bluuebunny/crossref_metadata_2025 huggingface dataset:
NONLOCALITY, LOCAL INDETERMINISM AND CONSCIOUSNESS
Authors: Hodgson David
Published: October 2006

In this paper, I argue that a satisfactory account of consciousness will involve both (1) local indeterminism, in that some relevant events are not wholly and unequivocally pre‐determined by immediately prior local events, and (2) nonlocality, in that, within the leeways left by local indeterminism, what happens can be immediately affected by spatially separated or extended events. I briefly consider if this can be avoided by treating consciousness as supervenient and epiphenomenal; and I suggest that current theories of consciousness break down through failure to incorporate local indeterminism and nonlocality. I conclude by outlining possible implications for freedom of the will, physicalism, and the relevance of quantum mechanics to consciousness.
CAUSALITY, INTENSIONALITY AND IDENTITY: MIND BODY INTERACTION IN SPINOZA
Authors: Koistinen Olli
Published: October 2006

According to Spinoza mental events and physical events are identical. What makes Spinoza's identity theory tempting is that it solves the problem of mind body interaction rather elegantly: mental events and physical events can be causally related to each other because mental events are physical events.

However, Spinoza seems to deny that there is any causal interaction between mental and physical events. My aim is to show that Spinoza's apparent denial of mind body interaction can be reconciled with the identity theory. I argue that Spinoza had both an extensional and an intensional concept of cause and when Spinoza seems to deny mind body interaction he is having in mind the intensional concept of cause. This intensional concept of cause corresponds to that of causal explanation. I will argue that Spinoza anticipated Donald Davidson's view that even though mental events cannot be explained by referring to physical events and vice versa, mental and physical events are causally related to each other.
NON‐CONDITIONAL ‘IF’S
Authors: Slater B. H.
Published: October 2006

Two uses of ‘if are discussed which do not involve conditions. The first is illustrated in the example ‘If he's here, I don't see him’, the second in ‘He's not a dunce, if a trifle stupid’. A third non‐conditional use, cognate with the first is also mentioned: it would be illustrated in the example ‘If he's a Dutchman, I'll eat my hat’. It is argued that recent attempts to formulate a logic of conditionals have distorted our understanding of ‘if, by ignoring these uses, sometimes deliberately. Specifically, as a result, many arguments involving ‘if have been misjudged as invalid, because the expectation has been that ‘if expresses a condition. It is suggested that the traditional analysis of ‘necessary and sufficient conditions’ in terms of ‘if and only if, is partly to blame for these misunderstandings. And the proper understanding of ‘if’ which emerges shows it is quite fully captured in the propositional calculus.
THE DANTO‐WOLLHEIM MEANING THEORY OF ART
Authors: Yanal Robert J.
Published: October 2006

Arthur Danto in The Transfiguration of the Commonplace and Richard Wollheim in Painting as an Art have each advanced a certain meaning theory of art (MT), more specifically, a theory according to which something is a work of art just in case it expresses a proposition. The first part of this essay sets out that view in more detail, with textual support that Danto and Wollheim do in fact hold that theory. The second part offers reasons against accepting MT. (1) There seem to be persuasive counterexamples to MT: objects that are clearly works of art but which do not appear to exhibit any tendency towards propositionality. (2) Neither theorist provides an explanation as to why someone with something to say would choose to, as it were, hide his thought behind a painting. (3) MT will force a theory of the evaluation of art that parallels the evaluation of (say) scientific or philosophical thought. Artworks will be judged according to the profundity of the thoughts they express rather than by their aesthetic features – which would make Duchamp a greater artist than Monet!
RELATIVISM AND ANTI‐REALISM
Authors: Young James O.
Published: October 2006

I characterise a relativist account of truth as one according to which the truth value of a sentence can vary without its meaning changing. Relativism is to be contrasted with absolutism, which states that the truth values of sentences cannot change, so long as their meanings remain constant. I argue that absolutism follows from the realist account of meaning and truth conditions. According to realism, the meaning of a sentence consists in objective truth conditions and sentences are true if and only if certain objective conditions obtain. Relativism is a consequence of anti‐realism. Anti‐realists believe that the meanings of sentences consist in recognisable conditions and that sentences are true if and only if certain recognisable conditions obtain. I contrast the sorts of relativism which results from partial, empiricism‐based anti‐realisms, and global anti‐realism, which is linked to a coherence theory of knowledge. I offer a few remarks on how global anti‐realists can restrict the scope of their relativism.
INTENTIONALITY AND ONE‐SIDED RELATIONS
Authors: Haldane John
Published: October 2006

