learning about a new technology pineapple in ghana this paper investigates the role of social learning in the diffusion of a new agri cultural technology in ghana we use unique data on farmers communication patterns to define each individual s information neighborhood conditional on many potentially confounding variables we find evidence that farmers adjust their inputs to align with those of their information neighbors who were surpris ingly successful in previous periods the relationship of these input adjustments to experience further indicates the presence of social learning in addition applying the same method to input choices for another crop of known technol ogy correctly indicates an absence of social learning effects jel d83 013 033 q16

monetary integration and economic reform recent research in contract theory views ownership as a substitute for complete contracts here this approach is applied to monetary integration countries face a coordination problem conducting monetary policy negative spillovers ensure uncoordinated policy generates too high inflation ex ante policy makers can undertake politically costly economic reform this has a positive spillover because it improves the outcome of the monetary policy game ex post contracting over policy may be possible but it supposed that ex ante contracting over reform and monetary policy is not this paper analyses when monetary union is a good substitute for this inability to commit

rules and discretion with noncoordinated monetary and fiscal policies the time inconsistency of optimal monetary policy is due to the effects of tax distortions thus the issue of how to improve upon the time consistent suboptimal monetary policy is related to that of the coordination of monetary and fiscal policy we present a model with three players the central bark the fiscal authority and wage setters in which distortionary taxes are explicitly modelled we show that binding commitments to monetary rules are not necessarily welfare improving if monetary and fiscal policy are not coordinated we also examine the effects of different degrees of independence of the central bank

monetary union and labor market reform abstract policy makers incentives to undertake costly labor market reform depend on the international monetary system a regime of noncooperative monetary policy is compared with monetary union we find that noncooperative policy leads to more reform of factors that affect the inflation bias which regime leads to more reform of factors affecting labor market flexibility depends on the size of monetary policy spillovers and the degree of correlation of supply shocks we show that monetary union produces higher expected inflation but a lower variance of inflation welfare can be higher or lower with monetary union

the bargaining system and performance a comparison of 18 oecd countries theoretical reasoning disagrees about what type of bargaining system performs best the authors have tested the explanatory power of three competing hypotheses neoliberalism corporatism and the hump shape hypothesis all of these hypotheses lack empirical support due to two main shortcomings first they ignore that wage restraint raises three distinct types of collective action problems second they do not consider qualitative differences among the national bargaining systems particularly the role of the state that do not allow analysis to construct such ordinal rankings of bargaining coordination as adopted by all previous empirical studies proceeding from a revised hypothesis and new measures of national bargaining systems the authors have found a nonlinear relationship between the bargaining system and economic performance in a way that economy wide wage coordination is superior only when the bargaining system is able to make local bargaining comply with coordination activities

the core of an economy with transaction costs this paper defines a new concept of the core for an economy with transaction costs and uses this concept to prove a limit theorem for sequences of replica economies in this way it provides a rationale for a definition of equilibrium in which agents face a sequence of budget constraints since economies with incomplete markets are special cases of economies with transaction costs the limit theorem also provides a rationale for radner s equilibrium of plans prices and price expectations

when are concerted reforms feasible explaining the emergence of social pacts in western europe under what conditions do governments employers and unions enter formal policy agreements on incomes employment and social security such agreements widely known as social pacts became particularly prominent during the 1990s when european economies underwent major adjustment this article seeks to explain national variation in adjustment strategies and specifically why concerted agreements were struck in some countries but not in others a fuzzy set qualitative comparative analysis of 14 european countries is employed to assess main arguments about the emergence of pacts the analysis yields two key findings first although prevailing arguments emphasize economic and monetary unionrelated pressures or alternatively unemployment these factors were neither necessary nor in themselves sufficient for pacts to materialize rather a high economic problem load appears to be causally relevant only when combined with particular political and institutional conditions namely the prevalence of electorally weak governments and or an intermediate level of union centralization second the analysis refines existing multicausal explanations of pacts by demonstrating three distinct theoretically and empirically relevant causal pathways to concerted agreements

emu and labour market reform needs incentives and realisations despite improving labour market conditions in recent years a number of emu countries still suffer from high and persistent unemployment it could therefore be expected that labour market reform would be given a prominent position on the political agenda the new constraints associated with the common monetary policy only increase the pressure for reform relying on the introduction of the single currency as a trigger for labour market reform may be a risky strategy emu generates a complex set of re optimising strategies of the players on the labour market which makes it difficult to get a clear idea what impact it will have on labour market reform evaluation of recent reform measures does not make one confident either the empirical analysis confirms to some extent the idea that countries with higher unemployment rates have carried out more labour market reform this finding holds however only for countries that do not belong to emu emu countries have on average carried out no more reform than countries outside emu and any link between the initial unemployment level and the labour market reform indicators seems to lack it may become apparent that more reform is needed once the macroeconomic environment becomes more unfavourable

