bluuebunny/crossref_metadata_2025 huggingface dataset:
Business Development in Colonial Australia
Authors: Ville Simon
Published: March 2003

We know little about business enterprises in colonial Australia. Existing case studies are analysed within the context of the established theoretical and international comparative literature on business history. Emphasis is placed upon the uncertainties caused by smallness and remoteness in the early decades, the opportunities of expansion in the middle of the century, and the challenges of economic crisis in the years leading up to Federation. Each period produced different types of strategies and structures from initial vertical integration, diversification, and networking, through to economies of scale, innovation, and internal hierarchies, and finally to collusion and incorporation.
Gentlemanly Capitalism and Settler Capitalists: Imperialism, Dependent Development and Colonial Wealth in The South Island of New Zealand
Authors: McAloon Jim
Published: March 2003

This article engages with Cain and Hopkins’ analysis of the British Empire, and the closely related literature of settler capitalism. For Cain and Hopkins, the Empire was dominated by gentlemanly rentiers, and the dominions were run by a dependent and collaborating elite. This paper rests in the first instance on a comprehensive analysis of wealthy settlers in the South Island of New Zealand. In noting that most settlers who became wealthy were not of gentlemanly origins, and that even those colonial financiers most closely tied to metropolitan capital pursued local agendas, it will suggest that the historiography under consideration needs to be balanced by a better understanding of the dynamic relationship between colonies and the metropolitan economy. The paper argues that settler capitalism is a model worth using, but that its utility will be greatly extended by a focus on settler capitalists as well as settler capitalism.
Consumer Prices and Expenditure Patterns in Australia 1850–1914
Authors: McLean Ian W.
Published: March 2003

A consumer price index is estimated for Australia for the period 1850 to 1914. This required the derivation of expenditure weights, permitting in turn comparisons of changes in the composition of expenditure patterns both across time and with nineteenth‐century United States evidence. Several variants of the price index were compiled to suit different uses as well as to assess the sensitivity of price movements to reasonable changes in estimation methods. No major differences in these variants were observed over the long run. In the 1890s and 1900s, however, significant short‐run differences in price movements exist between variants of the CPI.
The Murupara Project and Industrial Development in New Zealand 1945–65
Authors: Guest Morris , Singleton John
Published: March 2003

In New Zealand, after the Second World War, the share of manufacturing in GDP rose relative to the share of agriculture. Although the government lacked a clearly articulated industrial policy, it was increasingly drawn into the promotion and support of firms in manufacturing. The Murupara pulp and paper scheme was the most spectacular instance of state intervention in the first two postwar decades. Tasman, the company set up to operate the pulp and paper mill, was a joint venture between the state, a New Zealand construction firm called Fletchers, and British multinationals. Tasman soon became New Zealand’s leading exporter of manufactured products. The need to secure the market for Tasman’s newsprint exports was one of the main reasons for the negotiation of a partial free trade agreement between New Zealand and Australia in 1965. This article explains the early history of Murupara, and discusses its contribution to industrial development and diversification in New Zealand.
Australian Labour Market Institutions Through Time: A Perspective from the New Institutional Economics
Authors: Shanahan Martin
Published: March 2003

One of the distinguishing characteristics of the Australian economy over most of the past century has been its labour market institutions and organizations. Recently these institutions have changed to become more decentralized. Douglas North has argued that examining and explaining institutional change through time is an important and comparatively unresearched topic facing economic historians. In this paper, changes to Australia's labour market institutions are examined from the perspective of the New Institutional Economics. Following North, it is argued that further research should be directed to identifying the role ideological beliefs have played in shaping Australia's labour market institutions over time.
Directing the Directors: Assumptions about the Effectiveness of Corporate Law
Authors: Bottomley Stephen
Published: March 2003

Directors are important economic actors. In recent years there has been considerable debate between Australian judges, legislators, and law reformers about the formulation of appropriate liability rules for company directors. This debate relies on a number of assumptions about the effect which law can and ought to have on directors' behaviour. This paper reviews the law, examines these assumptions, and concludes that we have little clear empirical information about the effect of the law in this area.
F. L. McDougall: Éminence grise of Australian Economic Diplomacy
Authors: Turnell Sean
Published: March 2003

This paper examines the principal economic ideas of F. L. McDougall, a largely forgotten, sometime government official and ‘amateur’ economist who exercised an enigmatic influence upon Australia's economic diplomacy in the interwar years. Beginning with his conception of ‘sheltered markets’, the international manifestation of the Bruce Government’s vision for Australia of ‘men, money, and markets’, the paper explores McDougall’s later advocacy of a ‘nutrition approach’ to world agriculture and its extension into ‘economic appeasement’. McDougall’s ideas were theoretically unsophisticated, and realized little in the way of immediate achievements. In the longer run they could be viewed more favourably. Naive perhaps and idealistic certainly, McDougall’s ideas were part of a broader movement that, after the Second World War, redefined the role of international economic institutions. If nothing else, McDougall’s active proselytizing of his ideas lent Australia an unusual ‘voice’ in international forums at a time when it was scarcely heard.
The Savings Rate Debate: Does the Dependency Hypothesis Hold for Australia and Canada?
Authors: Wilson Stuart J.
Published: March 2003

