Economics

Permanent URI for this communityhttp://hdl.handle.net/1903/2232

Browse

Now showing 1 - 20 of 471

The Economic Development of Iran
(1948) Abbas, Ordoobadi; Ratzlaff, C.J.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
In the machine age, with the advance of mass production, a new problem has occupied the minds of economists. This new problem is not the Malthusian doctrine of inadequate supplies but rather that of a rate of production too high to be sold continually at profitable prices. With periodic insufficiency of demand industrial countries have faced depressions of varying duration and intensity, which have continued until the rate of production and demand once more were in equilibrium. Despite increased industrial productivity a large part of the world subsists at a standard of living which provides insufficient food values and which does not yield a minimum amount of housing, medical care and education. In industrial countries from ten to fifty per cent of the working population is unemployed during depression periods although workers are willing and able to work in order to obtain goods. In the non-industrial countries, on the other hand, millions of workers are victims of what has been termed "disguised unemployment." They find themselves at tasks which are much below their potential productivity and consequently yield a standard of living substantially under that which they are capable of achieving. The solution to this problem in the undeveloped areas lies partly in spreading the gains of science, both pure and practical; in combining adequate doses of capital and management with the supplies of labor; and in using the excess of resources originating from technical advances in industrial countries . A program on this line would at the same time eliminate inadequate demand in the high-standard countries and depressing poverty in the low-standard countries. As far as Iran is concerned, it is necessary to know her economic background before the necessary measures for economic development can be discussed intelligently. In this respect, in spite of a few works by Iranian and foreign scholars, the materials on the economy of Iran, in English literature, are limited. The result of insufficient and first-hand information or "little knowledge" of some writers has been a distorted picture in which certain points are overemphasized, while the significance of others are under-estimated. Statistics, censuses and data in many aspects are lacking. The absence of statistics makes the study very difficult . Due to the scarcity of published data on many of the topics discussed in the present study, it has been necessary to secure the desired information and data directly from the Ministries of Iranian Government and/or offices concerned. The present economic situation of Iran is the product of an evolution, and can only be under stood by a study of its economic background. Therefore, the application of August Comte's adage that "no conception can be understood except through its history" seemed a logical approach in this study.
THE VOLUNTARY CREDIT RESTRAINT PROGRAM - A NEW EXPERIMENT WITH AN OLD PROBLEM
(1954) Singleton, Roy L.; Gurley, John G.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
Economic Development in Southern Italy Since the Establishment of La Cassa per il Mezzogiorno
(1965) De Bone, Anthony Louis; Bennett, Robert L.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
The study begins with a survey of the social and economic structure of the area. Attention is then focused on the nature of economic dualism in Italy by pointing out that the Northern economy yields to those employed in it a reasonably high income per capita, while the Southern economy provides for those working in it a low income per capita. In 1950 the Italian Government undertook to increase the level of public investments under a ten-year development plan for the South. It entrusted the execution of this plan to a new agency, La Cassa per il Mezzogiorno . Its life was soon extended to 1965 and more recently to 1980. The ultimate goal of the program was to reduce the differences in the consumption and income levels between the North and the South and to integrate the South into the national economy. Southern developments since 1950 and their effects on the economy are discussed, with emphasis on the Cassa programs and investments. It is discovered that many serious obstacles must be overcome in order to change the economic structure of a region such as Southern Italy. Despite the large transfer of resources to this area, The economic structure has changed little since 1950. However, whatever judgment may be passed on the Cassa at a later date, it is apparent that until now production has been concentrated in those sectors that offer relatively little possibility of rapid growth.
