bluuebunny/crossref_metadata_2025_split huggingface dataset:
International Capital Movements In the Solow and Overlapping Generations Growth Models*
Authors: Ruffin Roy J. , Yoon Young Deak 
Published: October 2006

AbstractThis 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

AbstractThis 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

AbstractIn 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

AbstractThis 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

AbstractThis 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

AbstractAbstract 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

AbstractAbstract 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

AbstractI 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

AbstractIn 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

AbstractThis 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

AbstractBatra (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

AbstractModels 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

AbstractSome 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

AbstractA 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

AbstractCharacteristically, 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

AbstractThe 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

AbstractThis 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

AbstractPrior 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

AbstractWe 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

AbstractThis 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

AbstractWe 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

AbstractEmpirical 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

AbstractUsing 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

AbstractThis 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

AbstractTo 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

AbstractThis 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

AbstractAny (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

AbstractThis 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

AbstractTariff 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

AbstractThis 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

AbstractThis 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

AbstractVoluntary 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.