This is essentially a three-part thesis on money demand, bank credit and real exchange rates in Malaysia. Long and short run real money demand functions with money variously defined as MO, M1 and M2 have been estimated using the Johansen cointegration technique and the error correction approach respectively. While liberalisation and innovation in the Malaysian financial system have not ruled out the existence of stable long run money demand relationships as attested to by the presence of cointegrating vectors, they have rendered short run relationships unstable. This called for a reestimation of short run dynamics over more recent periods and all the revised estimates could withstand a battery of diagnostic tests akin to original full sample estimates. The estimated short run functions appear to track the direction of actual changes in the demand for money reasonably well. The second part of the thesis is basically concerned with the possible practice of equilibrium credit rationing (a la Stiglitz & Weiss, 1981 & 1983) amongst commercial banks in Malaysia and the significance of commercial bank credit vis-a-vis other monetary variables in the determination of economic activity in Malaysia. Two of the major implications of equilibrium credit rationing are the irresponsiveness of lending rates to changes in the factors determining loan demand and supply and the presence of a 'ceiling' on the lending rate. Via an application of cointegration and error correction techniques, the lending rate is found to be insensitive to determinants of loan demand while only nominally sensitive to loan supply determinants. This is corroborated by an evidence derived from an application of Sims' VAR technique that shows a lack of responsiveness of the lending rate to changes in the inter bank rate used as a proxy for the cost of financial market funds. With regard to the ceiling on the lending rate arising from equilibrium credit rationing, its effect on the volume of deposits and hence loanable funds mobilised by banks and the interest rate payable on them may depend on the interest elasticity of their flows. Two separate cases can be considered namely the case of zero elasticity and the case of non zero elasticity. In the former case, if it is against the banks' interests to impose a high lending rate owing to possible adverse selection effects, banks may suppress the deposit rate instead. In the latter case however, the higher is the interest elasticity of deposits, the greater will be the amount of loanable funds derived and the interest rate paid on them. In our empirical analysis involving the application of cointegration and error correction techniques, commercial bank deposits in Malaysia are found to have a zero elasticity in the short run. Hence the extent of excess demand arising from an any practice of equilibrium credit rationing may be relatively limited. By applying the Sims' VAR technique, commercial bank credit has been found to exert a greater influence than MI, M2 and the lending rate on the Malaysian GDP. The final part of the thesis pertains to exchange rates. In an adaptation of Dornbusch's (1976) model, it appears that any policy measure aimed at alleviating the asymmetric information problem in the domestic banking system could lead to a depreciation in the long run equilibrium exchange rate and a rise in the long run equilibrium price level. The impact effects are a weaker domestic currency and a higher output level. However the magnitude of the long run and impact effects would vary directly with the interest elasticity of money demand. The cointegration and error correction techniques have also been relied upon for estimating the long run equilibrium real effective and bilateral exchange rates of Malaysia and the short run dynamics of these rates a la Edwards (1988a, 1988b & 1989). The estimates suggest that there has been no sustained overvaluation or undervaluation of the Malaysian real exchange rates. By implication then, the question of a real exchange rate misalignment does not arise and that Malaysia's success in economic development so far has not been due to any deliberate undervaluation policy. Moreover the analysis of causal relationships amongst real exchange rate movements on one hand and exports and GDP on the other has highlighted no significant relationships existing between them. Finally, the results from modelling the short run dynamics of real effective exchange rates indicate that excess domestic credit could induce their depreciation instead of an appreciation, contrary to popular belief.

