... University Fei, John CHChung-Hua Institution for Economic Research Fu, Tsu-tanInstitute of ... more ... University Fei, John CHChung-Hua Institution for Economic Research Fu, Tsu-tanInstitute of ... in obtaining resources were vital to the success of the conference; Shirley Kuo who ... Chung-Cheng Lin was an active participant of the panel discussion on Alternative Interpretations ...
Until recently, the literature on cost-benefit analysis for projects has been largely within the ... more Until recently, the literature on cost-benefit analysis for projects has been largely within the domain of research on "public monopoly," literature currently reviewed by Jacques Lesourne, (ch. 3), and the work of public finance theorists as typified in the celebrated practical work of Ian Little and James Mirrlees in their Manual, and in the recent theoretical contribution of Peter Diamond and Mirrlees. International trade theorists have, however, turned now to the analysis of these problems, starting with the early work of Vijay Joshi and Deepak Lal, then that of W. M. Corden, and most recently culminating in the contributions of Ronald Findlay and Stanislaw Wellisz, and T. N. Srinivasan and Bhagwati. The work of Findlay-Wellisz and Srinivasan-Bhagwati (F-W-S-B) explicitly deploys the tools, insights and ideas of general equilibrium international trade theory. In particular, their analyses have been addressed to the question of deriving the shadow prices for primary fact...
It has been argued by Turunen-Red and Woodland that, on only mild empirical assumptions, any syst... more It has been argued by Turunen-Red and Woodland that, on only mild empirical assumptions, any system of non-distorting international transfers can be replaced by an "equivalent set" of distorting national tariffs without disturbing the international allocation of resources. This remarkable claim is disputed on the ground that the assumptions required for equivalence are not mild, that in particular they rule
Taiwan’s Development Experience: Lessons on Roles of Government and Market, 1999
The objective of this chapter is to provide a general overview of the major themes and issues pre... more The objective of this chapter is to provide a general overview of the major themes and issues presented in the various chapters of this volume. In the process we attempt to draw some general lessons from the Taiwanese performance over the last half century for development theory and policy based, largely, on the chapters that follow. In a related way, we also attempt to highlight, distill and synthesize some of the major features and characteristics of the Taiwanese experience so aptly brought out by the participants in their respective chapters. In this chapter we distill the main lessons that can be learned from the Taiwanese experience up to the onset of the Asian Financial Crisis. In turn, the Epilogue reviews and analyzes the specific Taiwanese institutions and policies that largely protected the economy from the massive socioeconomic devastation the Asian Financial Crisis brought on its neighbors.
Lucas (1988) recognized that trading new goods is of paramount importance to endogenous growth. A... more Lucas (1988) recognized that trading new goods is of paramount importance to endogenous growth. At the foundation of the trade pattern in the growing world economy today, there is a basic asymmetry. Developing countries usually find it difficult to start a socially desirable industry, where the entry of one firm may benefit another. The conventional wisdom may regard this as the classical decreasing cost industry of Marshall, where firms interact instantaneously and symmetrically. In those economies that manage to take off, initial restriction on entry often becomes relaxed gradually, inviting the interpretation that in correcting past intervention with current liberalization, it is the vested interest that slows down the progress. The time profile of relaxing restrictions is viewed as a meaningful index of the economic performance, and the optimal program presumably should end in free entry. We show that all these perceptions can be totally wrong. In fact, these are definitely fals...