Intentional states appear to relate thinkers to objects and situations even when these latter do not exist. Given the concern to allow that thought is a mode of engagement between subject and world, many writers have presented relational theories of intentionality and introduced odd relata to account for thought of the non‐existent. However there are familiar epistemological and ontological objections to such accounts which give reason to look for other ways of accommodating the appearance of relationality. A little explored possibility is to countenance not odd relata but odd relations, ones not requiring existent terms other than those which ground the relation on the side of the subject. Proposals to this effect by Findlay and Grossmann are underdescribed and not obviously different from more familiar odd relata theories. Here a more developed view is explored, which derives from scholastic accounts of intentionality, in particular that presented by John of St Thomas, as this has been elaborated and defended in recent writings by John Deely. While judging it to fail, I suggest that it leads us towards an older tradition according to which the intentionality of thought is constituted by the occurrence of the forms of things in the mind. ‘Formally and principally the whole difference between a mind‐independent relation and a mind‐dependent one comes down to this, that a physical relation has a mind‐independent fundament with a coexistent terminus while a mental relation lacks such a foundation.’(Joannes a Sancto Thoma, Cursus Philosophicus: Ars Logica; Tractatus de Signis)1
VARIETIES OF VIRTUE ETHICS
Authors: Oakley Justin
Published: October 2006

The revival of virtue ethics over the last thirty‐five years has produced a bewildering diversity of theories, which on the face of it seem united only by their opposition to various features of more familiar Kantian and Utilitarian ethical theories. In this paper I present a systematic account of the main positive features of virtue ethics, by articulating the common ground shared by its different varieties. I do so not to offer a fresh defence of virtue ethics, but rather to provide a conceptual map that locates its main claims and arguments in relation to those of rival theories, and identifies its distinctive contribution to contemporary ethics. I set out six specific claims which are made by all forms of virtue ethics, and I explain how these claims distinguish the theory from recent character‐based forms of Kantian ethics and Utilitarianism. I then use this framework to briefly survey two main strands of virtue ethics which have been developed in the literature.1
DO EXPLANATORY DESIRE ATTRIBUTIONS GENERATE OPAQUE CONTEXTS?
Authors: Reshotko Naomi
Published: October 2006

Many philosophers assert that psychological verbs generate opaque contexts and that the object of a psychological verb cannot be replaced with a co‐referring expressionsalva veritateas the objects of non‐psychological verbs can be. I argue that the logical and linguistic concerns which govern this assertion do not transfer to observational and experimental situations because the criteria that we use in order to verify that an observed subject has one hypothesized desire rather than another provide inconclusive evidence when we don't allow for all regular substitutions in psychological contexts. This becomes more obvious when we contextualize intentional behavior within the appropriate framework by recognizing that, in order to make sense of any desire attribution, we must understand the subject experiencing the desire to be pursuing each desired situation as a means to a further overarching goal. I conclude that the object of desire should always be readde re.
Factor‐Price Equalization By Trade In Joint and Non‐Joint Production
Authors: Samuelson Paul A.
Published: October 2006

Sans joint products, relative factor prices do determine relative goods prices. Free trade in goods thus can hope to equalize factor returns when this relationship is monotone and therefore uniquely reversible. However, when joint production obtains, often the same relative factor prices can entail an infinity of relative goods prices depending upon the composition of tastes and demand. In consequence, trade's equalization of goods prices is compatible with factor‐returns inequality. Generic and singular relationships are described.
The Fallacy of Free Trade *
Authors: Batra Ravi
Published: October 2006

The purpose of this paper is to explode the myth of free trade. Productivity and real wages in the United States rose sharply between 1950 and 1972, but since then real earnings have been falling in spite of a continuous rise in productivity. It turns out that America was more or less a closed economy until 1972, as its trade/GNP ratio was close to 10%; but since then it has become an open economy. the theoretical model shows how real wages may fall in an open economy, but not in a closed economy, in spite of rising productivity.
International Adjustment With Habit‐Forming Consumption: A Diagrammatic Exposition*
Authors: Obstfeld Maurice
Published: October 2006

This paper presents a simple diagrammatic analysis of an open economy's external adjustment process under habit‐forming individual preferences. the exposition focuses on the consumption side and alms to make transparent the linkage among wealth, past consumption experience, and current consumption. an extension of the standard representative‐agent model to a growing economy of overlapping generations completes the paper. Under habit formation an agent's consumption exhibits a form of hysteresis, in that his current consumption depends on his past consumption experience as well as initial assets. In the overlapping‐generations model aggregate hysteresis disappears in the long run.
GATT, Preferential/Regional Trading Blocs and Agricultural Trade*
Authors: Mccalla Alex F.
Published: October 2006

Agricultural trade impasses have again frustrated the GATT process. Interest in preferential/regional trading blocs is increasing. the paper probes the theoretical and empirical consequences of preferential arrangements instead of multilateral liberalization. It concludes that in a second‐best world preferential arrangements could either improve or decrease global welfare. For agricultural trade, previous experience suggests that in regional groupings such as the EC trade diversion exceeded trade creation. This results from trade distorting domestic policies. Prospects for liberalization of agricultural trade under either GATT or preferential arrangements are limited. the consequences for small agricultural exporters are not positive.
On the Relationship Between Trade Theory and Location Theory
Authors: Krugman Paul R.
Published: October 2006