union wage setting and exchange rate policy the performance of an optimally managed float is compared with that of a credibly fixed exchange rate in a small open economy framework where wages are set by a monopoly union two key results emerge first a sufficient condition for the managed float to outperform a fixed rate is that the union be no less inflation averse than society second introducing an inflation target into the central bank s loss function ensures the superiority of the managed float regardless of the weight attached to inflation by the union both results reflect the sensitivity of the union mark up to the policy regime

party politics and the reemergence of social pacts in western europe conventional accounts of the reemergence of social pacts in western europe argue they are a governmental response to economic pressures in particular the requirements for joining the european monetary union emu the authors analyze three case studies the netherlands ireland and austria to illustrate the usefulness of an alternative explanation centering on electoral calculations by political parties in choosing pacts parties forge social pacts not only to deal with economic problems but also when they perceive them to be helpful in reducing the potential electoral costs of economic adjustment and wage policies alternatively parties may forgo negotiations with social partners for electoral gain the authors extend the analysis to seven additional countries to apply the analysis more broadly by combining the separate literatures on political economy and party politics they are able to shed new light on the dynamics of social pacts in western europe

games of monetary and fiscal interactions in the emu abstract this paper constructs various models of the emu and ecb when member countries have different objectives voting in pursuit of national interest can yield moderate and stable inflation the metaphor of walsh type contracts implements a monetary policy rule that averages the member countries most preferred rules in a repeated relationship where a country suffering a large adverse shock can use political bargaining to subvert the ecb s commitment the optimal rule should incorporate some flexibility to forestall that finally freedom of national fiscal policies undermines the ecb s monetary commitment this may justify fiscal constraints like the stability and growth pact

monetary fiscal policy interactions and commitment versus discretion in a monetary union abstract we consider monetary fiscal policy interactions in a monetary union if monetary and fiscal authorities have different ideal output and inflation targets the nash equilibrium output or inflation or both are beyond the ideal points of all authorities leadership of either authority is better fiscal discretion entirely negates the advantage of monetary commitment the optimal monetary rule is equivalent to discretionary leadership of monetary over fiscal policy agreement about ideal output and inflation creates a monetary fiscal symbiosis yielding the ideal point despite disagreement about the relative weights of the two objectives for any order of moves without fiscal co ordination and without monetary commitment

adoption of agricultural innovations in developing countries a survey this paper reviews various studies which have provided a description and possible explanation to patterns of innovation adoption in the agricultural sector the survey points out that the tendency of many studies to consider innovation adoption in dichotomous terms adoption nonadoption may not be appropriate in many cases where the actual decisions are defined over a more continuous range more attention needs to be given to the socio cultural and institutional environment in area studies so that their interrelation with economic factors affecting adoption can be inferred the presence of several interrelated innovations is another aspect that needs to be considered more carefully in future research since a number of simultaneous decisions may be involved furthermore the possibility of regular sequential patterns in adopting components of a new technological package should be specifically addressed in future studies finally the impact of differential adoption rates on land holding distribution merits attention in future research

revisiting the case for a populist central banker it is known that discretionary policy may give rise to an inflationary bias if wages are negotiated in nominal terms in a recent issue of this review guzzo and velasco argued that this bias can be eliminated and welfare maximized by the appointment of a central banker who does not care at all about inflation a populist central banker a conceptual flaw of the latter result is identified here it is shown that when wages are negotiated in nominal terms the result is true only in the special case of a single all encompassing union in the more general case of multiple unions however inflation increases linearly with their number and a populist central bank may turn out to decrease welfare