Australia and Canada have both experienced a long‐run increase in aggregate savings rates over the past century from below 10 per cent to rates exceeding 20 per cent. Two recent studies have concluded that demographic change played the predominant role in driving this long‐run trend for both nations, one of which implies that a declining child dependency burden caused savings rates to increase over time. New results obtained by using a cointegration approach show that savings rates were driven by increases in real income in the long run. In the short run, increases in the working‐age population in Canada increased the savings rate. In Australia, baby booms and busts occurred simultaneously with savings booms and busts. Contrary to recent work, there is no significant evidence to support a child dependency burden on savings for Australia or Canada over the last century.
Controlling and Motivating the Workforce: Evidence from the Banking Industry in the Late Nineteenth and Early Twentieth Centuries
Authors: Seltzer Andrew J.
Published: March 2003

Large banks have a considerable advantage over their smaller rivals because they are better able to diversify their portfolios. However, to achieve this advantage they must overcome agency problems associated with delegating decision making to non‐owner employees. This paper uses evidence from the Union Bank of Australia to examine mechanisms used to monitor and motivate workers. Monitoring took the form of rigorous screening, beginning with the hiring process and continuing with frequent performance evaluations. Workers were also given strict rules of behaviour and incentives to supply effort in the form of seniority‐based wages, performance‐based promotions, and a generous pension plan.
The Rise and Decline of an International Zinc and Lead Cartel, 1945–75
Authors: Tsokhas Kosmas
Published: March 2003

From the late 1940s to the early 1970s major firms in the international zinc and lead industries organized cartels to stabilize the prices of the metals at above market levels. The attempts of the Zinc Producers Group and the Lead Producers Group to secure above‐market‐level prices met with limited success because of divisions within each cartel over strategy, the large number of producers and source countries, and the lack of international market power and comprehensive vertical integration. Limited barriers to entry, external competition, and the impact of anti‐monopoly and restrictive trade practices legislation further weakened the cartels.
The Industrial Finance Department: An Australian Experiement in Small Business Finance
Authors: Jones Evan
Published: March 2003

Small business has an uneasy relationship with the banking sector. In some countries, governments have stepped in to create specialist institutions for small business finance. One such institution was created in Australia after World War II. An Industrial Finance Department was created within a restructured Commonwealth Bank to provide specialist financial assistance to small business. This institution, neglected by historians, grew and survived in an evolving political and often hostile environment. The Industrial Finance Department provides further insight into the politics of financial provision and regulation in Australia.
Too Far Away, Too High and Too Stable: The EEC and Trade with Australia During the 1960s
Authors: Ludlow N. Piers
Published: March 2003

The EEC of the 1960s had little reason to prioritize trade with Australia: trade flows were too small and political ties between Australia and continental Europe too weak. That trade with Australia did become an issue of concern is thus largely due to Britain’s 1961 EEC application. The shape of the deal that looked like emerging in 1961–3 was, however, highly ungenerous – a fact which reflected both the nature of Australian exports and a strong European belief that Australia was less ‘deserving’ than other Commonwealth countries. Australian relief at de Gaulle’s veto may, however, have been premature, since early British membership of the Community might well have been in Australia’s medium‐term commercial interest.
After the veto: Australasian Commercial Policy in the mid sixties
Authors: Singleton John
Published: March 2003

The failure of Britain’s application to join the EEC in 1961‐3 did not eliminate the commercial uncertainty facing Australia and New Zealand. It was expected that Britain would apply again later, and in the meantime strike a hard commercial bargain with the dominions. This article shows how policy‐makers in Australia and New Zealand fought to preserve their access to the British market after 1963, and to respond to the challenges posed by Japan’s proposals for Pacific economic cooperation. External uncertainty brought Australia and New Zealand much closer together during the 1960s. The most enduring legacy of this period was the NAFTA agreement of 1965, which was the first step towards trans‐Tasman economic integration.
Indigenous accumulation in the Kimberley during the early years of ‘self‐determination’, 1968–1975
Authors: Smith Tony
Published: March 2003

This article — using empirical data gathered from, among other sources, the Western Australian State Records Office, National Archives, and Hansard — traces the trajectory of indigenous owned businesses in the Kimberley region of Western Australia. As part of the analysis, the article investigates the main reasons for a shift to the development policy of ‘self‐determination’ during the early 1970s. As well, there is recognition of the major contribution made by an emerging Aboriginal leadership to the evolving policy regime. In doing so, there is a critical re‐evaluation of the origins of, and support for, successful indigenous owned business enterprises.
OCFAID — A new tool for business historians
Authors: Robb Alan J. , Lewis Karen T.
Published: March 2003

