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No. 338
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January 2005
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Vol LXXXV
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ISSN0019-5170
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Contents
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On Money Uncertainty and
Inflation for Taiwan
Yen-Sen,Ni And Man-Hwa,
Wu
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The
paper uses monthly data of money and consumer
price index from January 1988 to December
2001 for Taiwan.We use GARCH
models and component GARCH models
to retrieve money volatilities and then
test the effect of money uncertainty to
inflation. With concerning symmetric
and asymmetric models and with concerning
five different Jag-chosen criteria, our
empirical results show that money volatilities
have significant, and positive effects on
inflation. It reveals that stable monetary
policies will be better for the economy
in Taiwan, since money uncertainty will
cause the inflation and the fluctuation
of economy in Taiwan.
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Trade off between inflation and Unemployment
Cointegration Approach
P. AMBIGA DEVI AND SELVI.
D. PRIYA
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There
were arguments for and against the trade-off
inflation and unemployment. There is fundamental
disagreement between the Keynesian, monetarist
and new classical economists as to what
were the main causes of inflation and unemployment.
Very little empirical research on this topic
was being carried out in India. But these
studies failed to analyse either the short
run dynamics or the long run equilibrium
in inflation and
unemployment based on cointegration.
approach. The present work is an attempt
to empirically test the relationship between
inflation and
unemployment using time series data
on the Indian economy applying the cointegration
approach. The results of the study indicated
the first order autoregressive form of unemployment
suggested by Sargent did perform well for
the Indian data. Further, there was a mild
support for the new classical proposition
that only the unanticipated rate of growth
of money supply lagged by two
years had real effect on unemployment.
However the models on inflation neither
supported the monetarists nor the Keynesians
schools of thought. The level of unemployment
was found to move towards short run equilibrium
and the rate of inflation was found to be
endogenous being explained by its own shocks.
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Government
Expenditures on Social Services : How Far
Has the Poor Benetited in Swaziland ?
OLUYELE AKINKUGBE
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The conventional
wisdom in both the public finance and development
economics literature seems to suggest that
one of the major roles of government in
any society is to enhance social welfare
through its fiscal policy actions. An important
way through which the government could achieve
this would be by spending on things of value
to people that they will not otherwise be
able to provide for themselves. In this
regard, the conjecture is that public spending
should be directed, not just at promoting
efficiency by correcting for market failure
in the economy, but also promoting equity
and reducing poverty through the distribution
of the gains from economic growth. In this
paper we have shown that despite substantial
increases in government expenditures on
health, education and other social services
in Swaziland, poverty continues to be endemic
and the poor continue to be under-served
in terms of access to basic education, primary
health care and better living conditions.
The level of poverty remains quite high;
70 per cent of the population continue to
live in the rural areas; a small proportion
of the population continue to hold a large
portion of income; and land remains largely
in the hands of the minority. For the objective
of poverty reduction and equity to become
achievable in Swaziland, fiscal policy actions
of the governments will need to be more
target at the currently underserved and
the poor in the society, particularly the
rural dwellers. In this way, the access
of the poor people to health, education
and other infrastructure such as housing,
safe water and other safety benefits could
be guaranteed and sustained.
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Optimizing
Strategy within Productive Location among
Three Countries under Exchange Rate Uncertainty
: A Real Options Approach
CHIN - TSAI LIN AND
CHENG - RU WU
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This
study considers the effects of two real
exchange rates on strategies that govern
the locations of production of by firms
that are entering foreign markets in three
countries. This investigation extends the
Cobb-Douglas batch process production model
of Lin and Wu (Indian Journal of Economics,
2004), which considers two locations of
production in two countries, respectively
to establish a decision valuation model
for selecting the three optimal locations
for one in each country. A general form
of the first order of degree homothetic
production functions is also considered
in relation to the rule for decision-making
in the proposed model. This paper applies
the real options approach (ROA) to evaluate
the behavior of the transferable location
in the three countries. Furthermore, a Continuous-Time
model Optimization Problem is solved to
obtain a closed form solution of the threshold
value, perform a sensitivity analysis, and
determine some characteristic strategies
of operating method for the CES batch process
model for three countries, omit summarized
into useful insights for global managers.
