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Market Distortions (market + distortion)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting90%

Kinds of Market Distortions

  • labour market distortion
    		•

    Selected Abstracts

    LABOUR MARKET DISTORTION, TECHNOLOGY TRANSFER AND GAINFUL EFFECTS OF FOREIGN CAPITAL,

    THE MANCHESTER SCHOOL, Issue 2 2005
    SARBAJIT CHAUDHURI
    This paper purports to show that even in a 2 × 2 full-employment production structure, an inflow of foreign capital may be welfare improving in the presence of labour market distortion. However, the existence of labour market distortion is a necessity to obtain this unconventional result. If an inflow of foreign capital is accompanied by labour market reform, the possibility of welfare gain due to foreign capital diminishes. Therefore, there may exist a trade-off between the policies of growth with foreign capital and labour market reform. However, if the inflow of foreign capital is accompanied by a labour-augmenting type technology transfer, it is found that investment liberalization policy and labour market reform may be undertaken concurrently in a developing economy. [source]

    The Political Economy of Inflation, Labour Market Distortions and Central Bank Independence*

    THE ECONOMIC JOURNAL, Issue 484 2003
    Berthold Herrendorf
    Using the citizen-candidate model we study the government's choice of institutions for the labour market and the central bank and derive the implications for inflation and employment. We derive conditions for the existence of equilibria in which the labour market is distorted and the central bank is dependent or independent under a range of conditions affecting central bank dependence, the post-election cycle in inflation and employment and inflation bias. Our results imply that average inflation and inflation variability are lower under an independent central bank whereas employment variability can be lower or higher, consistent with evidence for OECD countries. [source]

    The Choice of Optimal Protection under Oligopoly: Import Tariff v. Production Subsidy

    THE JAPANESE ECONOMIC REVIEW, Issue 3 2002
    Tsuyoshi Toshimitsu
    Economists researching the area of optimal protection have tended to analyse the ranking of alternative policy tools in the presence of perfect competition, either when the government in an importing country achieves a non-economic target, or when there is a market distortion. Assuming international oligopolistic competition, I reconsider the choice of optimal policy instruments, i.e. an import tariff and a production subsidy. I show that the choice of optimal policy instruments depends on the relative number of home firms and foreign ones and on the magnitude of international cost differences. JEL Classification Numbers: F12, F13. [source]

    LABOUR MARKET DISTORTION, TECHNOLOGY TRANSFER AND GAINFUL EFFECTS OF FOREIGN CAPITAL,

    THE MANCHESTER SCHOOL, Issue 2 2005
    SARBAJIT CHAUDHURI
    This paper purports to show that even in a 2 × 2 full-employment production structure, an inflow of foreign capital may be welfare improving in the presence of labour market distortion. However, the existence of labour market distortion is a necessity to obtain this unconventional result. If an inflow of foreign capital is accompanied by labour market reform, the possibility of welfare gain due to foreign capital diminishes. Therefore, there may exist a trade-off between the policies of growth with foreign capital and labour market reform. However, if the inflow of foreign capital is accompanied by a labour-augmenting type technology transfer, it is found that investment liberalization policy and labour market reform may be undertaken concurrently in a developing economy. [source]

    The Impact of APROC on Taiwan's Economy: A CGEAnalysis of Deregulation

    ASIAN ECONOMIC JOURNAL, Issue 1 2002
    Shiu-Tung Wang
    The Taiwan Government defines the Asia-Pacific Regional Operations Center (APROC) project as designed ,to transform Taiwan into a regional economic center through overall liberalization and internationalization'. From this definition and the targets of APROC as set by the Taiwan Government, it is not difficult to see that deregulation is one of the basic means of achieving its goals. In this paper, we use a computable general equilibrium (CGE) model to evaluate the possible effects of this deregulation. The effects of deregulation on the economy go through four channels in the model: (i) deregulation liberalizes the market; (ii) deregulation moderates factor market distortion; (iii) deregulation attracts foreign investment, speeds up capital accumulation and enlarges capital stock in Taiwan; and (iv) deregulation attracts foreign investment and hence improves technology. Six simulations are conducted in this paper. All of the simulations show positive effects on Taiwan's economy as a whole, while for individual sectors the effects are various. [source]

    Lessons for an ageing society: the political sustainability of social security systems

