Date of Award

12-1-1980

Degree Type

Thesis

University or Center

Atlanta University (AU)

School

School of Arts and Sciences

Degree Name

M.A.

Department

Economics

Abstract

Problem. - The basic problem is the attempt of less developed countries to render their economy less dependent on primary products by diversifying their pattern of productions to favor manufactured products. Since primary products’ price is thought to be more unstable than the price of manufactured products, this price instability will distort income distribution, change the pattern of production and lower economic welfare. Purpose.- The writer attempts to investigate whether price instability in the Philippines’ economy is transmitted from world price instability and domestic policies, and also to investigate whether this price instability can affect the level of output and input utilization. Result.- The result obtained from this study is that the price instability in the Philippines’ economy is transmitted partially from the world price instability and partially from the domestic policies. The domestic policies cause the price instability of primary products to be greater than the price instability of manufactured products. In the primary sector, price instability will not induce a reduction in output or input utilization, but in the manufacturing sector, price instability will lead producers to reduce their output. Methodology.- This study used the percentage deviation of error terms from exponential trend to calculate the price instability index. Simple linear regressions are estimated in order to investigate the price and price instability relationships between the world market and the domestic market. Multiple regressions are estimated in order to investigate the effects of expected price and price instability on level of output and input utilization.

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