Template-Type: ReDIF-Paper 1.0 Author-Name: Jose Encarnacion, Jr. Author-Name-First: Jose Author-Name-Last: Encarnacion, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Multidimensional Choice and Preference Reversals Abstract: Results of various experiments reported in recent literature have shown repeated violations of expected utility theory. In the model of this paper, expected utility is only first of three criteria that determine choices under uncertainly--the second criterion is the probability of doing better than or at least maintaining the status quo, and the third is the maximum possible gain. Choice being thus multidimensional, the observed violations get accounted for: the Allais and Ellsberg paradoxes, probabilistic insurance, risk seeking with negative prospects, translation effects, preference reversals, and Tversky intransitivities. Creation-Date: 1984-01 Publication-Status: Published as UPSE Discussion Paper No. DP 1984-01, January 1984 Number: 198401 Handle: RePEc:phs:dpaper:198401 Template-Type: ReDIF-Paper 1.0 Author-Name: Edita A. Tan Author-Name-First: Edita Author-Name-Last: Tan Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Overseas Employment Policy and Remittances Abstract: The paper reviews government policy on overseas contract workers and analyzes their remittances. Overseas employment has continued its upward trend up to the end of 1983 when the number of applicants processed for departure by the Philippine Overseas Employment Authority reached 444,208 as compared to 36,035 in 1975. The number currently employed abroad is estimated to be between 600,000 and 700,000. They have contributed about 1/6 of 1983 foreign exchange earnings and in reducing the unemployment problem. Government policy consists of trying to increase remittances and protecting the workers from fraudulent recruitment practices and poor or unfair employment conditions. The newly reorganized Philippine Overseas Employment Administration has made good progress in the recruitment procedure. But it still has to institute an effective staff and mechanism for assisting the workers in their place of work. Faced with serious BOP deficits and heavy debt servicing, the government imposed mandatory remittance rates of 50 to 70 percent. This appears not to have been successfully implemented. Consumption saving, portfolio choice and demand theory is applied to remittance behavior. The overseas worker is assumed to face a broader set of choices since he, jointly with his family, operates in both the domestic and foreign markets for goods and assets. The relative prices, yield and risks would determine the allocation of his foreign earnings to foreign purchases of consumption goods and assets and foreign exchange holdings and domestic purchases. Some policies negatively affect the relative prices, yield and risk explaining the smaller rate of remittance than the mandatory rates. Using the POEA cross section data, the paper further analyzed the effect of socioeconomic variables on remittances. Creation-Date: 1984-02 Publication-Status: Published as UPSE Discussion Paper No. 1984-02, February 1984 Number: 198402 Handle: RePEc:phs:dpaper:198402 Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Offshore Banking and the Philippine Economy Abstract: Offshore banking in the Philippines was allowed after 1976. This has led to the esablishment of offshore units of banks actively engaged in international banking, which prospered especially in the 1970's. This paper discusses the rationale of the establishment of offshore banks in the prospective of the country's financial and banking policies, the benefits foreseen form their establishment, the future of the operations of the offshore banks, and their contributions to the Philippine economy. The establishment of the offshore banks has given rise to new financial policy issues. Commenting on the current financial crisis facing the Philippine economy, it is suggested that offshores banks face a difficult period ahead. Creation-Date: 1984-03 Publication-Status: Published as UPSE Discussion Paper No. 1984-03, March 1984 Number: 198403 Handle: RePEc:phs:dpaper:198403 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Growth in Spasmodia : Foreign Borrowing and Crisis Abstract: We construct a dynamic decision model where foreign borrowing figures as one of the instruments to maximize welfare over a planning horizon. We hypothesize a relation, a rather reasonable one, between the repayment schedule and the debt ceiling. For every period, there exists an optimal per capita debt, which together with the optimal consumption path leads in a sustainable fashion to