Presenting financial data in an informative manner may be difficult, especially for historians and readers who are not trained accountants. The paper explains how operating cash flows after interest and dividends (OCFAID) may be calculated, and how the relative trajectories of OCFAID and retained profits can reveal underlying business problems that are not signalled by reported profits. A case study shows that the cash flow data followed the patterns that might be expected of an entity approaching and recovering from a financial crisis. A second study shows that a failing company can be distinguished from its surviving competitors. The paper concludes with a section cautioning against ways in which OCFAID may be manipulated by management.
Endogenous Cartel Formation
Authors: Eaton Curtis , Eswaran Mukesh
Published: March 2003

This paper investigates the endogenous formation of cartels in a supergame framework in which cheating on the cartel agreement results in the ejection of only the defector from the cartel while collusion continue s amongst the non‐cheating members. A more sophisticated notion of cartel stability than has been analysed hitherto is developed here, and it is shown that cartels are even less stable than they are generally believed to be. When firms produce heterogeneous goods and set prices, cartels comprising a small fraction of the industry's firms are shown to be viable. The emergence of two or more cartels within the same industry is seen not only to be a distinct possibility but also to be quite likely
Economic Consequences of Limited Technology Transferability
Authors: Yin Xiangkang , Zuscovitch Ehud
Published: March 2003

Because technology is often context‐dependent and partly tacit, it is much less transferable than conventional ‘innovation and market structure’ models have long assumed. Technological know‐how is represented in this paper as a combination of formal knowledge and informal practice. The balance of these basic components is viewed as an optimisation of R&D investment structure and level within an oligopolistic framework. We analyse the outcomes of this optimisation in terms of R&D production efficiency and social welfare. With regard to R&D investment structure, we find that the equilibrium outcome is neither efficient nor socially optimal, and the stronger competition is, the larger the divergence from efficiency and social optimum. For R&D investment level, the results are less conclusive, but they imply that competition represents the best conditions for stimulating R&D investment
Standby Letters of Credit and Bank Default Risk
Authors: Sharpe Ian , Tuzun Tayfun
Published: March 2003

This paper examines the relationship between Australian banks' use of standby letters of credit, an off‐balance sheet direct credit sub stitute, and default risk on bank liabilities. We find strong support for the sub‐optimal investment (or under‐investment) hypothesis. Riskier banks, defined as those with higher CD premiums, and those with higher proportions of long‐maturity liabilities make greater use of SLCs than less risky banks. However, there is little evidence of a feed‐back effect from SLCs to bank default risk
Social Risk in Health Insurance: A Reflection on the Economies of Scale and Scope in Health Insurance
Authors: Horgby Per‐Johan , Söderström Lars
Published: March 2003

Social risk causes distortion in the health insurance market. In the presence of social risk, health insurance must be inflated with a safety loading. This implies that policyholder will choose incomplete risk transformation and that health insurers have to build up large capital reserves. By using cross‐diversification and enlarging the insurance pool with other kinds of risk (utilising economies of scope in addition to scale production), the problem of social risk will reduce. It is shown how this is possible by using the capital market as a diversification pool
Causality Between Exports and Economic Growth: The Empirical Evidence from Shanghai
Authors: Shan Jordan , Tian Gary Gang
Published: March 2003

The export‐led growth hypothesis is tested using monthly time series data for Shanghai (one of the major exporting provinces in China) using the Granger no‐causality procedure developed by Toda and Yamamoto (1995) in a vector autoregresion (VAR) model. This paper builds on the existing literature in three distinct ways. This is the first study of the export‐led growth hypothesis which employs a regional dataset (Shanghai). Second, the paper follows Riezman et al. (1996) in controlling for the growth of imports to avoid a spurious causality result; and finally, the use of the methodology by Toda and Yamamoto is expected to improve the standard F‐statistics in the causality test process. The research finds one‐way Granger causality running from GDP to exports
Social Expenditure Projections: a Stochastic Approach
Authors: Creedy John , Alvarado Jose
Published: March 2003

This paper develops a stochastic approach to the projection of ratios of social expenditure to GDP in order to examine their sampling properties using simulation methods. The approach involves the translation of informed judgements about the range of variation of variables into distributional parameters. It is suggested that the method can be used in other contexts where projections need to be based on variables whose distributional characteristics cannot be obtained from a time series of data, either because there are few data or because there are good reasons for believing that past variations give little insight into potential future variations. The results suggest that while the standard approach generates unbiased values, these may be associated with quite large standard errors. In making projections, it is therefore recommended that serious consideration should be given to the likely variability in the component distributions. In particular, the results are sensitive to assumptions regarding the growth rate of productivity.
Capital Expansion, Endogenous Growth and Equilibrium Unemployment
Authors: Hoon Hian Teck
Published: March 2003

