bargaining in the shadow of power abstract often a bargainer can use some form of power legal military or political to impose a settlement how does the outside option of being able to impose a settlement albeit at some cost affect the bargaining and how does the probability that the bargaining will break down vary with the distribution of power between the bargainers these questions are examined by adding the option of imposing a settlement to rubinstein s game of dividing a pie each actor can accept an offer make a counteroffer or try to impose a solution imposing a settlement is however costly and each bargainer has private information about its cost journal of economic literatureclassification number c72

the variable rate of growth effect in the life cycle saving model the rate of growth in real gnp g affects the aggregate saving rate positively in life cycle saving models this rate of growth effect is invariably estimated as the coefficient of g in the saving function we show that other determinants of the saving rate influence the rate of growth effect in other words the rate of growth effect is not constant specifically the real rate of return on financial assets and the population dependency ratio determine the timing of saving over the life cycle and hence alter the rate of growth effect the dependency ratio also has an effect on the saving rate which is independent of g because it together with the foreign saving rate determines the level of saving over the life cycle

cross country estimates of the demand for money and its components the demand for money aggregates m1 m2 and their components currency demand deposits and time deposits are estimated using a sample of 103 countries at two time periods money demand is found to be affected by age literacy industrial development and political structure as well as income and inflation this expanded demand function helps to explain the considerable changes in money demand that have occurred over long periods and the large variation in money demand found across countries the knowledge thus gained is useful for understanding differences in monetary and taxation policies across countries

social capital as a product of class mobilization and state intervention industrial workers in kerala india abstract this paper argues that state intervention and class mobilization in the state of kerala india have produced two forms of social capital kerala s high level of social development and successful redistributive reforms are a direct result of mutually reinforcing interactions between a programmatic labor movement and a democratic state this synergy between state and labor has also created the institutional forms and political processes required for negotiating the class compromises through which redistribution and growth can be reconciled these dynamics are explored through a close examination of both the organized factory sector and the unorganized informal sector

age structure and inflation a wicksellian interpretation of the oecd data wicksell s cumulative inflation process is founded on the separation of investment and saving decisions the demographic age structure influences the aggregate of both these decisions and therefor

from bottom of the barrel to cream of the crop sequential screening with positive selection in a number of interesting environments dynamic screening involves positive selection in contrast with coasian dynamics only the most motivated remain over time the paper provides conditions under which the principal s commitment optimum is time consistent and uses this result to derive testable predictions under permanent or transient shocks it also identifies environments in which time consistency does not hold despite positive selection and yet simple equilibrium characterizations can be obtained

scandinavian evidence on growth and age structure the age distribution is seldom taken into consideration in macroeconometric papers in spite of the fact that established economic theories predict that demographic factors will affect the aggregate economy this paper investigates empirically the influence of age variables on growth unlike recent papers on the subject the focus here is on investigating the relationship on annual data for individual scandinavian countries estimations of a typical growth specification augmented with age variables are run and the results indicate that economic growth is indeed affected by the age distribution where the demographic structure catches the mediumrun trend in the growth rate the robustness of this finding is first checked by instrumental variable regressions to control for the potential endogeneity of the economic variables and then by running ridge regressions to mitigate the collinearity between the age variables rarement les etudes macro economiques considerent la distribution de la population par ge

the saving of the elderly in micro and macro data examination of household micro data on the elderly has generally concluded that they do not dissave significantly whereas estimates using aggregate macro data have shown that the presence of a large elderly population leads to a lower saving rate this paper shows that if interactions between generations are important one would not expect these estimates to be the same the paper presents new evidence that bequests are plausibly the source of this discrepancy examination of data from young households that have received or expect bequests confirms that bequests are indeed an important factor determining the saving of the young

