anticipated monetary policy in canada some new evidence abstract in this note i examine the policy ineffectiveness proposition for canada using monthly income data due to milbourne et al 1988 i find that anticipated monetary policy altered the evolution of real output in canada recent work by ambler and phaneuf 1988 can be used to attribute this result to a purely new keynesian model of the business cycle although this inference is found to be fragile with respect to the choice of the level of significance used in the hypothesis tests

developing country exports of manufactures moving up the ladder to escape the fallacy of composition this paper tests for a fallacy of composition by analysing the demand for exports of the 18 developing countries that are most specialised in manufactures in the markets of the 10 largest industrial countries estimated export equations both time series and panel data suggest that most developing countries compete with other developing country exporters rather than with industrialised country producers a smaller number of countries that export more high technology products compete with industrialised country producers and also have higher expenditure elasticities for their exports thus the fallacy of composition applies mainly to the larger group of countries exporting mostly low technology products

an estimate of the accuracy of hedonic real estate valuations using the orange county bankruptcy it has become standard practice to estimate the value of amenities such as environmental cleanliness local school quality and crime using hedonic valuations typically changes in real estate prices the accuracy of hedonic valuations depends critically on whether real estate prices adjust appropriately which is difficult to verify the 1994 orange county ca bankruptcy offers a test of the accuracy of hedonic real estate valuations orange county s failed investment strategy resulted in unexpected county losses of 1 7 billion in response the aggregate value of orange county real estate dropped by between 1 65 and 3 70 billion

china s competitive performance a threat to east asian manufactured exports there is growing concern in southeast and east asia about the competitive threat posed by china s burgeoning exports exacerbated by its accession to the wto the threat is not confined to labourintensive products but spans the whole technological and skill range at the same time china is rapidly raising its imports from the region and it is not clear whether its burgeoning exports will damage its neighbours we examine the dimensions of china s competitive threat in the 1990s benchmarking competitive performance by technology and market and finds that market share losses are so far mainly in low technology products with japan being the most vulnerable market we analyse market share changes and highlight product groups that are directly or indirectly exposed to a competitive threat we examine intra regional trade and find that china and its neighbours are raising high technology exports in tandem the nature of the international production systems involved lead to complementari ty rather than confrontation china is thus acting as an engine of export growth for its neighbours in terms of direct trade however this will change as china moves up the value chain and takes on the activities that have driven east asian export growth

property tax limits local fiscal behavior and property values evidence from massachusetts under proposition abstract this paper examines the impact of a specific property tax limit proposition 2 1 2 in massachusetts on the fiscal behavior of cities and towns in massachusetts and the capitalization of that behavior into property values proposition 2 1 2 places a cap on the effective property tax rate at 2 5 and limits nominal annual growth in property tax revenues to 2 5 unless residents pass a referendum allowing a greater increase the study analyzes the 1990 1994 period a time when massachusetts municipalities faced significant fiscal stress because of a 30 cut in real state aid and a demographically driven increase in school enrollments the findings include the following 1 proposition 2 1 2 significantly constrained local spending in some communities with most of its impact on school spending 2 constrained communities realized gains in property values to the degree that they were able to increase school spending despite the limitation and 3 changes in non school spending had little impact on property values

modelling the link between commodity prices and exchange rates the tale of daily data this paper examines daily data on exchange rates and the prices of three commodities traded on the winnipeg commodity exchange the temporal patterns of commodity prices and exchange rates are shown to be similar daily data are significantly non normal with garch models capturing the processes generating the data commodity prices and exchange rates are examined for cointegration using recent tests proposed by johansen and juselius 1990 currency depreciation is shown to granger cause commodity price inflation this information might be useful to central bankers concerned with reducing general price inflation through targeting commodity price inflation it also suggests that macro events have important effects on commodity markets in canada

inequality democracy and the protection of property rights motivated by the observed relevance of institutional quality such as strong property rights for economic performance this research considers the emergence of property rights protection as a political outcome it argues that the support for such protection is greater the more equal income distribution and the smaller political bias when these conditions initially hold the politically influential rich elite may prefer to relinquish its power through democratisation in order to commit future policy makers to the enforcement of property rights thus ensuring larger investment and faster growth along the transition path in a very unequal economy however such democratisation will not take place