maximal long-run welfare. In the short run, however, one can actually to better by borrowing exceeding the optimal debt but this path leads for a balance of payments crisis as the debt catches up with the ceiling. The economy goes into a spasm as it resorts to drastic measures. A regime with short memory may mount yet another assault on the debt ceiling and suffer the same fate. Myopia leads to a dismal long-run growth record. Creation-Date: 1984-04 Publication-Status: Published as UPSE Discussion Paper No. 1984-04, April 1984 Number: 198404 Handle: RePEc:phs:dpaper:198404 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Morale, Synergy and Welfare Abstract: Moral is a proverbial hidden variable in models of social games. Its importance is unquestioned but it ordinarily defies operational definition. We attempt here to parameterize its role and trace how it impacts on social production and welfare in a Nash-like bargaining games. Synergy is introduced through a production function with special simple properties. Society attains its highest welfare in the "pure energy solution". At this point, welfare egalitarianism obtains. Society is worst off within the bargaining milieu in the "pure exchange solution". When some members perceive that they are getting less within the bargaining milieu than they would under an alternative set-up, they may quit the game. Synergy and welfare rise when individuals perceive (a) a strong matching generosity current and (b) a strong synergy current. The present morale crisis in the country is then interpreted in this light. Creation-Date: 1984-04 Publication-Status: Published as UPSE Discussion Paper No. 1984-05, April 1984 Number: 198405 Handle: RePEc:phs:dpaper:198405 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Block Recursiveness of the Household Production Model Under Risk Abstract: Block-recursiveness of the household production model is a convenient property to have in the analysis of household production relations. We show here that, with perfectly competitive rural markets, block-recursiveness holds when production risk is additive but not when it is multiplicative. Block-recursiveness does not hold under price risk, additive or otherwise. This has some troubling implications for approaches that require homogeneous functions. Creation-Date: 1984-05 Publication-Status: Published as UPSE Discussion Paper No. 1984-06, May 1984 Number: 198406 Handle: RePEc:phs:dpaper:198406 Template-Type: ReDIF-Paper 1.0 Author-Name: Peter G. Warr Author-Name-First: Peter Author-Name-Last: Warr Title: Export Promotion Via Industrial Enclaves : The Philippines Bataan Export Processing Zone Abstract: The economic merits of export processing zones as a form of export promotion are studied by focusing upon a large, long-established zone in the Philippines. It is shown that although the absence of trade duties and other regulations led the zone to generate significant benefits for the Philippines through employment and foreign exchange earnings, this effect was outweighed by the heavy public infrastructure investment necessitated by the choice of location. Moreover, although the firms occupying the zone are predominantly foreign, over ninety per cent of their investment was financed by government-guaranteed borrowings from within the Philippines. Creation-Date: 1984-06 Publication-Status: Published as UPSE Discussion Paper No. 1984-07, June 1984 Number: 198407 Handle: RePEc:phs:dpaper:198407 Template-Type: ReDIF-Paper 1.0 Author-Name: Jose Encarnacion, Jr. Author-Name-First: Jose Author-Name-Last: Encarnacion, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Price Decisions and Equilibrium Abstract: This paper explores the model of the imperfectly competitive firm, facing demand uncertainly, that sets a price on its product so as to maximize the probability of obtaining satisfactory profits. It is a consequence that the price is higher with higher demand or higher costs. With all firms as price setters there is a general price equilibrium where prices are stationary. This entails an equilibrium average level of employment which is likely to be less than full employment. The model accommodates the phenomenon of inflation and increasing unemployment. Creation-Date: 1984-07 Publication-Status: Published as UPSE Discussion Paper No. 1984-08, July 1984 Number: 198408 Handle: RePEc:phs:dpaper:198408 Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: A Historical and Current Perspective of Philippine Economic Problems Creation-Date: 1984-08 Publication-Status: Published as UPSE Discussion Paper No. 1984-09, August 1984 Number: 198409 Handle: RePEc:phs:dpaper:198409