Template-Type: ReDIF-Paper 1.0 Author-Name: Casimiro V. Miranda, Jr. Author-Name-First: Casimiro, Jr. Author-Name-Last: Miranda Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Diseases and Other Health and Physical Hazards as External Diseconomies : A Theoretical Depiction Abstract: Under the various types of externality defined on the basis of which entity or entities are involved and the direction of the effect, diseases and other health and physical hazards are theoretically depicted using as conceptual framework the relationship between (a) production functions; (b) production functions and utility functions; (c) utility functions. In all cases considered, the concomitant optimality conditions that rectify the distortionary effect of externalities are defined. Creation-Date: 1995-01 Publication-Status: Published as UPSE Discussion Paper No.1995-01, January 1995 Number: 199501 Handle: RePEc:phs:dpaper:199501 Template-Type: ReDIF-Paper 1.0 Author-Name: Johnny Noe E. Ravalo Author-Name-First: Johnny Noe Author-Name-Last: Ravalo Title: An Intertemporal Model of Optimal Commercial Bank Reserves Abstract: The standard bank reserve model is extended by explicitly introducing the dimension of time. This feature has not been addressed in the literature which seem to be a very surprising omission given that that the concensus view of this financial institution is that of a (differentiated) microeconomic firm maximizing over terminal wealth. The results indicate that the solution across periods is stationary. All the information needed by the bank to make its choice is embodied in the various interest rates as well as in the penalty structure that institutionally defines the cost of illiquidity. Neither the contemporaneous level of portfolio variables nor its comparative levels in previous periods become relevant to the optimal rule. It is further shown that the stationary solution is in fact Markov stationary, that is, the intraperiod optima will be exactly the same as that in the static case. This literally suggests that the optimization in a multi-period horizon can be taken as a series of repeated one-period models, leading to the same set of optima. This result was shown to be robust, particularly when the allocation problems is modeled explicitly as a Marcov process. The model is extended to account for the possibility of loans with fixed term beyond one planning period. This means that resources for these type of instruments will have to be pre-committed by the bank and therefore would not be free to be allocated over the period in which the multi-period loan is in effect. The results lead to an ambiguity as to whether optimal reserves would either increase or decrease. This was explained in terms of the competing influence of what is labelled as an ?income-commitment effect? and an "income-option effect". Creation-Date: 1995-02 Publication-Status: Published as UPSE Discussion Paper No.1995-02, February 1995 Number: 199502 Handle: RePEc:phs:dpaper:199502 Template-Type: ReDIF-Paper 1.0 Author-Name: Johnny Noe E. Ravalo Author-Name-First: Johnny Noe Author-Name-Last: Ravalo Title: Interest Rate Spreads in a Theory of Financial Economics : A Proposed Model and Empirical Estimates Abstract: This essay proposes a method of evaluating the size of the interest rate spread without alluding to any of the common structure-cartel propositions. Instead emphasis is on the component of portfolio risk that banks as financial intermediaries must bear. Intermediation is taken to be an asset from the point of view of banks. Its acquisition requires that banks maintain a unique portfolio that specifically short-sells deposit instruments so that it can take a position in the loan market that is beyond the limits of its pure equity exposure. The convenient decomposition derived in this essay is that the ensuing portfolio is exposed to the undiversifiable risk that is inherent of loan instrument (lending effect) and that which ?borrowing short to lend long? creates (intermediation effect). If such risks have any intrinsic value, it must follow that banks ought to be compensated by a rate of return that appropriately reflects such a market valuation. This leads directly into the issue of interest rate spreads since the estimate of the systematic portfolio risk can be used as a reference in determining the size of a risk-related spread. The model is empirically tested in the case of the Philippines using monthly data for the six-year period between January 1986 to December 1991. The empirical results suggest that the various measures of actual interest rate spread fall short of the implied ?fair? return for undiversifiable risk borne by banks. Creation-Date: 1996-03 Publication-Status: Published as UPSE Discussion Paper No.1996-03, March 1995 Number: 199603 Handle: RePEc:phs:dpaper:199603 Template-Type: ReDIF-Paper 1.0 Author-Name: Jose Encarnacion, Jr. Author-Name-First: Jose, Jr. Author-Name-Last: Encarnacion Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Instability in the Basic Endogenous Growth Model Abstract: It is shown that the competitive equilibrium path is unstable in the basic model of endogenous growth with increasing returns. An extension of the model to include physical capital accumulation separately is also unstable.JEL classification D90. Creation-Date: 1995-04 Publication-Status: Published as UPSE Discussion Paper No.1995-04, April 1995 Number: 199504 Handle: RePEc:phs:dpaper:199504 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: Competition and The Competitiveness of Organizations and Nations Abstract: We show that increased breadth and/or depth of inter-firm competition among teams or partnerships leads to higher worker effort and thus to greater