is strike behavior cyclical we examine cyclicality of strike frequency and incidence using canadian data on strikes and contracts total strike frequency exhibits significant procyclicality to which within contract strikes contribute appreciably evidence is weaker for procyclical behavior of contract expiry strikes both in total and disaggregated by issue strike incidence is also procyclical particularly in manufacturing though the procyclicality here is confined to strikes over nonwage issues these results mirror those obtained by analyzing the frequency of strikes in the contract data industry specific cyclical variables positively affect strike incidence in manufacturing but region specific variables have no effect

modelling nie exports aggregation quantitative restrictions and choice of econometric methodology the current debate regarding the robustness of estimates of export demand and supply elasticities for nies is examined by modelling manufactured exports from korea the results suggest that normalisation of the export demand function for price rather than quantity is an important issue in estimating export demand functions of small countries and that estimates of export demand elasticities at high levels of aggregation are subject to potentially powerful biases when the aggregate consists of categories which are subject to quantitative restrictions if proper modelling procedures are followed it is likely that the small country assumption will find far more empirical support than it has hitherto

the demand for ldc exports of manufactures estimates from hong kong exports of manufactures from developing countries are generally believed to be sensitive to changes in the level of income in the developed countries their major market this belief is grounded on both casual observation especially from the experience of recent recessions and on extensive econometric evidence of low price elasticities and high income elasticities of demand for ldc exports in developed countries this paper argues that both casual observation and previous econometric evidence are misleading the aim of the paper is to show the order of magnitude of the bias contained in previous econometric estimates of price and income elasticities of demand for ldc exports of manufactures due to neglect of supply side influences previous econometric work has neglected the supply side of ldc exports for the simple reason that it is difficult to model it is difficult to model properly the supply of aggregate ldc exports since the determinants of export supply differ from country to country even for a single country modelling export supply is complicated since in addition to foreign demand and domestic supply exports are determined in part by domestic demand for exportables furthermore in most ldcs the incentive to export is strongly influenced by complex and continually changing industrial and trade policy measures there is one major exception hong kong one of the developing world s largest and most successful exporters of manufactured goods the manufacturing sector in hong kong is almost completely specialised exporting 95 of output consequently domestic demand plays no part in determining the volume of exports furthermore factor markets and the manufacturing sector are almost completely free from government intervention the main exception being the textile export restraints imposed at the insistence of importing countries the voluntary restraint agreements vras to which hong kong is subject no doubt affect the composition of exports but not necessarily the volume of aggregate exports if resources in the restrained sectors can easily be redeployed elsewhere in the economy judging from past export growth rates the vras do not appear to have had a significant effect on aggregate export growth in hong kong the results reported below also suggest that hong kong has effectively circumvented the trade barriers it faces the hong kong manufacturing sector in many ways resembles a firm in the

dynamics of the trade balance and the terms of trade in ldcs the s curve abstract in their analysis of the dynamic behavior of terms of trade and the trade balance backus kehoe and kydland found that the lead and lag correlation between these two variables is s shaped for a set of oecd countries furthermore they show that this s curve can be replicated by a two country dynamic general equilibrium model surprisingly the s curve also describes the dynamic relationship between terms of trade and the trade balance for a large set of ldcs this s curve can also be reproduced by a small open economy model which captures some important features of ldc economies the s curve is unexpectedly robust to variations in the key parameters of the model the model also captures the business cycle properties of the ldc data

estimating shocks and impulse response functions this paper examines the issue of how to identify the shocks in a cointegrated var when the following assumptions are made the variables can be classified as endogenous or exogenous there are as many cointegrating relations as endogenous variables the cointegrating vectors are identified and they contain at least one exogenous variable it is shown that with these assumptions it is possible to identify the shocks without the use of further restrictions on the covariance matrix of the disturbances or the short run dynamics if the long run parameters are known the whole model can be estimated by ols the analysis is extended to allow the var to have both stationary and non stationary variables an illustration of the method is provided using the traditional benchmark var model involving us data on output prices interest rates and money a liquidity effect is not found using this var methodology

