prices and quantities unsustainable consumption and the global economy abstract the ecological unsustainability of current consumption patterns is now well documented one aspect of this problem which has not been sufficiently addressed is the growth of excess consumption driven by falling goods prices the index of department store prices have fallen substantially since the early 1990s in large part because global capital mobility and excess global labor supply has allowed firms to depress wages and avoid paying environmental costs consumers have responded by purchasing increasing numbers of these artificially cheap goods the example of apparel is discussed in some detail and data from other goods categories are presented these trends suggest that achieving sustainable consumption in the us is not only a technical issue but will also involve fundamental changes in the global political economy to eliminate the artificially low prices of imported goods

asset inequality matters an assessment of the world bank s approach to poverty reduction the fight against poverty has been adopted by the multilateral development banks as their principal objective almost three decades after robert mcnamara announced that the world bank s fundamental work was to improve the lives of the poor its new president james wolfensohn has reiterated that poverty reduction is the world bank s principal purpose similarly in 1994 the inter american development bank set social progress and social equity as its central objective the emphasis in the international institutions contrasts with disappointing results in the real world although life expectancy school enrollmuent and other indicators of social wellbeing have improved dramatically across the developing world and although the proportion of the poor has declined in the last few decades the absolute number of poor people in the world has actually increased today about 1 3 billion people in less developed countries still subsist on less than 1 per day world bank 1980 1990 1996 the case of latin america is dramatic while in the 1970 s the number of poor fell it nearly doubled in the 1980 s increasing from about 80 to almost 150 million and in the last few years the number of poor now 33 percent of the total population has failed to fall despite economic recovery birdsall and londofio 1997 the contrast between the multilateral banks goals and these disappointing results suggests the need for a critical reassessment of their approach to poverty reduction in this paper we describe the approach reflected in the work of world bank economists and based on new empirical work assess its relevance for latin america

occupational self selection a human capital approach to sex differences in occupational structure a rich and diverse literature exists concerning the distribution of labor incomes one approach namely that of human capital concentrates on lifetime accumulation paths of earnings capacity units human capital individual variations in human capital imply differences in earnings power thereby yielding strong implications concerning earnings distribution within a population despite its explanatory power the human capital model has been widely criticized one criticism centers on its inability to obtain inferences concerning occupational distribution the purpose of this paper is to alleviate at least some such criticism by applying the hedonic price approach so as to embed occupational choice into the human capital framework the significance is that neoclassical economic theory can be used to obtain implications concerning the determinants of occupational structure excerpt

current account deficits and debt accumulation in latin america debate and evidence abstract in this paper i examine competing explanations for the behavior of latin america s current account in the 1970s and 1980s after briefly reviewing the focus of various economists on internal or external factors i outline a financial breakdown view which stresses the role of the changing availability of capital during this period of time i then turn to econometric work which 1 establishes the plausibility of viewing capital availability as a constraint on the current account and 2 offers some support for all three views of the determinants of latin america s current account

beyond search fiat money in organized exchange am odel offiat money is constructed in which spatial separation and the logistics of communication are made explicit as in search theory but in which exchange is organized by profit seeking business enterprises as in all market economies firms mitigate search costs by opening shops that are easily located the model endogenizes the number of shops and which objects are traded in each shop it permits the double coincidence of wants and deals easily with divisible commodities equilibria may exist in which fiat money is used as a universal medium of exchange when such an equilibrium exists fiat money is essential in the sense that it is the universal medium of exchange in any efficient network of shops the model provides a foundation to cash in advance theory without specifying in advance that one object will be used as the universal medium of exchange

employment rents and the incidence of strikes a new measure of labor market tightness on workers behavior the employment rent is modeled as a determinant of workplace conflict an empirical estimate of the employment rent workers expected cost of job loss is calculated it is argued that the cost of job loss affects strike incidence this relationship is tested by estimating an econometric model of strike incidence for the united states from 1955 to 1983 the cost of job loss is shown to explain a large percentage of the variation in strike incidence the cost of job loss is a far superior explanatory variable than the unemployment rate which is commonly used in strike models copyright 1987 by mit press

safe assets as commodity money this paper presents a model in which safe assets are systemic because they are the medium of exchange in risky assets it connects the literature from banking and finance on safe assets to the monetary literature on alternative monetary systems involving commodity money interest bearing money and private money creation because safe assets have intrinsic value changes in their supply lead to changes in market efficiency additionally because safe assets are costly to produce there is overproduction of safe assets relative to the social optimum when the model is calibrated to plausible liquidity premiums the resulting inefficiencies are not large

diffusion of development the late industrializing model and greater east asia diffusion of development the late industrializing model and greater east asia author s alice h amsden source the american economic review vol 81 no 2 papers and proceedings of the hundred and third annual meeting of the american economic association may 1991 pp 282 286 published by american economic association stable url http www jstor org stable 2006870 accessed 15 01 2010 13 30