The thesis presents a critical review of both traditional and new growth models emphasising their main implications and points of controversy. Three main research directions have been followed, refining hypothesis advanced in the sixties. We first find models which follow the learning by doing hypothesis and therefore consider knowledge embodied in physical capital. The second class of models incorporate knowledge within human capital while the third approach considers knowledge as generated by the research sector which sells designs to the manufacturing sector producing capital goods. A typical outcome of such models is the existence of externalities which causes divergence between market and socially optimal equilibria. Policy intervention aimed at subsidising either human capital or physical capital is thus justified. Empirical analysis has received new impetus from the theoretical debate. However, past empirical tests are mainly based on heterogeneous cross section data which take into account mean growth rates over given periods of time, and ignore pure time series analysis. On empirical grounds, the role of investment in the growth process has been emphasised. This variable has also been decomposed to consider the impact of machinery and equipment investment alone. In this thesis we have underlined six aspects of endogenous growth models, which in our opinion reflect the main points of controversy: i) scale effects; ii) the treatment of knowledge as a production input; iii) the role of institutions; iv) the empirical controversy dealing with the robustness of growth regression estimates and the measurement of the impact of some crucial variables (e.g., investment) on growth; v) the simplified representation of R&D; vi) the absence of any discussion of diffusion phenomena. We then propose a new version of an R&D endogenous growth model, which explicitly incorporates the diffusion of innovations and permits comparison with results derived from other models which do not consider the diffusion process. In this new model the interaction between the sector producing final output and the sector producing capital goods generates the time path of diffusion and hence the growth rate of the economy. In this new model there is a clear growth effect of a change in the interest rate. Such a change, on the one hand, affects the determination of the value of human capital in research, and, on the other hand, affects the diffusion path of new producer durables. This is important for policy because policy aimed at stimulating growth may be mainly concerned with reductions of the interest rate and will thus cause a higher allocation to human capital in research and a larger supply (and use) of new intermediate goods. In addition, there is another clear growth effect which derives from changes in the parameter which defines the diffusion path of new capital goods. An increase in the value of this parameter again causes an increase in human capital devoted to research and an upward shift of the diffusion path, thus increasing the long-run growth rate. This result underlines the difference with previous R&D endogenous growth models in that we now have a clear distinction between the sectors producing and using new capital goods. The empirical implications of the theoretical models are then investigated by testing the causal link between R&D and investment, on the one hand, and output growth and investment on the other hand. Indeed, a crucial task of any empirical investigation dealing with endogenous growth theories is to explain the nature of the links between industrial research, investment and economic growth. There is much room for study in this framework, as there are still only a few studies analysing these relationships. Our analysis deals with both aggregate data for the US and UK economies and an intersectoral analysis for the US manufacturing sector. We have used a test procedure which allows us to analyse both the short-run and the long-run properties of the variables using cointegration techniques. We are able to test for any feedback between these variables, thus giving more detailed and robust evidence on the forces underlying the growth process. The results suggests that R&D Granger causes investment in machinery and equipment only in the US economy. However, there is evidence of long-run feed-back implying that investment may also affect R&D. In the UK economy there is no evidence for R&D causing investment nor is there strong evidence of long-run feed-back between the two variables. This suggests that the causal link between R&D and investment may not be thought of as a stylised fact in industrialised economies. We have also analysed the relationship between investment and output growth to test whether investment may be considered as the key factor in the growth process. We find little support for the hypothesis that investment has a long-run effect on growth. In addition, causality tests support bi-directional causality between these variables in the US economy while in the UK economy, output growth causes investment both in the shortrun and in the long-run.

The object of this thesis is to examine the effects of export instability on post-war Ghana by seeking to identify the mechanism through which fluctuations were transmitted from the export to the domestic sector. This involves the construction and estimation of a macroeconomic model over the period 1956 to 1969, and the analysis of its dynamic properties by means of simulation. It is intended to extend our knowledge in this area of development economics by switching the focus of analysis to a time-series basis and demonstrating how the consequences of fluctuations in exports depend critically on the structural characteristics of an economy and the assumptions made about behaviour under uncertainty. We believe that this provides both the basis of an alternative methodology to the one currently in use, and a detailed investigation of one particular economy. In chapter 1 we present some background to the debate and outline the methodological framework employed. It includes a critical review of the literature, some historical background on Ghana, the reasons for its selection as a case-study; and an explanation of the-Methodology adopted in this study. In chapter 2 the general nature of the cocoa market is discussed, a model of the cocoa market is constructed and estimated, and its linkages with the Ghanaian economy explLained. In chapter 3, a macroeconomic model for Ghana is estimated and discussed in the light of hypotheses about the transmission of e sport fluctuations. In chapter 4, this model is simulated to investigate its dynamic properties and to quantify the implications of export market fluctuations. In our conclusion, we suggest that our methodology provides a useful basis for further research; and that export instabilitty had important, albeit complex, repercussions on the Ghanaian ecoinomy over the time period under investigation.

This comparative study of local development initiatives is inspired by efforts to address the chronic economic underdevelopment of Newfoundland. It explores the combination of economic and political forces which generate and sustain regional disparities within industrialised countries. This requires a conceptualisation of peripherality, underdevelopment and development. In the face of global economic restructuring, there are emerging trends which may be creating development opportunities which peripheral regions have social and economic advantages in exploiting. As these are rooted in the the potential of regional production systems of interdependent small and medium sized firms, economic development strategies must be implemented on a sub-national, and - in the Canadian context - subprovincial level. Traditional regional development policies by higher levels of government have failed on both political and economic grounds; a lower level of economic decision-making must take the lead if these emergent possibilities are to be realized. Local economic decision-making can take many forms: voluntary, third sector bodies, regional boards or bureaucracies of higher levels of government, or elected local government. Because only the last, the local state, can draw on the legitimacy of local democratic accountability, combined with the authority and resources of a state body, it is argued that it is best suited to implementing local development strategies, particularly those which must foster the trust and regional consensus for the delicate balance of co-operation and competition necessary for successful inter-firm networks. These conceptualisations provide the analytic thrust for a comparative analysis of development efforts implemented by a range of local organisational forms in Newfoundland and Northern Norway. Like Newfoundland, Northern Norway depended upon resource exploitation, particularly the fishery, with similar labour market and demographic characteristics. As part of a unitary state with weak regional government but substantial local government autonomy, Northern Norway provides a useful contrast in terms of local institutional forms. No assumption is made that the findings of the four Norwegian case studies can be generalised to the experience of the four Newfoundland cases examined. By relating the varying forces at work in each context, however, analytic generalisation is possible, in which the primary causal forces discerned in specific cases can inform theory, which can in turn be related to other contexts. Only by attemptig .to discern the substantial constraints on efforts to generate economic activity in peripheral regions can appropriate organisational forms and development strategies be adopted.