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

a dynamic analysis of japanese energy policies their impact on fuel switching and conservation abstract in 1973 the japanese economy was highly dependent on imported oil after the 1973 oil price shock vigorous policy action was undertaken by the japanese government in an attempt to reduce japan s energy consumption and in particular its dependence on imported oil this study attempts to determine how flexibly the japanese economy has responded to the dramatic changes in relative and absolute fuel prices which occurred since 1973 and to what extent government energy policies may have reinforced or undermined market signals and facilitated fuel switching and conservation to analyse the price and income elasticities of energy component demand a dynamic approach to energy demand modelling is employed the study reveals that japanese energy users have responded quite flexibly to the two major oil price rises in the 1970s the probable impact of energy policies on this response is however somewhat problematic

exports of manufactures by developing countries emerging patterns of trade and location developing countries are rapidly increasing their shares of manufactured trade not just in labour intensive products but also in capital and skill intensive ones their shares are rising particularly rapidly in the high technology area however manufactured exports remain highly concentrated in the developing world with a few countries dominating all forms of export within the successful exporting countries there are significant differences in the technology content of exports these trends are difficult to explain with received trade theory even taking human capital into account or with reference to broad economic policies it is useful to bring in learning along with scale economies increasing returns and agglomeration as determinants of comparative advantage these factors imply market failures and so a role for policy in developing genuine comparative advantages this article suggests that emerging trade and location patterns in the developing work are explained by market imperfections and government policies to overcome them

demand for india s manufactured exports abstract surprisingly few estimates exist of disaggregated world demand functions for ldc exports despite the obvious policy importance of the inherent price elasticities time series simultaneous equation estimates are herein presented of world demand for 23 categories of manufactured exports from india tests for homotheticity separability whether price elasticity of demand differs during world recession and for effects of foreign learning about india s exports are reported estimated price elasticities range from below unity to infinity revealing important variations masked by aggregate studies these results raise considerable doubts about policy design from a uniform small country assumption

are all democracies equally good the role of interactions between political environment and inequality for rule of law using cross country data we find evidence for a significant negative interaction effect between democracy and inequality in determining the quality of growth promoting institutions like rule of law democracy is associated with institutions of higher quality when inequality is lower

constitutional rules and fiscal policy outcomes we investigate the effect of electoral rules and forms of government on fiscal policy outcomes in a large sample of democracies we rely on different estimation methods to address prospective problems of statistical inference due to non random selection of these constitutional rules the findings are consistent with our theoretical priors presidential regimes induce smaller governments than parliamentary democracies while majoritarian elections lead to smaller governments and smaller welfare programs than proportional elections

a structural model for developing countries manufactured exports a dynamic structural econometric model is developed to analyze movements in manufactured exports and to capture lags in the adjustment to equilibrium the model is estimated with pooled cross section time series data for a representative sample of fifteen developing countries grouped according to their export market power the results suggest that prices domestic productive capacity and external economic activity are critical determinants of manufactured exports from developing countries the structural parameter estimates are used to infer the effects of changes in destination country income distinguishing between the short run and long run export volume and export revenue effects the results indicate that domestic economic policies that promote investment and capacity in export oriented activities are likely to play a key role in increasing foreign exchange earnings in developing countries even if growth in external demand is slow

real effective exchange rate and the constant elasticity of substitution assumption abstract the real effective exchange rate reer is an aggregation of several bilateral real exchange rates assuming constant elasticity of substitution ces between goods from different countries we investigate the validity of the ces assumption by estimating manufacturing export equations for 56 countries over 26 years under the ces assumption splitting the reer into two components should not increase the fit in an export equation and the coefficients on the two reers should be equal we reject both these implications and find that the export equations with two reers vs oecd and vs nonoecd countries perform better than the traditional ones

the impact of proposition 13 on house prices in northern california a test of the interjurisdictional capitalization hypothesis it wen institute of business and university of california economic research berkeley center for real estate and urban economics wobkingipaper series these papers are preliminary ature their purpose 39 limul discussion comme h re they are not to be 39 or quoted ny publication without express permission of the author working paper no 80 11 the impact of proposition 13 on house prices in northern california a test of the interjurisdictional capitalization hypothesis by kenneth t rosen