A model is developed, which captures the interactions of unemployment and economic growth in general equilibrium. The economy evolves along a correct‐expectations equilibrium path exhibiting endogenous job rationing, and productivity growth is driven by installation of new capital. Under the maintained hypothesis that the elasticity of substitution between capital and labour is less than unity, unemployment benefits are shown to shift up the whole path of equilibrium unemployment, leaving the economy with a higher natural rate of unemployment and lowering the long‐run growth rate permanently. Investment tax credits financed by lump sum taxes on total income are capable of lowering the natural rate and raising the economy's growth rate.
Contribution of Contingent Valuation and Other Stated Preference Methods to Evaluation of Environmental Policy
Authors: Lockwood Michael
Published: March 2003

Some form of stated preference method is essential for comprehensive evaluation of environmental policy options. The two most important stated preference methods are contingent valuation (CV) and choice modelling. I identify and discuss the major challenges facing CV and choice modelling researchers. Choice modelling applications to environmental valuation are comparatively recent, so the emphasis in this paper is on the more extensive body of CV research. The development of CV has been characterised by a (generally) constructive debate both within the economics profession, and between economists, philosophers, psychologists and other social scientists. As a result, much has been learnt about the nature of non‐market economic values and how they might be measured. Important issues are the extent to which existing stated preference methods accurately represent individuals' values, and provide valid and reliable measures of changes in economic welfare. I review each of these issues in the light of recent theoretical and empirical work, identify the major outstanding problems, and indicate areas where progress is being made. I argue that the problems are solvable, and that eventually a theoretically sound and empirically effective method will be developed.
Existence Value and the Contingent Valuation Method
Authors: Quiggin John
Published: March 2003

People express concern about the possible extinction of animal species which they will never see, about damage to wilderness areas they will never visit, and so on. Such concerns are often interpreted by economists in terms of ‘existence’ or ‘passive use’ values. Three views have been proposed regarding the appropriate way of dealing with existence values in benefit‐cost analysis. First, the existence values and concerns about environmental preservation that are not related to use may be disregarded. Second, concerns about environmental preservation may be taken into account, but not interpreted as existence values or evaluated in monetary terms. Third, the benefit‐cost analysis may be modified to incorporate monetary estimates of existence values. Advocates of the third approach have developed a range of techniques for eliciting existence values, collectively referred to as the contingent valuation method. In this paper, the concept of existence value and the techniques of contingent valuation are surveyed, with the aim or providing a basis for comparisons of the three approaches described above.
Rethinking Hecs: Its Definition and Fiscal Role in Compensating for Non‐deductibility of Tuition Fees
Authors: Bentick Brian
Published: March 2003

This paper develops a two period model of the higher education decision to determine the required return from higher education. It uses the model to calculate the proportion of full tuition costs which should be charged ‘up front’ under the Australian Higher Education Scheme (HECS), in order to compensate for the fact that such fees are not deductible against income for tax purposes. Because full tuition costs represent less than 11 per cent of the total costs of higher education, the ideal HECS ratio is relatively high, in the region of 0.7. The low relative importance of tuition costs means that fee subsidy schemes cannot possibly compensate for other distortions such as income tax progression which persist over the working life of graduates.
Oligopoly Information Exchange when Non‐negative Price and Output Constraints may Bind
Authors: Maleug David A. , Tsutsui Shunichi O.
Published: March 2003

The oligopoly information exchange literature has consistently employed linear demand functions. This paper explores whether earlier results are sensitive to the assumption of linear demand. Non‐linearity arises naturally from the condition that prices and outputs be non‐negative. We show standard results on information sharing can be reversed when there is the chance that non‐negativity constraints bind: in a homogeneous‐goods Cournot duopoly with constant marginal costs, information sharing can be profitable and it can reduce social welfare.
Employment Hysteresis in an Overlapping‐Generations Insider‐Outsider Model
Authors: McCausland W. David
Published: March 2003

This paper shows, within an overlapping generations insider‐outsider model, that, in the presence of training costs, there may be multiple employment equilibria. Adverse technology shocks may shift the system from ‘high’ to ‘low’ employment steady states. Restoration of the initial technological state does not always lead to the ‘high’ employment equilibrium being returned ‐ the system may get ‘stuck’ in a ‘low’ employment state.
A Theory of Tenure for the Teaching University
Authors: Chen Zhiqi , Stephen Ferris J.
Published: March 2003