International trade theory and location theory deal with many of the same issues, yet have evolved as almost completely distinct intellectual disciplines. This paper summarizes the main distinctive features of each field and suggests how we can try to generate a new discipline that combines insights from both.
International Capital Movements In the Solow and Overlapping Generations Growth Models*
Authors: Ruffin Roy J. , Yoon Young Deak
Published: October 2006

This paper examines capital movements in the overlapping generations and Solow models. For the overlapping generations model, a simple compensation scheme is developed to show how the gaining generation(s) can always compensate the losing generation(s) and still gain in the move from autarky to free capital mobility. Moreover, unlike the Solow model, the move to an open economy for the overlapping generations model has a tendency to reduce the assets held by the capital‐exporting country.
Policy Uncertainty, Persistence and Growth*
Authors: Aizenman Joshua , Marion Nancy P.
Published: October 2006

This paper explores links between policy uncertainty and growth. Using an endogenous growth model in which domestic investment is characterized by irreversibilities and policy fluctuates between a high‐ and a low‐tax regime, it shows that the magnitude of policy fluctuation and the persistence of policy jointly determine the pattern of investment and growth. Cross‐section regressions confirm that for 46 developing countries over the 1970‐85 period, policy uncertainty is negatively correlated with both investment and growth. Policy persistence also plays an important role.
Currency Hedging and Siegel's Paradox: On Black's Universal Hedging Rule*
Authors: Solnik Bruno
Published: October 2006

In an international multicurrency context, with nonstochastic inflation, equilibrium asset pricing models dictate that all investors should hold a combination of their national risk‐free bill and the world market portfolio partly hedged against currency risk. We show that the equilibrium hedge ratios are not universal and depend on investors' preferences and relative wealth. So‐called universal hedging rules are devoid of solid theoretical underpinning and practical applicability.
Trade Policy and Poverty In the United States: Theory and Evidence, 1947‐1990*
Authors: Batra Ravi , Slottje Daniel J.
Published: October 2006

This paper develops a two‐sector general equilibrium model to examine the impact of technical progress, factor accumulation, labor growth, unemployment, trade policy, and the government's antipoverty programs on the rate of poverty. the results are then tested empirically using the data regarding the United States. We find that low unemployment, productivity growth, and government transfers have the expected effects of alleviating poverty; but trade liberalization has the unexpected effect of being associated with a major increase in poverty‐a result contradicting traditional views.
Lobbying For Tariff Policies*
Authors: Mayer Wolfgang
Published: October 2006

This paper fully specifies the political and economic markets in which trade policies are formulated and lobbying efforts are determined. In the political market, the winner of a two‐candidate race chooses policies, and both candidates have incomplete information about the nonpolicy biases of voters. Voting is probabilistic and lobbying consists of informing candidates of the lobby members' nonpolicy voting biases. Economic markets are described by a Heckscher‐Ohlin model. the determinants of lobbying expenditures are developed from these microfoundations instead of being introduced in an ad hoc manner.
Industrial Policy As an Alternative to Trade Policy: Helping By Hurting*
Authors: Karp Larry S. , Perloff Jeffrey M.
Published: October 2006

Abstract Industrial policies that are essentially nonlinear taxes or subsidies on adjustment costs of domestic firms affect those firms' market power in oligopolistic international markets. These adjustment policies often can achieve a strategic purpose at lower cost to the government than linear trade or investment subsidies and are less likely to result in retaliation by other governments. Many governments, however, use adjustment policies for nonstrategic purposes without recognizing that they are reducing their firms' market power by subsidizing adjustment costs rather than taxing them.
International Capital Mobility and the Costs of Us Import Restraints*
Authors: De Melo Jaime , Roland‐Hoist David
Published: October 2006

Abstract This paper evaluates general equilibrium welfare effects of tariffs, quotas, and voluntary export restraints under different assumptions about international capital mobility. We show analytically that, when induced terms‐of‐trade and rental‐rate effects are considered, the qualitative influence of capital mobility on the costs of protection cannot be ascertained unambiguously. Simulation estimates for the US indicate the practical importance of capital mobility, as well as of terms‐of‐trade and rental‐rate adjustments, in determining the ultimate welfare effects of import restraints.
Human Capital Accumulation In the Middle‐Income Country and World Trade*
Authors: Dei Fumio
Published: October 2006

I construct a dynamic three‐country model of trade and growth in which a worker determines how long he takes training. the path of human capital accumulation of a worker is analyzed. I consider the case in which per capita human capital grows in the middle‐income country while it stagnates in the high‐income and low‐income countries. Effects of the middle‐income country's growth are studied.
Risk Aversion and International Markets: Does Asset Trade Smooth Real Income?*
Authors: Feeney Jo Anne , Jones Ronald W.
Published: October 2006