the demand for ldc exports of manufactures estimates from hong kong a comment in the march i 988 issue of this journal riedel claims that the findings of relatively low price elasticity of demand by the bulk of time series work are based on the assumption of infinite price elasticity of export supply and that the demand parameters derived from a fully specified simultaneous equation model strongly contradict the consensus view on the basis of his results suggesting infinitely price elastic demand for exports of manufactures from hong kong in this comment both of his claims and his results are disputed the author s conclusion concerning infinite price elasticity of demand for exports can be objected to on at least three grounds first in the context of his formulation it implies an abnormally large degree of money illusion on the part of the importers of manufactures second in using the inverse form of the demand function rather than the normal form he would necessarily produce a much larger estimate of price elasticity than otherwise using his approach one can quite easily produce an estimate of the marginal propensity to consume in excess of unity or an implausibly large estimate of the marginal propensity to save third infinite price elasticity is inferred from the statistical nonsignificance of the coefficient of export quantity in the inverse form of demand which represents the inverse of price elasticity however it can be argued that the estimate of the coefficient of export quantity is not statistically significant because of the high intercorrelation multicollinearity between quantity and income in view of the obvious upward bias involved in his approach to the estimation of price elasticity of export demand it is not only possible but also most probable that the adoption of his approach will also yield very high estimates of price elasticities of demand generally it is conceivable that one can produce a highly elastic demand for primary exports not only at individual country level but also at the world level using his approach if ldcs wrongly believe that demand for their primary exports is price elastic when in fact it is not unwarranted expansion of production could cause a significant fall in their export earnings with grave consequence for their economic development it is therefore most important to point out the weaknesses of his approach before it is widely adopted by other researchers keen to get high price elasticities of demand

symmetric or asymmetric price adjustments in the oil market an empirical analysis of the relations between international and domestic prices in the federal republic of germany 1972 89 abstract this paper investigates how german consumer and wholesale prices for gasoline and light heating oil react to changes in the corresponding rotterdam prices monthly data from 1972 to 1989 are employed and the subperiods of the 1970s 1972 to 1979 and 1980s 1980 1989 are distinguished error correction models are estimated to seperate long run equilibrium relations and short run adjustment processes for the 1980s we find rapid symmetric and full adjustment of the german prices to the rotterdam prices whereas during the 1970s we find some asymmetries and at least for gasoline the adjustment processes took considerably more time

polarization politics and property rights links between inequality and growth most efforts to trace the effects of income inequality on growth have focused on redistribution however empirical investigation has not substantiated either the positive association of income inequality with redistribution or the negative association of redistribution with economic growth the authors analyze the effects of inequality in the broader context of social polarization they argue that social polarization whether rooted in income inequality or in ethnic tension makes large changes in current policies including those guaranteeing the security of contract and property rights more likely under a wide range of institutional arrangements the resulting uncertainties in the policy and contractual environment hinder growth they find strong empirical support for both parts of this argument the policy implications of their argument are quite distinct from those of arguments that inequality reduces growth by increasing pressures for redistribution if redistributive policies per se were to blame for the low growth resulting from inequality governments that seek to mitigate income inequality must inevitably confront a tradeoff between equity and growth if on the other hand the insecurity of property rights slows growth in unequal or otherwise polarized societies governments that commit over the long run to particular redistributive policies incur less risk of slowing economic growth fiscal redistribution that reduces inequality may actually increase growth by reducing the risks of political uncertainty

