidence from exchange rates among the united states canada and japan this paper empirically examines whether the interaction between foreign exchange markets and monetary markets can help to resolve the forward discount puzzle following the monetary models of lucas 1990 and fuerst 1992 we define as liquidity effects the negative impact of monetary injection on nominal interest rates temporary deviations from the standard euler equation the liquidity effect identified by these models weakens the linkage between current forward rates and expected future spot rates and improves on the standard rational expectations model that predicts a one to one correspondence between the two using time series of exchange rates among the united states canada and japan this paper shows that the liquidity measure identified above has an impact on forward premiums and that once the liquidity effect is taken into consideration the unbiased prediction of the forward discount rate is recovered to some extent in a theoretically consistent manner

estimating the effects of monetary shocks an evaluation of different approaches abstract this paper compares several methods for estimating the effects of monetary innovations on key macroeconomic variables and subsequently clarifies issues related to the use of instrumental variables in the identification of structural impulse responses in particular we make explicit the property that a measure of monetary policy must satisfy in order to identify the effects of monetary shocks within our framework we find that none of the currently popular methods of identifying the effects of monetary shocks are supported by the data we also indicate how current approaches can be combined to provide unbiased estimates of the effects of monetary disturbances

the prebisch singer hypothesis four centuries of evidence we employ a unique data set and new time series techniques to reexamine the existence of trends in relative primary commodity prices the data set comprises 25 commodities and provides a new historical perspective spanning the seventeenth to the twenty first centuries new tests for the trend function robust to the order of integration of the series are applied to the data results show that eleven price series present a significant and downward trend over all or some fraction of the sample period in the very long run a secular deteriorating trend is a relevant phenomenon for a significant proportion of primary commodities 2010 the president and fellows of harvard college and the massachusetts institute of technology

review of de soto s the mystery of capital in the mystery of capital hernando de soto promotes his explanation of why formal capital markets function poorly in developing countries de soto argues that much of the population of developing countries lacks access to credit not because they lack assets but because ownership of their property is secured informally which prevents the use of property as collateral the inability to convert assets into capital keeps the developing world from benefiting from capitalism

recent trends in the terms of trade of jamaica 1955 86 the prebisch singer hypothesis of a long term deterioration in the commodity terms of trade of developing countries has evoked tremendous controversy in the literature most of the empirical work on the terms of trade is devoted to all developing countries this paper is country specific modern time series techniques have been used to test the perbisch singer hypothesis the empirical results for jamaica support the declining terms of trade hypothesis unit root tests indicate that jamaica s terms of trade is trend stationary finally the empirical evidence suggests that the decline in the terms of trade accounted for an annual loss of approximately 1 5 percent in jamaica s gdp

economic reform and food prices evidence from markets in ghana abstract this paper investigates trends in food prices in ghana during 1970 1993 regression results confirm that real wholesale prices of food have been declining since the 1970s price trends in the 1980s are characterized by a downward shift at the beginning of the postreform period and a subsequent continuing downward trend despite falling grain prices we find that agricultural wage rates failed to provide an adequate basis for subsistence particularly during periods of large seasonal price rises many farmers hold grain for both speculation and to smooth income this view is supported by evidence regarding seasonal price spreads that have been increasing since 1984 we find no support however for conclusions of trader manipulation of marketing margins during the adjustment period

some estimates of prebisch and singer effects on the terms of trade between primary producers and manufacturers abstract movements in the prices of primary products and manufactured goods are analyzed using a model based on the seminal contributions of raul prebisch and hans singer estimates are obtained from a system of equations using post wwii data on prices wages and manufacturing mark ups with the results providing evidence of the negative effects on the terms of trade of primary producers suggested by both prebisch and singer these effects more than offset positive effects arising from diminishing returns in primary production thereby providing an explanation for the negative net trend in the terms of trade of primary producers in the postwar period

