Research Notes Origins of Western Attitudes Toward Property Rights in Economic Thought THOMAS R. MCKINNON University of Arkansas--U.S.A.

The allocation of property rights is fundamental in any economic system, but the specific parameters in the U.S. are legal issues as defined by law and interpreted by the courts. However, these definitions and interpretations are based on attitudes that are the result of intellectual history. This paper explores the works of premodern writers in the history of economic thought on the source and extent of property rights. The profusion of writings on property rights may be summarized into three categories. The earliest position was that property rights should be allocated to achieve virtue among people. Greek philosophers and medieval theologians advocated this basis. John Locke, Adam Smith, and others based property rights allocations in natural law. The right to private property is a natural right that transcends government and is an extension of the right to one's self. A third basis is advanced by Thomas Hobbes and others who write that property allocation is a creation of the state and the state allocates to maximize societal welfare. All three views of the source and extent of property rights have left their mark on contemporary thinking. Current conflicts over issues such as land use planning, green space requirements, sign ordinances, and zoning echo the contrary attitudes developed in the history of economic thought.

Financing Systems for Intermediate Government Levels in Spain MIGUELROIG-ALONSO University of Valencia--Spain

Since establishing the Constitution of 1978, Spain has undergone deep changes in the organization of its levels of territorial governments. Seventeen autonomous regions have emerged with their own regional parliaments forming a new level of government in an intermediate position between the central and local levels. Among these autonomous regions, 15 form a territory under a common fiscal regime and two granted-by-charter communities are ruled by special laws. Although all autonomous regions can assume the same levels of political and administrative powers in the long term, grantedby-charter communities have more power than those under the common fiscal regime as its authorities are entitled to pass their own laws for their respective territories on broad-base taxes such as the personal income tax, the corporation income tax, the wealth tax, and so on. This paper analyzes the main inefficiency problems posed by each of these two different and opposite systems for financing intermediate governments and presents conclusions to improve economic efficiency in the allocation of real resources among the private and public sectors and subsectors. The suggested reforms are of general interest for OECD countries having or planning to have such intermediate governments.

Exports and Economic Growth in Developing Countries G. ROD ERFANI Transylvania University--U.S.A.

Two types of trade strategy have been used by developing countries to promote economic development, import substitution, and export promotion. An export promotion strategy versus an import substitution strategy as an effective trade strategy has been a subject of much debate among 147

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development economists. In recent years, the relative effectiveness of the two strategies in promoting economic development has been an issue of considerable interest. The neoclassical economic theory favors the export-led growth (export promotion policy) as the effective development strategy to increase economic growth. It is argued that exports expand the economy through increased economies of scale, productivity, specialization and trade, and technological advances. A number of East Asian countries have achieved high economic growth through the export promotion policy. However, many development economists believe that the high ratios of trade to gross domestic product in these countries are as much an effect as a cause of their economic growth. Advocates of the import substitution policy argue that it provides the basis for future economic growth by building foundations for economic growth, encouraging the development of manufacturing industries. This study examines the relationship between economic performance and exports by analyzing several developing countries in Asia and Latin America for the period of 1965 to 1995. A time series analysis is applied to examine the relationship between export growth and output growth. The results provide evidence to support the existence of a significantly positive relationship between exports and output growth. The study supports the hypothesis that exports lead to higher output growth, providing evidence in favor of export promotion.

Forecasting Currency Prices Using a Genetically Evolved Neural Network Architecture MONA R. EL SHAZLY AND HASSAN EL SHAZLY Columbia College - - U.S.A.

In this paper, a neural network model is developed to forecast the three-month spot rate of exchange for four currencies: the British pound, the German mark, the Japanese yen, and the Swiss franc. The network is then subjected to further training by applying a genetic training algorithm which combines the process of mutation and crossover on the connections or weights until the optimal network is identified. Forecasts derived from the genetically evolved network are compared to the three-month predictions of the forward and future exchange rates. The network's forecasts are evaluated in terms of accuracy by computing absolute forecast errors and the ability to correctly guess the direction of the exchange rate movement. Although the reported results reveal that the network' s forecasts outperform predictions made by the forward and future rates in terms of accuracy and correctness, more robust support is given to the correctness evaluation.

Corporate Financing and Investment Decisions Under Asymmetric Information Y. LAL MAHAJAN Monmouth University--U.S.A,

It had been documented that stockholders lose their wealth by about 2-3 percent at the announcement of convertible debt issues. This loss is consistent and robust regardless of the returngenerating model, estimation techniques, or time period used. It has been suggested that the loss of wealth at the issuance of any risky security may be due to the poor future expectations about the firm. This paper investigates three possible reasons for the decline in stockholders' wealth: changes in earnings, changes in beta, and changes in variance of earnings after the announcements. This paper uses a sample of 167 firms listed on either the American Stock Exchange or the New York Stock Exchange from 1977 to 1988. It is found that after adjusting for trends and other control firms in the data, the earnings decline significantly, there is no significant change in firm beta, and there is a significant increase in the variance of earnings after the issuance of convertible debt. In addition, this paper finds that the change in variance is the only statistically significant variable for the negative relative price effect or the decline of stockholders' wealth at the issuance of convertible debt. These