Estimation Of Shadow Prices Research Articles

Calculating Shadow Prices in Pakistan (Reflections on the Paper by Squire, Little and Durdag)

The Paper, "Shadow Pricing and Macroeconomic Analysis: Some illustrations from Pakistan ,,1 by Lyn Squire, I. M. D. little and M. Durdag (henceforth simply SLD) is an important contribution for two reasons. Firstly, it represents the first major step by the World Bank to provide a comprehensive set of shadow prices for Pakistan using a, methodology [7] that while not as yet officially adopted by the Bank seems likely to have a pervasive influence on all future attempts to define and estimate shadow prices in the Bank's economic work. The Bank's methodology is a lineal descendant of the famous Project Appraisal and Planning for the Developing Countries by I. M. D. Little and J. Mirrlees [6]. Thus, in the SLD paper, two of the leading "shapers" of shadow price technology take Pakistan as one of the first test cases for the practical application of their theories.

Estimation of Shadow Prices for Project Evaluation in Pakistan

The purpose of this paper1 is to estimate shadow prices of capital and labour for use in the social evaluation ofprojects.2 The Harberger approach (7) has been used here to estimate the shadow discount rale. Apart from being one of the few demonstrations of the empirical estimation by this approach in 'literature this is the correct method of .estimating the shadow discount rate where the marginal social value is not equal to the marginal social cost of funds at market equilibrium due to the presence of various distortions. The estimation, in this paper, of the shadow wage rate of unskilled labour of Pakistan improves upon other attempts by taking account of a number of factors not considered hitherto. Firstly, it takes account of the different flows of rural-urban migration to the various industrial cities to estimate more accurately the opportunity cost of employing labour in each city. Secondly, the estimate takes account of the changes in social cost brought about by changes in the consumption bundle of the immigrant labour and the physical relocation of labour. In addition the estimates have been derived under alternative assumptions regarding the marginal productivity of labour in the agriculture stack season.

Estimating the shadow price of foreign exchange: An illustration from India

Although there has been a rapid growth in the literature urging the use of shadow prices in cost‐benefit analysis, little attention has been devoted to the estimation of shadow prices or to the feasibility of alternative methodologies for estimating a particular shadow price. This paper is a modest contribution toward meeting this gap. By applying a variety of methodologies, a range of values is determined for the shadow price of foreign exchange for India. The paper also demonstrates a general approach to estimating shadow prices, which in turn emerges from an explicit consideration of the costs and expected benefits of the required research and analysis.

Cost‐Benefit Analysis of Irrigation Projects in Northeastern Brazil

AbstractCost‐benefit analysis using empirical estimation of labor's shadow price and linear programming for crop selection is applied to major proposed irrigation projects for Brazil's Northeast. Over half the project area is approved. However, these capital intensive projects should rank below investments with similar rates of return but larger employment effects.