ECONOMIC DEVELOPMENT AND TRADE LIBERALIZATION: THE INDONESIAN EXPERIENCE
Scott W. Fausti and Rony Bishry
From 1950 to 1965, Indonesia followed an import substitution industrialization development strategy. From 1966 to present, Indonesia has moved toward an export oriented development strategy. This paper tests the predictions of the Heckscher-Ohlin-Samuelson (HOS) model of international trade by comparing Indonesia's economic performance under two contrasting development strategies. The paper concludes that Indonesia's economic performance under the opposing development strategies supports the predictions of the HOS model. Furthermore, the Indonesian experience under the two development strategies supports the "trade as an engine of growth" hypothesis. (O20,F02)
THE LINK BETWEEN SKILL AND EDUCATION IN KENYA
Michael Benarroch
This paper examines the link between educational attainment and the ratio of skilled to unskilled labor in Kenya. The study recognizes that the relevant association must relate the stock of labor to the stock of population with a certain educational attainment. The results indicate the there is a strong positive correlation between the stock of population with some secondary education and the supply of skilled labor. This has implications for educational policy. To increase the supply of skilled labor, planners have to increase the ratio of the population with some secondary education. (O10,O15)
THE DEMAND FOR MONEY IN IRAN
Hamid Tabesh
Numerous studies have empirically examined the money demand function in several developed and less developed countries. However, current knowledge of demand for money in Iran is very limited. This paper presents a fairly standard approach to estimate appropriate money demand for M1 and M2 for Iran for the sample period 1959-1991. Findings of this paper suggest that money demand in Iran is affected by real income and the expected rate of inflation. The estimated money demand equations fit the data quite well and exhibit structural stability over the same period. In addition, demand for real money balances (M2-definition) was significantly lower during post-revolutionary period of 1979-1991. (E41,E43)
CONSUMER SENTIMENT AND INTERNATIONAL CONDITIONS
E.J. Jennings and P. McGrath
There is growing interest in the influence consumer sentiment has upon consumer behavior and, ultimately, the performance of the aggregate economy. The purpose of this study is to examine what role, if any, international economic conditions have in molding the outlook of U.S. consumers. Evidence is presented that indicates movements in oil prices, as well as the value of the U.S. dollar vs. other currencies, offer predictive power for forecasting movements in consumer expectations. (E37,E27)
FACTORS INFLUENCING GOVERNORS' SALARIES
Fred J. Abraham, Donn M. Johnson, and Bulent Uyar
Historically little attention has been devoted to the factors that determine the salaries of elected officials such as governors. If governors can be perceived as CEO's of public corporations then the factors that determine governors' salaries should be similar to those that determine the CEO's of private corporations. A model is tested where governors' salaries depend on productivity, responsibility, and raiding practices as suggested by a model of corporate CEO salaries estimated by Abraham (1988). The results suggest governors' salaries are not determined similar to CEO's. Beyond recognizing the responsibilities of office, the salaries are probably determined by non-economic factors. (J31,J45)
ENHANCED HUMAN CAPITAL STOCK AND THE MILITARY EXPERIENCE: A MODEST POLICY PROPOSAL
John A. Sondey
Military service is a proven builder of human capital. Empirical evidence supports the hypothesis that veterans of World War II and Korean enjoy a "veteran's premium" in civilian earnings relative to the non-veteran cohort. However, there appears to be no premium accruing to service during the Vietnam conflict. It is suggested that Vietnam is an outlier and that the unique capital attributable to military service remains reality. It is proposed the production of service-unique human capital be encouraged through a new, 12 month enlisted option. (H56,J24)
A RETROSPECTIVE LOOK AT THE DOUGLAS COMMITTEE REPORT
Robert Stanley Herren
The paper briefly summarizes the Douglas Committee Report(1950). The report advocated more reliance on monetary policy and less on fiscal policy. Douglas recommended that the Federal Reserve end its policy of pegging interest rates on government securities. The Truman administration vigorously attacked the report while economists were ambivalent toward it. It was a factor that led to the 1951 Treasury-Federal Reserve Accord and represents an early shot in the Monetarist Counterrevolution. The paper's final section evaluates the pertinence of the report with regard to current issues in monetary policy. (B22,E50)
COALITION FORMATION AS A SOLUTION TO INDECISIVE DECISION-MAKING
Michael M. Tansey
Cooperative games often lead to the confirmation of coalitions. Nevertheless, organizations based on such coalitions may be marked by powerful incentives for intransigent behavior by individuals. This paper traces the incentives for intransigence to (a) indecisiveness in voting and decision making procedures and (b) the ease with such procedures can be overthrown. A computer model of social interaction, based on cellular automata, shows that asymmetries in willingness to coalesce tend to favor intransigence when indecisiveness occurs in voting. To avoid intransigent behavior, managers must convince members of an organization that (1) coalition making process will be allowed to work until a decisive vote is achieved and (2) voting procedures cannot be overthrown as a result of indecisive votes.