The State of Education in Afghanistan and the Application of a Linear Programming Model
(1969) Ulfat, Abderrahman; Bennett, Robert L.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
In this study the role of education in economic development is briefly discussed; the state of education in Afghanistan is assessed and compared with a group of Asian countries. Through the application of a constrained maximization model the rate of return to primary education in Afghanistan is obtained. Discounted streams of income and cost, associated with different levels of education, were used as the coefficients of the equation which was set to maximize the return to education; the different categories of students and the needed teachers constrained the maximization of the afore-mentioned equation. The model thus described was also dynamic-given a group of youngsters it advanced them to higher levels of education and also generated the required number of teachers from those students. Education in the elementary level is found to be a profitable investment for Afghanistan to undertake. The rate of return to six years of education in this model is more than five percent and for the first three years it is more than ten percent.
A Monetary Base Analysis and Control Model for Turkey
(1976) Gursel, Haluk Ferden; Bennett, Robert L.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
A monetary base analysis and control model is the focus of the paper. In the first chapter, the monetary base approach is presented and the links between monetary base, money supply and money income are shown. Further, the monetary policy problems of the developing countries are reviewed. The second chapter describes the institutional framework for Turkey. Here, as background information, the Central Bank, the Treasury and the State Economic Enterprises are examined from a monetary policy viewpoint. Also the stability of prices, the credit system, interest rates, money and security markets and foreign sector developments in recent decades are summarized. In the third chapter, the model which highlights the essentials of monetary base control is constituted. Here, the "direct" control of reserve money sources is suggested, and given the exogenously determined components of reserve money sources, the limits on the range of deliberate Central Bank-Treasury asset changes, through exchange rate, rediscount rate, open market interventions, etc., are estimated. The recommended use of the policy variable defined is explained in the last chapter.
Path Curves and Plant Buds: an Introduction to the Work of Lawrence Edwards
(International Institute for Applied Systems Analysis, 1979-07) Almon, Clopper
Lawrence Edwards has shown that many flowering plants have buds with an outline in the form of a path curve, the curve that a point follows under repeated projective transformation of the plane into itself. Edwards, however, did not give a formula for these curves nor did he fit the curves by the standard method of least squares. This paper gives an elementary exposition of the method used by Edwards, shows its relation to projective geometry, and then uses homogeneous coordinates, linear differential equations and characteristic values and vectors of a matrix to derive the formula for path curves. This formula is then used to fit path curves by least squares to data provided by Edwards for the buds of 150 plants. Most buds are fit very closely.
An Empirical Analysis of the Determinants of Initial Occupational Choice by Male High School Graduates
(1986) Cox, Donald Francis; Brechling, Frank; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, MD)
This dissertation consisted of an empirical analysis of the determinants or initial occupational choice by male high school graduates. The approach used was based on the theory of random utility. According to this approach, the individual selects a particular outcome from a set of possible outcomes based on both observed and unobserved characteristics of the individual and the particular possible outcome. In this analysis, the occupational choice set contained three possible outcomes. These possibilities were civilian sector employment, military service and college enrollment. For empirical analysis, a sample of 1,748 male high school graduates was drawn from the National Longitudinal Survey of Youths (1979-1981). The empirical model consisted of a mixed discrete/continuous simultaneous 4 equation system. Three estimation strategies were used. The first was a sample two stage logit/ordinary least squares procedure. The second was a modified two stage logit/ordinary least squares procedure that corrected for self-selectivity bias. the third strategy consisted of a modified two stage logit/ordinary least squares procedure that corrected for both self-selectivity and choice-based sampling bias. The estimation results indicate that the decision to enlist is most sensitive to the net income of the individual's family and the predicted civilian sector wage. The military experience of the individual's father and the desire to acquire additional training are also important in this decision. In addition, the differences in the estimates across the three estimation procedures illustrate the importance of correcting for sample biases.