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Overseas
Mergers and Acquisitions by Indian Enterprises
: Patterns and Motivations
JAYA PRAKASH PRADHAN
AND VINOJ ABRAHAM
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This
paper examines the patterns and motivations
behind the overseas M & As by Indian
enterprises. It is found that a large majority
of overseas M & As originated within
services sector led by software industry
and in overwhelming cases were directed
towards developedcountries of the world
economy. The main motivations of
Indian firm's overseas acquisitions have
been to access international market,firm-specific
intangibles like technology and human skills,
benefits from operational synergies, overcome
constraints from limited home market growth,
and survive in an increasingly competitive
business environment. Further it has been
found that overseas acquirers in the case
of manufacturing sector tends to be large
sized and research intensive,while they
are older, large sized and export-oriented
in the case of software sector.
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An
Analysis of the Growth of Manufacturing
Sector in West Bengal (1977-1988)
ARPITA BANERJEE AND
DEBESH CHAKRABORTY
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The paper
analyses growth of the manufacturing sector
in West Bengal in a more disaggregative
way for the period 1977-1998 as this sector
is dynamic in any economy. The compound
growth mtes for the two-digit industries
have been calculated for the period 1977-1998
and also for the period 1977-1992 and 1992-1998.
The results show that the industrial situation
in the state at the time 1977-1992 was dismal
but after this period the situation is improving
to some extent. Growth rate of most of the
industries accelerated during reform period.
To know the concentration of industries
Hirshman Herfindal Index has also been calculated
in the paper.
To know the closeness between employment
and output and also the relation between
employment and capital, employment elasticity
with respect to output and employment elasticity
with respect to capital have been calculated.
The results of employment elasticity with
respect to output show that manufacture
of jute. beverages, furniture, wool. silk
has positive employment elasticities indicating
labour intensiveness of these industries.
The employment elasticity with respect of
fixed capital shows negative sign for most
of those industries which show positive
sign for employment elasticity with respect
to output implying substitutability between
capital and labour. However manufacture
of food, cotton textile. wool. silk. leather
shows complementarity between these two
factors. Concluding remarks are presented
in the paper.
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Migration
as A Source of Human Resource Development
: An Analysis of Indian Empirical Experience
SHRI PRAKASH AND NILASANTHA
MOHANTY
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The study
has estimated the value of migrants' contribution
to growth of a state. This has been a neglected
aspect, though the role of migration in
economic growth has attracted attention
of economists, analysts and policy makers.
Migration accelerates growth by shifting
manpower from labour surplus region/nations,
sectors and occupations to those experiencing
shortages, moving the economy towards equilibrium
in human resource allocation and utilization.
It shifts the demand curve for labour upwards
to the right, raising investment, employment,
wages and about. This study develops an
input-output model of inter-state migration
to detennine (i) Markov-Chain
probabilities
of spatial pattern of migration, and (ii)
Value of migrants to the economy for which
an input-output model has been developed.
The study reveals that (a) distance determines
the choice of state/region of migrants destination.
where job opportunities are available at
comparable wages; (b) migrants prefer industrially/agriculturally
developed states/regions as the destination
of migration; (c) agricultural labour dominates
the occupational structure of migrants,
reflecting the dominance of rural to rural
rather than rural to urban migration. This
contradicts the Todaro hypothesis of the
dominance of rural to urban migration; and
(d) migration. besides generating employment,
raises productivity, and hence, the earnings
of the migrants. thereby improving not only
economic conditions of migrants but also
promoting growth of the economy.
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Exports,
Importsand Output in the US : What Causes
What?
TSANGYAO CHANG, WENRONG
LIU AND HENRY THOMPSON
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Cointegration
and vector autoregression are used to examine
relationships among exports, imports, and
output in the United States from 1971 to
2001. These three variables are co integrated.
There is bi-directional Granger causality
for output-imports and exports-imports,
but only unidirectional causality from output
to exports. Impulse response and variance
decomposition analyses tell similar stories.
Exports do not appear to have led to economic
growth in the US over this period.
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