This paper examines the role of human capital on economic growth by using a large panel of data including 93 countries. Given the cross-sectional character in most of the relevant studies, there is a possibility that when the long-run dynamics are considered, education might not be a significant determinant of growth. Following a dynamic panel data approach, the analysis indicates that education has, indeed, a significant and positive long-run effect on economic growth. Moreover, the size of this effect is stronger as the level of education (primary, secondary, and tertiary) increases. This has a straightforward policy implication that governments taking actions towards an expansion of their higher education may well expect larger gains in terms of higher economic growth in their countries. (JEL E1, F43, C33); Int'l Advances in Econ. Res., 8(3): pp. 177-87, Aug. 02. ©All Rights Reserved

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This paper shows that there exists a long-run equilibrium relationship between M2 and its determinants, real income and the long-term interest rate, in Korea by using Johansen and Juselius maximum likelihood cointegration method. However, M1 does not have any meaningful cointegration relationships with its determinants. The long-term interest rate is a better proxy than the short-term rate to measure the opportunity cost of holding money. Based on the results, a broad definition of money is a better measure than a narrow definition of money in considering the long-run economic impacts of changes in monetary policy in Korea. (JEL E41); Int'l Advances in Econ. Res., 8(3): pp. 188-95, Aug. 02. ©All Rights Reserved

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The law of demand states that individual demand curves are negatively sloped. To date, the Giffen Paradox represents the only analytically valid exception to the law under standard assumptions. This article shows that if consumption externalities exist, it is possible for the individual's demand curve to slope upward. In particular, the condition under which demand becomes upward-sloping can be delineated in terms of measures of elasticity of demand. (JEL D11, D62); Int'l Advances in Econ. Res., 8(3): pp. 196-200, Aug. 02. ©All Rights Reserved

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Recent events indicate that the Republic of Estonia is on the fast track for catching up with its Western European neighbors. However, the country's successful performance has not translated to improved economic conditions for all regions of Estonia. This paper examines the nature of this regional diversity as it relates to the labor market. A statistical analysis indicates that age, educational, and nationality distributions vary across regions, causing earnings to vary as well. Policy initiatives to change the nature of these distributions, either through migration or educational incentives in regions with low earnings, or social policy changes to enhance the well-being of those living in the low-earnings regions, may provide more opportunity for those left behind in the transition process. (JEL J31); Int'l Advances in Econ. Res., 8(3): pp. 201-14, Aug. 02. ©All Rights Reserved

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This paper presents some statistical methods of income inequality analysis based on the theoretical income distribution models that are well-fitted to the empirical models. As theoretical curves, the lognormal, gamma, Burr Type XII, and the Dagum models were used. They were applied to the earnings distributions in Poland in the period of economic transformation from a centrally-planned to a market economy. On the basis of the Dagum model, showing the perfect consistency with the considered earnings distributions, the maximun likelihood estimators of inequality parameters and economic distance ratios between men and women were calculated. (JEL C10); Int'l Advances in Econ. Res., 8(3): pp. 215-20, Aug. 02. ©All Rights Reserved

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The Securities and Exchange Commission requires foreign firms wishing to list their securities on the U.S. exchanges to convert their financial statements to U.S.-based generally accepted accounting principles (GAAP) in a reconciliation filing known as Form 20-F. This paper extends prior research analyzing the importance of the SEC requirement by examining the value relevance to U.S. capital markets of Form 20-F reconciliation information under two additional hypotheses: investors' anticipation of the reconciliation, and investors' perception of foreign countries' enforcement and reliability in applying local accounting rules. It is argued that the information content of the Form 20-F reconciliation data is preempted (at least partially) on the date of foreign earnings announcements because of investor anticipation of these reconciliations. Therefore, only significant unanticipated reconciliations exhibit value relevance on the date of filing. In addition, investor perception of the reliability of the reconciliations and the degree of confidence in foreign authorities enforcing local GAAP also affect the value relevance of the reconciliation data. This study hypothesizes that reconciliations made by firms from countries with mature and developed capital markets should be more value relevant to U.S. investors. The results show that both unexpected foreign earnings and anticipated reconciliations to U.S. GAAP are significantly associated with unexpected market returns during the week of earnings announcements. The region of the foreign country is also significantly associated with market returns. However, unexpected reconciliations are not significantly associated with unexpected market returns during the week of Form 20-F filing. (JEL M4, F3); Int'l Advances in Econ. Res., 8(3): pp. 221-34, Aug. 02. ©All Rights Reserved

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A Transaction Cost Model of Contract Choice: The Case of Petroleum Exploration

GEOFFREY BLACK

The growing literature on transaction costs posits that the structures of contracts involving exchange under uncertainty are influenced by the costs incurred by the contracting parties prior to, as well as after, a contract is signed. This research investigates the contractual responses to the substantial uncertainty attending the exchange of rights to underground petroleum deposits. It develops a transaction cost model to explain the payment structure found in these contracts. The model identifies the major transaction costs associated with the payment types used in oil and gas exploration contracts, including ex ante measurement costs and ex post production inefficiencies, and explains their effect on contract structure. Testable implications concerning variations in the payment structure of petroleum exploration contracts are generated and tested using data from private oil and gas mineral rights leasing contracts in four western states. The study has direct public policy significance in that it delineates the implications of different payment structures of oil and gas leasing contracts. These implications can be used to evaluate proposals to reform federal oil and gas leasing policies. In addition, while there has been considerable analysis of federal offshore oil and gas leasing contracts, there has been a dearth of research on private onshore oil leasing practices. This study helps to fill this empirical void. (JEL Q20); Int'l Advances in Econ. Res., 8(3): pp. 235-47, Aug. 02. ©All Rights Reserved

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The Effect of Task Experience on Assessments of Auditor Expert Potential

JOSEPH A. RUSSO, JR.

This paper proposes a model and methodology for studying the effect of experience on an auditor's expert potential. Expert potential is defined as an increase in the expected level of expertise at which an auditor will perform in an arbitrary future task. An auditor's behaviors during performance of a current task are treated as probes of that auditor's knowledge base. From an analysis of the responses thus obtained, inferences are made concerning the effects of task experience on the underlying properties of the knowledge driving task behaviors and on the probability of greater expert-like task behavior in the future. Application of the model is illustrated by evaluating the effects of experience on the expert potential of four first-year auditors who performed audit-related tasks in simulated auditing environments. (JEL M41); Int'l Advances in Econ. Res., 8(3): pp. 248-59, Aug. 02. ©All Rights Reserved

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