In this paper we challenge the presumption that academic tenure is an outmoded institutional form for the small teaching university. Starting from the premise that tenure is granted on the basis of research (reflected in a minimum required number of publications), we argue that tenure has value for a university concerned solely with teaching (as opposed to research) because research enhances human capital and incentives for its accumulation are necessary to improve the quality of faculty teaching over the lifecycle. However, while human capital accumulation and research effort create future value, contracting on either basis is not feasible because neither can be measured objectively. Numbers of publications, the usual proxy for research, meter the desired activity only imperfectly due to randomness in the publication process. In these circumstances, an employment contract that offers tenure, compared with contracts that a) reward only teaching and b) supplement teaching payments with a direct reward for publications, can better generate the optimal level of human capital. The minimum publication requirement of the tenure contract induces the optimal level of research with less variation in expected income, avoiding inefficient behavioural responses to the greater riskiness of a contract rewarding only realised publications.
Wage Effects on the Volume of Unpaid Work in Nuclear Australian Households
Authors: Williams Ross A.
Published: March 2003

Using the 1992 Australian Time‐Use Survey, empirical estimates are obtained of the determinants of unpaid work in nuclear household by each adult. Eight types of unpaid work are examined. Wage rates and demographic variables are found to exert most influence on household time devoted to unpaid work. The strongest result is the negative effect of the female wage rate on unpaid work undertaken by females.
On Licensing Under Bertrand Competition
Authors: Wang X. H. , Yang Bill Z.
Published: March 2003

This paper considers licensing by an innovating firm to its competitor in a differentiated duopoly with Bertrand competition. A principal finding is that royalty licensing may be superior to fee licensing for the innovating firm both when the innovation is drastic and when the innovation is non‐drastic.
Cournot Duopoly With Multi‐period Competition: Inventory as a Coordination Device
Authors: Matsumura Toshihiro
Published: March 2003

This paper analyses a Cournot duopoly model with finitely repeated competition. Each firm is allowed to hold inventories for a period. When there are more than two periods, inventory‐holdings encourage firms to take collusive actions. By holding large inventories, a firm can commit to large sales in the next period, giving inventories a strategic value. When a firm deviates from collusion, the strategic value of inventories allows the non‐defecting firm to become the Stackelberg leader in future markets, forcing the defecting firm to become the Stackelberg follower. Collusive sales can be attained with this threat of punishment.
The Distributional Effects of Monopoly
Authors: Creedy John , Dixon Robert
Published: March 2003

This paper examines the relative burden of monopoly, measured using the equivalent variation, for different household income levels. The results indicate that, whatever the size of the absolute welfare loss due to monopoly, there may be a substantial effect on the distribution of welfare.
On Hotelling's Location Model With a Restricted Reservation Price
Authors: Henry Wang X. , Yang Bill Z.
Published: March 2003

This paper studies Hotelling's location model with a restricted consumer reservation price. It establishes that firms will locate closer to the middle of the market when price competition becomes more intense caused by a low reservation price.
Workplace Characteristics and Their Effects on Wages: Australian Evidence
Authors: Wooden Mark , Bora Bijit
Published: March 2003

Using data, from the 1995 Australian Workplace Industrial Relations Survey, which match individual employees to the firms and workplaces at which they are employed, this paper examines the relative importance of both individual and workplace characteristics for wages. Results from the estimation of ‘effects’ models indicate that workplace‐specific effects are important, explaining 39 per cent of the variation in individual log hourly wages. Estimation of a model including both individual‐level and workplace‐level variables (and using a random effects approach) identified workplace size, foreign ownership, the significance of export markets, the gender composition of the workforce, workplace union organisation, the incidence of shift work, and location as the most important workplace‐level influences on wages.
Financial Deregulation and Stability of Money Demand: The Australian Case
Authors: Asano Hirokatsu
Published: March 2003

This paper analyses the Australian economy in the post‐war period. The analysis examines stationarity and cointegrating relationship among output, interest rate and money. The analysis shows that Australia has had a stable cointegrating relationship among output, interest rate and money during the post‐war period although the country deregulated its financial sector in the 1980's. Australia's money demand function fails to reject the hypothesis that the interest elasticity of money demand is 0.5. In addition, one specification of the country's money demand function fails to reject the hypothesis that the income elasticity of money demand is unity. The specification is the Vector Error Correction Model that includes real output, real balances, an interest rate, and a deregulation dummy variable, with the lag length of three.
Small Firms and Unemployment in a Two‐sector Model
Authors: Bhattacharya Prabir C.
Published: March 2003

This paper presents a two‐sector model of an economy – one sector consisting of large firms with institutionally determined wage (the Formal sector) and the other sector consisting of small firms (the Informal sector). The paper examines the effects of changes in benefits, entrepreneurial zeal, and the institutionally determined wage in the Formal sector on unemployment. It concludes with brief comments on the role of aggregate demand and supply policies in reducing unemployment in this economy.
Preemptive Spacing With Vertical Differentiation When Input Quality is of Inelastic Supply
Authors: Frascatore Mark R.
Published: March 2003

