|
|
|
 |
|
No. 334 |
JANUARY 2004 |
Vol LXXXIV |
ISSN 0019-5170 |
|
|
|
|
|
Contents
|
|
|
|
|
|
The Choice of Foreign Product Strategy
Between Two Countries under Exchange
Rate Uncertainty
CHIN- TSAI UN AND CHENG-RU Wu
|
|
This study considers
the effects of real exchange rate on
strategies that govern the locations of
production of by firms that are
entering/exiting foreign markets in one
country. This study extends the
Cobb-Douglas batch process production
model of Lin and Wu (2002), 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. This paper applies the real
options approach (ROA) to evaluate the
behavior of the trans1erable 'location in
the two countries. The export-oriented
manufacturer is risk averse and has
rational expectations. As the entry
cost-declines, the export - oriented
manufacturer's entry trigger for the
Cobb-Douglas production function increases
for transferring from a domestic and to a
foreign location. Additionally, the
manufacturer's exit trigger for
Cobb-Douglas production function increases
for transferring from a foreign and to a
domestic location. Moreover, the exit cost
resembles the entry cost. |
|
 Top |
|
|
|
|
Relationship Between
Corporate Growth and Profitability
ABHISKEK SINHA, PREMRAJ PILLAI, RANJAN
VARGHESE AND SANGEET A D. MISRA
|
|
Previous empirical and
theoretical research by Marris suggests
that under many circumstances firm growth
may fall short or generating any
sustainable competitive advantage and
increasing profitability and that high
growth firms, in particular, may incur
some inherent "growth" risks. including
business failure. Growth of a firm is
measured in terms or growth in assets and
revenues from main business line.
Profitability of a firm is measured in the
form of Return on Assets W1U Profit margin
of a firm. This study extends the work of
Gartner & Markman from Fortune 500
companies in US to top 30 Indian companies
across six sectors in empirically testing
the relationship between the growth and
profitability of a firm. The findings and
interpretations are based on the
statistical analysis carried out on the
growth and profitability parameters
mentioned earlier. This paper also offers
for why firm growth and profitability has
a different correlation across industries.
This paper also suggests that various
means employed for firm growth may no!
111cessarily translate into increasing
profitability and associated value
creation. |
|
Top |
|
|
|
|
Rural-Urban Migration: A
Search for Economic Determinants
HADI GHAFFARI AND S. P. SINGH
|
|
The contributing
factors for rural-urban migration may
either be "push" or "pull", with ,the
former guided by force of internal circum-
stances and the latter by lure. of
external attractions or incentives. The
present paper attempts to identify the
major push and pull factors responsible
for rural out-migration, based on the data
collected from 1991 Census for 50
districts of Uttar Pradesh. The OLS
regression model has been applied to
examine the impact of various determinants
on rural-urban migration. It has been
found that development of educational
facilities as well as irrigation
facilities in rural areas and acceleration
of industrialization process in these
areas are significant variables in abating
the flow of rural exodus. |
|
Top |
|
|
|
|
Detection of .Inter-State
Kuznets Cycle through Neo-Classical and eo-Keynesian
Paradigms: Indian Experience
ACHAL KUMAR GAUR
|
|
Kuzents hypothesis
(1955, 1963) has established a link
between inequality and average well-being
at the level of economy. The hypothesis
maintains that given a two-sector economy
with not much inequality within sectors
but different sectoral mean incomes, a
continuous transfer of population from one
sector to another will initially raise the
aggregate inequality and it will decrease
at later stage.
Inter-state Kuznets hypothesis has been
tested in the present paper for the twenty
states of the Indian federation for which
per capita state domestic (at current
prices) data has been taken for the period
1980-81 to 2001-02. The result reveal
existence of Kuznets cycle for per capita
state domestic product (SOP) in the Indian
states.
Regression results based on OLS technique
suggest that inter- state inequality in
per capita revenue of states
(pre-devolution period), per capita
revenue of the state (post-development
period) and per capita expenditure of
states were primarily responsible for
growing inter-state income inequality in
India during 1980-81 to 1999-2000. The
study may help in identifying the
economically backward states [or
transferring the funds to them from
central divisible pool of resources in
order to accelerate the principle of
'horizontal equity' and 'balanced regional
development' in a federation. |
|
Top |
|
|
|
|
The Impact of Interest
Rates on Savings Mobilization in Nigeria
(]970-2000): A Co-Integration Approach
M. O. VICTOR OUSEAND R. O. ABIOLA
|
|
The role of interest
rates in savings mobilization at best has
remained controversial. While economic
theory would tend to suggest a positive
correlation between savings and interest
rates, the result of most empirical works
particularly for developing countries do
not at best conform with the expectations.