agriculture s terms of trade issues and implications the article addresses 1 the issue of what agricultural commodity prices should be compared to if we are concerned with the welfare of agriculturalists 2 the general absence of product quality adjustment when analysis is undertaken comparing agricultural to manufactured goods prices 3 the extent to which energy prices are or will be the driver of both manufactured and agricultural prices and 4 the importance of considering agriculture s terms of trade tot against the service sector since the service sector is typically the largest in the economy it reflects on the basic question of whether the widespread perception that agriculture s tot secularly decline is correct

untitled a study of formal and informal property rights in urban ecuador we explore the substitutability of formal and informal property rights using new survey data from ecuador where households have both formal and informal claims to urban residential property we develop a model of property transactions that distinguishes between transferable and non transferable claims and show how this distinction affects the interpretation of hedonic price regressions the unconditional effect of title is to raise properties value by 23 5 however we also find that informal property rights can substitute effectively for formal property rights and suggest that titling programmes should be targeted at young disorganised communities if they are to benefit the recipients

can globalisation stop the decline in commodities terms of trade in this paper we address the following question would a fully integrated world economy eliminate the widely reported decline in the terms of trade of primary commodities we address the question by looking at the terms of trade within the us a highly integrated economy our findings show two results first us internal real commodities terms of trade over the 1947 1998 period experienced slowly declining but significant trends second once we control for the effect of us prices on international terms of trade we find a long run relationship between the us and international relative prices these findings support the view that the decline of commodities terms of trade bears no relationship with the process of globalisation this seems to indicate that if world terms of trade behaved as the us terms of trade neither increased integration nor protectionist measures would eliminate this trend

manufactured exports of developing countries and their terms of trade since 1965 abstract during the last 40 years since the prebisch singer terms of trade deterioration hypothesis was first proposed the commodity composition of exports of developing countries has undergone a major change in the direction of dominance of manufactures in their nonfuel exports with strong growth in the volume of their manufactured exports but this did not allow developing countries to escape unequal exchange relations with the industrial countries their barter terms of trade in manufactures showed signs of weakness rather than improvement and clearly failed to reflect the respective productivity trends leading to deterioration in factoral terms of trade

on the determinants of slum formation we construct a simple model of a city with heterogeneous agents and housing choice to explain the determinants of slums home to about one third of the urban population in developing countries the model supports the main empirical evidence regarding slum formation and is able quantitatively to assess the role of each determinant of slum growth we show that urban poverty inequality and rural urban migration explain much of the variation in slum growth in brazil from 1980 to 2000 ex ante evaluation of the impacts of policy interventions shows that removing barriers to formalisation has a strong impact on slum reduction

the fallacy of composition argument is it relevant for ldcs manufactures exports abstract the constraints imposed upon ldcs export growth by international demand have been the subject of a long standing controversy in this paper we present estimates of manufactures export demand functions for 23 ldcs we focus first on the constraints that the international environment imposes upon export growth for an individual ldc to this purpose the small country hypothesis of an infinitely elastic export demand is tested and the claim that supply factors play a determinant role in affecting export performances is then assessed we turn next to the constraints on global ldc growth and ask whether exports from ldcs complete mostly with northern products or are better substitutes with exports from other ldcs this allows us to assess the heuristic value of cline s 1982 remark that a generalized outward shift in the ldcs export supply schedule would be associated with an important decline in prices and would undermine the success of a widespread export led strategy we find that for a representative ldc a large share almost 80 percent of the benefits of devaluation on export revenues are made to vanish when other ldcs competitors pursue similar policies

the demand for tenure security in developing countries abstract we use survey data for manila the philippines to estimate hedonic functions for formal and squatter housing values we show that on average a rented squatter unit in manila would rent for 15 percent more if it were a formal sector unit an owned squatter unit would sell for 25 percent more if it were a formal sector unit these percentages are interpreted as eviction risk discount for squatter dwellings we conclude that assistance projects that provide secure tenure over a wide area will bestow comparatively greater benefits on lower income households and to those in newer less established settlements since the risks that they bear initially are greater