the importance of noncognitive skills lessons from the ged testing program it is common knowledge outside of academic journals that motivation tenacity trustworthiness and perseverance are important traits for success in life thomas edison wrote that genius is 1 percent inspiration and 99 percent perspiration most parents read the aesop fable of the tortoise and the hare to their young children at about the same time they read them the story of the little train that could numerous instances can be cited of high iq people who failed to achieve success in life because they lacked self discipline and low iq people who succeeded by virtue of persistence reliability and self discipline the value of trustworthiness has recently been demonstrated when market systems were extended to eastern european societies with traditions of corruption and deceit it is thus surprising that academic discussions of skill and skill formation almost exclusively focus on measures of cognitive ability and ignore noncognitive skills the early literature on human capital e g gary becker 1964 contrasted cognitive ability models of earnings with human capital models ignoring noncognitive traits entirely the signaling literature e g michael spence 1974 emphasized that education was a signal of a one dimensional ability usually interpreted as a cognitive skill most discussions of ability bias in the estimated return to education treat omitted ability as cognitive ability and attempt to proxy the missing ability by cognitive tests most assessments of school reforms stress the gain from reforms as measured by the ability of students to perform on a standardized achievement test widespread use of standardized achievement and ability tests for admissions and educational evaluation are premised on the belief that the skills that can be tested are essential for success in schooling a central premise of the educational testing movement since its inception much of the neglect of noncognitive skills in analyses of earnings schooling and other lifetime outcomes is due to the lack of any reliable measure of them many different personality and motivational traits are lumped into the category of noncognitive skills psychologists have developed batteries of tests to measure noncognitive skills e g robert sternberg 1985 these tests are used by companies to screen workers but are not yet used to ascertain college readiness or to evaluate the effectiveness of schools or reforms of schools the literature on cognitive tests ascertains that one dominant factor g summarizes cognitive tests and their effects on outcomes no single factor has yet emerged to date in the literature on noncognitive skills and it is unlikely that one will ever be found given the diversity of traits subsumed under the category of noncognitive skills studies by samuel bowles and herbert gintis 1976 rick edwards 1976 and roger klein et al 1991 demonstrate that job stability and dependability are traits most valued by employers as ascertained by supervisor ratings and questions of employers although they present no direct evidence on wages and educational t discussants susan mayer university of chicago cecilia rouse princeton university nan maxwell california state university hayward janet currie university of california los angeles

corporatism monetary policy and macroeconomic performance a simple game theoretic analysis the effects of corporatism on inflation and output are analyzed in a model of a game between a government and a union this model allows consideration of aspects of corporatism other than centralization of wage bargaining and permits monetary policy to be endogenized corporatist attitudes on the part of the union have beneficial effects on economic performance provided the game is played noncooperatively with simultaneous moves through the nature of their impact depends critically on the government s preferences if the government leads certain forms of corporatism can be inflationary cooperative play reduces inflation but has an ambiguous effect on output copyright 1995 by the editors of the scandinavian journal of economics

corporatism labor unions and the safety net abstract this paper models corporatism as the attainment of outcomes superior to those when individual parties act alone this idea is developed in the context of union government interactions in the determination of wages and unemployment benefits a central finding is that while corporatism is welfare improving for the actors involved it yields few clear implications for the evolution of wages employment benefits or output it may therefore be unwise to employ corporatism indices in macroeconometric analyses without explicitly accounting for bargaining structures information and especially preferences

the existence of equilibrium without free disposal in economies with transaction costs and incomplete markets this paper presents a general model of an economy with transaction costs and proves the existence of a competitive equilibrium using t c bergstrom s procedure to discard the free disposal assumption since economies with incomplete markets are shown to be special cases of economies with transaction costs this result is used to discuss the conditions for the existence of an equilibrium in economies with incomplete markets copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

organizational determinants of wage moderation this article contributes to the political economic literature regarding the effects of industrial relations institutions on national economic outcomes based on an econometric analysis of the determinants of wage moderation in sixteen industrialized countries between 1974 and 2000 it argues that the organizational characteristics of trade unions have a significant impact on wage dynamics controlling for a number of institutional and economic factors the countries in which trade union confederations directly involve workers in the process of collective bargaining ratification have on average lower wage growth relative to productivity than others the authors also find that collective bargaining coordination and contract ratification magnify each other s wage dampening effect through case studies of ireland and italy the article examines the causal mechanisms underlying the uncovered statistical regularities and concludes that particularly at a time in which classic political exchange is waning worker involvement in contract ratification allows confederation leaders to resolve conflicting claims inside their organizations at lower wage levels than are achieved by a less participatory governance process

the rate of return to the high scope perry preschool program abstract this paper estimates the rate of return to the highscope perry preschool program an early intervention program targeted toward disadvantaged african american youth estimates of the rate of return to the perry program are widely cited to support the claim of substantial economic benefits from preschool education programs previous studies of the rate of return to this program ignore the compromises that occurred in the randomization protocol they do not report standard errors the rates of return estimated in this paper account for these factors we conduct an extensive analysis of sensitivity to alternative plausible assumptions estimated annual social rates of return generally fall between 7 and 10 with most estimates substantially lower than those previously reported in the literature however returns are generally statistically significantly different from zero for both males and females and are above the historical return on equity estimated benefit to cost ratios support this conclusion

