Please select from the titles below:
- Are Devaluations Expansionary or Contractionary? A survey article
- Ex post Moral Hazard in Crop Insurance: Costly State Verification or Falsification?
- An Error Correction Model of the Median Voter’s Demand for Public Goods in Mauritius
- A Complete Characterization of Economies with the Nonsubstitution Property
- The Frontier Approach to the Measurement of Productivity and Technical Efficiency
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Are Devaluations Expansionary or Contractionary? A survey article (p.1)
by M Bahmani-Oskooee and I Miteza Earlier studies that investigated the impact of devaluation on domestic production relied upon the aggregate demand analysis. They argued that by making a country’s exports cheaper and imports expensive, devaluation is said to stimulate the aggregate demand and thus, domestic production. In this case, devaluation is said to be expansionary. Recent studies, however, have argued that by raising the cost of imported inputs, devaluation contracts aggregate supply. If decrease in aggregate supply more than offsets the increase in aggregate demand, output eventually declines. In this case, devaluation is said to be contractionary. This article reviews the existing research on the effects of devaluation on domestic production and concludes that the impact is country specific and depends on model specification and results depend on the estimation technique.
Ex post Moral Hazard in Crop Insurance: Costly State Verification or Falsification? (p.29)
by R M Rejesus
This article examines the extent to which actual crop insurance indemnification behaviour conforms to the theoretical predictions of two ex post moral hazard models — costly state verification and costly state falsification — and then explores whether the closely conforming model can indeed help deter ex post moral hazard in the United States (US) crop insurance program. The results suggest that indemnification behaviour in crop insurance is more in line with the costly state verification model. Following the theoretical predictions of the costly state verification model, however, may not be the optimal policy to deter ex post moral hazard since it is possible for insured producers to deceive loss adjusters and for loss magnitudes to not be truthfully verified.
An Error Correction Model of the Median Voter’s Demand for Public Goods in Mauritius (p.47)
by S K SobheeFrom an optimizing framework, the median voter’s demand for public goods is derived and estimated using data pertaining to the economy of Mauritius over the period 1970-1999. Empirical findings reveal that a long run relationship exists between the quantity demanded of public goods and the income of the median voter, the latter's perceived tax price (for these goods) and overall population. Public goods are found to be basic necessities rather than luxury goods. Moreover, the rising number of beneficiaries generates an increase in the demand for public goods, though not in a manner that would substantiate the congestion hypothesis. A disaggregation of the temporal elasticities through the formulation of an Error Correction Mechanism indicates that, while in the short run, it is basically the perceived tax-price variable which predominates, in the long run, all the three variables — price, income and population become significant in influencing the median voter's demand. A major policy implication emanating from these findings is it may be necessary but not sufficient to curb public spending by simply eliminating fiscal deficits.
A Complete Characterization of Economies with the Nonsubstitution Property
(p.63)
by Takao Fujimoto, Carmen Herrero, Ravindra R Ranade, José A Silva and Antonio Villar A complete characterization of economies with the nonsubstitution property is presented for linear models. In this characterization, a degree of proper joint production as well as the existence of durable capital goods is allowed for.
The Frontier Approach to the Measurement of Productivity and Technical Efficiency
(p.71)
by V Sena In 1957, Farrell proposed to measure technical (in)efficiency as the realised deviation from a frontier isoquant. Since then, the research has developed several methods to derive the production frontier and it has also extended its scope in applying frontier techniques to the measurement of total factor productivity. In this paper, I present the core techniques for the measurement of technical efficiency and productivity based on the notion of frontier and introduce the more rcent technological advances in the field.
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