    ECONOMIC POLICY, Issue 38 2004
    Vincenzo Galasso
    SUMMARY Politics, ageing and pensions What is the future of social security systems in OECD countries? We suggest that the answer belongs to the realm of politics, and evaluate how political constraints and ageing shape the social security system. The increasing ratio of retirees to workers lowers the rate of returns of unfunded pay-as-you-go social security, and induces citizens to prefer smaller such systems and a larger role for private savings. An ageing electorate, however, increases the relevance of pension spending on the agenda of office-seeking policy-makers and tends to increase the size of unfunded pension systems. Calibrating the strength of these effects for France, Germany, Italy, Spain, the UK and the US, we find that the latter political aspect always outweighs the former. The relative size of the effects depends on country-specific characteristics and modelling details: when labour market distortions are accounted for the political effect still dominates but becomes less sizeable; the different redistributive character of pension systems and the strength of family ties also play a role in determining politico-economic outcomes. A higher effective retirement age always decreases the size of the system chosen by the voters, often increases its generosity, and may be the only viable solution to pension system problems in the face of population ageing. [source]

    Trade Creation and Diversion Effects of Preferential Trade Associations on Agricultural and Food Trade

    JOURNAL OF AGRICULTURAL ECONOMICS, Issue 1 2009
    David Lambert
    Q17; Q18; F13 Abstract Agricultural market distortions remain a major focus of contention in world trade negotiations. Estimates of the effects of liberalising current agricultural trade restrictions indicate an approximately $385 billion increase in global welfare, with the disproportionate share of the benefit being enjoyed by developing countries. In response to difficulties in adopting agricultural trade reforms, individual groups of countries have formed multiple bilateral and regional preferential trade agreements (PTA) to enhance trade among members. Few sectoral analyses exist of the effects on agricultural and food product trade of PTAs. This research uses a gravity model to isolate the effects of various PTAs on both intra- and extra-bloc agricultural and food product trade for three time periods: 1995, 2000 and 2004. Findings strongly support PTA benefits in terms of increased intra-bloc trade in both sectors. The findings also generally support trade creation in agricultural products. PTA membership was also associated with food trade creation in most cases, although diversion was observed for several associations composed primarily of developing countries. [source]

    Economic transition and the decline of agricultural production in Estonia

    JOURNAL OF INTERNATIONAL DEVELOPMENT, Issue 4 2005
    Shujie Yao
    Agricultural production in Estonia has declined rapidly under economic transition since 1992, causing a number of undesirable social and economic problems. Rural unemployment has increased, so has the incidence of poverty. The country has changed from being a net exporter to a net importer of many major agricultural products over a short period of time. To understand the causes of agricultural decline, this paper uses a policy analysis matrix (PAM) to study the competitiveness and profitability of various agricultural, fishery and forest products for the period 1994,95. The results suggest that much of the loss of production may have been explained by economic reforms that were intended to eradicate market distortions created by the former Soviet system, but government's ,non-interventionist' policy and the rigidity of foreign exchange rate may have aggravated the situation. Copyright © 2005 John Wiley & Sons, Ltd. [source]

    Understanding Economic Crises: The Great Depression and the 2008 Recession

    THE ECONOMIC RECORD, Issue 2010
    LEE E. OHANIAN
    Economic crises, involving large and persistent declines in output and employment, are puzzles, particularly in developed countries with economies that typically function at a high level. This article analyses the Great Depression and the 2008 recession using recent developments in business cycle diagnostic procedures, and finds that the key to both episodes is understanding labour market distortions that resulted in the marginal product of labour being much higher than the marginal rate of substitution between consumption and leisure. This finding stands in sharp contrast to the received wisdom, which focuses on the role of banking crises and capital market distortions. The article also discusses possible hypotheses for these labour market distortions. [source]

    DUAL ECONOMY MODELS: A PRIMER FOR GROWTH ECONOMISTS

    THE MANCHESTER SCHOOL, Issue 4 2005
    JONATHAN TEMPLE
    This paper argues that dual economy models deserve a central place in the analysis of growth in developing countries. The paper shows how these models can be used to analyse the output losses associated with factor misallocation, aggregate growth in the presence of factor market distortions, international differences in sectoral productivity and the potential role of increasing returns to scale. Above all, small-scale general equilibrium models can be used to investigate the interactions between growth and labour markets, to shed new light on the origins of pro-poor and labour-intensive growth, and to explore the role of the informal sector. [source]

    Responding to High Commodity Prices

    ASIAN-PACIFIC ECONOMIC LITERATURE, Issue 1 2009
    Craig Sugden
    The recent commodity price boom resulted from rising demand in the face of a long period of low supply growth and market distortions. Structural factors are expected to return international commodity prices to relatively high levels as the global economy recovers. The Asian and Pacific economies and the region's poor will be among the most exposed to a rebound in prices. The recent response to high commodity prices can be improved upon. At the global level, the priority for Asian and Pacific governments is to seek a commitment to lessening distortions favouring bio-fuels. At the regional level, there is a need to address the use of trade restrictions on food commodities in Asia, notably rice. At a national level, the long-term neglect of the rural economy warrants correction; and efforts to expand and make social safety nets more ,market friendly' are called for. [source]