simple analytics of segmented markets what case for liberalization abstract discussion about the liberalization of controlled markets in developing countries frequently assumes that the removal of price or quantity restrictions will lead rapidly to increased marketed output however when parallel markets exist market controls may not depress marketed output and may actually increase it conversely liberalization may not increase marketed output much if at all the benefits of liberalization will be greater where parallel markets are costly to enter so that decontrol increases efficiency and scarce resources such as entrepreneurial and administrative ability are diverted into the rent seeking activity of gaining access to illegal parallel markets this paper employs partial equilibrium techniques to analyze market controls and liberalization in the presence of parallel markets for foodgrains credit labor and foreign exchange

marriage markets labor markets and unobserved human capital an empirical exploration for south central india some aspects of the linkage between dimensions of unobserved human capital that are rewarded in the marriage market and in the wage market are explored it is postulated that in rural south central india the schooling age and dowry of a mans wife are determined by the mans observed characteristics schooling caste and those of his parents parental wealth parental occupation and dimensions of his unobserved by the researcher human capital the theoretical model consisted of two sets of equations the first describing the determination of the wifes characteristics through the marriage market and the second the determination of the mans wage and wage growth and his participation in the wage market the data were part of the village level studies vls conducted in rural semiarid south india a total of 120 households from 3 villages were surveyed continuously over the period 1975 76 to 1984 85 detailed information was obtained on farm management income consumption time allocation and asset ownership the mans schooling had a significant effect on his wifes schooling and on her age the characteristics of the mans parental household had a significant effect on each of the 3 observed characteristics of his wife the year of marriage significantly increased the wifes schooling by 0 08 year per year the net dowry 1 2 per year and the wifes age at marriage by 0 24 years per year schooling had a significant impact on a mans participation in the wage market and on wage growth a mans unobserved human capital generally had a significant and positive effect on his wage rate and wage growth though a negative effect on participation in the wage market some important dimensions of human capital beyond schooling had important effects in both marriage and labor markets potential brides and parents presumably value such characteristics because they increase the expected earning power of potential husbands

exchange market pressure in paraguay 1963 88 monetary disequilibrium versus global and regional dependency the relevance of the monetary approach to exchange market pressure for paraguay s small open economy is compared to that of two competing keynesian structural approaches which emphasize respectively global and regional dependency effects estimation results for the three models including formal comparisons using nonnested hypothesis tests and forecast accuracy staistics suggest that the explanatory power of the monetary model is dominated by that of the regional dependency model with the global dependency model having an intermediate degree of applicability this result is intuitive given the extreme dependency of the paraguayan economy on argentina and brazil

global equity and environmental crisis an argument for reducing working hours in the north abstract is an improvement in the distribution of income between north and south compatible with environmental reconstruction to date economic growth rather than redistribution has been the dominant strategy for redressing global inequality but environmental constraints on growth at least in the north may prove desirable this paper argues that one strategy for reconciling these two goals is for the north to take productivity increases in the form of leisure time rather than increased output it discusses the feasibility of such an approach

economic democracy as an environmental measure abstract even though the conventional capitalist corporation is the globally dominant form of business organization it may not be the most environmentally friendly given the need for a sustainable steady state economic system some other form of business organization will likely be required that uses natural resource inputs more efficiently and is less growth oriented than the typical corporation an attractive alternative is the producer cooperative where employment is accompanied by a right to democratic participation in organizational governance and a share of surplus earnings a comparative theoretical analysis of cooperative and profit maximizing corporate behavior suggests that cooperatives will tend to use natural resource inputs more efficiently and will be less growth oriented than corporations the limited comparative empirical research that is available supports the greater input efficiency of cooperatives relative to corporations this same research suggests that in fully employed economies cooperatives will be less growth oriented than corporations although where unemployment is substantial the reverse is likely environmentally sustainable full employment is theoretically achievable through workweek reductions

a search theoretic approach to monetary economics the essential function of money is its role as a medium of exchange the authors formalize this idea using a search theoretic equilibrium model of the exchange process that captures the double coincidence of wants problem with pure barter one advantage of the framework described here is that it is very tractable the authors also show that the model can be used to addre ss some substantive issues in monetary economics including the potenti al welfare enhancing role of money the interaction between specializat ion and monetary exchange and the possibility of equilibria with multip le fiat currencies copyright 1993 by american economic association

an empirical test of the infant industry argument the basic infant industry argument maintains that the cost of a new activity is initially high it does not pay any individual to enter an infant industry at free trade prices if developed the industry will permit a reasonable return on initial losses and a temporary period of protection is required this paper has attempted two things to develop an empirical test for the validity of the infant industry argument and to use that test on turkish data the test is simple and straightforward input per unit of output must fall more rapidly in more protected industries if there is to be any rationale for infant industry protection in the turkish case there was no such tendency over the period covered the fact that protected turkish industries did not experience rapid increases in output per unit of input is sufficient to prove that protection was not warranted it does not however prove that there were no infant industries the trade regime might have provided the wrong incentives and under an alternative structure output per unit of input might have grown more rapidly in some or possibly all turkish industries in conclusion protection did not elicit the sort of growth in output per unit on which infant industry proponents base their claim for protection