In a two‐country model, complete asset markets do not guarantee that individuals will choose to eliminate all (diverifiable) risk in aggregate consumption. the presence of nontraded goods forces individuals to choose between reducing uncertainty in aggregate consumption and in the composition between traded and nontraded goods. This choice depends on a comparison of the standard coefficient of relative risk aversion with a second type of risk aversion that becomes relevant when nontraded goods are present, one that captures aversion to risk in composition. Regardless of the decision made, asset trade always reduces the risk premium.
Endogenous Growth and International Trade*
Authors: Ruffin Roy J.
Published: October 2006

This paper clarifies and slightly generalizes the basic endogenous‐growth model. I prove the basic theorems without the usual assumption that the distribution of knowledge around the world is irrelevant. Results are stated in terms of lemmas, theorems, and corollaries in order to bring out as clearly as possible the role of each assumption.
An Evaluation of Batra's “Fallacy of Free Trade”*
Authors: Rassekh Farhad
Published: October 2006

Batra (1992) argues that international trade since 1972 has lowered the living standards of most Americans (whose income results from providing labor services), while benefiting the small group of capital owners. This commentary shows that Batra's arguments are based on incorrect data and that his analyses are grossly lopsided. Batra further claims that the manufacturing base of the United States is shrinking due to international trade and that, therefore, this sector should be protected. the facts, however, counter Batra's contention, thereby dealing a fatal blow to his policy recommendation. This commentary refutes several additional assertions in Batra's paper.
Aggregation By Industry In High‐Dimensional Models*
Authors: Lloyd Peter J.
Published: October 2006

Models of trading economies have become very large in dimensions and complex in structure. Conditions which are sufficient for aggregation in production and/or consumption are derived. They require the existence of linearly homogeneous indices of production and/or consumption in the industries or sufficient similarity among agents. These methods are applied to the Armington model and to a group of models in which the commodities in an industry are denned on a continuum. the results are applied to the method of constructing general‐equilibrium models with many commodities, tests of comparative advantage, and the measurement of effective protection in multicommodity industries.
Sectoral Adjustments In Eastern Germany Due to Market Forces*
Authors: Paarlberg Philip L.
Published: October 2006

Some characteristics of the eastern German economy are analyzed as to their effects on the adjustment to market forces, using a modified Ricardo‐Viner model. Included are transfer payments, EC farm policy, wage policy, and currency overvaluation. the analysis shows that the adjustments for a sector cannot be understood solely in terms of developments in that sector alone. the wage policy and the currency conversion magnified the adjustments in agriculture. Agricultural policy dampened the decline in agricultural output and had positive spillover effects on nontraded goods. Such interconnections must be kept in mind when analyzing the reform process.
The Possibility of Inefficient Liberalization Through Tariffication*
Authors: Kaempfer William H. , Marks Stephen V.
Published: October 2006

A typical step in trade liberalization under the GATT is tariffication—the conversion of quantitative import restrictions to their ad valorem tariff equivalents. This paper shows that, if there is market power in the protected industry, tariffication may cause a global efficiency loss. In particular, in a small country, if the protected industry is a monopoly that is freely able to export but cannot profitably do so, then tariffication unambiguously imposes global efficiency costs. In a large country, the global efficiency effects are uncertain a priori. In both cases, however, tariffication unambiguously benefits the monopoly and lowers foreign welfare.
Tail Estimates and the Ems Target Zone*
Authors: Koedijk Kees G. , Kool Clemens J. M.
Published: October 2006

Characteristically, distributions of exchange‐rate returns are fat‐tailed. We use a nonparametric tail‐index estimator based on extreme value theory for seven EMS currencies between April 1979 and October 1991. We find that the behavior of the Belgian franc, the Danish Krone, the French franc, and the Italian lira has become significantly less fat‐tailed over time. We attribute this to the decline in the exchange‐rate variance as observed in the EMS, which according to the target‐zone literature should lead to a convergence of fixed exchange‐rate behavior to that of floating rates. A comparison of tail estimates for the Deutsche mark and dollar exchange rates supports this notion.
Theory and Tests of Generalized Purchasing‐Power Parity: Common Trends and Real Exchange Rates In the Pacific Rim
Authors: Enders Walter , Hum Stan
Published: October 2006

The paper develops the theory of generalized purchasing‐power parity (G‐PPP) to explain the “stylized facts” of real exchange‐rate behavior. the fundamental economic variables determining real exchange rates are nonstationary; thus, real rates are nonstationary. If the fundamentals are sufficiently integrated, as in a currency area, the real rates will share common trends. the theory is tested using the Pacific Rim nations. It is shown that G‐PPP holds between each of the Pacific Rim nations and the large industrialized countries. There is only mild evidence that G‐PPP holds among the Pacific Rim nations as a group.
The Balassa‐Samuelson Model: an Overview*
Authors: Asea Patrick. K. , Corden W. Max
Published: October 2006

This paper introduces a special issue marking the thirtieth anniversary of the publication of two classic papers in international economics, Balassa (1964) and Samuelson (1964). We provide a brief analytical treatment of the basic model and an overview of the contributions in this special issue. the special issue includes novel empirical and theoretical approaches related to the Balassa‐Samuelson model. Theoretical models include dynamic two‐sector growth models, two‐country general‐equilibrium models, and openeconomy models with imperfectly competitive nontraded‐goods sectors. Several papers exploit new sources of data or datasets constructed in new ways from traditional sources.