the macroeconomics of social pacts in this paper we analyze macroeconomic interactions between trade unions the central bank and the fiscal policymaker we explicitly model unions concern for public expenditure paving the way for an analysis of the potential gains from cooperation between the fiscal policymaker and the unions i e the so called corporatist or social pacts that have characterized economic policies in a number of european countries in the last few decades we also highlight the profoundly different incentives generated by institutional arrangements such as the maastricht criteria and the stability and growth pact the former has unambiguously induced more efficient outcomes the latter is likely to backfire

government partisanship labor organization and macroeconomic performance governments of the left and right have distinct partisan economic policies and objectives that they would prefer to pursue their propensity to do so however is constrained by their desire for reelection we argue that the ability of governments to further their partisan interests and preside over reelectable macroeconomic outcomes simultaneously is dependent on the organization of the domestic economy particularly the labor movement we hypothesize that there are two different paths to desirable macroeconomic performance in countries with densely and centrally organized labor movements leftist governments can promote economic growth and reduce inflation and unemployment conversely in countries with weak labor movements rightist governments can pursue their partisan preferred macroeconomic strategies and achieve similarly beneficial macroeconomic outcomes performance will be poorer in other cases these hypotheses are supported by analysis of pooled annual time series data for 16 advanced industrial democracies between 1967 and 1984

fiscal leadership and central bank design this article investigates the impact on economic performance of the timing of moves in a policy game between the government and the central bank for a government that has both redistributional and stabilization objectives it is shown that both inflation and income inequality are reduced without sacrificing output growth if the government assumes a leadership role compared with a regime in which monetary and fiscal policy are determined simultaneously further it is shown that government leadership benefits both the fiscal and monetary authorities through the enhanced coordination that this arrangement implies jel classification e52 e61 f42

optimal simple and implementable monetary and fiscal rules welfare maximizing monetary and fiscal policy rules are studied in a model with sticky prices money and distortionary taxation the ramsey optimal policy is used as a point of comparison the main findings are the size of the inflation coefficient in the interest rate rule plays a minor role for welfare it matters only insofar as it affects the determinacy of equilibrium optimal monetary policy features a muted response to output interest rate rules that feature a positive response to output can lead to significant welfare losses the welfare gains from interest rate smoothing are negligible optimal fiscal policy is passive the optimal monetary and fiscal rule combination attains virtually the same level of welfare as the ramsey optimal policy

interactions of commitment and discretion in monetary and fiscal policies we consider monetary scal interactions when the monetary authority is more conservative than the scal with both policies discretionary 1 nash equilibrium yields lower output and higher price than the ideal points of both authorities 2 of the two leadership possibilities scal leadership is generally better with scal discretion monetary commitment yields the same outcome as discretionary monetary leadership for all realizations of shocks but scal commitment is not similarly negated by monetary discretion second best outcomes require either joint commitment or identical targets for both authorities output socially optimal and price level appropriately conservative or complete separation of tasks jel e61 e63

navigating institutional change the accord rogernomics and the politics of adjustment in australia and new zealand this article uses a transactions approach to examine the ability of governments to develop and sustain negotiated solutions to major economic challenges where actors are embedded in long term repeated interaction have long time horizons and invest in monitoring and enforcement technologies effective political exchange is more likely in good transactions environments policy bargains will be more easily renegotiated and therefore more flexible and durable to examine the expectations the author looks to the puzzle posed by events in australia and new zealand 1983 1996 facing similar macroeconomic crises and with historically similar wage bargaining institutions and levels of union density both elect labor governments which then make opposite choices a negotiated solution emerged in australia but not in new zealand relying on the secondary literature and interviews with key actors the author finds support for the transactions approach findings here point to ways in which to broaden the study of

an analysis of the stability and growth pact we use a stylised model to analyse the stability and growth pact for countries that have formed the european monetary union emu in our model shortsighted governments fail to internalise the consequences of their debt policies for the common inflation rate fully therefore while governments have no incentive to sign a stability pact in the absence of a monetary union they do so with monetary union to restrain this externality with uncertainty a monetary union combined with an appropriately designed pact will be strictly preferred to autonomy with differences in initial conditions conflicts of interest arise we study the nash bargaining solution

the nature of the farm abstract using a model based on a trade off between moral hazard incentives and gains from specialization this paper explains why farming has generally not converted from small family based firms into large factory style corporate firms nature is both seasonal and random and the interplay of these qualities generates moral hazard limits the gains from specialization and causes timing problems between stages of production by identifying conditions in which these forces vary we derive testable predictions about the choice of organization and the extent of farm integration to test these predictions we study the historical development of several agricultural industries and analyze data from a sample of over 1 000 farms in british columbia and louisiana in general seasonality and randomness so limit the benefits of specialization that family farms are optimal but when farmers are successful in mitigating the effects of seasonality and random shocks to output farm organizations gravitate toward fa