high interest rates a new conventional wisdom for development policy some conclusions from sri lankan experience abstract the paper is concerned with the general proposition that high interest rates paid to savers can contribute significantly to the long run development of ldcs as well as to stabilization of their economies in the short run by relating this general proposition to some simple theory about the behaviour of imperfect financial markets as well as to specific institutional circumstances in sri lanka it is demonstrated that there are important qualifications that have to be borne in mind in particular in the current institutional circumstances of sri lanka which are closely replicated in other ldcs the instinctive argument of the neoclassical economist that interest rates should reflect the scarcity price of capital is not a great deal of help to policy makers

the compatibility of market liberalization and local economic development strategies cook p and hulme d 1988 the compatibility of market liberalization and local economic development strategies reg studies 22 221 231 the last decade has witnessed a growing emphasis on economic liberalization this new orthodoxy has come at a time when there is an increasing atmosphere of disillusionment surrounding conventional approaches to regional policy calls have been made for the creation of a new regional paradigm of development from below but most proposals are inappropriate for the majority of third world nations as they assume that planning occurs within a socialist framework this paper outlines the concepts that underpin policies of macroeconomic liberalization and the local economic development approach and examines the compatability of these policies it is argued that the local economic development approach could provide the basis for a development from below regional policy that complements a market oriented macroeconomic philosophy the conclusion notes the lack of empirica

the political economy of stabilization commitment capacity and public response abstract political pressures are generally recognized as important in determining success or failure of economic stabilization and adjustment programs but there has been little comparative analysis of the politics of stabilization this study examines the factors affecting i political leaders commitment to stabilization measures often called political will ii governmental ability to implement stabilization measures and iii the responses of key interest groups and the public at large to those measures the study also discusses political implications of the design of programs and the attempted speed of stabilization and sketches the tactics available to governments to manage political risk including partial compensation persuasion diversion or obfuscation and containment of protest the discussion is based on case studies of stabilization efforts in five fairly poor small highly trade dependent countries ghana in the late 1960s and early 1970s and zambia kenya sri lanka and jamaica in the late 1970s and early 1980s a subsidiary theme within the broader discussion is the ways in which the political economy of stabilization may differ in such countries as compared to larger semi industrialized economies

capital flight from latin america abstract this paper focuses on capital flight from latin america during the 1970s and 1980s after estimating the extent of such flight i suggest that capital flight imposes growth costs erodes the tax base and worsens income distribution i then use regression analysis to investigate the causes of capital flight as well as the role of capital controls and imf programs in slowing flight i conclude by criticizing the current policy approach to the capital flight problem and suggesting some new directions

search bargaining money and prices the goal of this paper is to extend existing search theoretic models of fiat money which until now have assumed that the price level is exogenous by explicitly incorporating bilateral bargaining this allows us to determine the price level endogenously and leads to additional insights concerning the role of money for example we find that monetary equilibria are generally inefficient in the sense that output and prices differ from the solution to a social planner s problem although the difference can become small as the discount rate or search friction vanishes we also find that there exist nonstationary inflationary equilibria

search evolution and money abstract this paper describes a search theoretic model that can be used to determine which objects serve as media of exchange or money existing versions of the model are generalized to allow arbitrary distributions of agents who specialize in different consumption production activities i characterize the way the numbers of consumers and producers of the various goods help determine which goods serve as money the distribution is then endogenized so that agents can choose their type this generates a unique equilibrium outcome ideas from evolutionary dynamics are employed as a way to interpret the model and to compute equilibria

the international debt situation and north south relations chapter 1 argued that little progress has been made on north south issues because much of the debate and negotiations have been at a general level ignoring particular interests in order to make progress in identifying obstacles to reform in north south relationships and in formulating proposals with more likelihood of success it is necessary to examine the particular interests involved in each of the major issues and how they would be affected by various reforms matching of interests and vision which has been lacking in proposals for north south reforms in recent years is needed this essay examines the debt crisis from this perspective

markets correlation and regret matching inspired by the existing work on correlated equilibria and regretbased dynamics in games we carry out a first exploration of the links between the leading equilibrium concept for exchange economies walrasian equilibrium and the dynamics specifically regret matching dynamics of trading games that fit the economic structure and have the property that their pure nash equilibria implement the walrasian outcomes interestingly in the case of quasilinear utilities or transferable utility all the concepts essentially coincide and we get simple deterministic dynamics converging to walrasian outcomes connections to sunspot equilibria are also studied