capitals and capabilities a framework for analyzing peasant viability rural livelihoods and poverty abstract on the basis of themes emerging in current debates on rural development in latin america this paper develops an analytical framework for analyzing rural livelihoods in terms of their sustainability and their implications for rural poverty the framework argues that our analyses of rural livelihoods need to understand them in terms of a people s access to five types of capital asset b the ways in which they combine and transform those assets in the building of livelihoods that as far as possible meet their material and their experiential needs c the ways in which people are able to expand their asset bases through engaging with other actors through relationships governed by the logics of the state market and civil society and d the ways in which they are able to deploy and enhance their capabilities both to make living more meaningful and to change the dominant rules and relationships governing the ways in which resources are controlled distributed and transformed in society particular attention is paid to the importance of social capital as an asset through which people are able to widen their access to resources and other actors

cross country evidence on long run growth and inflation i introduction many believe inflation has important adverse effects on long run economic performance this conviction is based on the logic summarized by fischer and modigliani 1978 for example that firms and workers devote productive resources to dealing with inflation that inflation uncertainty reduces efficiency by discouraging long term contracting and increasing relative price variability and so on nonetheless many others believe that the magnitudes of such costs are small and insignificant at moderate rates of inflation cross country growth regressions would seem to offer a sensible means of empirically determining inflation s effects 1 such analysis would appear less sensible however in light of the levine and renelt 1992 finding that estimates of the growth inflation relationship vary sharply with the regression specification nonetheless analyses completed subsequent to levine and renelt 1992 for example fischer 1991 1993 cozier and selody 1992 and cukierman et al 1993 continue to use growth regressions to infer inflation s effects and typically conclude growth and inflation to be inversely related this paper shows that while inflation does generally appear to be inversely related to growth estimates of the relationship suffer two additional robustness problems problems which emerge across a variety of model specifications more specifically this analysis first demonstrates the sensitivity of growth inflation results to modifications to the sample of countries limited from the start to low and moderate inflation countries it next demonstrates the sensitivity of results to modifications in the time period for example among oecd countries abbreviating the covered time period from 1960 85 to 1968 85 reduces inflation s effect on growth to insignificance such fragility with respect to the country sample and time period may be viewed as even more fundamental than the regression specification sensitivity documented by levine and renelt 1992 this analysis then shows that the same robustness problems plague alternative specifications of the growth inflation relationship the baseline regression estimated here supposes a linear growth inflation relationship formally it follows from an augmented solow growth model 1956 in which inflation drives the level but not the growth rate of steady state income plausible alternatives include allowing inflation to have non linear effects on growth as in log and quadratic specifications and respecifying the model such that inflation formally drives steady state growth rather than just the steady state level of income such alternatives to the baseline specification yield results which suffer the same basic difficulties of sensitivity to country sample and time period ultimately these findings should further discourage that is lay to rest the practice of quantifying inflation s effects with cross country growth regressions while cross country growth regressions may be viewed as generally suggesting that inflation imposes costs the fragility of the estimates indicates researchers will need to use alternative approaches to better identify inflation s costs researchers might for example find it productive to build on the investment analyses of huizinga 1993 and pindyck and solimano 1993 which combine time series and cross section variation ii theory as detailed by mankiw romer and weil 1992 the solow growth model 1956 augmented to allow for human capital may be used to derive a simple relationship between growth and initial income population growth and the rates of physical and human capital investment 1 ln y sub i t y sub i 0 gamma sub 0 gamma sub 1 ln y sub i 0 gamma sub 2 ln n sub i g delta gamma sub 3 ln s sub i gamma sub 4 ln h sub i v sub i the variable y denotes income per capita n represents exogenous population growth g denotes the exogenous rate of growth of labor augmenting technology delta is the common rate of depreciation of physical and human capital and s and h denote respectively the rates of physical and human capital accumulation

