Satya Paul

Inflation and economic growth: a multi-country empirical analysis

The world eocnomy is currently adjusting to a low inflation regime which has implicastions for the cross-country distribution of world growth opportunities. In contrast to previous related work which assumes unidirectional causality, this paper uses the Granger methodology to examine both the direction and pattern of causality between inflation and economic growth in 70 countries using annual data over the period 1960-89. Among the conclusions are that first, the relationship between inflation and growth is non-uniform across countries: 40% of countries studied reveal no causality, one-third exhibit unidirectional causality and about one-fifth of countries show bidirectional causality, second, a vast majority of countries which show either uni- or bi-directional causality beong to the industrial group, and third, the low world inflation regime will on balance redistribute real growth opportunities benefit away from the developing countries towards the industrialized countries.

An index of relative deprivation

This paper proposes an index of relative deprivation which, unlike the earlier indices, assumes that the deprivation of a person is sensitive to income transfers among those who are richer than him. The proposed index is quite flexible in accomodating value judgements on the degree of envy felt by individuals in the society.

A model of constructing the poverty line

Abstract This paper proposes a model which defines the poverty line as that level of expenditure at which all caloric and nutrient shortfalls are eliminated, where requirements with respect to these are tailored to the age-sex-occupation characteristics of each household. The methodology avoids all the allegations of subjectivity and conceptual circularity levelled against the traditional methods. An application of the model to the NSS data for Indian Punjab demonstrates the computational simplicity and easy identifiability of the poverty line.

An illfare approach to the measurement of unemployment

Based on an illfare approach, a new index of unemployment is proposed which, unlike the traditional measures, takes into account the incidence of unemployment, mean duration of unemployment, and the disparity in the distribution of the burden of unemployment. The proposed measure is most relevant for comparing levels of unemployment across regions or over a period of time. An illustation with US data is presented.

Public infrastructure and the productive performance of Canadian manufacturing industries

This article examines the effects of public infrastructure on the productive performance of 12 two-digit Canadian manufacturing industries. A flexible cost function incorporating public capital infrastructure is estimated for each industry separately using annual time series data for 1961–1995. The effects of public infrastructure on productivity are measured in terms of both cost-saving (dual) and output-augmenting (primal) measures. We also investigate how public capital influences the input demand and cost structure in each industry and calculate the rate of return to public capital. The empirical results provide strong evidence of the important role public infrastructure plays in the productivity of manufacturing industries. The public capital serves as a substitute for both private capital and labor in most industries. The rates of return to public capital are significant and vary over the years.

An Analysis of Technological Change, Factor Substitution and Economies of Scale in Manufacturing Industries in India

The biases of technological change, factor substitution and economies of scale in four major manufacturing industries (viz. Cement, electricity and gas, cotton textiles and iron and steel) in India are examined. The translog cost functions are estimated using annual time series data covering the period 1960-61 to 1982-83. The study reveals that technical change has been biased towards the use of labour and materials and against the use of capital and energy in electricity and gas industries. In cotton textiles, the technological change has shown the opposity biases. Significant economies of sclae exist in the production of electricity and gas. Enough evidence of substitution possibilities among factors of production in all the four industries was also found.

Export–led growth hypothesis: some empirical testing

The hypothesis of export-led growth is tested using annual time series data for Australia. The analysis reveals that both exports and the GDP series in log levels have unit roots but they do not cointegrate. However, there is evidence of Granger causality running from exports to GDP growth implying that expansion of exports promotes economic growth in Australia.

A modified human development index and international comparison

The paper proposes a modified human development index (HDI) which complies with the view of the Sen and others that an increase in the value of a physical indicator at a higher level represents a greater achievement than an equal increase in its value at the lower level. It also includes an infant survival rate, which is another important key indicator of development. The relative ranking of countries based on the modified index is significantly different from that based on the traditional HDI. This indicates the empirical usefulness of the proposed index.

Defence spending and unemployment rates: An empirical analysis for the OECD

Estimates a three‐equation model to test various economic hypotheses regarding the relationship between unemployment rate and defence spending in 18 OECD countries during the period 1962‐1988. Reveals that the relationship which exists between unemployment rate and defence spending is not uniform across countries. Defence spending has a favourable impact on unemployment rate in Germany and Australia, whereas in Denmark it worsens the employment situation. In Australia, Germany and Belgium, non‐defence spending and the unemployment rate are causally independent. Defence spending appears to act as a stablization tool in response to changes in the unemployment rate only in the UK. No significant causal relationship between unemployment rate and either type of spending is revealed in Japan, The Netherlands, Italy, Spain, Austria, New Zealand, Sweden, Canada and the USA. Observes a few cases of bi‐directional causality between unemployment rate and defence/non‐defence spending. Gives possible explanations for the observed cross‐country variability in causal relation.

A Welfare Loss Measure of Unemployment with an Empirical Illustration

Based on interpersonal comparisons, a welfare loss measure of unemployment is developed. The proposed measure is additively decomposable which enables us to assess the group-specific contribution to aggregate welfare cost. It possesses certain other desirable properties. It is sensitive to unemployment rate, mean duration of unemployment and the relative differences in the duration of unemployment. Since all these can vary differently over the years and across regions, the proposed measure is most suitable for comparing the welfare cost of unemployment over a period of time or across regions. An empirical exercise based on the Australian labour force survey data illustrates the usefulness and an easy applicability of the proposed measure. Copyright 2001 by Blackwell Publishers Ltd and The Victoria University of Manchester