intercountry comparisons of labor force trends and of related developments an overview this paper is a survey of analyses of women s labor force growth in 12 industrialized countries originally presented at a conference in sussex england in june 1983 the main focus of the conference papers and of the current survey is on growth of the labor force of married women in the years 1960 80 trends in fertility wages and family instability also receive attention as related developments married women s labor force growth is observed in all countries except for the ussr after 1970 where labor force rates of women reached the level of men growth rates differ among countries they apparently respond to growth in real wages and to growth in education but response elasticities differ among countries estimates of these elasticities contained in the country papers were helpful in predicting the trends other findings include ubiquitous declines in fertility and growth of divorce in the 1970s both developments are related to long run labor force growth in all countries wages of women were lo

feasible and continuous implementation there has been a great deal of research in recent years investigating the question of whether or not there exist institutions game forms for which the set of equilibria will coincide with the set of walrasian equilibria in this paper we show the existence of a game form that is feasible both for equilibrium and disequilibrium strategies continuous and for which the set of nash equilibria coincides with the set of constrained walrasian equilibria for all pure exchange economies the game form allows agents to behave strategically both with respect to their preferences and their initial endowments

tied wage hours offers and the endogeneity of wages in the standard model of labor supply each worker is a price taker where the relevant price is an hourly wage rate which is fixed in the short run and which does not depend upon the number of hours supplied with this basic assumption the wage can be regarded as exogenous for the purpose of estimating a labor supply function this paper proposes and implements a pair of tests for the exogeneity of wages in a longitudinal labor supply model and for the particular failure of exogeneity associated with jobs that offer wage hour packages the first test is very simple it amounts to a test of whether hours granger cause wages at the individual level the second test involves a simultaneous estimation of labor supply and wage offer equations both tests indicate that the offered wage is related to hours worked though the offer locus is for this sample very flat the principal conclusion is that labor supply equations cannot properly be estimated in isolation from the process generating wages even when long time series are available on a sample of individuals this abstract was borrowed from another version of this item

commercial policy the terms of trade and the real exchange rate revisited abstract we estimate the effects of commercial policy and changes in the external terms of trade on the real exchange rate for four latin american economies using data on internal relative prices we find that the greater the elasticity of the non traded price level with respect to the price of importables the larger is the real exchange rate effect of import restrictions but the smaller is the real exchange rate effect of changes in the external terms of trade

implementation with incomplete information in exchange economies in this paper we analyze the problem of designing incentive compatible mechanisms in pure exchange economic environments when agents have incomplete information the equilibrium concept employed is bayesian nash equilibrium and the notion of implemantation is full implementation which is stronger than the more commonly employed notion of truthful implementation an allocation rule is truthfully implementable if there exists a direct mechanism to which truth telling is an equilibrium and which yields the allocation rule as its truthful equilibrium outcome an allocation rule is fully implementable if there exists mechanism which yields the allocation rule as its unique equilibrium outcome more generally a set of allocation rules or a social choice set is fully implementable if there exist a mechanism whose equilibrium outcomes coincide with the set this stronger notion of implemention avoids the well known problems of multiple equilibria which arise in direct revelation games we develop a condition termed bayesian monotonicity which we show is necessary for full implementation an incentive compatibility condition is also necessary we prove that bayesian monotonicity and a slightly stronger incentive compatibility condition are sufficient for full implementation when there are at least three agents we present several examples of allocation rules which do and do not satisfy our condition one example is that of an allocation rule which is fully inplementable by an indirect mechanism but for which every equivalent direct mechanism has multiple equilibrium outcomes

nash equilibrium and the evolution of preferences abstract a population of players is randomly matched to play a normal form game g the payoffs in this game represent the fitness associated with the various outcomes each individual has preferences over the outcomes of the game and chooses an optimal action with respect to those preferences however these preferences need not coincide with the fitness payoffs when evolution selects individuals on the basis of the fitness of the actions they take the distribution of aggregate play must be a nash equilibrium of g weak additional assumptions on the evolutionary process imply perfect equilibrium journal of economic literature classification number c72

external disturbances domestic policy responses and debt accumulation in nigeria abstract this paper provides a case study of the link between external shocks domestic policy responses and external debt accumulation in nigeria the indonesian experience during 1970 1989 is provided as a contrast for policy comparison a significant part of the increase in external debt in the two countries corresponds to financing of capital flight after 1981 current account deficits assumed greater importance in the accumulation of external debt the growth in external debt was caused in part by adverse external conditions the results of this study show that the nigerian debt crisis was exacerbated by inappropriate policy responses indonesia avoided a crisis by applying prudent real exchange rate management and fiscal restraint

continuous implementation of constrained rational expectations equilibria abstract we investigate the implementability of the social choice correspondence induced by constrained rational expectations equilibria we construct an almost continuous mechanism that implements it provided that information held by each agent is non exclusive