The aim of this research is to understand the current economic scene and the stabilisation policies in historical perspective, and to survey and develop models for analysing issues of macroeconomic adjustment with growth. The topics have been chosen for their continued relevance in the current policy debates. The standard open economy model on which the Bretton Woods macroeconomics is based takes into account neither the endogeneity and decomposition of aggregate government expenditure or investment nor the price formation process in a developing economy. Further, with the opening up of the Indian economy since 1991, macroeconomic policy analysis needs to be examined in a different analytical framework from the essentially closed economy framework that has hitherto characterised policy discussions in India.T he present study investigates the appropriateness of the Fund-Bank approach to macroeconomic adjustment; modifies and analyses the respective effects of the model in light of the structural constraints in the form of low capital formation in the Indian economy after having disaggregated government expenditure into government consumption and investment expenditures. This thesis models trade, inflation and the determinants of long-run growth considering the role of endogenous growth and the demand factors in growth. The modelling procedure follows the VAR-based time series literature as against the traditional Cowles Commission approach to structural macroeconometric modelling. It estimates a macroeconomic model that incorporates the paradigm underlying the IMF's policy recommendations to developing countries, using Indian time series data from 1950-51 to 1995-96. It discusses structural sensitivities, dynamics and deterministic optimal control. This study investigates the effectiveness of three sets of key macroeconomic policy instruments which are typical in financial liberalisation process - namely, a tight credit policy, a depreciation of domestic currency and, a hike in regulated interest rates. Finally this study solves a multi-target and multi-instrument optimal control problem and finds that the two-target two-instrument problem of a standard policy package is not growth inducive and must target output growth in order to make the adjustment program as growth-oriented. This research has focused on explicitly recognising and analysing the operation of a credit or lending channel in the transmission of monetary policy.

As a contribution to the continuing debate among trade and development economists as to the role of industrial strategies in the pattern of economic development, this study analyses the experience of one developing country, Nigeria, with an import substitution strategy. The performance of the industrial sector is critically assessed and related to the trade policy adopted. Using published data, the study covers 24 industries and a period of 16 years, beginning 1963 and extending to 1978. An analysis of the structure of protection reveals a considerably high and wide ranging levels of effective protection, in favour of consumer-goods oriented sectors. The relationship between these rates of effective protection on the one hand and import substitution and sectoral growth on the other was examined using various parametric and non-parametric tests of association. The evidence, which is only suggestive in nature, indicates that the structure of protection does play a role, albeit a minimal one, in stimulating industrial growth. Using Input-Output techniques, the employment, foreign exchange and output implications of the present strategy of Import- Substitution and of a hypothetical strategy of export promotion are analysed. There is a general absence of 'key' employment sectors and, paradoxically, an export promotion strategy is found to be less employment generating and more capital using but less foreign exchangeusing than the existing strategy. Although there is a considerable scope for capital-labour substitution in many industries, it was found that the often recommended policy of getting prices 'right' will not be sufficient to bring about an appreciable improvement in the employment situation. The development of factor productivity between 1963 and 1978 for each of the 24 industries was analysed; and three possible determinants of productivity are investigated: capital intensity and technical progress, output growth (the Verdoorn's Law) and trade policy. With regards to the latter, it was found that periods of especially slack productivity growth roughly correspond to those in which there was especially restrictive trade policy as quantified by high erps. The economic efficiency of the manufacturing sector was appraised using the criteria of net social profitability, social rate of return and Domestic Resources Costs (DRCs). Evidence was found in support of the hypothesis that the resource pull of protection to the protected industries is accompanied by higher rates of private, but lower rates of social profitability for the more heavily protected sectors. The overall conclusion of the thesis is that the policies of protection should have been more rationally applied and the IS strategy more rationally executed in line with the country's enunciated objectives.

