In explaining why service prices differ across countries
(both developed and developing countries), most studies have
paid attention to the role of structural variables such as
population, trade balance, resource abundance etc., by using
a full employment assumption. Due to the existence of high
urban unemployment in developing countries, the assumption of
full employment is not suitable.
The objective of this study is to build general equilibrium
models that can be used to explain the service price
differences across developing countries by incorporating
rural-urban migration and urban unemployment. Internal
migration from rural to urban areas is allowed because of
distortions in labor market. The current work includes
structural variables that are used in the literature, such as
agricultural land, mineral resources, labor endowment, trade
deficit, population, and tourism, along with 2 new variables,
manufacturing capital and services capital. This study also
considers the effects of macroeconomic policies (fiscal and
monetary policies) on service prices which are neglected in
the literature.
The theoretical models suggest that, ceteris paribus,
larger land area, mineral resources, higher trade deficits,
tourist receipts, and money supply increase service prices,
but larger populations reduce service prices. The effects of
services capital, labor force, the terms of trade, and
government spending are ambiguous from the theoretical models.
An empirical study is performed to test the theoretical
implications. The empirical results suggest that larger
endowments of land, mineral resources, manufacturing capital,
labor force, and services capital, as well as higher trade
deficits, tourist receipts, government spending, and money
supply increase the service prices. Conversely, larger
populations reduce service prices as predicted. / Graduation date: 1993
| Identifer | oai:union.ndltd.org:ORGSU/oai:ir.library.oregonstate.edu:1957/35940 |
| Date | 30 April 1993 |
| Creators | Pakotiprapha, Sauwaluck |
| Contributors | Chao, Chi-Chur |
| Source Sets | Oregon State University |
| Language | en_US |
| Detected Language | English |
| Type | Thesis/Dissertation |
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