Amar K. Parai

Budget deficit and inflation: the Peruvian experience

The purpose of this paper is to investigate the role of huge budget deficits in Perus near-hyperinflation during recent years. We use the rational expectations macro model of inflation to find out effect of the anticipated budget deficits on inflation rates by using the quartely data of Peru for the period 1973:1 to 1988:1. Our major finding has been that the budget deficits as well as the rate of growth of money supply do have significant impact on the inflation rates in Peru.

Customs union and unemployment in LDCs

Abstract Welfare effects of customs union are examined for a small open economy with unemployment of labor of Harris-Todaro type and some new results are reported. Specifically, it is demonstrated that for LDCs afflicted with urban unemployment, trade-creating customs union continues to be an effective policy.

Profit tax and tariff under international oligopoly

Abstract A simple model of international duopoly is developed to examine the effects of tariff and corporate profit tax. It is shown that in an export-cum-on-site-production regime, a tariff continues to be an effective instrument for shifting net profit away from foreign to domestic firms. A corporate profit tax, on the other hand, could lower the domestic output and employment and decrease the net earnings of both domestic and foreign firms. Thus when the host governments ability to raise tariff is limited, it should seriously consider a corporate tax cut policy to achieve the dual purpose of creating more jobs and increasing corporate earning at home.

Computer use and wage differentials: US and foreign born male and female workers

The dual issues of nationality and on-the-job computer use are introduced into the analysis of gender wage gap in the United States, and some new results are reported. It is shown that, all other things remaining the same, (i) inter-gender wage differentials across different groups based on computer use and/or nationality vary from 23% to 35%; (ii) among computer nonusers, the inter-gender wage differentials are quite high and invariant of the country of birth; and (iii) intra-gender wage gap based on computer use at work is high for both native and foreign born workers, but the intra-gender wage gap based on nationality is low for both users and nonusers of computer at work.

Unionization and distribution of income under variable returns to scale

Abstract Variable returns to scale are introduced into the two-sector analysis of unionization and income distribution, and some new results are obtained. Specifically, with increasing returns to scale it is possible for both union and non-union workers to lose (gain) from unionization even when the unionized sector is relatively capital (labor) intensive.

Optimal tariff under domestic distortions

Abstract The purpose of this paper is to derive a generalized formula for a third-best optimal tariff in the presence of domestic production distortions in a country in which tariff is the only available trade policy.

Anticipated monetary policy and real output: evidence from Latin American countries

This paper is an empirical investigation of the effects of anticipated and unanticipated monetary policies on real output for 13 LDCs in Latin and Central America. The well-know Mishkin econometric procedure is applied to the annual IMF date for the decomposition of actual money growth into anticipated and unanticipated components and the evidence of significant relation between anticipated money supply and real output for each country is reported. The results derived in this paper thus provide additional empirical support for the validity of the ‘non-classical rational expectations’ macro models of Fisher, and Phelps and Taylor.

Imperfect Labor Mobility and Corporate Tax Incidence

We introduce imperfect labor mobility into the corporate tax incidence analysis and demonstrate that for smaller values of the elasticity of labor mobility parameter the corporate income tax could reduce the relative income of corporate labor even when the taxed sector was capital intensive. Specifically, we identify a range of values of the elasticity of labor mobility parameter for which the well-known Harberger result could be overturned. [H2]

Labor Immobility, Technical Progress and Welfare

The paper examines the effects of technical progress on output, terms of trade, and welfare of a growing open economy characterized by endogenous intersectoral wage differential originating from imperfect labor mobility. It is shown that technical progress is always ultra-biased regardless of the degree of labor immobility, and improves (may deteriorate) the welfare of a small open economy if labor immobility leads to a higher wage rate paid by the progressing (stationary) industry. For a large open economy, technical progress would lead to a deterioration (improvement) in its terms of trade if the progressing (stationary) sector paid the wage differential. [F11]

The incidence of classified property taxes in a three-sector model with an imperfectly mobile population

Abstract This paper analyzes the incidence of a classified property tax, imposing different effective tax rates on residential, commercial, and industrial property, as compared to a uniform property tax, taxing capital and land in all sectors at the same rate. Our model includes three sectors, commercial, industrial and residential, and three factors of production, land, labor, and capital. Capital is assumed to be perfectly mobile, but we consider varying degrees of labor mobility, allowing the possibility that part of a classified property tax may be shifted to workers through lower wages.