Nan-Ting Chou

Random Walks in World Money Rates

Interest rate changes in major industrialized countries are examined and found to exhibit significant deviations from random walks. When measured over short horizons, interest rate changes demonstrate significant negative serial correlation. As the time horizon is extended, the negative dependencies decline and interest rate changes approach random walks. In general, the evidence suggests that short-term interest rate changes in major industrialized countries follow a mean-reverting process.

An alternative monetary policy target

For most of the period since the mid-1970s, the Federal Reserve has expressed its monetary policy intentions by announcing the target growth rates of three principal monetary aggregates: the simple-sum M1, M2 and M3. However, the sweeping changes and the deregulation in the financial industry have greatly affected the relevance of these traditional monetary aggregates. The unusual behaviour of the simple-sum monetary aggregates has forced the Federal Reserve to stop setting target range for M1. The measuring of monetary aggregates has become a controversial question. This paper constructs the new-benchmark Divisia monetary indexes which reflect ‘moneyness’ more accurately than the old Divisia indexes. I demonstrate that the historical trends of the Divisia monetary indexes are sensitive to the brenchmark rates chosen in constructing these indexes. In addition, I compare the forecasting performance of the new-benchmark Divisia monetary indexes with the simple-sum and the old Divisia monetary indexes in the...

Small enterprise development: evidence from China

Since 1978 the Peoples Republic of China has allowed small businesses in rural areas under the title township and village enterprises (TVEs). These were intended to absorb excess rural labour and initially they used locally available agricultural and industrial raw materials. Since the 1980s TVEs have expanded dramatically and they now employ 27 per cent of the rural workforce, and contribute half Chinas industrial value added. This article discusses how this remarkable growth came about, and charts the rising contribution of TVEs to the rural economy, and the importance of the TVEs to the economic growth of China. The TVEs can be classified into three patterns of growth. Comparison between TVEs and state-owned enterprises shows that although TVEs have received little subsidy and financial support over the years they have higher economic efficiency.

The efficiency of the price system: evidence from an alternative market

Most economists take it for granted that a price mechanism is usually the most effective means of resource allocation. This paper compares two methods of allocating resources in the thoroughbred racing market: a price mechanism and bureaucratic restrictions. It is shown that a simple price mechanism does a superior job of allocating racing ability than a myriad of conditions and restrictions set by even a highly informed expert.

The Stages and Features of Small Enterprise Development in China

Abstract This paper defines four stages of development of the small enterprises sector in China: initial stage, depressed stage, rapid expansion stage, and adjustment and improvement stage. Based on the analysis of some limited statistical data, we discuss: the characteristics of each stage; the dominance of township small enterprises; the diversity in ownership; and the rapid growth and unbalanced development in regions. We also describe the major problems in the development of small enterprises in China.