Search results

This paper aims to investigate whether empirical evidence for scale economies can be found across countries and if so, whether this evidence varies across the stage of development.

The paper uses statistical methods to make comparisons between countries.

The empirical results suggest overall evidence towards aggregate increasing returns across all samples. Within the Cobb‐Douglas framework, stronger evidence for aggregate increasing returns is found among samples depicting economies in the early stages of development. The CES framework in turn supports aggregate scale economies for advanced economies, while unitary elasticity of substitution cannot be rejected for less developed economies, giving further support for the Cobb‐Douglas estimates.

Given that evidence for scale economies is found within different estimation frameworks for different groups of economies, comparative judgment is prevented. The results nevertheless provide evidence on the overall relevance of scale economies within and across groups of economies, while also giving a clear indication of the relevance of stage of development in economic growth and development analysis.

The most fundamental insight of the empirical results presented in this paper is that there is no reason to assume that the determinants of growth or the parameters guiding economies' adjustments towards their steady states or growth paths will be similar for economies at different stages of development, given their significant structural differences, whether in terms of production structures and characteristics or consumption patterns.

Five hundred financial executives from North American companies were surveyed by means of a mailed questionnaire to gain a view from outside the operations functions of the basis on which aggregate inventory decisions are taken. The response indicated that more functions than might have been expected were involved in the process of determining inventory levels and, partly because of this, policy tended to be of a shorter rather than longer term nature.

The 21st century is a new century of environmental protection. Environmental protection is one of the most important subject matters yet to come. Moreover, as the public pays more attention to environmental problems, enterprises should increase their investment in environmental management. Therefore, determining the investment level for environmental management and allocating the investment to associated environmental management activities has become a major task. The principal and agent theory and sales response functions are used for analysis in this research. The allocation of capital investment in environmental management is found to have significant impact on the aggregate sales response, aggregate profit and investment level. Therefore, in preparing the budget for environmental management, enterprises should focus on investment allocation decisions, determine the investment level and allocation method using integrated means, and apply submarket data in the allocation decision‐making process. In other words, in setting the investment level, executive management should take managers’ willingness into consideration. In allocating capital investment, managers should identify the optimal allocation method based on submarket characteristics.

The recent publication of a sixth edition of Dornbusch and Fischer’s (D&F’s) Macroeconomics will be of interest to many teachers of macro theory. D&F’s text must currently be one of the most widely used intermediate‐level guides to macroeconomics; as the authors themselves tell us, the book has been translated into many languages and is in use around the world “from Canada to Argentina and Australia, all over Europe, in India, Indonesia and Japan, from China and Albania to Russia”. The undogmatic “middle‐of‐the‐road” approach, together with the careful and clear presentation characteristic of this user‐friendly textbook, has won it many friends.

An aggregate production function has been used in macroeconomic analysis for a long time, even though it seems that it is conceptually confusing and problematic. The purpose of this paper is to argue that the measurement problem related to the heterogenous capital input that exists in macroeconomics is also relevant to microeconomic market situations.

The author constructed a microeconomic market model to address both the problems of the measurement of the physical capital and of substitutability between labor and capital in the short run using two types of technologies: labor neutral and labor reducing. The author proposed that labor and physical capital inputs are complementary in the short run and can become substitutes only in the long run when the technology advances.

The author found that even if the technology improves at a fast rate over time, there are then diminishing returns of profits to technology and an upper limit to profits. Moreover, the author showed that under the labor-reducing technology, labor class earns more initially as technology improves, but their incomes start declining after some threshold level of passage of time.

The author cautioned the applied researcher that the estimated labor and capital coefficients of generalized Cobb–Douglas and constant elasticity of substitution of types of production functions could not be interpreted as partial elasticities of labor and capital if in reality the data come from fixed-proportions types of processes.

At an early stage in the new product development process, marketers often evaluate several concept statements in terms of customer preferences to choose the best concept for further development. Purchase intention scale is often used to measure consumer preferences at this stage when the product is still a concept statement or a mathematical position on a perceptual map. This paper discusses the limitations of two methods of aggregating individual preferences, namely plurality (first‐choice) and the Condorcet (pair‐wise majority) methods. The plurality method is subject to the top‐box paradox while the Condorcet method suffers from the paradox of voting. The Copeland method is presented as an alternative to the Condorcet method when the latter fails to identify the majority’s choice. Some limitations of predicting product trial are also presented.

This note shows that much conventional macro‐economic literature uses two inconsistent definitions of equilibrium in the commodity market. Equilibrium is defined as income equalling expenditure when deriving the IS curve; but when overall equilibrium is treated the requirement for equilibrium is that planned supply equals planned demand. The note shows that these inconsistent definitions lead to a confusing and often erroneous exposition of disequilibrium behaviour.

The objective in this paper is to review several theoretical issues associated with fiscal policy and to test these theories via a reduced form real GNP equation using quarterly U.S. data from 1958 through 1966. Theoretical work by Friedman, Holmes and Smith, and others suggest (for different reasons) that fiscal policy may be ineffective. Holmes and Smith point out that increases in taxes may conceivably increase aggregate demand if the demand for money depends on disposable income. Higher taxes shift the IS curve to the left as usual. However, higher taxes reduce disposable income and decrease the demand for money. With a constant money supply, the LM curve shifts to the right and the lower equilibrium interest rate increases aggregate demand. The net effect of the opposite shifts in IS & LM could conceivably be an increase in income. Similarly, lower taxes may conceivably lower equilibrium income. The argument of Friedman and others runs along different lines. They emphasize that any change in government expenditure or change in taxes may temporarily alter real income, but any “pure” fiscal policy must be accompanied by a change in government debt. The larger debt that accompanies a fiscal expansion raises interest rates and eventually reduces private demand. The fiscal expansion can allegedly “crowd out” private expenditure completely so that the net long run effect on real income is zero.

Models of endogenous economic growth typically assume that aggregate production is characterised by increasing returns to scale, often as a result of the accumulation of physical and human capital. In this paper, an international data‐set on formal educational attainments is used to disaggregate total employment in order to estimate a Cobb‐Douglas aggregate production function. The function is estimated, using a pooled cross‐section time‐series model, for a selection of high income OECD countries for five years in the period 1960‐85. The estimation results suggest that increasing returns to scale prevailed.

The dynamics of economic growth in India continues to engage economists and still remains much debated. The trends and patterns of growth observed in India have seen acceleration in growth in Indian economy in the period following macroeconomic reforms and policy changes in investment and trade regimes. However, when and how did India transform itself from Hindu rate of growth to the present growth regime continues to be debated.

Using INDIA KLEMS data set, this study provides a distinctive perspective on India’s economic growth. A unique data set comprising 27 sectors of Indian economy at a disaggregate industry level for a period of 30 years, beginning 1980s, attempts to understand the dynamics of India’s growth from the contribution of industries that comprise the Indian economy.

This productivity data set offers a new way of analyzing the dynamics of growth including the sources of growth. The growth empirics allow evaluation of the relative significance of total factor productivity growth vis-a-vis input accumulation in accounting for output growth. In addition, the authors were able to document the industry contributions to aggregate growth. In this way, they were able to analyze the importance of the constituent industries within the different sectors of the economy − agriculture, manufacturing, construction and market, as well as non-market services in accounting for the observed growth in India. In conclusion, the industry perspective offers a new and analytical way of discerning new aspects of India’s march to higher growth regimes in post-1990s era.

A unique data set comprising 27 sectors of Indian economy at a disaggregate industry level for a period of 30 years, beginning 1980s, attempts to understand the dynamics of India’s growth from the contribution of industries that comprise the Indian economy.