Nonrandom Mixing Models of HIV Transmission
(Springer-Verlag, 1989) Kaplan, Edward H.; Cramton, Peter; Paltiel, A. David
Models of HIV transmission and the AIDS epidemic generally assume random mixing among those infected with HIV and those who are not. For sexually transmitted HIV, this implies that individuals select sex partners without regard to attributes such as familiarity, attractiveness, or risk of infection. This paper formulates a model for examining the impact of nonrandom mixing on HIV transmission. We present threshold conditions that determine when HIV epidemics can occur within the framework of this model. Nonrandom mixing is introduced by assuming that sexually active individuals select sex partners to minimize the risk of infection. In addition to variability in risky sex rates, some versions of our model allow for error (or noise) in information exchanged between prospective partners. We investigate several models including random partner selection (or proportionate mixing), segregation of the population by risky sex rates, a probabilistic combination of segregation and random selection induced by imperfect information (or preferred mixing), and a model of costly search with perfect information. We develop examples which show that nonrandom mixing can lead to epidemics that are more severe or less severe than random mixing. For reasonable parameter choices describing the AIDS epidemic, however, the results suggest that random mixing models overstate the number of HIV infections that will occur.
Fiscal Illusion in Public Finance: A Theoretical and Empirical Study
(1989) Marshall, Frances Louise Lightsey; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
This study of fiscal illusion begins by surveying existing studies of its nature and consequences: finding no consensus upon its definition proposes a comprehensive one: "the misperception by one or more individuals of the value of one or more fiscal parameters." No specifications of source, locus, nature, duration, variables affected, or direction of bias are presumed, and none are precluded. The issue of aggregation of individual perceptions, often preempted as definitional, is found to be crucial in interpreting the existing literature. The theoretical portion of the study uses the standard consumer choice model and the median voter model, again finding that the method of aggregating individual choices is crucial. It demonstrates that high average and total levels of fiscal illusion can be consistent with efficient social outcomes and that survey evidence is inappropriate for assessing the importance of fiscal illusion. It further finds that the impact of fiscal illusion on individual welfare provides a source of potential gain for agents who can dispel that illusion in individuals who may be decisive for the outcome of the collective choice process. An examination of the incentives of various agents to dispel illusion concludes that, though the existing literature evinces a recurrent concern that fiscal illusion results in misallocation of resources to and within the public sector, especially through the public officials' manipulation of citizens' perceptions, there exists a considerable array of forces that have significant power to limit the ability of such illusion to impose important burdens upon the electorate. The work concludes with an empirical study of the fiscal illusion hypothesis, in which estimates of the dollar magnitudes of the state tax "windfalls" resulting from the federal Tax Reform Act of 1986 are calculated and, in the estimated model, are found to exert no significant impact upon either the levels of state expenditures or changes in those levels. Because the windfalls are exogenous, this finding is free from the simultaneity issues that have compromised existing empirical studies of fiscal illusion. The results are consistent with the proposition that existing forces effectively limit the sway of fiscal illusion.
Shrewd Bargaining on the Moral Frontier: Toward a Theory of Morality in Practice
(Philosophy Documentation Center, 1991) Dees, J. Gregory; Cramton, Peter
From a traditional moral point of view, business practitioners often seem overly concerned about the behavior of their peers in deciding how they ought to act. We propose to account for this concern by introducing a mutual trust perspective, where moral obligations are grounded in a sense of trust that others will abide by the same rules. When grounds for trust are absent, the obligation is weakened. We illustrate this perspective by examining the widespread ambivalence with regard to deception about one’s settlement preferences in negotiation. On an abstract level, such deception generally seems undesirable, though in many individual cases it is condoned, even admired as shrewd bargaining. Because of the difficulty in verifying someone’s settlement preferences, it is hard to establish a basis for trusting the revelations of the other party, especially in competitive negotiations with relative strangers.
Promoting Honesty in Negotiation: An Exercise in Practical Ethics
(Philosophy Documentation Center, 1993) Cramton, Peter; Dees, J. Gregory
In a competitive and morally imperfect world, business people are often faced with serious ethical challenges. Harboring suspicions about the ethics of others, many feel justified in engaging in less-than-ideal conduct to protect their own interests. The most sophisticated moral arguments are unlikely to counteract this behavior. We believe that this morally defensive behavior is responsible, in large part, for much undesirable deception in negotiation. Drawing on recent work in the literature of negotiations, we present some practical guidance on how negotiators might build trust, establish common interests, and secure credibility for their statements thereby promoting honesty. We also point out the types of social and institutional arrangements, many of which have become commonplace, that work to promote credibility, trust, and honesty in business dealings. Our approach is offered not only as a specific response to the problem of deception in negotiation, but as one model of how research in business ethics might offer constructive advice to practitioners.