incomplete information bargaining with outside opportunities we consider two kinds of outside opportunity that a seller of an indivisible good might have selling to a different buyer and consuming the good herself in both models the seller is uncertain about the buyer s valuation and becomes more pessimistic over time when the seller becomes sufficiently pessimistic she prefers the outside opportunity so she will not bargain indefinitely with the current buyer despite the resulting finite horizon nature of negotiations the link between the buyer s willingness to accept an offer and the seller s eagerness to go outside generates multiple equilibria

gender differences in bargaining outcomes a field experiment on discrimination abstract relying on a commonly used fixed offer bargaining script we examine gender differences in bargaining outcomes in a highly competitive and frequently used market the taxi market in lima peru our bargaining script secures that only the seller can change prices and terminate negotiations thus we are able to examine differences in the seller s entire path of negotiation and in the reservation price at which they are willing to trade we find that male and female passengers who use the same bargaining script are not treated equally men face higher initial prices final prices and rejection rates these differences are consistent with male drivers being more reluctant to give in to demanding negotiations by male passengers and with male passengers being perceived as having high valuations to identify whether taste based or statistical discrimination drives the inferior treatment of men we conduct an experiment where passengers send a signal on valuation before negotiating the signal eliminates gender differences and the response is shown only to be consistent with statistical discrimination thus in the limiting case of a highly competitive market with experienced traders we do not find evidence of taste based discrimination the differential observed is however consistent with statistical discrimination

gambling reputation repeated bargaining with outside options we study the role of incomplete information and outside options in determining bargaining postures and surplus division in repeated bargaining between a long run player and a sequence of short run players the outside option is not only a disagreement point but reveals information privately held by the long run player in equilibrium the uninformed short run players offers do not always respond to changes in reputation and the informed long run player s payoffs are discontinuous the long run player invokes inefficient random outside options repeatedly to build reputation to a level where the subsequent short run players succumb to his extraction of a larger payoff but he also runs the risk of losing reputation and relinquishing bargaining power we investigate equilibrium properties when the discount factor goes to 1 and when the informativeness of outside options diffuses in both cases bargaining outcomes become more inefficient and the limit reputation building probabilities are interior publication abstract

age structure and trade openness an empirical investigation this study focuses on the relationship between age structure and trade openness we hypothesise that a higher share of the working age population in the total population increases trade openness because the dependent population tends to spend more than the working age population on non tradable goods such as education and medical services we estimate the effects of age structure on trade openness using panel data for 85 countries from 1991 to 2010 the empirical results show that the share of the working age population has a positive effect on trade openness an increase in the share of the working age population is considered to be one factor that contributed to an increase in trade openness in the sample period

bilateral trading in networks in many markets goods flow from initial producers to final customers travelling through many layers of intermediaries and information is asymmetric we study a dynamic model of bargaining in networks that captures these features we show that the equilibrium price demanded over time is non monotonic but the sequence of transaction prices declines over time with the possible exception of the last period the price dynamic is therefore reminiscent of fire sales and hot potato trading traders who intermediate the object arise endogenously and make a positive profit the profit earning intermediaries are not necessarily traders with many connections for the case of multilayer networks they belong to the path that reaches the maximum number of potential buyers using the minimal number of intermediaries this is not necessarily the path of the network that maximizes the probability of consumption by traders who value the most the object i e welfare

sequential bargaining with correlated values the paper analyzes an infinite horizon sequential bargaining game with one sided offers between a buyer and a seller when the buyer s valuation depends on the seller s the seller knows the value of the object and the buyer does not the influence of relative discount factors on the solution is studied it is shown for example that an impasse may result if the buyer offeror is too impatient relative to the seller the buyer makes a single take it or leave it offer

local capacity village governance and the political economy of rural development in indonesia summary this paper develops a framework for conceptualizing local capacity to address village level livelihood and governance problems the framework is based on an analysis of asset distribution combined with an explicit analysis of the links between processes of state formation state business linkages and local forms of social capital the framework is used to discuss findings from recent research on village capacity in rural indonesia the discussion suggests that it is possible to link a political economic approach to rural development with recent conceptualizations of social capital such an analysis can illuminate the forms taken by and the effectiveness of village level collective action in ways that either purely political economy or social capital approaches do not