It is, therefore, the objective of this
study, considering the structure of
interest rate, the pre-SAP interest rate
management regime, to examine the effect
of interest rates on savings mobilization
in Nigeria. Data on interest rates in
Nigeria from 1970 -2000 were collected and
a co-integration method of analysis was
used.
It was found that the specific variables
that influence aggregate savings ratio in
Nigeria includes lagged savings -income
ratio, current ratio of foreign savings to
GDP, Lag foreign savings -GDP ratio and a
dummy variable capturing financial
liberalization. The empirical result
showed the existence of a long run
equilibrium relationship between these
variables and aggregate savings ratio in
Nigeria. |
|
Top |
|
|
|
|
The Relative
Effectiveness of Fiscal and Monetary
Policy in the Indian Context (1970-71 to
1999-2000)
G. RAMATHILAGAMAND Ms. S. AMUDHA
|
|
This study on the
relative effectiveness of fiscal and
monetary policy using the Indian macro
level data for the period 1970-7 I to
1999-2000 in the modified St. Louis
equation and Granger causality frameworks
had confirmed that monetary policy as
measured by Ml is relatively more potent
than fiscal policy. It underlines the need
for limiting Government expenditure that
results in crowding-out effect. It
recommends that the Government should
focus on monetary policy targets and
strive for central bank independence to
ensure stability in the policy
environment. It concludes that fiscal
policy is a necessary, but not a
sufficient condition for stability in the
economy. |
|
Top |
|
|
|
|
Mixture Distribution Models
of Indian Stock Returns: An Empirical
Comparison
D. S. BROCA
|
|
A significant portion
of financial theory assumes that stock
price relatives are independent and
identically distributed according to a
normal (Gaussian) distribution. However,
this assumption has long been disputed;
the distribution of security returns has
fatter tails and some positive skew ness
compared to the normal curve. In an
attempt to capture these features, two
heavy-tailed mixture densities are
proposed for Indian stock returns; the
Student t and the double normal. Model
calibration over a fourteen year period,
1985-1998, revealed that the Student t
distribution provides a superior fit on
the basis of the Schwarz criterion. This
raises concerns about the applicability of
mainstream financial models, based on the
Gaussian postulate, to Indian markets. |
|
Top |
|
|
|
|
Primary
Co-operative Banks: A Paradox of Loss WEN
RONG Liu: A Note on investigating Causal
Link Between the Hidden Economy and Real
GDP in Taiwan, 1962-2001 Contents: Indian
Association of Social Science Institutions
(lASSI), Vol. 21, No.1, July-September
2002 KUMUD
SHARMA
|
|
A strange problem is
faced by the Primary Co-operative
Agricultural and Rural Development Banks (PCARDBs).
They borrow from the upper tier, the State
Co-operative Agricultural and Rural
Development Bank (SCARDB) at a lower rate
of interest and lend it to the farmers and
when it is repaid they pay it back to the
SCARDB. Superficially seen, out of this
simple operation, PCARDBs should earn
profit, because the regular and the penal
interests charged by the PCARDBs to the
farmers are higher than the corresponding
rates charged by the SCARDB to the PCARDBs.
However, the PCARDBs suffer loss, when
some of the borrowers repay regularly and
some repay it at a later date. The present
paper throws light on the causes, the
solutions to and the gravity of the said
problem. |
|
Top |
|
|
|
|
|
|
A Note on
investigating Causal Link Between the
Hidden Economy and Real GDP in Taiwan,
1962-2001 Contents: Indian Association
of Social Science Institutions (lASSI),
Vol. 21, No.1, July-September 2002
WEN RONG Liu
|
|
In this study, we first
re-estimate the size of the hidden economy
based on Tanzi's (1983) currency-ratio
approach for the first time in the Taiwan
context covering such a long time period
(1962-200 I); second, we investigate time
series properties of the estimated real
hidden economy and real GDP; and third, we
test the hypothesis of a long-run
relationship and causal link between the
estimated hidden economy and real. GDP
over this sample period. The test result
indicates that these two variables are
cointetgrated with one vector indicating a
long-run equilibrium relationship exists
between-these two variables. Granger-
causality test result based on vector
error-correction model (VECM) suggests a
bi-directional causality (feedback)
between these two variables. This result
poses a dilemma for Taiwan policy makers
who wish to stimulate economic growth and
also minimize the size of the "tax gap" in
Taiwan over this sample period. |
|
Top |
|
|
|
|
|
|