Handbook of Game Theory with Economic Applications, 1994
Publisher Summary This chapter discusses the differential games economic applications. Much of th... more Publisher Summary This chapter discusses the differential games economic applications. Much of the application of N-person, general-sum differential games is in economics, where observed regularities are rarely invariant as in natural sciences. Thus, expenditure patterns in America offer little insights upon the consumption habits in Papua-New Guinea. Out of those differential games that depend on specific function forms (e.g., the linear-quadratic game), useful theoretic examples may be constructed but not the basis for robust predictions. In the case of optimal control, broad conclusions are often obtained by means of the globally analytic phase diagram for those problems with a low-dimension state space. On the other hand, from the viewpoint of economics, there are two distinct types of contributions that differential games can offer. First is regarding the multiplicity of solutions: differential game can yield broad conceptual contributions that do not require the detailed solution(s) of a particular game. Second, there remains an unsatisfied need that differential games may meet. For situations where a single decision maker faces an impersonal environment, the system dynamics can be studied fruitfully with optimal control models. There are analogous situations where the system dynamics is decided by the interactions of a few players. Differential games seem to be the natural tool. What economists wish to predict is not only the details about a single time profile, such as existence and stability of any long run configuration and the monotonicity and speed of convergence toward that limit, but also the findings from the sensitivity analysis: how such a configuration responds to parametric variations.
The current Chinese trade expansion brings benefit to many parties, both outside and inside the C... more The current Chinese trade expansion brings benefit to many parties, both outside and inside the Chinese Mainland. It also poses huge challenges to others, in foreign countries, also in China. The event is important for its own sake, but also what it implies when rapid growth happens to countries large in population and size (including India, Russia, Brazil). It has to be understood in context. Conventional wisdom in economics and popular explanations cannot explain Chinese growth, let alone its implications. Only with suitable adaptations of what the economic discipline has to offer, can one assess the nature of what we observe and the policy measures needed for today. Like other episodes after Industrial Revolution, the late industrialization in China also relies on outside technology, often gained through trade and foreign investment. Because of the de-colonization after 1945, such growth can succeed even with scanty domestic resource. Like other East Asian economies, participatio...
It has long been recognized that, in a restricted world of just two countries and two commodities... more It has long been recognized that, in a restricted world of just two countries and two commodities, any feasible non-distorting international transfer can be replaced by a pair of individually distorting but collectively non-distorting equivalent import duties. In recent years it has sometimes been suggested that equivalence persists in broader contexts and there have been two attempts to provide interesting sufficient conditions for equivalence. Our purpose is three-fold. We first note that the sufficient conditions so far provided relate to the equilibrium values of endogenous variables (like prices) rather than to the given values of exogenous variables (like endowments, technologies and preferences) and that conditions of the former kind may be difficult to empirically justify. It is then shown, by means of a robust example with conditions imposed on exogenous variables only, that equivalence cannot be relied upon when there are more than two countries, even when the countries ha...
ABSTRACT A stabilization policy is developed for an economy with unknown and possibly unknowable ... more ABSTRACT A stabilization policy is developed for an economy with unknown and possibly unknowable characteristics. Uniform asymptotic stability is guaranteed for all initial states and for all admissible uncertainties. Welfare loss over the infinite horizon is bounded by a level dependent on the initial state. The policy is robust, with a simple structure. A simple example sheds some light on the fiscalist-monetarist debate.
We introduce competitive markets into an extension of the differential game model. The non-unique... more We introduce competitive markets into an extension of the differential game model. The non-uniqueness of market-clearing prices implies the constant presence of uninsurable risks for the players. In a class of examples, some characteristics of the system as well as part of the players' rational response remain to be perfectly predictable. This offers a distinct view regarding the recent financial crises and new insight concerning institutional reform.
ABSTRACT In the Jones–Kierzkowski world of fragmented production, we address a strategic trade is... more ABSTRACT In the Jones–Kierzkowski world of fragmented production, we address a strategic trade issue for development: how to industrialize under the WTO regime. One solution is to generate cross-border externalities, such as becoming the hub of a network of countries, so as to attract foreign investment with collective comparative advantage. Thus the small, remote and pre-industrial Singapore managed to organize a hub–spokes game: achieving a win-win solution for all and gaining the most as the hub. In servicing the spokes for fee, Singapore has earned First World income levels, by the twin patterns of the flying geese and the triangular accord.