thanks but no thanks a new policy to reduce land conflict abstract land conflicts in developing countries are costly both directly and through increased land degradation an important policy goal is to create respect for borders this often involves mandatory expensive interventions we propose a new policy design which in theory promotes neighborly relations at low cost a salient feature is the option to by pass regulation through consensus the key idea combines the insight that social preferences transform social dilemmas into coordination problems with the logic of forward induction as a first low cost pass at empirical evaluation we conduct an experiment among farmers in the ethiopian highlands a region exhibiting features typical of countries where borders are often disputed

land tenure security and investment incentives puzzling evidence from burkina faso abstract the commonsense logic associating higher land security and higher incentives to invest has been recently called into question in the case of african agriculture to be meaningful empirical tests have to be carefully designed so as to take account of the possible endogeneity of the land rights variable this is done in this paper by applying suitable econometric methods to the original data collected in burkina faso the results obtained cast doubt on the existence of a systematic influence of land tenure security on investment by reviewing the justifications for scepticism in the recent literature we are able to conclude that the traditional village order where it exists provides the basic land rights required to stimulate small scale investment

african terms of trade and the commodity terms of trade close cousins or distant relatives this paper examines whether there is a relationship between the commodity terms of trade the price of primary commodities relative to the price of manufactures and the net barter terms of trade of 42 sub saharan african countries for most countries there is little evidence of a stable long run relationship between the two terms of trade series accordingly the practice in the literature of proxying for movements in any given country s terms of trade by using an aggregate index of relative commodity prices is inappropriate and is likely to engender misleading policy conclusions

do multinationals deteriorate developing countries export prices the impact of fdi on net barter terms of trade this paper explores the economic relationship between foreign direct investment fdi to developing countries and the export prices of the latter measured by terms of trade it is rst shown that economic theory suggests such a relationship for various reasons but is inconclusive about the direction of the eect to address this open issue empirically i analyze data on more than 50 developing countries throughout the period 1980 2008 using robust dynamic panel data methods the results show that fdi had an economically relevant and statistically signicant positive impact on developing countries net barter terms of trade a higher level of education in the developing country fosters this eect

the prebisch singer terms of trade hypothesis some very new evidence the chapters in this section of the book are concerned with various dimensions of an hypothesis which has become inextricably associated with the names hans singer and raul prebisch according to this hypothesis which was launched simultaneously by singer 1950 and prebisch 1950 the net barter terms of trade between primary products and manufactures have been and could be expected to continue to be subject to a downward long run trend being in direct contradiction with the then prevailing orthodoxy it is not surprising that the prebisch singer hypothesis p s hereafter attracted criticism from a number of quarters the ensuing debate which initially focused its attack on the basis of issues related to the treatment of transport costs and quality change is well summarized by spraos 1980 who showed that adjustments for shipping costs and changing quality left the hypothesis largely undented in the sense that they failed to destroy its empirical validity however since the mid 1980s the debate surrounding the p s hypothesis has shifted to the statistical arena indeed such is the interest generated by the hypothesis amongst econometricians and time series statisticians that it has established itself as one of the major test beds on which they routinely evaluate their latest methods of trend estimation

the long run behavior of the relative price of primary commodities statistical evidence and policy implications abstract this paper is concerned with both the statistical and policy issues surrounding the long run behavior of the ratio of primary commodities prices to those of manufactured goods seen as a measure of the barter terms of trade between primary producers and the producers of manufacturers the statistical evidence reported is found to offer support for the secular deterioration hypothesis the policy implications of this finding for less developed countries are explored

nonlinear budget constraints and consumer demand an application to public programs for residential housing abstract this study presents a methodology for exploiting the nonlinear hedonic nature of housing prices to estimate the compensated demands of households for particular housing attributes the methodology is employed to provide hicksian benefit measures of a particular housing subsidy program typical of those undertaken recently in developing countries