trade as the engine of growth in developing countries revisited economic growth in developed countries since the mid 1970s the only way to keep the engine of ldc growth beating at a satisfactory rate so the argument goes is to turn to an alternative source of fuel this lewis argues lies in trade among the developing countries which he asserts can take up the slack left by mdcs more developed countries as mdcs slow down 1980 p 560 pessimism about demand for ldc exports in developed countries markets is a recurrent theme in the development literature also familiar is the approach taken by lewis to dismiss past successes of ldcs in world trade by declaring the alleged engine of past growth to be no longer operating satisfactorily the intellectual foundations of the import substitution strategy laid in the 1950s by prebisch myrdal and most importantly nurkse rested on similar grounds arguing that the demand for periphery countries exports in the 20th century is far weaker than it was in the 19th century trade was dismissed as an engine of growth a function nurkse alleged it had served in the 19th century the solution prescribed in the 1950s was to look inward in effect to scrap the trade engine altogether lewis remedy coming two decades later when most importsubstitution possibilities in many ldcs have been all but exhausted retains the trade engine but seeks an alternative source of fuel to drive it the classic critique by irving kravis 1970 of nurkse s thesis of trade as a faltering engine of growth showed that export expansion did not serve in the nineteenth century to differentiate successful from unsuccessful countries p 850 this followed from two findings first that successful 19th century countries showed few signs of export dominated growth second that unsuccessful periphery countries enjoyed export expansion in the second half of the 19th century of the same order of magnitude as the temperate regions of recent settlement this led kravis to conclude that a more warranted metaphor

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

china s accession to the wto timing is everything since china s application in 1987 to resume its status in the generalized agreement on trade and tariffs gatt world trade organization wto there has been a great deal of debate over the timing of china s accession although most of the issues relating to the timing of china s trade liberalization have been resolved the abolition of restrictions on chinese textiles and clothing may still be subject to delay if the united states and europe choose to implement the safeguards contained in the their bilateral accession agreements with china as well as in the original agreement on textiles and clothing atc in this paper the effects of alternative target dates for the elimination of restrictions on textiles quotas are examined since this issue revolves fundamentally around the question of timing it is most appropriately addressed in a dynamic model in this study we use the dynamic gtap model this is applied to a 19 region by 22 commodity aggregation of the gtap database supplemented with foreign income data the paper finds that timing is indeed an important determinant of the profile of structural adjustment required in china and the rest of the world in light of their interest in delayed implementation the atc it is interesting to note that our results suggest slower elimination of these quotas is detrimental to national welfare in north america and europe

property taxes and property values evidence from proposition 212 abstract we examine the effect of proposition 2 1 2 on revenues and housing prices in massachusetts communities that were initially constrained by the law saw large increases in state aid and the use of fees we use these initial constraints as instruments for changes in other components of revenue while treating the change in the property tax as exogenously determined by proposition 2 1 2 our results strongly suggest that communities that were able to increase their property taxes more rapidly saw greater increases in their housing values in the period following passage of the law

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

other people s taxes nonresident voters and statewide limitation of local government abstract why would voters resort to a statewide tax limitation to force change in their own local government this paper develops and tests the hypothesis that property tax limitations succeeded because they allowed voters to lower tax rates in other communities statewide limitations effectively extend the voting franchise to individuals who have no standing in local elections voters may have preferences for tax and expenditure levels in other jurisdictions because they receive rents from employment in those jurisdictions because they directly own taxable assets in those jurisdictions or because changes in other jurisdictions might influence their own residential location choice empirical tests of this hypothesis focus on the massachusetts experience with proposition 2 documentclass aastex usepackage amsbsy usepackage amsfonts usepackage amssymb usepackage bm usepackage mathrsfs usepackage pifont usepackage stmaryrd usepackage textcomp usepackage portland xspace usepackage amsmat

declining discount rates and the fisher effect inflated past discounted future uncertain and persistent real interest rates underpin one argument for using a declining term structure of social discount rates in the expected net present value enpv framework despite being controversial this approach has influenced both the inter agency working group on cost benefit analysis and the uk government s guidelines on discounting we first clarify the theoretical basis of the enpv approach then rather than following previous work which used a single series of u s treasury bond returns we treat nominal interest rates and inflation as co integrated series and estimate the empirical term structure of discount rates via the fisher effect this nests previous empirical models and is more flexible it also addresses an irregularity in previous work which used data on nominal interest rates until 1950 and real interest rates thereafter as we show the real and nominal data have very different time series properties this paper therefore provides a robustness check on previous discounting advice and updated methodological guidance at a time when governments around the world are reviewing their guidelines on social discounting the policy implications are discussed in the context of the social cost of carbon nuclear decommissioning and public health

