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: Interpreting the Basic Rational Expectations Macroeconomic Model Abstract: The conclusion that systematic monetary policy is ineffective seems necessary in the basic rational expectations macroeconomic model. This rests on an implicit normalization that puts the natural employment level Ln at the classical full employment point which interpretation, however, requires irrational workers. A more self-consistent interpretation defines Ln in terms in terms of the condition that production meets demand at the going price while firms maximize expected profit. The resulting implications are closer to standard Keynesian theory: fully anticipated monetary policy can, and fully anticipated demand changes must, affect output and employment. Creation-Date: 1987-01 Publication-Status: Published as UPSE Discussion Paper No. DP 1987-01, January 1987 Number: 198701 Handle: RePEc:phs:dpaper:198701 Template-Type: ReDIF-Paper 1.0 Author-Name: Norma A. Tan Author-Name-First: Norma Author-Name-Last: Tan Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Incentives and Protection Policies in Relation to Comparative Advantage and Labor-Intensity in Philippine Manufacturing: An Evaluation Abstract: The paper evaluates the effectiveness of the country's system of incentives in promoting the objectives of efficient and employment expansion in manufacturing sector. For this purpose, it lays out a framework by which industries are ranked on the basis of their desirability in terms of their comparative advantage position or relative efficiency in production and of their labor-intensity indicating their employment-generating capacity. In then test the hypothesis suggested by the Hechscher-Ohlin-Samuelson factor proportions theory of trade that a labor-abundant country like the Philippines would have its comparative advantage in labor-intensive industries, and would, if it followed its comparative advantage, produce and export relatively more of labor-intensive products. The country's incentives system by introducing "market distortions" is raised to explain the divergence of the observed factor content of production and exports from what it is expected to be under efficient resource allocation conditions. Creation-Date: 1987-02 Publication-Status: Published as UPSE Discussion Paper No. 1987-02, February 1987 Number: 198702 Handle: RePEc:phs:dpaper:198702 Template-Type: ReDIF-Paper 1.0 Author-Name: Fidelina B. Natividad Author-Name-First: Fidelina Author-Name-Last: Natividad Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Joe A. Stone Author-Name-First: Joe Author-Name-Last: Stone Title: A General Equilibruim Model of Exchange Market Intervention with Variable Sterilization Abstract: This paper presents a general equilibrium model that incorporates three of the most prominent features of the recent floating exchange rate period: (1) rational asset markets; (2)"managed" exchange rates with partial (and variable) sterilization; and (3) the use by policymakers of both purely discretionary and systematic policies. The model is characterized by rational expectations, sticky prices, imperfect capital substitution, separate policy functions for domestic credit and reserves, and variable sterilization. The most important implications of the model are that (1) monetary, exchange rate, and variable sterilization policies may be used to pursue tradeoffs between internal and external objectives; and (2) these tradeoffs are nonlinear functions of the policies chosen (e.g., partial sterilization is not a simple linear interpolation of complete and zero sterilization). Creation-Date: 1987-03 Publication-Status: Published as UPSE Discussion Paper No. 1987-03, March 1987 Number: 198703 Handle: RePEc:phs:dpaper:198703 Template-Type: ReDIF-Paper 1.0 Author-Name: Florian A. Alburo Author-Name-First: Florian Author-Name-Last: Alburo Title: Asean Free Trade Area or Improved PTA? What's in a Name? Abstract: After two decades of ASEAN, there is disappointment over its lack of economic integration along the line of the European community. The paper reviews recent proposals for improving freer trade in ASEAN that have come from private sector groups or non-government organizations. ASEAN itself has drawn up its own scheme for promoting ASEAN trade. The paper argues that the new ASEAN initiatives on trade and investment also attain the free trade aspects of integration. What would make it more acceptable and concrete is that it provides for more systematic interventions and allows for their phase out. Creation-Date: 1987-04 Publication-Status: Published as UPSE Discussion Paper No. 1987-04, April 1987 Number: 198704 Handle: RePEc:phs:dpaper:198704