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

the evolution of monetary equilibrium abstract the hahn problem is that even if a monetary equilibrium with valued fiat money exists in general equilibrium a nonmonetary equilibrium with a zero price on money generally also exists why should we expect the former over the latter here i consider the preferences that will survive repeated trading in an exchange economy where agents compete in biological fitness with unobservable preferences and positive assortativity in matching evolutionarily stable preferences implement the competitive equilibrium that maximizes the sum of agents fitnesses in a standard bewley townsend model this implies selection of the monetary over the nonmonetary equilibrium and also implies the survival of agents with money in the utility function trust in fiat money is only a recent development and even today such faith is hardly universal cass and shell 1980

the challenge of monetary theory departing from custom i want to address a problem that needs to be solved rather than one that has been solved i do not have much to contribute to its solution but i believe that the problem is important and want to focus attention on it in general terms the problem is to find appropriate conceptual foundations for monetary economics i believe that we do not as yet have a suitable theoretical framework for studying the functioning of a monetary system the main obstacle to the development of such a framework is our habit of thinking in terms of frictionless organized i e walrasian markets the problem is partly a problem of language the central concepts of economics demand supply and price are concepts that presuppose a system of centralized walrasian markets we are used to thinking in terms of these concepts and we tend to apply them rather automatically to the market for money frequently without realizing that the market for money must be a rather non walrasian market if indeed it can be called a market at all more or less all the models of monetary economics that are being used in practice proceed in this way using artifical adaptations of the walrasian centralized markets model to accommodate money without actually giving an account of what the role of money in the economy is the problem is one of pure economic theory however it bears on many important questions of applied economics and economic policy to study the relation between money income and prices we need a framework which gives a satisfactory account of the relation between the monetary system and the price mechanism to study the effects of central bank open market

has government any role in money abstract recent interest in monetary reform has been sparked by the emergence of a world irredeemable paper money system in light of this interest we review the current validity of four good reasons friedman advanced in 1960 to rationalize government intervention we conclude that the forces that produced government involvement in the past will persist deregulation of financial intermediaries is desirable on grounds of market efficiency though it is an open question whether government should continue as lender of last resort we expect that the present world fiat money standard will neither degenerate into hyperinflation nor revert to a commodity standard

ocupational segregation labour force participation and the relative earnings of men and women a model of the labour market is developed in which particiaption rates of men and women wages rates of men and women and occupational segregation are determined simultaneously the model is estimated using cross sectional data from australia the most important empirical results are that a particiaption rates wage rates and occupational segregation should be viewed as being simultaneously determined b differences in male and female labour force attactment and human capital attainment are important determinants of the gender composition of occupations and c there is little direct evidence in this study to support discrimination based theories of occupational segregation

why isn t the whole world experimenting with the east asian model to develop review of the east asian miracle abstract like narcissus the world bank sees its own reflection in east asia s success it attributes the east asian miracle to macroeconomic basics high saving and investment rates expenditures on education and exports but in reality these are anchored in micro institutions that exhibit pervasive state intervention east asia created competitiveness by subsidizing learning whereas bank policy emphasizes methods that effectively cut real wages the report is rich in empirical data but they do not support the bank s dismissal of industrial policy as ineffective and they are presented in a way that makes it difficult for students to corroborate bank findings the greatest disappointment of the report s market fundamentalism is a failure to study seriously how elements of the east asian model can be adapted to suit conditions in other countries

a theory of a generally acceptable medium of exchange and barter abstract this paper develops a model that accounts both for the existence of money defined as a generally acceptable medium of exchange and for the survival of some barter exchange in economies in which money exists in contrast to jones 1976 seminal article in which individuals are restricted to fix trading strategies before entering the market the present model assumes that individuals have conditional trading strategies that allow them to effect exchange according to the types of trades they encounter in the market the analysis shows how decentralized market forces generate money and lead to a unique level of monetization

evolution of preferences we endogenize preferences using the indirect evolutionary approach individuals are randomly matched to play a two person game individual subjective preferences determine their behaviour and may differ from the actual objective pay offs that determine fitness matched individuals may observe the opponents preferences perfectly not at all or with some in between probability when preferences are observable a stable outcome must be efficient when they are not observable a stable outcome must be a nash equilibrium and all strict equilibria are stable we show that for pure strategy outcomes these conclusions are robust to allowing almost perfect and almost no observability with the notable exception that inefficient strict equilibria may fail to be stable with any arbitrarily small degree of observability despite being stable with no observability