The Determinants of U.S. Labor Disputes
(University of Chicago Press, 1994) Cramton, Peter; Tracy, Joseph S.
We present a bargaining model of union contract negotiations, in which the union decides between two threats: the union can strike or continue to work under the expired contract. The model makes predictions about the level of dispute activity and the form the disputes take. Strike incidence increases as the strike threat becomes more attractive, because of low unemployment or a real wage drop during the prior contract. We test these predictions by estimating logistic models of dispute incidence and dispute composition for U.S. labor contract negotiations from 1970 to 1989. We find empirical support for the model's key predictions, but these associations are weaker after 1981.
Wage Bargaining with Time-Varying Threats
(University of Chicago Press, 1994) Cramton, Peter; Tracy, Joseph S.
We study wage bargaining in which the union is uncertain about the firm's willingness to pay and threat payoffs vary over time. Strike payoffs change over time as replacement workers are hired, as strikers find temporary jobs, and as inventories or strike funds run out. We find that bargaining outcomes are substantially altered if threat payoffs vary. If dispute costs increase in the long-run, then dispute durations are longer, settlement rates are lower, and wages decline more slowly during the short-run (and may even increase). The settlement wage is largely determined from the long-run threat, rather than the short-run threat.
Money Out of Thin Air: The Nationwide Narrowband PCS Auction
(Blackwell, 1995) Cramton, Peter
The Federal Communications Commission held its first auction of radio spectrum at the Nationwide Narrowband PCS Auction in July 1994. The simultaneous multiple-round auction, which lasted five days, was an ascending bid auction in which all licenses were offered simultaneously. This paper describes the auction rules and how bidders prepared for the auction. The full history of bidding is presented. Several questions for auction theory are discussed. In the end, the government collected $617 million for ten licenses. The auction was viewed by all as a huge success—an excellent example of bringing economic theory to bear on practical problems of allocating scarce resources.
Why is 'The Market' so Unforgiving? Reflections on the Tequilazo
(1996-09-21) Calvo, Guillermo A.
Mexico’s financial debacle and its impact on other emerging markets (the Tequila effect) has raised many fundamental questions. Mexico achieved fiscal balance in 1993, undertook several fundamental market-oriented reforms, signed a free trade agreement with a very large market (the NAFTA), became a member of the OECD, and was hailed by international institutions as a paramount example of successful reform. Yet, the December 20, 1994, devaluation brought the economy down like a house of cards. Output fell by more than 7 percent in 1995, the current account deficit sharply swung from about 8 percent of GDP in 1994 to zero, and investors turned their noses away from high-yield Mexican public debt even though the international community had plunked about $50 billion in a rescue package. In addition, Mexican problems quickly spread around the world’s emerging markets, including those exhibiting long and enviable track records.
Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions
(Blackwell, 1997) Ausubel, Lawrence M.; Cramton, Peter; McAfee, R. Preston; McMillan, John
We examine bid data from the first two broadband PCS spectrum auctions for evidence of value synergies. First, we estimate a benchmark regression for the determinants of final auction prices. Then, we include variables reflecting the extent to which bidders ultimately won or already owned the adjacent wireless properties. Consistent with geographic synergies in an ascending-bid auction, prices were higher when the highest-losing bidder had adjacent licenses. The footprints of winning bidders suggest that they were often successful in realizing these synergies.
Monetary and Exchange Rate Policy for Mexico: Key Issues and a Proposal
(1997-06-08) Calvo, Guillermo A.