whither the terms of trade an elaboration of the prebisch singer hypothesis movements in the prices of primary products and manufactured goods are analysed using a model that introduces differences in wage and price determination between primary production and manufacturing wages and prices in primary production are treated as competitively determined while prices and wages in manufacturing are determined by mark up pricing and union employer bargaining respectively the objective is to capture the influence of structural differences between manufacturing and primary production on the terms of trade between industrialised and developing worlds as discussed in the seminal contributions to the development literature by raul prebisch and hans singer the model is estimated using price and wage data from the post world war ii period support is found for the prebisch singer hypothesis however our estimates suggest that during periods of particularly rapid manufac turing growth there have been intervals of net improvement in the terms of trade of primary producers

foreign direct investment economic performance and trade liberalisation in a number of influential papers published by v n balasubramanyam and collaborators during the decade of the 1990s compelling arguments and supporting evidence was presented to indicate that export promoting trade and investment strategies attract more and more productive inflows of foreign capital than do import substituting strategies this paper revisits these hypotheses in the context of more recent cross section data and reports evidence to suggest that the earlier findings are robust

cual es el destino de los paises abundantes en recursos minerales nueva evidencia sobre la relacion entre recursos naturales instituciones y crecimiento economico economies that have large endowments of natural resources especially the ones thatrely on oil and minerals are ofien regarded as unlikely to develop or even seen as cursedby nature it is said that the mineral rents which could be used to trigger a growthprocess have in practice several negative effects that by and large counteract their potentialpositive contributions nevertheless it seems that these results are sensitive tothe measures of resource abundance that are used and mineral resource abundancemight not be necessarily growth retarding this study will evaluate if the arguments touphold that mineral rich countries are dwmed to low economic growth are strong andsound by testing a number of robustness checks on the standard models of resourcesand growth we test if there are any specification bias in the model proposed i n pa rticularof omitted variables and if the resource curse thesis remains robust whenusing other measures of resource abundance and when testing specifically for a mineralrecource curse

economics of multihabitation housing conditions household occupancy and household structure under rent control inflation and nonmarketability of ownership rights abstract multihabitation in terms of sharing facilities in a dwelling or extended family occupancy is common in parts of the third world this paper uses the ghanaian housing market to assess the impact of multihabitation on house condition and on household occupancy rates per room as distinct from the influence of other factors on these variables multivariate statistical techniques form the method of analysis and the models have a high predictive accuracy the impacts of current government policies such as rent control on house condition and occupancy rates is also discussed along with cultural attitudes to ownership and obligations to the extended family

variable long term trends in mineral prices the ongoing tug of war between exploration depletion and technological change abstract this paper explores the use of low frequency band pass filters for describing long run trends in real mineral commodity prices this approach has the advantage of allowing long run trend rates to evolve gradually over time rather than assuming that they are constant perhaps with occasional structural breaks over time this is a flexible way of capturing the ongoing tug of war between exploration depletion and technological change over 100 mineral and commodities stretching back to the late 19th or early 20th century are considered the variety of lr trends is astonishing but very few increase monotonically contrary to the prediction of the basic hotelling model some decline monotonically as predicted by prebisch and singer some have the u shaped pattern predicted by pindyck 1978 heal 1981 and slade 1982 others have changed direction up to three times in the period since 1900 the tug of war continues with exhaustion nowhere in sight

the prebisch singer hypothesis a reappraisal independent of stationarity hypotheses time series behaviour of the relative price of primary commodities raul prebisch i950 and hans singer i950 believed that the long term trend of primary commodity prices was negative the latter in an interesting discussion of the above quandary pp 482 3 viewed rises in primary commodity prices as purely temporary sources of surplus that offered short lived opportunities to increase industrial investment these opportunities were missed by private investors who instead increased primary sector investment in such circumstances because all private activity tends to be governed by the price