strikes are more common in countries with majoritarian electoral systems strikes are more common in those oecd countries where the legislature is elected in single member districts smd than in those where it is elected by proportional representation pr furthermore more working days are lost due to industrial conflict in countries with smd i suggest a politico economic explanation for these rarely noticed empirical regularities further empirical testing including controls drawn from previous strike research reveals that they hold up in a variety of econometric specifications

accounting for intergenerational income persistence noncognitive skills ability and education we analyse in detail the factors that lead to intergenerational persistence among sons where this is measured as the association between childhood family income and later adult earnings we seek to account for the level of income persistence in the 1970 bcs cohort and also to explore the decline in mobility in the uk between the 1958 ncds cohort and the 1970 cohort the mediating factors considered are cognitive skills non cognitive traits educational attainment and labour market attachment changes in the relationships between these variables parental income and earnings are able to explain over 80 of the rise in intergenerational persistence across the cohorts

optimal contracts and the role of the government in wage bargaining abstract this paper introduces a contract between the government and trade unions in a model of strategic wage bargaining a la lippi 2003 it shows that an optimal contract can be implemented through an appropriately defined inflation target

union density and political strikes why do trade unions organize antigovernment strikes in some countries but not in others this article argues that there is a curvilinear relationship between union density and political strike activity political strikes are rare in countries with low union density since effective protests require a basic level of organizational capacity they are also rare in countries with high union density since a government that faces a strong union movement has powerful incentives to adjust its policies in order to avoid open confrontation but political strikes are relatively common in countries with moderate levels of union density since it is difficult for governments and unions to find viable compromises when the strength of the unions is not secure the empirical part of the article estimates the relationship between union density and the likelihood of political strikes in two samples of advanced democracies

centralised wage setting inflation contracts and the optimal choice of central banker the paper examines the appropriate design of central banking institutions in an economy in which the nominal wage is set by an inflation averse monopoly union as a positive mark up over its market clearing value the analysis considers both the optimal choice of central banker and the potential role for a linear inflation contract the optimal set of arrangements is a central banker who attaches less significance to inflation than does society combined with an inflation contract where the value of the contract parameter is related to the union s degree of inflationaversion following the important contribution of rogoff 1985 the appointment of a conservative central banker has been widely accepted as a potential albeit partial solution to the time inconsistency problem associated with discretionary policy making in placing a greater weight on inflation than does the government and society as a whole in the setting of monetary policy the central bank s temptation to create inflation surprises is reduced this then leads to a lower inflation rate in equilibrium than would otherwise prevail whilst in rogoff s stochastic framework this reduction in the inflationary bias has to be weighed against an increase in output variability the appropriate choice of central banker ensures a net improvement in welfare an important feature of rogoff s model is the assumption of an atomistic labour market in which nominal wages embodied in single period contracts reflect interaction between agents who hold no market power such a representation of the labour market also characterises most subsequent extensions of rogoff s analysis e g lohmann 1992 and waller 1992 however a number of recent papers in considering the time inconsistency issue have employed the assumption of unionised wage setting assuming either an allencompassing monopoly union or alternatively a number of individual unions each of which has a non negligible impact on macroeconomic variables examples include agell and ysander 1993 bleaney 1996 cubitt 1992 1995 horn and persson 1988 hutchison and walsh 1998 and skott 1997 these contributions have examined the implications of the assumed labour market imperfection from a variety of perspectives but only those of bleaney and skott directly consider its consequences for the appropriate specification of central bank objectives in what follows we explore the significance of unionised wage setting for

rationalist explanations for war realist and other scholars commonly hold that rationally led states can and sometimes do fight when no peaceful bargains exist that both would prefer to war against this view i show that under very broad conditions there will exist negotiated settlements that genuinely rational states would mutually prefer to a risky and costly fight popular rationalist and realist explanations for war fail either to address or to explain adequately what would prevent leaders from locating a less costly bargain essentially just two mechanisms can resolve this puzzle on strictly rationalist terms the first turns on the fact that states have both private information about capabilities and resolve and the incentive to misrepresent it the second turns on the fact that in specific strategic contexts states may be unable credibly to commit to uphold a mutually preferable bargain historical examples suggest that both mechanisms are empirically plausible

