Real exchange rate and elasticity of labour supply in a balance-of-payments-constrained macrodynamics

A macrodynamic model is proposed in which the real exchange rate and the elasticity of labour supply interact defining different trajectories of growth and income distribution in a developing economy. Growth depends on imports of capital goods which are paid with exports (there are no capital flows) and hence is constrained by equilibrium in current account. The role of the elasticity of labour supply is to prevent the real exchange rate from appreciating as the economy grows, thereby sustaining international competitiveness. The model allows for endogenous technological change and considers the impact of migration from the subsistence to the modern sector on the cumulative (Kaldor-Verdoorn) process of learning.

The structure of worker compensation in Brazil, with a comparison to France and the United States

We employ comprehensive linked employer-employee data for Brazil to analyze wage determinants and compare results to Abowd et al. (2001) for French and U.S. manufacturing. While returns to human capita in Brazilian manufacturing exceed those of the other countries, occupation and gender differentials are similar. The worker-characteristics component accounts for much of the greater wage inequality in Brazil, but the establishment-fixed component has scant explanatory power. Thus, firm-or industry-level factors offer little scope for explaining the differences in wage inequality. Brazil`s wage structure resembles that of France, a country with some similarity in labor market institutions.

A Comparison of Bayesian and Sampling Theory Inferences in a Probit Model

HE PROBIT MODEL IS A POPULAR DEVICE for explaining binary choice decisions in econometrics. It has been used to describe choices such as labor force participation, travel mode, home ownership, and type of education. These and many more examples can be found in papers by Amemiya (1981) and Maddala (1983). Given the contribution of economics towards explaining such choices, and given the nature of data that are collected, prior information on the relationship between a choice probability and several explanatory variables frequently exists. Bayesian inference is a convenient vehicle for including such prior information. Given the increasing popularity of Bayesian inference it is useful to ask whether inferences from a probit model are sensitive to a choice between Bayesian and sampling theory techniques. Of interest is the sensitivity of inference on coefficients, probabilities, and elasticities. We consider these issues in a model designed to explain choice between fixed and variable interest rate mortgages. Two Bayesian priors are employed: a uniform prior on the coefficients, designed to be noninformative for the coefficients, and an inequality restricted prior on the signs of the coefficients. We often know, a priori, whether increasing the value of a particular explanatory variable will have a positive or negative effect on a choice probability. This knowledge can be captured by using a prior probability density function (pdf) that is truncated to be positive or negative. Thus, three sets of results are compared:those from maximum likelihood (ML) estimation, those from Bayesian estimation with an unrestricted uniform prior on the coefficients, and those from Bayesian estimation with a uniform prior truncated to accommodate inequality restrictions on the coefficients.

An Economic Analysis of the Legal Concept of Trustees' Power of Investment

Authorised trustee status is a legal concept which has economic implications; one of the major implications is that it assists in the direction of investment funds into particular securities and areas of the economy. The concept of authorised trustee status, while attempting to achieve specific outcomes for the beneficiaries of trusts cannot be relied upon to secure these results. Economic analysis of the role of the trustee maintains that this role is one of portfolio manager; a role which is complex but which is explicable in terms of definable procedures and practices. The role of trustee as portfolio manager is one which requires greater financial knowledge than can be assumed is possessed by all trustees. The trustee as portfolio manager is required to maintain a review of decisions make under powers to invest trust assets. A solution to the problem of authorised trustee status is proposed. The solution takes two parts: the first is the adoption of the prudent person approach but with the codification of duties of the trustee and the explicit listing of the factors that a trustee should consider in using the investment powers. The second part of the proposed solution is to link the investment powers of trustees to the best practice features of securities advisers who are now licensed by a regulatory body, the Australian Securities and Investment Commission.

Migration of Husbands, Remittances and Agricultural Production: Impacts when Wives Head Households in Rural Kenya

This paper uses data collected from migrants' wives in the Nyeri district of Kenya. The main objective is to determine whether migration and remittances contribute to the development of agriculture. Our results suggest that most migrants are pushed out of rural areas, belong to the group of low-paid workers in urban areas, send little and irregular remittances to their wives back in rural areas and that these remittances are mainly used for consumption purposes and do not contribute to any significant development in agriculture. Our results also indicate that altruism or social obligation might be the main reason for migrants sending remittances back to their rural wives.