MONEY, INFLATION AND UNEMPLOYMENT LINKAGES: SOME MONETARISTS PROPOSITIONS REEXAMINED
Dewan A. Abdullah and Raouf S. Hanna
This paper solves a conventional macroeconomic model to derive reduced from equations for inflation and unemployment. Within this reduced form framework, we examine some monetarist long-run propositions embodied in the natural rate hypothesis. The neutrality restrictions imposed separately and jointly on both the unemployment rate and the inflation rate equations could not reject the hypothesis that in the steady state, a once-for-all shift in the money growth rate has no effect on unemployment rate and instead translates, once-for-all, into a change in the rate of inflation. The estimated sums of coefficients in the unemployment rate equation indicate that money growth has short-run effects in reducing the unemployment rate and fiscal expenditure is unimportant as monetarists would expect. (B22,E3 and E5).
AN EXAMINATION OF THE RELATIONSHIP AMONG PRODUCTIVITY, WAGE RATES AND RELATIVE PRICES
Jack Strauss and Mark E. Ferris
Several assumptions implicit in Balassa s and Samuelson's explanation of the causes of purchasing power parity violations are examined. Empirical results do not support wage nobility across sectors for most for most economics, rather our study supports the result that wages are determined by the productivity in each sector. Our results support the efficiency wage model which suggests that higher productivity in the traded sector is accompanied by higher real wages in that sector. We believe that the proposition that PPP violations are due to productivity differentials across economies should be reexamined. (F10)
WITHIN MARKET PROFITABILITY OF BANKS IN THE STATE OF IOWA
Arthur T. Cox
Bank profitability has been the subject of many studies. Earlier studies have examined economies of scale and scope and were based on comparisons made across different markets. This study examines profitability but from within a given market. The thesis of this study is absolute bank size is not as important as is relative bank size. Some markets are large and may contain some very large banks. Some markets are small and may not contain any large banks. However, even in small markets, there may be banks which dominate that market and as a result are more profitable than are their competitors. Stated differently, the only comparisons which are necessary are to compare a bank to its competitors.
Several different statistics were conducted. Results showed some support for the thesis. In addition, there appears to be a negative relation between a bank's ranking with respect to total deposits and profitability, and a positive relation between the ranking with respect to total loans and profitability.
CONFLICTING FORCES IN THE DEREGULATION OF THE SOUTH DAKOTA TELECOMMUNICATIONS MARKET
Jack Trierweiler and Dwight W. Adamson
This study reviews the impact the divestiture of AT&T had on the South Dakota telecommunications market and explains the technological changes that have occurred and how these changes have been translated into lower costs. The South Dakota telecommunications market is examined under the scenarios: 1) fully regulated; 2) partially regulated; and 3) unregulated market. ARIMA procedures are used to forecast changes in revenues under two different regulatory schemes. The degree of contestability of the South Dakota telecommunications market is investigated to determine if competition is suitable for the unregulated scenario. The study argues that the market is competitive. (L96,L51)
A STIMULATION STUDY OF NONPARAMETRIC TECHNICAL EFFICIENCY WITH K FIRMS AND J INPUTS
Feng Xu and Tony Prato
Nonparametric firm efficiency is simulated and metamodels of simulated efficiency are estimated. Results show that measured firm efficiencies from data envelopment analysis are affected by the number of firms and inputs used in the simulations. The fewer the number of firms and the greater the number of inputs, the higher the overall firm efficiency and the higher the percentage of firms being measured as completely efficient. Future empirical studies using data envelopment techniques should be cautious about the dimension of the problem. A researcher can check if there is any discrepancy between the calculated efficiencies and the results from the metamodels of randomly generated data presented in this paper. (C14, C15, C63)