“Under the skin of any international economist lies a deep‐seated belief in some variant of the PPP theory of exchange rates.” (Rudiger Dornbusch and Paul Krugman, 1976, p. 540)
Facets of Balassa‐Samuelson Thirty Years Later*
Authors: Samuelson Paul A.
Published: October 2006

Prior to the important Penn studies of Kravis‐Heston‐Summers, statisticians relied on exchange‐rate conversion estimates that would be correct only if naive Gustav Cassel versions of purchasing‐power parity were true. By contrast, correct real‐income estimates, using actual local prices and incomes, exhibit the systematic Penn effect: real per capita income ratios between poor and rich are systematically exaggerated by conventional exchange‐rate conversions. Bela Balassa and Paul Samuelson, independently in 1964, explained why. And, as the Penn authors cited, David Ricardo and Roy Harrod had already similarly argued. It is shown here how subtle must be the theoretical analysis addressed by Jagdish Bhagwati and mainstream economists in tackling this problem.
The Balassa‐Samuelson Model: A General‐Equilibrium Appraisal*
Authors: Asea Patrick K. , Mendoza Enrique G.
Published: October 2006

We derive two key propositions of the Balassa‐Samuelson model as long‐run balanced growth implications of a neoclassical general equilibrium model. the propositions are that productivity differentials determine international differences in nontradable relative prices and deviations from PPP reflect differences in nontradable prices. Closed‐form solutions are obtained and tested using panel methods applied to long‐run components of OECD sectoral data computed using the Hodrick‐Prescott filter. the results indicate that labor productivity differentials help explain international low‐frequency differences in relative prices. However, predicted nontradable relative prices are less successful in explaining long‐run deviations from PPP.

Unless very sophisticated indeed, PPP is a misleadingly pretentious doctrine, promising us what is rare in economics, detailed numerical predictions. (Paul A. Samuelson, 1964, p. 153)
Economic Development and the Relative Price of Nontradables: Global Dynamics of the Krueger‐Deardorff‐Leamer Model*
Authors: Brock Philip L.
Published: October 2006

This paper employs a three‐factor model of economic development to model forward‐looking nontraded investment as a determinant of the relative price of nontradables. A capital‐intensity. reversal of nontraded output relative to manufactured output‐arising from a switch toward a capital‐intensive manufacturing technique from a labor‐intensive technique‐produces a bifurcation in the model's dynamics. the two resulting saddlepath trajectories are each consistent with optimizing behavior and transversality conditions at infinity. History, as embodied in the economy's capital stock, as well as forward‐looking expectations determine whether the economy chooses the low‐investment or high‐investment trajectory.
International Environmental Permit Trade and Debt: the Consequences of Country Sovereignty and Cross‐Default Policies*
Authors: Mohr Ernst
Published: October 2006

We investigate the joint occurrence of international intertemporal trade and international environmental‐permit trade, both of which are subject to country sovereignty. Assuming that side payments cannot be made to keep a debtor country from terminating international environmental cooperation, we analyze the impact of these two trade opportunities on a debtor country's incentive to continue environmental cooperation. We also show how, by way of a suitable strategic linkage between debt and permit trade, the public good of ensuring continued environmental cooperation can be provided by the supply side of private international loans.
Substitution, Income, and Intertemporal Effects In Currency‐Substitution Models*
Authors: Smith Constance E.
Published: October 2006

Empirical studies which aim to determine the extent of international currency substitution typically focus on the coefficient associated with the anticipated rate of depreciation of the domestic currency or on the foreign interest rate in the domestic money demand equation. an intertemporal optimizing model is used to obtain a money demand function which shows that the anticipated exchange‐rate change and the foreign interest rate capture an income effect and an intertemporal income or substitution effect. Using these theoretical results, the findings from empirical studies are examined to show circumstances in which international currency substitutability may have been overstated or understated.
Tariffs and Welfare In A Dynamic Differentiated Oligopoly*
Authors: Lapham Beverly
Published: October 2006

Using a dynamic general‐equilibrium environment with strategically interacting oligopolists, this paper demonstrates that dynamic elements will significantly alter the equilibrium effects of tariff policy. In particular, the tariff rate which maximizes aggregate steady state welfare is decreasing in the level of adjustment costs. Furthermore, when tariff rates change, there are short‐run welfare losses along the dynamic transition path to the new steady state. Gradual implementation of policy can avoid these losses. This provides a justification for the gradual implementation of tariff reductions in the GATT rounds or in the Free Trade Agreement between Canada and the United States.
Strategic Trade Policy Under Uncertainty*
Authors: Qiu Larry D.
Published: October 2006