adaptive learning and the transition to fiat money this article explores some implications of adaptive learning for monetary evolution using a search theoretic framework that allows for media of exchange network effects adaptive learning precludes any voluntary transition to a fiat standard from a non monetary state of nature and can account for the historically observed tendency for fiat monetary standards to emerge only following the prior appearance of commodity money and the widespread employment of redeemable banknotes adaptive learning can also account for governments frequent resort to coercive measures to force a switch to fiat money and for their ability to affect such a switch even when doing so is not pareto optimal exchange media fall into the general category of products for which the utility that a user of the good derives from use of the good increases with the number of other agents using the good katz and shapiro 1985 p 424 there are two reasons for these positive network effects 1 indirect the more agents who employ a particular medium of exchange the more likely it is that prices will be quoted in terms of that medium of exchange i e that the medium of exchange will also serve as the economy s principle medium of account the costs of exchange are less for a medium of exchange that trades at par this indirect external effect is analogous to one encountered in computer hardware the more purchasers of a particular kind of hardware the more likely manufacturers of software are to supply compatible products 2 direct the more persons who use a particular exchange medium the better its quality or performance this direct network effect is analogous to one encountered in communications technologies such as telephones the analogy is especially close for fiat money which is useless to an isolated individual this article examines some ways in which media of exchange network effects influence the evolution of monetary standards and especially their role in determining both when and how a transition may occur from barter or commodity money to fiat money the approach taken here emphasises the role of adaptive learning where agents select exchange strategies that reflect static expectations concerning other agents preferred strategies although the exchange game agents play generally has multiple nash equilibria including one in which all agents accept fiat money adaptive learning precludes a spontaneous transition from barter to a fiat monetary standard even where a fiat standard would be welfare enhancing yet such learning does not rule out the spontaneous evolution of a commodity money standard or the eventual substitution of redeemable banknotes for commodity money readers familiar with the literature on network effects will recognise this

the many faces of adjustment the 1980s was a decade of adjustment for much of the third world at an early stage unicef drew attention to the serious human costs of the recession and subsequently to the impact of stabilisation and adjustment measures on vulnerable groups and the need for special policies to counter these costs jolly and cornia 1984 cornia jolly and stewart 1987 in the latter half of the decade there were apparently very major changes in the international financial institutions in these matters in their recognition of the social costs of adjustment and of the need for changes in policies

beyond export led growth abstract in light of the adverse conditions in the current international economic environment this paper reassesses the feasibility of continuing to rely on manufacturing export led growth as the major development dynamic for most ldcs during the next decade this paper argues that after the initial stages of industrial development the emphasis in policy toward agriculture should shift from surplus extraction to surplus creation and to the generation of demand linkages with the rest of the economy the author compares the relative merits of two alternative open development strategies export led industrialization and agricultural demand led industrialization adli by means of several simulation experiments the experiments are performed with a computable general equilibrium model of a small low income semi industrial open economy which is a stylization of south korea of 1963 they are carried out in an international environment assumed to represent the next decade based on a rate of growth of international demand for imports of about half the 1960 1973 rate the results support the adli approach on all counts

government transaction policy the medium of exchange and welfare abstract policy regarding what the government accepts in transactions is embedded in a version of the kiyotaki wright model of media of exchange in an example with two goods and one fiat money the policies that are consistent with fiat money as the unique medium of exchange are identified these policies have the government favoring fiat money in its transactions a benefit and a cost accompany any such policy the benefit is that a worse nonmonetary steady state is eliminated the cost is that a better monetary steady state is eliminated journal of economic literatureclassification number e40

barter in the us economy a macroeconomic analysis in this paper a statistical model is developed to examine the determinants of the growing level of barter transactions in the us although a barter system is believed to be pareto inferior to a money system recent statistics of the estimated level of barter transactions in the us show a rapidly growing interest by large corporations as well as individuals in this type of trade the primary obstacle in empirical research in this area is the difficulty of measuring the size of barter transactions here data from barter exchange organizations are used to test the significance of several variables the ordinary least squares and cointegration and error correction models are employed as two alternative empirical techniques to analyse the data the results support the counter cyclical arguments as well as the inflation factor however the notion of tax evasion as a motive in organized barter receives only a partial support

stabilization the political economy of overkill abstract this paper considers whether national and international aspects of the imf s stabilization programmes during the 1970s and early 1980s have resulted in a process of overkill or in other words a process of economic retrenchment which went much further than was strictly necessary in terms of what could have been regarded as reasonable objectives in the international context the author describes how the attack on inflation has become an end in itself at the expense of other stated objectives of the imf thus creating a distortion of its priorities the paper discusses errors of diagnosis which have led to this disorientation and explains why deflationary policies should not be regarded as a panacea the paper then considers the nead for equity and efficiency in the distribution of the political and economic costs of adjustment the next section of this paper discusses the assumptions underlying the imf s treatment of fund members and to what extent even handedness in the application of stabilization measures may result in inequality of burden sharing among borrowers problems related to monetarist theories and the consequent policies are examined followed by a consideration of the dangers involved in devising straightforward performance criteria in the form of precise monetary targets that can readily be monitored by the imf this means of evaluating the national adjustment policies success is seen to be unsatisfactory viz the frequency of stand by arrangement breakdowns and mistakes in forecasting the paper concludes that the concept of unilateral adjustment is not an acceptable basis for imf supervision of the international monetary system in addition care should be taken to avoid overkill in determining the degree and character of adjustment needed in stabilization programmes one possible solution to the extra burden imposed on the ldcs might be a liberalization of the compensatory financing facility with the objective of applying the same kind of regime to imports as to exports

