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No. 320

JULY 2000

Vol LXXXI

ISSN 0019-5170

Contents


 
 

Public Infrastructure Investment and Economic Growth in Nigeria

R. I. UDEGBUNAM
 

This paper examines the empirical relation between public infrastructure investment, as measured any nonmilitary expenditure, and output growth in Nigeria. A simple model is formulated and estimated, using annual data covering the period 1975-1995. The estimates indicate a modest evidence of positive correlation between public infrastructure investment and output growth. While the evidence shows that private capital investment is strongly positively related to output growth, public infrastructure investment is found to exert a moderate effect on output growth.

The implication of these findings is that not the amount of money expended on infrastructure per se, but the actual services flow from such expenditures, that generate growth. Thus, the results suggest that public infrastructure policy should focus more on enhancing services delivery ability of the existing public infrastructure.

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 A Theoretical Model of Sustainable Development

 MIAO-SHENG CHEN AND MING-LIANG TSAI
 

The purpose of this paper is to describe a theoretical model of sustainable development. Under the consideration of the sustainable development, the objective of this model is to maximize the total present utility value of current and future generations. To internalize the externality, the environmental protection is to collect the pollution tax not only from producer but also from consumer in order to accordance with the spirit of social justice. At last, we have the contributions of this theoretical model as our conclusions.

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    A Re-examination of the Long-run Relationship between Money Supply and Inflation, in India

M. THOMAS PAUL. NISHANT BAPAT AND N. R. BHANUMURTHY
 

The present study tries to examine the long-run relationship between money supply and prices in the Indian context with the help of both annual data for the period 1953-1998 and with the help of monthly data for the period 1993 : 1 to 1998 : 12. By using various time series techniques the present study concludes that there still exists the strong influence, though not immediate, of money supply on the price changes in India in the loog run. It was also found that the money supply is not exogenous and is influenced by prices and output. The results that are derived in this study certainly raise doubts about shifting focus from money supply to interest rates by RBI. The shift to interest rate targeting is not supported, by this study. Financial liberalization has not made income velocity of money unstable in India. The monetary targeting is still useful.

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 Rural Income, Savings and Investment Behaviouramong Farmers in Osun State of Nigeria

A. B.AYANWALEANDA. S. BAMIRE
 

This paper aims at identifying the determinants of farmers' farm investments and savings as they affect farm level production in Osun State of Nigeria.
A multi-stage sampling technique was employed to select 100 respondents for the study. Data analysis revealed that farmers spent 67.84 per cent of their annual total income on non-farm activities out of which about 17 per cent was on socio-culture activities. Regression results showed that farm investments, area of land cultivated to food crop, time spent on the farm, labour size and age of farmers were significant determinants of respondents income; expenses on socio-cultural activities and level of farm income were main determinants of savings; while area of food crops grown, amount borrowed and expenses on socio-cultural activities determine farm investments. Factor analysis presented farmers economic and social status as well as off-farm commitments as the main determinants of their financial allocative decision.
Thus, real income growth and enhancement of food self-sufficiency can be made possible if policy makers embark on enlightenment programs aimed at re-orienting rural dwellers' spending habits.

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   Market Imperfections, Financial Constraints, and the Volatility of Production

ANITA SINGH AND T. V. RAMAMOHAN RAO
 

The present study demonstrates, both theoretically and empirically, that production is more volatile than sales in imperfect product markets primarily because output is more flexible than sales ex post. In particular, financial constraints do not have any influence on sales whereas production takes the brunt of the adjustment. In addition, a part of the variation in production is due to the changes in the desired inventory to sales ratio as prices vary over the business cycle. It has also been demonstrated that a finn's adjustment to demand, cost, and credit shocks will be different from the anticipated levels. These adjustments, when they are incorporated into the production smoothing model, provide a resolution of the Blinder paradox.

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 The Political Economy of Suppressed Markets: Controls, Black Markets and Rent Seeking in the Indian Cement. Industry

SHYAM J. KAMATH
 

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 Demand for Money Stability Revisited: A Case of India

KISHORE G. KULKARNI AND ERICK LEE ERICKSON
 

This paper reinvestigates the behaviour of Demand for Money in Indian economy. It also surveys the main contentions of demand for money theory of Keynesians and monetarists and brings out the main differences in their policy advice. By using the annual data for period between 1968 and 1997 the paper investigates the demand for money stability. It is concluded that interest rate has insignificant effect on the Indian demand for money and real GDP affects money demand in a significant way. It appears that in some ways, the monetarists argument that interest. rate is not a significant determinant of money demand is vindicated for the Indian case.

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