This paper extends the Brander‐Spencer (1985) model by considering market uncertainty, exploring nonlinear policy, and examining firms' choices of strategic variables. By investigating the interrelationship between trade policy and market conduct, we find that unlike the often‐studied linear policy, a nonlinear policy can influence the domestic firm's choice of strategic variables and hence alter the market conduct in favor of the domestic country. Therefore, a nonlinear policy proves strictly superior to a linear one.
Heterogeneous Households, the Distribution of Wealth, and the Laursen‐Metzler Effect*
Authors: Karayalçin Cem
Published: October 2006

To study the effects of a terms‐of‐trade deterioration the paper constructs a dynamic model with heterogeneous households that maximize intertemporal utility. It shows that insofar as this shock leads to a redistribution of wealth‐an outcome ignored by the literature because of the representative‐agent assumption invariably adopted‐it may give rise to an initial current‐account deficit and nonmonotonic adjustment paths. the paper also buttresses the argument that heterogeneous‐household models help explain the observed “excess smoothness” of consumption.
Divergence, Convergence, and the Gains From Trade*
Authors: Hymans Saul H. , Stafford Frank P.
Published: October 2006

This paper is about a country which has enjoyed a comparative advantage in producing some good(s) and suddenly finds its trading partners increasing their productivity in producing precisely those same goods; e.g., the US with its big lead in many kinds of manufacturing production in the 1950s and 1960s, and the rest of the world catching up in the same kinds of goods in the 1970s and 1980s. This is what the paper means by “convergence.” We show that such convergence results in an absolute loss of real income and standard of living for the original “leader” country.
The Voluntary (Private) Production of Public Goods, the Gains From Trade, and Comparative Advantage*
Authors: Schweinberger Albert G.
Published: October 2006

Any (finite) number of privately produced public goods are incorporated into a general trade‐theory model of private goods and factors. Postulating Cournot‐Nash behavior, a necessary condition for gainful trade is derived. Potential trade gains are related to the law of comparative advantage in private goods and the change in the underproduction of public goods. A sufficient condition is also proven. Trade gains/losses are compared for more or less populous economies. All the results have analogues in the literature on imperfect competition and/or increasing returns to scale.
The Effects of Trade Liberalization On Cost‐Reducing Horizontal Mergers*
Authors: Long Ngo Van , Vousden Neil
Published: October 2006

This paper analyzes the effects of tariff reductions on horizontal mergers in a Cournot oligopoly in a two‐country world. It is shown that for mergers between two domestic firms and for cross‐border mergers which supply both markets from a foreign plant, unilateral tariff reduction encourages mergers which concentrate market power at the expense of mergers which reduce cost, while bilateral tariff reductions have the opposite effect, encouraging mergers which significantly reduce cost. Cross‐border mergers which continue to supply each market from a local plant are discouraged by both unilateral and bilateral tariff reduction.
Tariff‐Index Theory*
Authors: Anderson James E.
Published: October 2006

Tariff indices such as trade‐weighted means, variances, and coefficients of variation are commonly used despite their lack of a theoretical foundation. This paper provides a theoretical framework for the index‐number problem for tariffs. This paper shows that the Anderson and Neary (1993) trade‐restrictiveness index is a function of “marginal trade‐weighted moments” of the tariff schedule, higher mean and generalized variance both implying a higher TRI. In the CES case, the TRI is increasing in the trade‐weighted mean and in the variance of the tariff schedule. For this special case the mean and the variance are partially legitimized.
On the Term Structure of Sovereign‐Debt Contracts*
Authors: Bac Mehmet
Published: October 2006

This paper studies the term structure of a repudiation‐proof debt contract encompassing many sequentially scheduled short‐term loans in a principal‐agent (lender‐sovereign borrower) framework. the extension of each loan is conditional on the full repayment of the previous loans in due maturity. Both direct sanctions and loss of access to the international credit market are present as debt‐repudiation costs. It is shown that the proposed repudiation‐proof composite contract exhibiting decreasing loan sizes and increasing maturities is better for coping with the enforcement problems that characterize sovereign lending.
Learning By Doing, Technology Choice, and Export Promotion*
Authors: Lai Edwin L.‐C.
Published: October 2006

This paper shows that when there is a high degree of learning by doing for a new superior technology (versus no learning by doing for the old inferior technology), there might be multiple equilibria in technology choice and export‐market expansion. the inferior technology might be chosen when there is no coordination between the firms and the government. With coordination, Pareto improvement might be possible, with each firm choosing the superior technology and the government undertaking to expand the international market. This idea is demonstrated by a two‐period (a learning period and a mature period) model with two firms that have symmetric demand and cost functions.
Protectionist Reputations and the Threat of Voluntary Export Restraint*
Authors: Jans Ivette , Wall Howard J. , Hariharan Govind
Published: October 2006