evolution and kantian morality what kind of preferences should one expect evolution to favor we propose a definition of evolutionary stability of preferences in interactions in groups of arbitrary finite size groups are formed under random matching that may be assortative individuals preferences are their private information the set of potential preferences are all those that can be represented by continuous functions we show that a certain class of such preferences that combine self interest with morality of a kantian flavor are evolutionarily stable and that preferences resulting in other behaviors are evolutionarily unstable we also establish a connection between evolutionary stability of preferences and a generalized version of maynard smith s and price s 1973 notion of evolutionary stability of strategies

money barter and consumption interdependence abstract by introducing a degree of consumption interdependence into a search model we show that people may switch from using money to bartering during hyperinflation but barter activities however could still be popular even though the inflation rate is low

the equity productivity tradeoff public school resources in brazil abstract a governmental welfare function is specified to explore the equity productivity tradeoff in the allocation of governmental schooling resources the constrained maximization model is estimated for brazil using expected incomes in each geographical area as the outcome of interest and governmental resources for each area as the input the equity productivity tradeoff in brazillian governmental preferences is estimated to be considerable with a welfare curvature close neither to the utilitarian nor to the rawlsian extremes but close to the intermediate cobb douglas value this implies neutral rather than reinforcing or compensating behavior in the allocation of governmental resources with the result that the distribution of such resources across areas is more equal than is that of expected incomes

coordination in the use of money abstract fundamental models of money while explicit about the frictions that render money essential are silent on how agents actually coordinate in its use this paper studies this coordination problem providing an endogenous map between the primitives of the environment and the beliefs on the acceptability of money we show that an increase in the frequency of trade meetings besides its direct impact on payoffs facilitates coordination in particular for a large enough frequency of trade meetings agents always coordinate in the use of money

money and prices a model of search and bargaining abstract this paper makes commodities divisible and incorporates bargaining into the search theoretic model of money to determine the purchasing power of money or price it is shown that two monetary equilibria always coexist where fiat money is universally accepted the two equilibria differ in price output welfare and the velocity of money sunspot monetary equilibria exist in which money is universally accepted in all states of the economy multiplicity has novel implications on the effectiveness of currency substitution and exchange market intervention journal of economic literature classification numbers c78 e40

government transaction policy media of exchange and prices abstract we study government transaction policies in search theoretic models of money we model government as a subset of agents who are subject to the same random matching technology and other constraints as private agents but who behave in an exogenous way regarding which objects they accept in trade and at what price the objective is to see how these policies affect private agents strategies and hence the set of equilibria we analyze how the effects depend on factors like the size of government the intrinsic properties of money and the availability and efficacy of substitutes like barter or foreign currency journal of economic literature classification numbers c78 e31 e42

on the private provision of fiat currency this paper considers whether fiat money can be provided by a revenue maximizing monopolist in an environment where money is essential two questions arise concerning the private supply of money is it feasible and is it optimal concerning the feasibility question i show that the revenue maximizing policy is time consistent if the trading history of the issuer is public information and if money demanders respond to the revelation of defection by playing autarky concerning the optimality question the model suggests that any private organization of the market for fiat currency is suboptimal

money is memory abstract this paper examines the sets of feasible allocations in a large class of economic environments in which commitment is impossible following myerson 8 the standard definition of feasibility is adapted to take account of the lack of commitment the environments feature either memory or money memory is defined as knowledge on the part of an agent of the full histories of all agents with whom he has had direct or indirect contact in the past money is defined as an object that does not enter utility or production functions and is available in fixed supply the main proposition is that any allocation that is feasible in an environment with money is also feasible in the same environment with memory depending on the environment the converse may or may not be true hence from a technological point of view money is equivalent to a primitive form of memory journal of economic literature classification numbers e40 c73 d82

homo moralis preference evolution under incomplete information and assortative matching what preferences will prevail in a society of rational individuals when preference evolution is driven by the resulting payoffs we show that when individuals preferences are their private information a convex combination of selfishness and morality stands out as evolutionarily stable we call individuals with such preferences homo moralis a t one end of the spectrum is homo oeconomicus who acts so as to maximize his or her own payoff at the opposite end is homo kantiensis who does what would be the right thing to do in terms of payoffs if all others would do likewise we show that the stable degree of morality the weight placed on the moral goal is determined by the degree of assortativity in the process whereby individuals are matched to interact

the causes and consequences of occupational segregation a simultaneous equations approach lewis and shorten applied economics 1991 23 167 77 have proposed that male and female earnings male and female labour force participation rates and occupational segregation are simultaneously determined in the labour market they estimate their model for australia using 1981 census data and find substantial evidence to support their hypothesis however there have been no subsequent studies to empirically test their hypothesis for other countries in this paper their model for the united states using 1990 census data is replicated all but one of the coefficients on the endogenous variables have the same signs as those reported by lewis and shorten which tends to support their model the specification of lewis and shorten s model is tested and it is inappropriate for the us data the model is then reformulated and re estimated the reformulated model also shows substantial evidence of simultaneity between occupational segregation and other labour market outcomes