In these notes I lay out basic considerations which I believe are relevant for the design of monetary/exchange-rate policy, MEP, in Mexico. In my view, there are no ‘magic’ formulas. For some countries, an iron-clad currency board may be a desirable arrangement, while for others flexible exchange rates would be appropriate. This is so because ‘money’, unlike regular goods like bread, derives its value from convention, institutions and, more than any other good, from expectations. Thus, a key consideration in the design of MEP is the credibility of policymakers - - the latter being heavily determined by history and institutions which are, by necessity, countryspecific. Section II discusses some traditional goals of MEP, while Section III examines the role of credibility and flexibility to ensure its effectiveness. Section IV studies the recent experience in Mexico and shows that the proximate case for the 1994 financial debacle was a failed attempt at interest-rate smoothing, coupled with having ignored the role of external factors. Moreover, this section briefly examines MEP after the crisis. It concludes that MEP is highly accommodative and may have contributed to the existence of a “peso problem.” The latter, in turn, may give rise to further real appreciation of the currency. Section V presents a brief summary of the pros and cons of different MEPs. This is complemented in Section VI with a discussion of other policies and considerations that are essential for the sustainability of any MEP. More specifically, I will discuss the role of fiscal policy, management of domestic public debt and the role of the financial sector. Section VII offers some ideas for a MEP for Mexico based on previous considerations. In a nutshell, I propose adopting a system of flexible exchange rates, much like the present one, but with a longer horizon and complemented with a sliding floor on the nominal exchange rate to prevent large and sudden currency appreciation. Furthermore, I argue in favor of free-floating interest rates and no controls on capital mobility, except for reserves requirements aimed at preventing sudden and sizable growth in bank credit. Comparison with present MEP and some criticisms are discussed in Section VIII. Questions about long-term goals and transition are presented in Section IX. Appendix I examines a simple formal model to rationalize the effect of the MEP after the December 1994 crisis, while Appendix II analyzes some technical implications of the proposed exchange rate rule.
Using Auctions to Divest Generation Assets
(Elsevier Science, 1997-12) Cameron, Lisa J.; Cramton, Peter; Wilson, Robert
In most states, ratepayers will compensate utilities for their stranded costs. As a result, these costs must be measured as accurately as possible, in a manner that is easily understood by all concerned parties. We describe the options for measuring stranded costs and argue that a simultaneous ascending auction is the best approach.
The Use of Replacement Workers in Union Contract Negotiations: The U.S. Experience, 1980-1989
(University of Chicago Press, 1998) Cramton, Peter; Tracy, Joseph S.
It is argued in many circles that a structural change occurred in U.S. collective bargaining in the 1980s. Strike incidence declined, dispute incidence increased, and the composition of disputes shifted away from strikes and toward holdouts. We investigate the extent to which the hiring of replacement workers can account for these changes. For a sample of over 300 major strikes since 1980, we estimate the likelihood of replacements being hired. We find that the risk of replacement is lower for bargaining units with more experienced workers, and declines during tight labor markets. The composition of disputes shifts away from strikes as the predicted risk of replacement increases. In addition, the overall level of disputes increases as a result of the shift in the composition of disputes. Based on our estimates reducing the predicted replacement risk faced by bargaining units to the pre-1982 levels would have lead to a reduction in the dispute incidence by around 5 percentage points, an increase in the fraction of disputes involving a strike by around 4 percentage points, and an increase in the strike incidence by around 0.8 percentage points.
Uncertain Duration of Reform: Dynamic Implications
(Cambridge University Press, 1998) Calvo, Guillermo A.; Drazen, Allan
We develop a framework to study the effects of policies of uncertain duration on consumption dynamics under both complete and incomplete markets. We focus on the dynamic implications of market incompleteness, specifically on the lack of state-contingent bonds. Two policies are considered: pure output-increasing and tariff-reducing (trade liberalization). With complete markets, the output-increasing policy leads to flat consumption, while with no contingent assets, consumption jumps upward on the announcement of the policy, continues rising as long as the policy is in effect, and collapses when it is abandoned. A similar consumption path obtains in a trade liberalization in the realistic case of low elasticity of substitution and no rebate of tariffs. Market incompleteness rationalizes the existence of gradual changes in consumption.