... University Fei, John CHChung-Hua Institution for Economic Research Fu, Tsu-tanInstitute of ... more ... University Fei, John CHChung-Hua Institution for Economic Research Fu, Tsu-tanInstitute of ... in obtaining resources were vital to the success of the conference; Shirley Kuo who ... Chung-Cheng Lin was an active participant of the panel discussion on Alternative Interpretations ...
Until recently, the literature on cost-benefit analysis for projects has been largely within the ... more Until recently, the literature on cost-benefit analysis for projects has been largely within the domain of research on "public monopoly," literature currently reviewed by Jacques Lesourne, (ch. 3), and the work of public finance theorists as typified in the celebrated practical work of Ian Little and James Mirrlees in their Manual, and in the recent theoretical contribution of Peter Diamond and Mirrlees. International trade theorists have, however, turned now to the analysis of these problems, starting with the early work of Vijay Joshi and Deepak Lal, then that of W. M. Corden, and most recently culminating in the contributions of Ronald Findlay and Stanislaw Wellisz, and T. N. Srinivasan and Bhagwati. The work of Findlay-Wellisz and Srinivasan-Bhagwati (F-W-S-B) explicitly deploys the tools, insights and ideas of general equilibrium international trade theory. In particular, their analyses have been addressed to the question of deriving the shadow prices for primary fact...
It has been argued by Turunen-Red and Woodland that, on only mild empirical assumptions, any syst... more It has been argued by Turunen-Red and Woodland that, on only mild empirical assumptions, any system of non-distorting international transfers can be replaced by an "equivalent set" of distorting national tariffs without disturbing the international allocation of resources. This remarkable claim is disputed on the ground that the assumptions required for equivalence are not mild, that in particular they rule
Taiwan’s Development Experience: Lessons on Roles of Government and Market, 1999
The objective of this chapter is to provide a general overview of the major themes and issues pre... more The objective of this chapter is to provide a general overview of the major themes and issues presented in the various chapters of this volume. In the process we attempt to draw some general lessons from the Taiwanese performance over the last half century for development theory and policy based, largely, on the chapters that follow. In a related way, we also attempt to highlight, distill and synthesize some of the major features and characteristics of the Taiwanese experience so aptly brought out by the participants in their respective chapters. In this chapter we distill the main lessons that can be learned from the Taiwanese experience up to the onset of the Asian Financial Crisis. In turn, the Epilogue reviews and analyzes the specific Taiwanese institutions and policies that largely protected the economy from the massive socioeconomic devastation the Asian Financial Crisis brought on its neighbors.
Lucas (1988) recognized that trading new goods is of paramount importance to endogenous growth. A... more Lucas (1988) recognized that trading new goods is of paramount importance to endogenous growth. At the foundation of the trade pattern in the growing world economy today, there is a basic asymmetry. Developing countries usually find it difficult to start a socially desirable industry, where the entry of one firm may benefit another. The conventional wisdom may regard this as the classical decreasing cost industry of Marshall, where firms interact instantaneously and symmetrically. In those economies that manage to take off, initial restriction on entry often becomes relaxed gradually, inviting the interpretation that in correcting past intervention with current liberalization, it is the vested interest that slows down the progress. The time profile of relaxing restrictions is viewed as a meaningful index of the economic performance, and the optimal program presumably should end in free entry. We show that all these perceptions can be totally wrong. In fact, these are definitely fals...