the transition from barter to fiat money how did it become possible to exchange apparently valueless pieces of paper for goods this paper provides an equilibrium account of the transition between barter and fiat money regimes the explanation relies on the intervention of a self interested government that must be able to promise credibly to limit the issue of money to achieve credibility the government must offset the benefits of seigniorage by internalizing some of the macroeconomic externalities generated by the issue of fiat money the government s patience and the extent of its involvement in the economy are key determinants of whether the transition can be accomplished copyright 1995 by american economic association

on bayesian implementable allocations this paper identifies several social choice correspondences which are and are not fully implementable in economic environments when agents are incompletely informed about the environment we show that in contrast to results in the case of complete information neither efficient allocations nor core allocations define implementable social choice correspondences we also identify conditions under which the rational expectations equilibrium correspondence is implementable we extend the concepts of fair allocations and lindahl allocations to economies with incomplete information and show that envy free allocations and lindahl allocations are implementable under some conditions while fair allocations are not

an analysis of external debt positions of eight developing countries through 1990 abstract this paper traces the accumulation of large external debts by eight developing countries since 1973 it presents a framework that provides a useful measure of the economic burden of the external debts of these countries simulations based on data from the eight countries are reported

private investment and democracy in latin america abstract this paper argues that the deterioration of latin american private investment in the 1980s may have been largely due to debt difficulties and not the concurrent wave of democratization after reviewing why more political systems may actually be conducive to investment we test an investment function for seven countries over 1973 1986 that includes traditional economic factors two debt measures and several political variables including measures of democracy worker power international monetary fund support and risk the results are quite congenial for our hypothesis under several reasonable alternative specifications for the economic determinants our democracy measure is positively signed and significant

implementation of walrasian expectations equilibria in an exchange economy with differentially informed traders non exclusivity of information nei is the condition that each trader s private information be perfectly predictable by an outside observer who has observed the private information of all other traders nei is one of a set of conditions which taken together are sufficient for the implementability of fully revealing expectations equilibria here we show that this condition is in fact necessary for the weak implementation of a much broader class of walrasian equilibria herein called expectations equilibria

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

local development conceptual bases and policy implications coffey w j and polese m 1985 local development conceptual bases and policy implications reg studies 19 85 93 although local development is frequently cited as an option within the broader context of regional policy the concept remains vague the bases of the local development approach lie in its complementarity with three traditional pillars of regional theory and policy capital and infrastructure policies migration as an adjustment mechanism and growth centre strategies in examining the potential utility of local development as an effective element of regional development policy we emphasize the emergence of local entrepreneurship and the role of the state in stimulating local initiatives local development policy may be generalized in terms of three options involving financial assistance access to information and social animation

endogenous price fluctuations in an optimizing model of a monetary economy this paper demonstrates that an optimizing model of a monetary economy can produce perfect foresight equilibria in which the price level fluctuates forever cyclically or chaotically fluctuating equilibria are more likely to exist when the rate of money supply growth is high furthermore the set of equilibrium prices may have a complicated topological structure which poses a more serious problem concerning the validity of comparative statics method than any sort of indeterminacy previously discussed in the literature copyright 1991 by the econometric society

liquidity a new monetarist perspective this essay surveys the new monetarist approach to liquidity work in this literature strives for empirical and policy relevance plus rigorous foundations questions include what is liquidity is money essential in achieving desirable outcomes which objects can or should serve in this capacity when can asset prices differ from fundamentals what are the functions of commitment and collateral in credit markets how does money interact with credit and intermediation what can and should monetary policy do the research summarized emphasizes the micro structure of frictional transactions and studies how institutions like monetary exchange credit arrangements or intermediation facilitate the exchange process

estimation of a labour supply model with censoring due to unemployment and underemployment this study proposes and implements a method of labour supply estimation which is appropriate when the sample contains unemployed and underemployed workers the estimation method consists of excluding unemployed and underemployed workers from the sample and then using to avoid selection bias an extension of heckman s approach to the case where two correlated selection rules generate the sample hausman s specification test is then used to determine whether ignoring constrained workers has led to biases in traditional labour supply estimates and the empirical results suggest that previous estimates of several important parameters are biased since the biases go in the direction that would be predicted by the hypothesis that the unemployed and underemployed are constrained the results support this hypothesis

outstanding female economists in the analysis and practice of development economics abstract this article examines the contributions of five eminent economists all women to the analysis and practice of development economics irma adelman frances stewart and nancy birdsall are leading advocates of alternative development strategies that focus on poverty alleviation and investment in human capital anne krueger and alice amsden stand at the forefront of two opposing camps in a lively and long lasting debate on the appropriate role of government in trade and industrialization we use the storied careers of these economists as a vehicle to convey the big picture of how development economics has evolved and which topics have proved durable