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Economists frequently make judgments about economic welfare, but there is today little discussion of the foundations of welfare economics. It is assumed either that there is unanimity of interests, or that there is general acceptance of utilitarianism. This means that economics cannot address many key policy issues and that important differences in ethical views cannot be recognized. This paper argues that it is a legitimate exercise of economic analysis to examine the consequences of different ethical positions, taking case studies of employment as a macroeconomic objective, and the role of capabilities in the measurement of economic performance. [ABSTRACT FROM AUTHOR]

This paper evaluates the impact of water sector privatization in Colombia on access, price and water quality, as well as health outcomes using differences-in-differences methodology. The main findings of the impact of water privatization are: (i) an improvement in the quality of water and an increase in the frequency of the service in privatized urban municipalities for the lower quintiles; (ii) a positive effect on health outcomes in both urban and rural areas; (iii) a negative effect on payment for the lower quintiles; and (iv) strong negative effects on access to water in rural areas. Some of these effects appear in municipalities with better technical capacity. [ABSTRACT FROM AUTHOR]

One factor limiting aid effectiveness is its volatility. We examine aid volatility in 66 countries over 1975–2004, paying particular attention to the characteristics of ‘difficult partnership countries’ and making a distinction between sector aid and total aid. We explore whether weak recipient institutions and policies are associated with greater volatility, allowing for differences in donor characteristics. Institutional quality and macroeconomic stability affect the stability of all kinds of aid, as does reliance on a small number of donors. However, the relative importance of these effects varies across different aid types. [ABSTRACT FROM AUTHOR]

In a monetary version of the Uzawa (1965)-Lucas (1988) model of endogenous growth, this paper illustrates how a credible policy of rapid disinflation can induce temporary declines in employment and output, with the former exhibiting a significant degree of persistance; however, these temporary declines in employment and output are not associated with any nominal rigidities in the economy, and therefore do not represent dead-weight losses that occur along the transition path, but are instead a part of an optimal response to the policy change. The measured welfare benefits of disinflation are seen to be higher when the transition path is taken into account. [ABSTRACT FROM AUTHOR]

The aim of this paper is to re-appraise the significance of the "real" as distinct from the "monetary" aspect of Smith's international trade theory. It will be argued that Smith's theory of foreign trade is so closely interwoven with his theory of domestic economic development that the two have to be considered together. This means that Smith's trade theory should not be treated simply as a static cross-section analysis of the existing pattern of trade based on the allocation of the given resources with the given productivity; rather it should be considered as an attempt to study the longer-run mutual interaction between foreign trade and domestic economic development, essentially involving an increase in the total volume of the resources and a rise in their productivity. [ABSTRACT FROM AUTHOR]

This paper investigates the role of monetary policy in economic growth. Using an infinitely lived overlapping-generations model with a simple convex technology that can yield endogenous growth, we show that money supply behaviour of the government may have significant effects on the long-run economic growth. In addition to the effect on the long-term growth rate of the economy, the policy may determine whether the economy stays in the exogenous growth process restricted by the growth rate of labour supply, or realizes the endogenous growth that sustains continuous growth of per capita income and consumption. [ABSTRACT FROM AUTHOR]

In this paper I have examined the major principles underlying the new economic mechanism in Hungary and the extent to which these have been applied in practice so far. The most important changes have been the discontinuation of plan directives to the firm, the use of profit incentives, increased freedom for the managers to make investment decisions, greater flexibility in prices, and the linking of domestic and foreign prices through the use of uniform conversion ratios. Against these achievements one should set the application of administrative measures in a variety of areas. Such measures have been described as "brakes" which the authorities applied in launching the new mechanism.
Various considerations explain the application of brakes. An important reason is the fear of inflation which has led to the use of direct measures in regard to wages, prices, material allocation, credit and foreign trade. There has further been a tendency to restrict the freedom of firm managers by limiting profits from exports, imposing a high profits tax, and maintaining the supervisory role of the industrial ministries. This has been done for conflicting reasons: it was feared that the managers would have difficulties in adjusting to the new mechanism, or that they might adjust only too well and their actions would create undesirable results for the national economy. Finally, social considerations have led the government to avoid taking measures that would create unemployment or give rise to very large disparities in personal incomes. [ABSTRACT FROM AUTHOR]

Market-oriented economic policies have been strongly linked to faster rates of economic growth. Foreign aid is often provided in part to encourage market-oriented reforms. We analyse the impact of aid on market-liberalizing policy reform, correcting for its potential endogeneity. Results indicate that higher aid slowed reform over the 1980–2000 period, as measured by a broad index of policies. Disaggregating policy into five areas, aid is associated with slower reform in some policy areas but not in others. Disaggregating by decade, the adverse impact of aid on policy reform is much more pronounced for the 1980s than for the 1990s. [ABSTRACT FROM AUTHOR]

This article examines the results of development planning in developing countries. For all the differences in underlying conditions, in national goals and ideologies and in degrees of technical sophistication, development planning everywhere follows much the same pattern. A typical development plan consists of articulation of over-all growth targets in terms of plan-end output levels or plan-period productive capacities by sector or by product group. The development plan is a technocratic conception of a feasible program for the fulfillment of policy-makers' goals. The critique of the efficiency of private enterprise centers on the inability or the unwillingness of private business to seize potentially profitable business opportunities. One of the reasons for the alleged failure is the inadequacy of market signals, which reflect current scarcities but fail to indicate future opportunities in the rapidly evolving environment of the developing world. The experience of several countries, including Iran and Pakistan, shows how powerfully policy can affect the direction of investment.