This study is mainly concerned with the estimation of Greece's dynamic import and export demand equations for goods over the period 1954-1976. Some recent empirical studies of the foreign trade of various countries are first presented and the approaches that have been pursued are described as a preliminary to the development of our own theoretical framework. Foreign trade elasticities are then estimated to test various hypotheses in the theory of international trade and, subsequently, to be used in the formulation of economic policy. Some applications of the empirical findings to the trade balance of Greece are attempted. In general the trade balance of Greece is found to be sensitive to both relative price changes and the growth rates of Greece and its trading partners. In the course of the empirical work a number of methodological pOints of importance in applied econometrics arise. In particular we are concerned with the empirical specification of dynamic models and the resulting hypothesis-testing problems. Two model selection procedures for the empirical specification of dynamic models are described and their performance is evaluated in the context of our large scale empirical study. The first procedure begins with the simplest (statiC) form of the relationship and tests are performed to determine whether it is necessary to consider more general specifications. An alternative method begins with a general unrestricted dynamic model and then attempts to reduce the number of parameters needed to specify the data generation process. These two procedures are applied to every import and export demand equation we consider and the preferred specification to which each approach leads is reported. It is found that the possibility of conflict between the two procedures increases as higher-order dynamic models are considered. The use of monthly data for the period 1954-1976 instead of annual or quarterly observations, which have been employed in previous work on models of foreign trade, constitutes a further novelty of our approach, and the resulting problems and their practical solution are described.

This thesis consists of three studies. The topics discussed are in the area of international trade and economic growth with a reference to the policy issues in East Asia. The study in Chapter 2 presents a model of North-South trade which can explain the observed cross-country variations in factor prices. Intuition and evidence suggest that knowledge is largely non-excludable and hence all countries should have access to broadly similar technology. However, this public-good assumption for technology leads to implausible predictions of factor prices in standard models. The model in this study does not assume any differences in technology but its predictions are consistent with observations. In Chapter 3, the implications of the two vintage models for growth accounting are examined. Growth accounting studies have shown that total factor productivity growth in East Asian economies has been slower than expected. Analysis of the vintages models suggests that this puzzling finding could be due to mismeasurements of capital arising from the particular characteristic of East Asian growth experience. In Chapter 4, it is shown that when asymmetric economies adopt an open regionalism policy, some of them may gain at the expense of others. This result is very different from the commonly held view in the literature. In certain situations, some economies in the bloc achieves a higher welfare level than under global free trade. A policy of open regionalism could therefore turn out to be an obstacle to the process of multilateral trade liberalization.

The aim of this thesis is to examine the impact of corporate control on households' choice on consumption-savings and, as a result, on financial capital accumulation. It attempts to provide an alternative to the managerialist and neoclassical 'orthodoxies' in theory (Part I) and subjects the alternative theories to empirical-econometric testing (Part II). The central theme of the thesis runs as follows. The emergence and growth of the joint-stock company has led to the socialization of the 'ownership' of the means of production. The latter has resulted in the generation of a higher level of aggregate saving being available for investment purposes, than could I-lave been the case in its absence. A preference on the part of the corporate 'controlling group' for higher retention and net inflow to the corporate pension funds ratios than that of the non-controlling shareholders and the latters' inability and/or unwillingness to substitute for increases in corporate savings by sufficiently reducing their net personal savings, has facilitated the achievement of this result. Historical consistency and the existing evidence suggests that it is more plausible to interpret the above as the result of capitalist control of today's corporations, rather than managerial and/or all shareholders' control. Increases in corporate saving and less than perfect substitution between corporate and personal saving will tend to reduce the part of private income devoted to consumption: thus containing the seeds of a realization failure. The Saving Function should be extended to allow for these developments: a proposed 'Monopoly Capitalism Saving Function' appears, closer to describing saving behaviour today. The post-war U.K. evidence does not contradict the above propositions. Our econometric evidence lends support to our proposed form of the saving function, the idea that different forms of saving substitute imperfectly and the other hypotheses advanced in the thesis.

This study is concerned with the impact of the 1986 Stock Market deregulation, or Big Bang, on the efficiency of the United Kingdom government securities market. The main theoretical finding is that the change to dual capacity dealing with negotiated commissions cannot be justified economically without the inclusion of a best execution rule for broker/dealers. The empirical section of the study has three parts. The first part uses established and new autocorrelation techniques to test market efficiency in the traditional weak-form efficient market hypothesis paradigm. The second part tests market efficiency through an analysis of pricing residuals from fitting term structure curves. A new method to fit these curves is developed. The third section tests market efficiency by examining evidence of anomalies in the shape and movements of the term structure. From all three sources, there is strong evidence that the changes introduced by Big Bang improved efficiency in the gilt-edged market.