a survey of some recent econometric methods this survey is written mainly for the applied economist though we hope that the specialist econometrician will find something of interest too our aim has been to try to bring the applied worker as up to date as possible and in the process to improve the quality of applied work by providing access to the latest ideas in econometrics we have tried to describe and explain in a relatively non technical way the main developments that have taken place in the last ten years partly for reasons of space the survey is by no means exhaustive but it does cover a wide range of topics in both time series and cross section analysis among the subjects covered are the followoing the nature of data including integrated and fractionally integrated data four estimation methods maximum likelihood method of moments m estimators and non parametric estimation inference with stationary and integrated regressors a comparison of various model evaluation principles the formulation of models including dynamic specification cointegration and conditional expectations in mean and variance copyright 1989 by royal economic society

optimal hedge ratios at the winnipeg commodity exchange multivariate garch models are employed to estimate time varying hedge ratios for three commodities traded on the winnipeg commodity exchange garch hedge ratios are shown to be superior to those based on the traditional regression approach to calculating the optimal hedge les ratios optimaux de comptant par rapport aux contrats a terme a la bourse de denrees de winnipeg l auteur emploie des modeles multivaries de type garch pour calibrer les ratios optimaux de comptant par rapport aux contrats a terme pour trois denrees transigees a la bourse des denrees de winnipeg ces ratios s averent superieurs a ceux qu on obtient par les methodes de regression traditionnelles

running out of steam manufacturing in malaysia this article examines the process of deindustrialisation in developing countries looking at the case of malaysia it provides a framework to examine how industrial structure and domestic technological capabilities are affected by the wider challenges of late industrialisation changes in global accumulation and domestic class formations it discusses the emerging evidence of malaysia s premature deindustrialisation and how this is the result of broader accumulation strategies that were primarily driven by internal factors related to the emergence of a malay middle class and supported by changes in global accumulation processes related to the development of global production networks and financialisation

are efficiency and equity in school finance substitutes or complements this paper analyzes cases made for local and centralized school finance and policies such as vouchers categorical aid and equalization aid an ideal system of school finance would achieve efficiency and equity by ensuring every person invests in the amount of schooling that is socially optimal for him the author evaluates the empirical evidence for and the merit and importance of arguments for each policy she concludes that the theoretical arguments for centralized finance not only exaggerate the efficiency equity tradeoff but actually make better arguments for a system combining local school finance with categorical aid and means tested vouchers

political regimes and income inequality abstract we construct a theoretically motivated model of income inequality through a pooled regression on an international panel we demonstrate that political regime whether extractive redistributive or reinvestment oriented correlates with within country income inequality

the imf the world bank and commodity prices a case of shifting sands abstract this paper examines some recent developments in the thinking of both the international monetary fund and the world bank regarding the macroeconomic determinants of commodity prices and the relative importance of secular and cyclical factors in explaining their recent behavior

revisiting the revisited terms of trade will china make a difference in challenging the conventional wisdom at the time singer and prebisch posited a number of explanations for declining terms of trade of developing economies including both country and product specific factors over the past decade we have begun to witness a simultaneous process of price differentiation within commodities with the prices of some commodities increasing and within manufacturing with the price of many manufactures falling these price changes may reverse the decline in the terms of trade of commodity producers the entry of china into the global market has played an important role in this augmenting the demand for many hard commodities its role as an exporter of manufactures coupled with concentration in global buying may undermine the prices of many manufactures

you can take it with you proposition 13 tax benefits residential mobility and willingness to pay for housing amenities abstract the endogeneity of prices has long been recognized as the main identification problem in the estimation of marginal willingness to pay mwtp for the characteristics of a given product this issue is particularly important in the housing market since a number of housing and neighborhood features are unobserved by the econometrician this paper proposes the use of a well defined type of transaction costs moving costs generated by property tax laws to deal with this type of omitted variable bias california s proposition 13 property tax law is the source of variation in transaction costs used in the empirical analysis beyond its fiscal consequences proposition 13 created a lock in effect on housing choice because of the implicit tax break enjoyed by homeowners living in the same house for a long time its importance to homeowners is estimated from a natural experiment created by two amendments that allow households headed by an individual over the age of 55 to transfer the implicit tax benefit to a new home indeed 55 year old homeowners have 25 higher moving rates than those of comparable 54 year olds these transaction costs from the property tax laws are then incorporated into a household sorting model the key insight is that because of the property tax laws different potential buyers may have different user costs for the same house the exogenous property tax component of this user cost is then used as an instrumental variable i find that mwtp estimates for housing characteristics are approximately 100 upward biased when the choice model does not account for the price endogeneity