the political economy of social democratic economic policies the pasok experiment in greece this article looks at the political economy of social democratic economic policies it focuses on those policies that seek to extend democracy to the social and economic spheres and examines why such experiments have met with limited success in the past it compares external constraints on the viability of such policies such as the freedom of capital movements and globalization with internal constraints since social democratic policies rely on promoting coordination and cooperation between economic agents and groups it is argued that an important but often neglected internal constraint is the extent to which social democracy can draw upon or if they are lacking foster those institutions within society which promote coordination and cooperation the paper examines in detail the social democratic experience of pasok in greece and draws some conclusions for the wider relevance of the future viability of social democratic economic policies copyright 1998 by oxford university press

a new characterization of the efficiency of equilibrium with incomplete markets abstract this paper defines a new concept of efficiency for economies with incomplete markets called d efficiency which characterizes radner equilibrium allocations we show that these allocations are d efficient for some partition d of the set d of date event pairs and that under certain conditions any d efficient allocation may be decentralized as an equilibrium with lump sum transfers since any d efficient allocation is a social nash optimum our results generalize s j grossman s j econ theory 15 1977 1 15 characterization of efficiency also since for d d d efficiency coincides with full pareto efficiency we obtain sufficient conditions for radner equilibrium allocations to be pareto efficient

the nonneutrality of monetary policy with large price or wage setters monetary rules matter for the equilibrium rate of employment when the number of price wage setters is small even when assuming rational expectations complete information central bank precommitment and absence of nominal rigidities if the central bank is nonaccommodating sufficiently large unions bargaining independently have an incentive to moderate sectoral money wages and thereby expected real wages the result is an increase in the real money supply and hence higher demand and employment this does not hold with accommodating monetary policy since unions wage decisions cannot then affect the real money supply a similar argument holds for large monopolistically competitive price setters

the today and tomorrow of kids time preferences and educational outcomes of children abstract we experimentally investigate the distribution of children s time preferences along gender and racial lines we find that boys are more impatient than girls and black children are more impatient than white children black boys have the highest discount rates of all groups most importantly we show that impatience has a direct correlation with behavior that is predictive of economic success an increase of one standard deviation in the discount rate is associated with an increase in the number of disciplinary referrals that a child has the following school year by 14 our results suggest that impatience might play an important role in determining the success of performance incentive programs for school children

smallholder technical efficiency controlling for environmental production conditions abstract smallholder agricultural production depends heavily on environmental production conditions that are largely exogenously determined yet few data sets collect necessary detailed information on environmental production conditions this oversight raises the spectre of likely omitted variables bias because farmers input choices typically respond in part to environmental conditions moreover because environmental production conditions are rarely symmetrically distributed the omission also generally leads to upward bias in estimated technical inefficiency and to biased estimates of the correlates of estimated technical inefficiency as well using panel data from 464 traditional rice plots in cote d ivoire we show that controlling for heterogeneous environmental production conditions significantly changes inferences perhaps especially with respect to smallholder rice farmers estimated technical inefficiency

campaign contributions as a commitment device we explore the idea that the influence of interest groups in elections may have positive economic effects since the investment decisions of firms determine economic growth and employment voters have a common interest in making their governments commit to policies that encourage private investments however governments may renege on promises for economic stability and choose excessively leftist policies campaign contributions by firms tend to restrain the scope for such opportunism and provide a commitment device this is achieved if firms after the policy is chosen contribute to the governing party or to its rivals

neighbors and extension agents in ethiopia who matters more for technology adoption improving agricultural productivity is seen as vital to economic growth in poor countries particularly in sub saharan africa where productivity growth has lagged behind that of other continents the focus has therefore been on new technologies particularly the adoption and diffusion of improved seed varieties and the increased use of fertiliser supported by investments in effective extension services it is important to understand how these new technologies spread and the effectiveness of extension services in this process

redistributive promises and the adoption of economic reform this paper analyzes the relationship between economic reform and the democratic process to ask the following question does the likelihood of adoption of an economic reform increase with an increase in the efficiency benefits from that reform a priori we might expect that this likelihood should increase monotonically for two reasons first economic reform results in an increase in the size of the national pie if the government has the ability to make compensatory tax transfers an increase in each citizen s income is possible second a larger economic reform results in a greater number of winners this might also be expected to reinforce the political support for economic reform so we should expect a reform with greater efficiency benefits to a larger population to have a greater chance of adoption by the government however in this paper we show that this intuition is mistaken in particular we demonstrate that there exists a certain non monotonicity between the distribution of winners from economic reform and the probability of its adoption an increase in the number of winners may lower rather than increase the likelihood of adoption of economic reform in particular even though reforms that benefit a minority or an overwhelming majority are adopted reforms that benefit a smaller majority are not adopted