Voluntary export restraints are often administered in such a way that each firm's post‐VER output allocation is positively related to its output under free trade. When this is true, a credible threat of a future VER will induce foreign firms to dump in the current period, decreasing the domestic price (the Yano effect), and possibly increasing welfare. We show that if an importing government's preferences are private information and if the government makes a series of VER decisions, there may exist an incentive for a welfare‐maximizing government that normally prefers free trade to maintain a protectionist reputation by imposing a VER.
The Internationalization of the Us Wage Process*
Authors: Cha Baekin , Himarios Daniel
Published: October 2006

This paper explains the wage‐growth slowdown that occurred in the US in the 1980s. Using the vector auto regression method, it is shown that (I) a substantial portion of variations in the growth rate of average hourly earnings and other sectoral wages in the US can be attributed to exchange‐rule changes; (2) during the 1983‐1985 period the strong appreciation significantly reduced the growth rate of wages, but the subsequent depreciation had only modest effects; and (3) sectors like construction and services, traditionally assumed to be immune to foreign competition, have become sensitive to exchange‐rate developments.
Technology Choice, Overtaking, and Comparative Advantage*
Authors: Ohyama Michihiro , Jones Ronald W.
Published: October 2006

This paper argues that the basic concept of comparative advantage, used in international trade theory to establish choices of commodities exported, can also be used to explain choice of technology by a firm. A firm with a current leading position in a given technology may spurn a new technology, which is developed by a currently lagging firm, leading to future overtaking.
Some Implications of Imperfect Competition For Recent Trade Theory*
Authors: Shimomura Koji
Published: October 2006

This paper argues that in a general‐equilibrium context, it is not sensible for oligopolistic (and mono‐polistically competitive) firms to maximize profit, because the outcome would be sensitive to the choice of the numeraire. the natural objective of these firms would be to maximize the utility of the shareholders if the shareholders are identical. I show that even if each firm takes the representative individual's marginal utility of income as given, the outcome of the utility maximization objective is Pareto optimal, and in equilibrium, each firm equates price with marginal cost.
Bargaining In International Trade Under Exchange‐Rate Uncertainty
Authors: Donnenfeld Shabtai , Zilcha Itzhak
Published: October 2006

This paper examines the implications of various contracting alternatives between exporting and importing firms on the volume of international transactions. the contracts that we study are determined in a bargaining situation under exchange‐rate uncertainty. First we look at contracts which entail an ex ante commitment on price and quantity of exports without the possibility of renegotiation ex post. Second, spot contracts, i.e., the price and the quantity of exports are negotiated after the exchange the rate is known. A third type of contracts consists of ex ante commitment and ex post renegotiation.
Constant Consumption Paths In Open Economies With Exhaustible Resources
Authors: Hartwick John M.
Published: October 2006

We examine the effects of international trade on the paths of investment which maintain consumption constant over time in each country, each of which produces an essential exhaustible resource such as oil. For countries identical except for the sizes of their oil stocks, the investing of own oil rents in machine capital will not result in constant consumption in each country. Adjusted rent‐investment strategies are developed which do yield constant consumption in each country. We also report results on the link in each country between its consumption levels and aggregate current wealth.
Internal Quota‐Allocation Schemes and the Costs of the Mfa*
Authors: Trela Irene , Whalley John
Published: October 2006

This paper suggests that schemes used within developing countries to allocate textile export quota among domestic producers typically have more severe negative effects on developing‐country economic performance than the MFA export quotas themselves. We summarize allocation schemes in 16 countries, highlighting common “lock‐in” and “rent‐dissipation” effects of such schemes. We then use a global general‐equilibrium model to evaluate the effects of MFA removal with and without these additional effects. Results indicate that estimates of gains to developing countries from an MFA removal increase sharply when internal quota‐allocation schemes are taken into account.
Environmental Degradation As an Incentive For Trade*
Authors: Leger Lawrence A.
Published: October 2006

A modified Heckscher‐Ohlin‐Samuelson model is used in which industries are allocated by historical accident to geographical regions and agents care about their environment. Incentives for international trade arise when economies with identical factor endowments and geophysical characteristics differ in the allocation of industries to regions, and economies will tend to export goods produced in regions with higher environmental assimilative capacity.
Export Bans, Environment, and Developing Country Welfare
Authors: Dean Judith M.
Published: October 2006

Deforestation is a serious problem in several developing countries which are timber exporters. Export bans on logs, therefore, have been hailed by some as a welfare‐improving policy relative to free trade. This paper explores the case for an export ban on an intermediate good whose production generates environmental damage. In this two‐good model, a trade‐off emerges between achieving the environmental target and raising national welfare. When environmental damage grows rapidly with output, an export ban is likely to raise welfare. However, it is also likely to lead to higher rates of harvesting than are sustainable.
Linking Absolute and Comparative Advantage to Intra‐Industry Trade Theory*
Authors: Weder Rolf
Published: October 2006

