The Deaton paradox implies that the permanent income hypothesis (PIH) under certainty equivalence is rejected because observed consumption is excessively smooth. It is shown how several reasonable parametrization of the PIH under precautionary saving imply that consumption is smoother than...

This paper examines long-run purchasing power parity (PPP) using a new formulation of PPP in the presence of transaction costs. Our results strongly support the proposition that PPP holds as a long-run equilibrium condition.

This paper uses the Demsetz-Bagehot theory of dealer services and bid-ask spreads to analyse the determinants of the bid and ask spread in the Kuwaiti foreign exchange market for dollars. The explanatory variables predicted by the theory are found to be significant. Idiosyncrasies arising from...

This study re-examines the hypothesis that exchange-rate variability is another factor contributing to inflation variability. The analysis uses cross-country data for 41 countries over the current floating exchange-rate era. It employs the instrumental variable estimator, Emery's (1993)...

The Brock, Dechert and Scheinkman (1987) method is used to test for nonlinear dependence in daily rates of change of the exchange rate of the British pound relative to seven most heavily traded currencies against the pound during the period 2 January 1993 to 7 October 1996. The currencies are...

In this paper, the effect of tariff is analysed at a broad sectoral level using a simple general equilibrium model. The sectors of the Indian economy have been classified on the basis of trade. Commodities have been identified as importables or exportables based on whether India is a major...

Conflicting findings on stationarity in inflation have been reported in different economic literatures. This study attempts to reconcile the disparate findings and provides alternative international evidence on stationarity in inflation. Empirical results show that when a new, powerful unit-root...

In this letter we examine the consistency property of the exchange rate expectation formation process, a precondition to rational expectations and efficient markets. Two major survey data sets over multiple forecast horizons are examined using the recently available null of cointegration test....

The paper analyzes the effects of the minimum wage over the other wages in Brazil using a bargaining framework. The key result is that the minimum wage precedes the market wage in the period 1980-85 while there is simultaneous determination in the period 1986-93.

An empirical test of the human capital model of occupational segregation is undertaken by analysing the gender ratio of new entrants into a traditional female occupation over a period of time characterized by significant technological change. Specifically, the relative number of females...