export processing zones in the dominican republic transforming manufactures into commodities this paper examines the performance of export processing zones in the dominican republic it shows that in specializing in unskilled labor intensive export processing in the context of competitive devaluations between central american countries the dominican republic has experienced immiserizing employment growth in these circumstances the export of labor intensive manufactures is akin to that of primary commodities exporting countries which rely on unskilled labor and which fail to make the transition to higher value added production exports are thus likely to experience declining terms of trade the conclusions of this case study are considered to have wider relevance to world bank and international monetary fund inspired structural adjustment programs in the region

determinants of the expected real long term interest rates in the g7 countries the paper investigates which factors determine the expected real long term interest rates of the g7 countries as a whole within a single equation error correction model inflationary expectations are generated using the low frequency component of inflation provided by the hodrick prescott filter a comparison of the calculated expected inflation rates with those resulting from index linked and conventional uk bonds suggests this approach to be appropriate expected real long term interest rates turn out to be influenced positively by real short term interest rates capacity utilization and structural public borrowing

intra nie competition in exports of manufactures this paper provides empirical evidence on the extent to which the asian newly industrialised economies nies compete in world export markets our results support existing studies which emphasise the importance of allowing for intra ldc competition in modelling an individual developing country s exports whilst the asian nies are regarded as a model for other developing countries to emulate one has to consider whether such an expansion in export supply would be at the expense of oecd economies or whether it will lead to a deterioration in the terms of trade of the developing countries as a group

export growth performance of less developed countries abstract this paper has two purposes 1 to estimate own price cross price and income elasticities of export demand for a sample of 41 ldcs and 2 to test whether relative export growth performance of ldcs can be explained in terms of differing values of these elasticities the study finds that in conformance with the theory specified export growth is enhanced by a smaller ownprice elasticity a larger cross price elasticity and a larger income elasticity

an analysis of the disaggregated manufacturing exports of the asian nies to eec usa and japan this paper examines the export performance of the four asian newly industrialized economics nies by modelling their bilateral export flows to three main oecd blocks the usa japan and the european community our estimated export demand models reveal interesting asymmetries between these three areas of destination which do not emerge from previous aggregate empirical studies of nie export performance

why has house price dispersion gone up we calibrate a dynamic general equilibrium island model to investigate the 30 year increase in the level of house prices and their dispersion across u s metropolitan areas the model is based on two main assumptions households o w in and out metropolitan areas in response to local productivity shocks and the housing supply cannot adjust instantly because of technological and regulatory constraints the calibration reveals that the observed tightening of housing supply regulation cannot quantitatively account for the rise in the level and dispersion of house prices in equilibrium workers o w out of tightly regulated towards less regulated metropolitan areas undoing most of the price impact of local supply restrictions in contrast the observed increase in wage dispersion across metropolitan areas does create the observed increase in the level and dispersion of house prices workers o w towards exceptionally productive metropolitan areas and drive house prices up the calibration also suggests that the welfare eects of housing supply regulation are large when wages become more dispersed

primary commodity prices manufactured goods prices and the terms of trade of developing countries what the long run shows the authors revisit in this article the empirical foundation of the alleged secular decline in the prices of primary commodities relative to those of manufactures they use a newly constructed index of commodity prices and two modified indexes of manufactured good prices and find that from 1900 to 1986 the relative prices of all primary commodities fell on trend by 0 5 percent a year and those of nonfuel primary commodities by 0 6 percent a year they thus confirm the sign but not the magnitude of the trend implicit in the work of prebisch but even the more limited secular decline shown by their relative price indexes may be magnified by an incomplete account of quality improvements in manufactures they then show that the evolution of terms of trade of nonfuel primary commodities is not the same as that of the net barter terms of trade of non oil exporting developing countries finally they find that despite the decline that has probably occurred during the current century in the terms of trade of nonfuel primary commodities the purchasing power of total exports of these products has increased considerably similarly the fall that may have occurred after world war ii in the net barter terms of trade of developing countries seems to have been more than compensated for by the steady improvement in their income terms of trade