personality traits technology adoption and technical efficiency evidence from smallholder rice farms in ghana although a large literature highlights the impact of personality traits on key labor market outcomes evidence of their impact on agricultural production decisions remains limited data from 1 200 ghanaian rice farmers suggest that noncognitive skills polychronicity work centrality and optimism significantly affect simple adoption decisions returns from adoption and technical efficiency in rice production and that the size of the estimated impacts exceeds that of traditional human capital measures greater focus on personality traits relative to cognitive skills may help accelerate innovation diffusion in the short term and help farmers to respond flexibly to new opportunities and risks in the longer term

on the need for fiscal constraints in a monetary union the desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to following its policies if it can commit then debt constraints can only impose costs if it cannot commit then fiscal policy has a free rider problem and debt constraints may be desirable this type of free rider problem is new and arises only because of a time inconsistency problem

governments trade unions and the macroeconomy an expository analysis of the political business cycle we have briefly reviewed the state of the art of research on the political business cycle in the context of a simple textbook model of the macroeconomy it has been demonstrated that the government generated political business cycle vanishes as expectations turn rational even then however non inflationary policies apparently are time inconsistent hence democracies seem to be stuck with some sort of inflationary bias

on the efficiency of equilibrium with transaction costs this paper defines a concept of efficiency for economies with transactions costs called nash efficiency which characterizes in the sense of the fundamental theorems of welfare economics equilibrium allocations in these economies in particular it is shown that these allocations are nash efficient and under certain conditions any nash efficient allocation may be decentralized as an equilibrium with a system of lump sum transfers copyright 1989 by the london school of economics and political science

monetary union without fiscal coordination may discipline policymakers abstract with benevolent policymakers and fiscal leadership monetary unification reduces inflation taxes and public spending these disciplining effects of a monetary union which become stronger if the number of participants in the union increases are likely to raise welfare two types of arrangements are considered for the union s common central bank ccb making the ccb more conservative and imposing an inflation target on the ccb in contrast to the results of svensson 1997 svensson l e o 1997 optimal inflation targets conservative central banks and linear inflation contracts american economic review 87 98 114 an optimally designed conservative ccb may outperform inflation targeting finally we find that fiscal coordination offsets the disciplining effects of monetary unification hence subsidiarity in fiscal policymaking may enhance welfare

from populism to neoliberalism labor unions and market reforms in latin america in the late 1980s populist labor parties which had advanced protectionism and state intervention in the postwar period implemented market oriented reforms in argentina mexico and venezuela in all three countries market reforms hurt their union allies the interaction between allied unions and governing labor parties however varied across countries and across sectors within the same country while some unions endorsed neoliberal reforms others rejected them despite their long term alliance with governing parties while some unions obtained concessions others failed to do so this article argues that the incentives created by partisan loyalties partisan competition and union competition explain these interactions partisan loyalty results from the long term affiliation of unions with a political party partisan competition takes place among union leaders affiliated with different political parties for the control of unions union competition occurs in diverse national and sectoral contexts among labor organizations for the representation of the same workers loyalty derived from a long term affiliation with the incumbent party facilitates collaboration between labor unions and the government yet if partisan competition makes loyal union leaders afraid of being replaced by activists affiliated with the opposition parties their incentives for militancy increase as a way of showing their responsiveness to the rank and file hurt by market reforms union competition for the representation of the same workers makes coordination more difficult thereby weakening unions and making them less likely to obtain concessions from the government despite their partisan loyalty the article presents empirical evidence from eighteen cases including national confederations and individual unions in five economic sectors in argentina mexico and venezuela to test this theory

designing fiscal and monetary institutions for a european monetary union this paper explores the conditions under which aeuropean monetary union emu is an optimum currencyarea the scope for an emu increases with theconvergence of structural and fiscal policies smallmoney holdings a conservative european central bank and dependent national central banks how nationalpolicies affect the rest of the union once the emu hasbeen established is also investigated the case forsurveillance of national structural and fiscalpolicies appears to depend mainly on the monetaryarrangements in the union

the interaction of monetary policy and wages this paper focuses on the interaction of monetary policy and wage formation in economies with strong labor unions government and unions are viewed as endogenous utility maximizers and the macroeconomic consequences of their strategic interaction are explored with the aid of some elements of simple game theory specifically it is shown a how labor unions adjust wages to prices so as to maximize their utility following changes in monetary policy b how the effectiveness of monetary policy is circumscribed without necessarily being nullified by the utility maximizing reactions of unions and c how the interplay of government and unions can create a persistent tendency towards inflation and unemployment simultaneously