Two countries, which differ with respect to domestic demand for two groups of differentiated products, are considered in a setting of monopolistic competition where international trade is subject to transaction costs. It is shown that relative differences in demand determine the trade pattern. Each country is a net exporter of that group for which domestic demand is relatively larger‐where the country has a comparative home‐market advantage. Absolute differences in demand determine relative wages. Thus, the paper argues that the notions of absolute and comparative advantage as found in traditional trade theory also have meaning in new trade theory.
Quota Wars In Conjectural Variations*
Authors: Csaplar Wilfrid W.
Published: October 2006

This paper uses a two‐country, two‐good, conjectural‐variations model of trade to show that a quota war will not end in autarky as Rodriguez (1974) and Tower (1975) concluded. Since both countries expect retaliatory responses to reductions in their quotas, both countries are willing to stop the trade war before autarky is reached. the possible equilibria are free trade, two equilibria in which one country has its optimal quota while the other country chooses free trade, and an interior solution. It is possible that some, all, or none of these equilibria will exist.
Explaining Managed Trade as Rational Cheating
Authors: Dick Andrew R.
Published: October 2006

Postwar “managed‐trade” policies feature low baseline tariffs combined with selective nontariff protection. This paper interprets managed trade as a rational strategy to undermine trade‐liberalization agreements in the absence of credible external enforcement. Analyzing the Kennedy GATT Round, I explore the calculus that led the United States to undermine across‐the‐board tariff reductions selectively by introducing nontariff barriers in industries with rapidly rising import demand. I show empirically that nontariff barrier dynamics across 216 industries support a rational‐cheating interpretation of managed‐trade policy.
Inflationary Expectations, Variable Output, and Exchange‐Rate Dynamics
Authors: Levin Jay H.
Published: October 2006

This paper develops a model of exchange‐rate dynamics characterized by inflationary expectations held with perfect foresight, sticky wages, and sluggish output adjustment. In this framework monetary expansion initially lowers interest rates because of sluggish output and price adjustment but quite surprisingly produces exchange‐rate overshooting or undershooting. Moreover, after its initial depreciation in the overshooting case, the domestic currency temporarily appreciates beyond its new long‐run equilibrium level. In the undershooting case, the home currency temporarily appreciates away from its new long‐run equilibrium level. Finally, the dynamic real exchange rate‐real interest rate relationship at times becomes inverse.
The Real Yen Exchange Rate and Japanese Productivity Growth
Authors: Ceglowski Janet
Published: October 2006

This study investigates the time‐series properties of five real yen exchange rates by testing for stationarity in the context of a single structural shift. It finds that all but one of the series are stationary in conjunction with a trend‐ or mean‐break in the late 1950s or early 1970s. By comparison, most real rates for five other industrialized countries are stationary around a constant mean. These findings suggest that the behavior of the real yen exchange rate is unique among the six currencies in the sample, a difference that may originate in the exceptional productivity performance of the Japanese traded‐goods sector.
Entry into a Foreign Market: Foreign Direct Investment versus Licensing
Authors: Saggi Kamal
Published: October 2006

We compare foreign direct investment (FDI) and technology licensing as two modes of entry into a foreign market. While direct entry via FDI dissipates rents in the host country, opportunistic competition from a licensee may erode rents in the entrant's other markets. Since FDI increases competition in the host country while licensing stifles it. welfare is higher under FDI than under licensing.
The Link between Domestic Investment and Domestic Savings in Open Economies: Evidence from Balanced Stochastic Growth
Authors: Grinols Earl L.
Published: October 2006

What relationship between domestic and foreign variables could explain the observed high correlation between domestic savings and investment in OECD countries with perfect capital mobility? Is such an explanation empirically supportable? This paper constructs a stochastic continuous‐time optimizing model of a small open country. It finds the formula for the implied theoretical correlation between domestic savings and investment—of interest in its own right—and calibrates the model using regression coefficients and stock market data from the US and Canada. The model accounts quite well for the observed investment‐savings correlation, even in the presence of perfect capital mobility.
Incentive Pay, Worker Effort, and Trade Protection
Authors: Das Satya P.
Published: October 2006

Positive and normative aspects of trade policy are examined when firms offer incentive pay to workers, such as piece‐rate pay and profit sharing, to deal with worker moral hazard. Protection increases the incentive pay rate. Its effect on effort depends upon the degree of labor mobility and the type of the incentive pay. In the presence of a piece‐rate pay, protection induces second‐order welfare losses. But in the presence of profit sharing, there is a direct impact of protection on the incentive‐compatibility constraint facing firms and hence there is a first‐order positive effect on welfare.
On the Causality between Export Growth and GDP Growth: An Empirical Reinvestigation
Authors: Xu Zhenhui
Published: October 2006

Although conventional wisdom suggests that export growth contributes positively to economic growth, empirical studies on the causal links between exports and output have provided little support for the exportled growth hypothesis. This paper reexamines the direction of causation by handling properly two important issues in causality tests: the characteristics of the data, and the choice of optimal lags. The results of this study show that in a sample of 32 economies, the export‐led hypothesis is supported by 17 economies and is strongly supported by 9 economies.