tests of exchange market efficiency fragile evidence from cointegration tests abstract several recent papers have employed engle and granger 1987 cointegration tests to determine whether or not markets are efficient we use a new test for cointegration due to johansen 1988 to examine market efficiency with respect to the us dollar exchange rates for canadian japanese and west german currencies the fragile nature of the test indications suggests that cointegration methodologies cannot be relied upon to provide reliable evidence on market efficiency

determinants of agriculture s relative decline thailand during economic development agriculture declines as a proportion of aggregate national output a number of theoretical explanations for this phenomenon have been advanced in the economic literature but their relative historical significance has not been clear this paper develops an econometric methodology to analyze this issue and applies it to time series data for thailand the study investigates the importance of relative commodity prices factor endowments and technical progress as explanations for changing sectoral gdp shares of agriculture manufacturing and services it is concluded that the movement in thailand s aggregate factor endowment relative to labor was the most important determinant of agriculture s relative decline

can the east asian model of development be generalized abstract export led growth has become increasingly popular among analysts and some governments as a development strategy besides contrasting its virtues to the distortions of the import substitution model popular through the 1960s advocates of the model frequently illustrate its merits by pointing to the remarkable success of its most prominent practitioners the east asian gang of four hong kong korea singapore and taiwan this study explores a possible limitation of the model known as the fallacy of composition while the model may work well if pursued by a limited number of countries it may break down if a large majority of developing countries seeks to pursue it at the same time because the resulting outpouring of manufactured exports might be more than western markets could absorb protectionist response might be the result of attempts to generalize the east asian export model of growth

import competition from developed and developing countries separate demand equations for imports from less developed countries ldcs and imports from developed countries dcs were estimated for each of eleven representative product groups imports were found to compete quite readily with domestically produced goods with plausible own price and cross price elasticities whereas the quantity of each type of import was found to be quite responsive to changes in the price of us home goods each appears to be less sensitive to the price of the alternative import an explanation that is consistent with this observation and that finds support from detailed industry information is that dcs and ldcs supply goods that are at different stages in the product or technology cycle whereas us producers compete in all submarkets this suggests that trade creation rather than trade diversion provides the predominant inroad for ldcs into the us market 25 references 3 tables

inequality and institutions abstract this paper presents theory and evidence on the relationship between inequality and institutional quality we exhibit a model in which the two may dynamically reinforce each other and set to test this relationship with a broad array of institutional measures the double causality between institutional strength and a more equal distribution of income is empirically established using dynamic panel and linear feedback analysis

fiscal pressure tax competition and the adoption of tax increment financing tax increment financing tif has been widely adopted as an economic development tool by municipalities this study estimates a structural probit model of municipal tif adoption decisions using data drawn from cities in indiana it provides empirical evidence that factors such as fiscal pressures tax competition economic distress industrial composition availability of alternative programmes and the expected gains in property values from the use of tif exert significant influence in a city s decision to adopt a tif programme after using an accurate measure of prior growth this analysis finds no empirical evidence to support the contention that growing cities are more likely to adopt tif

property tax shifting under imperfect competition the hedonic price models are commonly used to empirically assess the degree to which property taxes are shifted from property owners to property renters the findings of these studies vary sporadically in terms of the degree of tax shifting the competitiveness of housing markets may significantly influence the degree of tax shifting in this article we allow a nonzero price cost markup in the hedonic price equation and examine the impact of market power on property tax shifting in our case study we examine the property specific characteristics occupancy record and local property tax associated with hundreds of managed rental properties in central new hampshire the results show that depending on the degree of market power exercised by a property management firm the anti competitive structure of the market may significantly contribute to property tax shifting from property owners to property renters