This paper examines a model of vertical differentiation in which an incumbent engages in preemptive spacing to prevent entry. Input quality is of fixed supply, and the incumbent prevents high‐end entry by producing a product with all the quality available. It also commits to the production of a minimum‐quality product to deter low‐end entry. There is no entry in equilibrium, and the incumbent monopolist chooses to sell only its high‐quality product. Commitment to the production of the minimum‐quality product is used merely as a credible threat to vigorously compete should an entrant also produce a minimum‐quality product.
The Size of the Firm and Social Division of Labour
Authors: Sun Guang‐Zhen
Published: March 2003

This paper develops a formal model with transaction costs and economies of specialisation to address the size of the firm and the level of social division of labour. It is shown that the increase of the level of social division of labour and the decline of firm size may concur, and that the size of the firm crucially depends on, among other things, the relative transaction efficiency of the labour market with that of the markets for intermediate products.
Endogenous Co‐Leadership When Demand is Uncertain
Authors: Hirokawa Midori , Sasaki Dan
Published: March 2003

Consider an oligopolistic industry where production is time‐consuming, so that each firm needs to make quantity commitment by producing before the market opens. If demand uncertainty resolves some time before the market arrives, then those firms who produce early behave as simultaneous leaders (co‐leaders), whilst those who wait until demand becomes observable will be followers. We discover that, in an n‐firm oligopoly, the equilibrium number of co‐leaders tends to be in excess of their socially optimal number, albeit both numbers monotonically decrease in the magnitude of demand uncertainty relative to the expected level of demand. We also find that, with demand uncertainty and the possibility of Stackelberg behaviour, whether the excess entry theorem applies depends upon the number of existing followers.
Modelling the Equity Beta Risk of Australian Financial Sector Companies
Authors: Lie Frida , Brooks Robert , Faff Robert
Published: March 2003

In this paper we apply the generalised auto‐regressive conditional heteroskedasticity (GARCH) and Kalman Filter approaches to modelling the equity beta risk of a sample of fifteen Australian financial sector companies. A de‐regulated environment in which strong competitive forces are at play typifies the period of investigation. Consistent with the existing literature, we find that these modelling techniques perform well and, in particular, that the Kalman Filter approach is preferred. Further, we find that considerable variability of risk occurs throughout the sample period. Thus, extending the evidence of Harper and Scheit (1992); Brooks and Faff (1995) and Brooks, Faff and McKenzie (1997), we find evidence consistent with the hypothesis that deregulation has impacted the risk of banking sector stocks.
In Defence of Model‐Based Seasonal Adjustment: An Illustration Using Australian Data
Authors: Moosa Imad A.
Published: March 2003

It is argued that the X‐11 seasonal adjustment procedure suffers from severe drawbacks, and so it should be abandoned in favour of model‐based seasonal adjustment. Furthermore, it is argued that Harvey's structural time series model is superior to the conventional seasonal ARIMA models for the purpose of model‐based seasonal adjustment. It is shown, with the help of a large number of Australian time series, that the nature of seasonality differs from one series to another, and this is why model selection is crucial for seasonal adjustment. It is further shown that model‐based seasonal adjustment could produce results that are significantly different from those obtained by applying the X‐11 procedure. Since the X‐11 procedure is not based on an explicit model and in view of its other serious drawbacks, it is concluded that the procedure should be abandoned in favour of model‐based seasonal adjustment.
Consumer Protection in Islam: The Case of Pakistan
Authors: Khan Kishwar , Aftab Sarwat
Published: March 2003

Consumers whether in an Islamic State or otherwise face similar problems that need to be taken care of by the government and the individuals themselves. Islam as a religion gives a comprehensive framework for conducting business and protecting the consumers' rights. Apparently, this framework seems similar to the commercial laws but glaring differences between the two exist: commercial laws are a relatively new phenomena and are made by humans for the sake of convenience only. Islamic law on the other hand, provided such guidelines 1500 years ago which are based on divine principles set by Allah. Moreover, there is no reward in complying with the commercial laws but Allah promised the believers rewards both in this world and the Hereafter for complying with Islamic principles.

Pakistan is an Islamic State but the area of consumer protection has remained neglected so far. This paper explores how an environment can be created in Pakistan whereby the interests of consumers are best protected under the teachings of Islam. The Qur'anic principles are delineated with reference to: guidelines for Muslim businessmen and consumers; the role of state and institutions.
Inequality, Polarisation and Welfare: Theory and Applications
Authors: Chakravarty Satya R. , Majumder Amita
Published: March 2003

In this paper we explore the possibility of using the Atkinson (1970) – Kolm (1969) – Sen (1973) general ethical index in polarisation measurement. It is shown that though inequality and polarisation are two dissimilar concepts, different indices of inequality may be used to generate alternative indices of polarisation. A numerical illustration based on Indian household expenditure survey data is provided using several polarisation indices.
Lifetime Employment Contract and Strategic Entry Deterrence: Cournot and Bertrand
Authors: Ohnishi Kazuhiro
Published: March 2003