demographic change and bank profitability empirical evidence from german savings banks most european economies will experience significant demographic changes in the decades ahead due to low birth rates populations are shrinking and ageing at the same time this paper explores the impact of demographic change on the banking industry a unique data set which contains detailed information on almost 2 5 million accounts in 11 german savings banks allows us estimating the socio demographic determinants of retail profitability using a simulation model we are able to predict the development of bank profitability due to demographic shifts up to 2025 one of the main findings is that the effects of population ageing will partially offset the impact of shrinking customer bases while the decline in the size of the population reduces the customer base ageing per se increases profitability as older customers typically generate higher profits for their banks

age effects in swedish local labor markets abstract the paper studies age structure effects on local labor market performance results show that young workers benefit from large youth cohorts and that a one standard deviation increase in the share of workers aged 50 60 years raises overall unemployment by 1 1 percentage points

government action social capital and development reviewing the evidence on synergy abstract instead of assuming a zero sum relationship between government involvement and private cooperative efforts the five preceding articles argue for the possibility of state society synergy that active government and mobilized communities can enhance each others developmental efforts this article draws on these articles to explore the forms and sources of state society synergy i argue that synergy usually combines complementarity with embeddedness and is most easily fostered in societies characterized by egalitarian social structures ard robust coherent state bureaucracies i also argue however that synergy is constructable even in the more adverse circumstances typical of third world countries

editorial human capital and human capability i would like to comment on the connection as well as contrast between two distinct but related areas of investigation in understanding the processes of economic and social development the accumulation of human capital and the expansion of human capability the former concentrates on the agency of human beings through skill and knowledge as well as effort in augmenting production possibilities the latter focuses on the ability of human beings to lead lives they have reason to value and to enhance the substantive choices they have the two perspectives cannot but be related since both are concerned with the role of human beings and in particular with the actual abilities that they achieve and acquire given her personal characteristics social background economic circumstances etc a person has the ability to do or be certain things that she has reason to value the reason for valuation can be direct the functioning involved may directly enrich her life such as being well nourished or being healthy or indirect the functioning involved may contribute to further production or command a price in the market the human capital perspective can in principle be defined very broadly to cover both types of valuation but it is typically defined by convention primarily in terms of indirect value human qualities that can be employed as capital in production in the way physical capital is in this sense the narrower view of human capital approach fits into the more inclusive perspective of human capability which can cover both direct and indirect consequences of human abilities consider an example if education makes a person more efficient in commodity production then this is clearly an enhancement of human capital this can add to the value of production in the economy and also to the income of the person who has been educated but even with the same level of income a person may benefit from education in reading communicating arguing in being able to choose in a more informed way in being taken more seriously by others and so on the benefits of education thus exceeds its role as human capital in commodity production the broader human capability perspective would record and value these additional roles the two perspectives are thus closely related but distinct the significant transformation that has occurred in recent years in giving greater recognition to the role of human capital is helpful for understanding the relevance of the capability perspective if a person can become more productive in making commodities through better education better health and so on it is not unnatural to expect that she can also directly achieve more and have the freedom to achieve more in leading her life both perspectives put humanity at the center of attention altogether this involves to a great extent a return to an integrated approach to economic and social development championed particularly by adam smith both in the wealth of nations and in the theory of moral sentiments in analysing the determination of production possibilities smith emphasized the role education as well as division of labor learning by doing and skill formation the development of human capability in leading a worthwhile life as well as in being more productive is quite central to smith s analysis of the wealth of nations indeed adam smith s belief in the power of education and learning was peculiarly strong regarding the debate that continues today on the respective roles of nature and nurture smith was an uncompromising nurturist and this fitted in with his massive confidence in the improvability of human capabilities