competitiveness. An industry with greater domestic competition will produce firms more competitive than its counterparts in other countries. This is part from the birth and death process among competing firms. We also show that increased moral hazard and team size reduce effort and competitiveness. Creation-Date: 1995-05 Publication-Status: Published as UPSE Discussion Paper No.1995-05, May 1995 Number: 199505 Handle: RePEc:phs:dpaper:199505 Template-Type: ReDIF-Paper 1.0 Author-Name: Orville Solon Author-Name-First: Orville Author-Name-Last: Solon Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Willingness to Pay for Health-Enhancing Housing Components and The Self-Help Approach to Housing the Urban Poor Abstract: The self-help approach, which proposes that the government facilitate rather than directly provide housing improvements in urban poor communities, could lead households to underinvest in housing components with strong health benefits. This argues for the direct provision of health beneficial housing components, owing to their public goods nature. Data from a survey of households from Metro Manila and Metro Cebu in the Philippines was used to identify which housing components had significant influence on health status. Hedonic regressions were used to estimate the lack of willingness to pay by households for such housing components as sewers, pest control, and removal of stagnant water. The net cost of providing health beneficial housing components were estimated to be the additional rent from having such housing components improved less the value of health benefits these generate. Lower bound estimates of the value of improved health are measured as the foregone health expenditures implied by reduced health risks. Creation-Date: 1995-06 Publication-Status: Published as UPSE Discussion Paper No.1995-06, June 1995 Number: 199506 Handle: RePEc:phs:dpaper:199506 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: Risk Sharing and Layoff Risk in Profit Sharing Abstract: We show that if the employer is risk averse, however slightly, there is always a profit sharing contract that will Pareto-dominate the spot wage contract in the sense of pure risk sharing. The smaller is employer risk aversion, the narrower is the room for profit sharing. the higher the workers value employment stability (less layoff risk), the more Pareto attractive is profit sharing regardless of employer risk aversion. Creation-Date: 1995-07 Publication-Status: Published as UPSE Discussion Paper No.1995-07, July 1995 Number: 199507 Handle: RePEc:phs:dpaper:199507 Template-Type: ReDIF-Paper 1.0 Author-Name: Arsenio M. Balisacan Author-Name-First: Arsenio Author-Name-Last: Balisacan Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Aspects of Employment Location, Regional Redistribution, and Poverty and Inequality in the Philippines Abstract: Recent discussions of public policy in developing countries have frequently called attention to the need for reducing high income disparities among regions and between urban and rural areas. This paper examines the relative influence of regional differences in household access to land, infrastructure, and education on aggregate poverty and inequality in the Philippines. It finds that improvement in access to infrastructure and education in less favored regions offers a big push to the poverty-reduction objective. Land redistribution increases rural household incomes, but these increases are not likely to substantially alter the picture of aggregate poverty and inequality. Creation-Date: 1995-08 Publication-Status: Published as UPSE Discussion Paper No.1995-08, August 1995 Number: 199508 Handle: RePEc:phs:dpaper:199508 Template-Type: ReDIF-Paper 1.0 Author-Name: Michael M. Alba Author-Name-First: Michael Author-Name-Last: Alba Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Translog Variable Cost Function Estimates for Philippine Hospitals Abstract: This paper presents the parameter estimates of a translog variable cost function for 65 Philippine hospitals and discusses certain inferences that can be drawn from these estimates. It means to highlight three points: First, it shows how a translog cost function, which has many parameters, can be estimated with a relatively small regression sample (typical of hospital data sets in developing countries) by applying a system estimation method (FIML) on the cost function and its input demand equations. Second, using a specification that allows the intercepts of the cost function and the factor share equations to be different between private and public hospital, the paper finds that private hospitals are apparently not more technically efficient than public hospitals. Third, the optimal bed size (at which minimum effecient scale is achieved) is inferred to be about 80 beds-way below those in developed countries, perhaps because of the generally lower quality of hospitals in developing countries. Creation-Date: 1995-09 Publication-Status: Published as UPSE Discussion Paper No.1995-09, September 1995 Number: 199509 Handle: RePEc:phs:dpaper:199509 Template-Type: ReDIF-Paper 1.0 Author-Name: Casimiro V. Miranda, Jr. Author-Name-First: Casimiro, Jr. Author-Name-Last: Miranda Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Determining the Foreign Exchange Rate in Aid of Export Industries Abstract: The general definition of profit is used to derived an equation that uniquely determines the foreign exchange rate required to maintain the long-run normal rate of profit of exporters, under the detrimental effect of the local currency's appreciation. Compensatory foreign exchange rate adjustment affecting only the revenue side is then considered. Creation-Date: 1995-10 Number: 199510 Handle: RePEc:phs:dpaper:199510