This paper is based on a two‐stage model of an incumbent firm and a potential entrant, and studies both quantity‐setting competition and price‐setting competition. We consider a lifetime‐employment‐contract policy as a strategic commitment that generates kinks in the reaction curve. Furthermore, demand functions are classified into two cases in terms of the strategic relevance between both firms. Therefore, we examine the following four cases: ‘quantity‐setting competition with strategic substitutes’, ‘quantity‐setting competition with strategic complements’, ‘price‐setting competition with strategic substitutes’ and ‘price‐setting competition with strategic complements’. The purpose of this paper is to analyse entry deterrence in the four cases and to show the effectiveness of the lifetime‐employment‐contract policy as a result of its analyses.
The Long‐run Growth Effects of Rent‐extracting Contingent Tariffs
Authors: Kulihala Hisashi
Published: March 2003

This paper examines the effects of rent‐extracting contingent tariffs in a two‐country model of R&D‐driven growth without scale effects where firms engage in both horizontal and vertical R&D activities. Unlike a semi‐endogenous growth model as Dinopoulos and Segerstrom (1999), government policies can have long‐run growth effects. Indeed, a permanent increase in the contingent tariff rate permanently increases or decreases the long‐run rate of economic growth. Our main results show that a weak form of tariff imposition comparing to Rivera‐Batiz and Romer (1991) sufficiently retards the whole technological progress in the existing industries in the world. The results derived in this paper also parallel to and complement Dinopoulos and Segerstrom (1999).
The Long Run Demand for Broad Money in Australia Subject to Regime Shifts
Authors: Felmingham Bruce , Zhang Qing
Published: March 2003

The goal is to determine if there is a stable Broad Money demand relationship for Australia. Previous studies have not reached a consensus on this important issue, partly because the time series techniques used do not accommodate structural breaks. A standard multivariate cointegration analysis is conducted on monthly data over the period 1976(3) to 1998(4). It reveals some evidence for the presence of cointegration since one cointegrating vector is found. This involves broad money, the spread between interest on broad money and on non‐money assets and real GDP. The evidence of cointegration is again present when a structural break is found in the relationship using Gregory and Hansen (GH) methodology. This occurs in 1991 coinciding with a deep recession and policy induced, interest rate reductions. The income elasticity of demand exceeds one, reacts positively to the interest spread and negatively to inflation.
Horizontal Mergers and Merger Waves in a Location Model
Authors: Matsushima Noriaki
Published: March 2003

We consider sequential mergers in a spatial model with Cournot competition. This model is suitable for explaining the behaviour of some industries where several brands of the same product are delivered by plants. The automobile and oil product industries are examples. To discuss sequential mergers, we use the method of Nilssen and Sørgard (1998). We show that if the transportation cost per length is large relative to market size, a merger wave occurs. In addition, it might improve social surplus. On the other hand, if the transportation cost per length is relatively small, a merger wave does not occur even though firms would be better off with sequential mergers.

We also compare our model to that of Levy and Reitzes (1992) who consider horizontal mergers with spatial price competition. We show that in a merger of neighbouring firms the merged firm's profit decreases. This result is opposite to that of Levy and Reitzes (1992).

Finally, we consider how a regulator affects sequential mergers. When each merger occurs, the regulator assesses each merger. In this case, there is a possibility that the existence of the regulator deters welfare‐improving sequential mergers.
Co‐Movement Towards a Currency or Monetary Union? An Empirical Study for New Zealand
Authors: Haug Alfred A.
Published: March 2003

This paper analyses whether New Zealand would be ready to form a currency or monetary union with either Australia, the 11 EU countries that are members of the EMU, Japan, or the US, if the criteria that have been used by researchers for the EMU are applied. The analysis is an empirical study with data from the mid 1980s to 1998, using cointegration techniques to search for co‐movement and convergence in key economic variables: interest rates, inflation rates, exchange rates, real GDP, and current‐account/GDP ratios.
Cycle and Trend in Models of the Range of Equilibria
Authors: Lye J. N. , McDonald I. M. , Sibly H.
Published: March 2003

This paper investigates the potential of models of the range of equilibria to yield a pattern of equilibrium rates of unemployment that is consistent with the observed mix of cycle with no trend in the rate of unemployment. To do this the paper considers a model in which wages are determined by a group of unionised insiders bargaining with an employer. In the model the supply of labour is endogenous. Specifications of the utility function are found which are consistent with the mix of cycle and no trend in the rate of unemployment. Of these it is concluded that loss aversion in the evaluation of wage relativities is a crucial ingredient for models of the range of equilibria.
Testing the Efficient Markets Hypothesis with Futures Markets Data: Forecast Errors, Model Predictions and Live Cattle
Authors: King Jason
Published: March 2003