Handbook of Game Theory with Economic Applications, 1994
Publisher Summary This chapter discusses the differential games economic applications. Much of th... more Publisher Summary This chapter discusses the differential games economic applications. Much of the application of N-person, general-sum differential games is in economics, where observed regularities are rarely invariant as in natural sciences. Thus, expenditure patterns in America offer little insights upon the consumption habits in Papua-New Guinea. Out of those differential games that depend on specific function forms (e.g., the linear-quadratic game), useful theoretic examples may be constructed but not the basis for robust predictions. In the case of optimal control, broad conclusions are often obtained by means of the globally analytic phase diagram for those problems with a low-dimension state space. On the other hand, from the viewpoint of economics, there are two distinct types of contributions that differential games can offer. First is regarding the multiplicity of solutions: differential game can yield broad conceptual contributions that do not require the detailed solution(s) of a particular game. Second, there remains an unsatisfied need that differential games may meet. For situations where a single decision maker faces an impersonal environment, the system dynamics can be studied fruitfully with optimal control models. There are analogous situations where the system dynamics is decided by the interactions of a few players. Differential games seem to be the natural tool. What economists wish to predict is not only the details about a single time profile, such as existence and stability of any long run configuration and the monotonicity and speed of convergence toward that limit, but also the findings from the sensitivity analysis: how such a configuration responds to parametric variations.
The current Chinese trade expansion brings benefit to many parties, both outside and inside the C... more The current Chinese trade expansion brings benefit to many parties, both outside and inside the Chinese Mainland. It also poses huge challenges to others, in foreign countries, also in China. The event is important for its own sake, but also what it implies when rapid growth happens to countries large in population and size (including India, Russia, Brazil). It has to be understood in context. Conventional wisdom in economics and popular explanations cannot explain Chinese growth, let alone its implications. Only with suitable adaptations of what the economic discipline has to offer, can one assess the nature of what we observe and the policy measures needed for today. Like other episodes after Industrial Revolution, the late industrialization in China also relies on outside technology, often gained through trade and foreign investment. Because of the de-colonization after 1945, such growth can succeed even with scanty domestic resource. Like other East Asian economies, participatio...
It has long been recognized that, in a restricted world of just two countries and two commodities... more It has long been recognized that, in a restricted world of just two countries and two commodities, any feasible non-distorting international transfer can be replaced by a pair of individually distorting but collectively non-distorting equivalent import duties. In recent years it has sometimes been suggested that equivalence persists in broader contexts and there have been two attempts to provide interesting sufficient conditions for equivalence. Our purpose is three-fold. We first note that the sufficient conditions so far provided relate to the equilibrium values of endogenous variables (like prices) rather than to the given values of exogenous variables (like endowments, technologies and preferences) and that conditions of the former kind may be difficult to empirically justify. It is then shown, by means of a robust example with conditions imposed on exogenous variables only, that equivalence cannot be relied upon when there are more than two countries, even when the countries ha...
ABSTRACT A stabilization policy is developed for an economy with unknown and possibly unknowable ... more ABSTRACT A stabilization policy is developed for an economy with unknown and possibly unknowable characteristics. Uniform asymptotic stability is guaranteed for all initial states and for all admissible uncertainties. Welfare loss over the infinite horizon is bounded by a level dependent on the initial state. The policy is robust, with a simple structure. A simple example sheds some light on the fiscalist-monetarist debate.
We introduce competitive markets into an extension of the differential game model. The non-unique... more We introduce competitive markets into an extension of the differential game model. The non-uniqueness of market-clearing prices implies the constant presence of uninsurable risks for the players. In a class of examples, some characteristics of the system as well as part of the players' rational response remain to be perfectly predictable. This offers a distinct view regarding the recent financial crises and new insight concerning institutional reform.
ABSTRACT In the Jones–Kierzkowski world of fragmented production, we address a strategic trade is... more ABSTRACT In the Jones–Kierzkowski world of fragmented production, we address a strategic trade issue for development: how to industrialize under the WTO regime. One solution is to generate cross-border externalities, such as becoming the hub of a network of countries, so as to attract foreign investment with collective comparative advantage. Thus the small, remote and pre-industrial Singapore managed to organize a hub–spokes game: achieving a win-win solution for all and gaining the most as the hub. In servicing the spokes for fee, Singapore has earned First World income levels, by the twin patterns of the flying geese and the triangular accord.
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