electoral competition under the threat of political unrest this paper examines how voting and the outcomesof majority rule elections are affected by factors beyond the control of the winning party we present a model that helps to predict how threats against the electoral process ineuence 1 platform choice by political parties 2 which party wins the election and 3 the policy outcomes enally implemented in a democracy where the majority winner sets policy dissatiseed groups including groups outside the electoral process may still be able to interfere with that policy a losing party may organize a coup voters may riot unions may go on strike investors may take their capital abroad terrorists and foreign powers may threaten disruption and loss of life foreign powers may withdraw aid or even impose a trade embargo we analyze the effect of these nonelectoral factors on electoral outcomes we consider a majority rule electoral competition between two political parties with ideal policies lying to either side of the median voter s ideal policy we allow for only a one dimensional policy space but the disruption possibility leads to a twodimensional outcome space as evident in the examples given above the actors threaten

time preference noncognitive skills and well being across the life course do noncognitive skills encourage healthy behavior a number of prominent diseases are influenced by health behaviors for example it is well known that the decision to smoke comes with considerable risks of developing smoking related ailments such as lung cancer emphysema and heart disease obesity is another health condition that can be costly it is associated with increased risk for diseases such as coronary heart disease and diabetes centers for disease control 2009 nationally it is estimated that about one third of the u s population is obese and estimates suggest that obesity costs society anywhere from 27 to 47 billion in health care expenditures annually centers for disease control 2009 national center for health statistics 2008 research suggests that changing individuals diets and getting them to exercise would help to reduce the prevalence of obesity in society melayne mcinnes and judith shinogle 2009 smoking and obesity provide just two examples of cases in which the nation s burden of disease is influence by behaviors that its citizens engage in because the united states spends a large share of gdp on health care each year understanding the determinants of health behaviors is important as it may allow scholars to identify ways to reduce these costs this paper examines the relationship between individuals health behaviors and the non cognitive skills that individuals possess in the past decade the economics discipline has seen a burst of interest in human capabilities that contribute to labor market productivity beyond the usual foci of attention levels of education and learning by doing the collection of personality traits soft skills incentive enhancing preferences and socio emotional factors that economists are now studying has been loosely grouped together under the heading non cognitive skills 1 while the term may be something of a misnomer because many of the worker attributes that the authors writing in this subfield are interested in require reasoning or cognition the skills of interest have been found to be important determinants of labor market success james heckman jora stixrud and sergio urzua 2006 samuel bowles herbert gintis and melissa osborne 2001 2james heckman 2007 has stated that these socio emotional attributes as non cognitive skills are sometimes called are also likely to affect health behaviors this paper tests this hypothesis it provides a theoretical and an empirical analysis of the connection between socio emotional attributes and the choices that individuals make about health it uses data from a large nationally representative dataset to analyze the relationships

the inefficient use of power costly conflict with complete information recent work across a wide range of issues in political economy as well as in american comparative and international politics tries to explain the inefficient use of power revolutions civil wars high levels of public debt international conflict and costly policy insulation in terms of commitment problems this paper shows that a common mechanism is at work in a number of these diverse studies this common mechanism provides a more general formulation of a type of commitment problem that can arise in many different substantive settings the present analysis then formalizes this mechanism as an inefficiency condition that ensures that all of the equilibria of a stochastic game are inefficient this condition has a natural substantive interpretation large rapid changes in the actors relative power measured in terms of their minmax payoffs may cause inefficiency

central bank independence centralization of wage bargaining inflation and unemployment theory and some evidence abstract this paper proposes a conceptual framework to investigate the effects of central bank independence of the degree of centralization of wage bargaining and of the interaction between those institutional variables on real wages unemployment and inflation in a framework in which unions are averse to inflation this aversion moderates union s wage demands as they attempt to induce the central bank to inflate at a lower rate an increase in the degree of centralization of wage bargaining a decrease in the number of unions triggers two opposite effects on real wages unemployment and inflation it reduces the substitutability between the labor of different unions and therefore the degree of effective competition between them this reduced competition effect raises real wages unemployment and inflation but the decrease in the number of unions also strengthens the moderating effect of inflationary fears on the real wage demands of each union this strategic effect lowers real wages unemployment and inflation for sufficiently inflation averse unions the interaction between those two effects produces a calmfors driffill type relation between real wages and centralization the paper analyzes the effects of central bank independence on the position and the shape of this relation as well as on inflation and unemployment the paper features two mechanisms one of which is novel through which monetary institutions have real effects the model implies that if there is a single union social welfare is maximized when the central bank attaches a zero weight to inflation but when the number of unions is larger than one this result is no longer true in general empirical evaluation of some of the theoretical implications using data from 19 developed economies is for the most part supportive of those implications