At the forefront of empirical research into the examination of the efficiency of futures commodity markets, two fundamentally different testing techniques have been popularised – the ‘forecast error’ and ‘model prediction’ approaches. This paper assesses the relative strengths of these techniques by contrasting results obtained when both approaches are used to examine the efficiency of the Sydney live cattle futures market. While neither model provides evidence to suggest that this market is inefficient, it is clearly shown that the model prediction approach enjoys a number of distinct advantages over its rival. Indeed, the model prediction approach provides additional information that is important not only for those interested in testing the efficiency of futures markets, but is important for anyone interested in developing a greater understanding of the determination of prices and the behaviour of agents in futures markets.
Encouraging Tutorial Attendance at University Did Not Improve Performance
Authors: Rodgers Joan R.
Published: March 2003

When tertiary education is subsidised the cost of poor student performance in university subjects falls not only on the individual student but also on society in general. Society therefore has an interest in promoting student performance. There is evidence in the literature that absenteeism from university classes is widespread and that absenteeism adversely affects student performance. In this paper I describe an incentive scheme that increased attendance of business and economics students in an introductory statistics subject at a typical Australian university. Like other authors I find a strong positive association between attendance and academic performance, both in the presence and absence of the scheme. However, there is no evidence that the incentive scheme caused student performance to improve. Although students attended more classes they did not perform better than students in the previous year's class who had the same observable characteristics and attendance levels but who were not exposed to the scheme.
Exchange Rates and Monetary Policy
Authors: Gaspar Vítor , Issing Otmar
Published: March 2003

This paper looks at the relation between exchange rates and monetary policy. It focuses in particular on the role of the exchange rate of the euro in the context of the ECB's monetary policy strategy. The objective of monetary policy is to maintain price stability. The euro area is a large and relatively closed economy. Therefore, the exchange rate of the euro is not an intermediate target nor is it an objective. Nevertheless, the ECB's stability–oriented monetary policy strategy does not neglect the exchange rate of the euro. Clearly, exchange rate developments are taken into account both when looking at the transmission mechanism of monetary policy and when assessing the current economic situation and prospects for the euro area.
Enlargement and the Value of the Euro
Authors: Stein Jerome L.
Published: March 2003

The EMU is in the process of expanding its membership. How will the expansion affect the equilibrium or sustainable real value of the euro? What is the explanatory power of the model used to explain the equilibrium value of a synthetic euro? We then demonstrate quantitatively the dynamic effects of enlargement upon the equilibrium value of the euro under different scenarios.
A History of the D–Mark's Real External Value
Authors: Fischer Christoph , Sauernheimer Karlhans
Published: March 2003

An equilibrium time path of the real effective exchange rate of Germany's currency in the post Bretton Woods period is calculated. For this purpose, a NATREX model for the long–run determination of this specific variable is developed. A cointegration analysis gives evidence in favour of the model and provides the equilibrium values. The theoretical and empirical results are used to analyse in detail movements in the real exchange rate of the D–Mark. Estimation results suggest, among other things, that the D–Mark has mostly been overvalued and that it often adjusted with some delay to changes in the fundamentals.
Choice of Exchange Rate Regime: Currency Board (Hong Kong) or Monitoring Band (Singapore)?
Authors: Rajan Ramkishen S. , Siregar Reza
Published: March 2003

Following the East Asian crisis, a number of observers have advocated that small and open economies in Asia adopt an irrevocably fixed regime. Such a hard peg, it is argued, signals greater commitment to rule out arbitrary exchange rate adjustments as well as the authorities’ willingness to subordinate domestic policy objectives such as output and employment growth to the maintenance of the pegged exchange rate. But is this a reasonable position to adopt? In order to answer this question, we consider and contrast the experiences of Hong Kong and Singapore. While both of these economies share a number of broad similarities, the former operates a US dollar–linked currency board arrangement and the latter maintains an adjustable peg in the form of a monitoring band arrangement with the central parity based on an undisclosed trade–weighted currency basket.
Tacit Collusion and Non–uniform Prices
Authors: Martini Gianmaria
Published: March 2003

This article examines the possibility of building a tacit agreement between price–setters that yields non–uniform pricing. It is shown that firms with market power may restrict competition not only by alternating between periods of high prices and low prices (Green and Porter (1984), Rotemberg and Saloner (1986)), but also by always charging different prices and taking turns in being the monopolist. In contrast with the existing literature, price variability is not due to imperfect monitoring, stochastic demand or short–run pricing rigidity but it is a pure supply side effect. The author provides the necessary conditions to have collusion with non–uniform pricing, and shows that the latter dominates a fixed price solution. In terms of competition policy this result confirms that no price parallelism is not, per se, a signal of no collusion.