agriculture and the transition to the market agricultural sectors in eastern and central europe are large so that changes in producer prices farm employment and land ownership affect substantial numbers of people in the past food in the region was politicized for decades governments of eastern european countries and the ussr offered their citizens stable subsidized food prices and a steadily improving diet in an effort to demonstrate the superiority of communism over capitalism during the transition the context has changed but food remains politicized many consumers in the region are ill prepared to pay the real costs of food which are quite high the task of reducing those costs will be difficult involving restructuring of farms and fostering competition in processing and distribution management of the agricultural transition will affect the political sustainability of the process and influence agriculture s contribution to the growth of emerging market economies although the agricultural sector of eastern and central europe is large soviet agriculture dwarfs it in its impact on the region and the world a positive program to stop the decline in soviet agriculture could contribute to economic growth and political stability failure to remedy the fundamental flaws in soviet agriculture will speed the country s slide into poverty and ethnic turmoil and undermine the efforts of central and eastern europeans to succeed

measures of agricultural support policies in transition economies 1994 1997 in the pre reform period agriculture was heavily subsidized in most central and eastern european countries ceec s around 1989 most ceec s began to open up their markets liberalize prices and reduce subsidies and the level of support provided to agriculture declined drastically while not questioning the direction of economic reforms there was concern that the decline in profitability in farning would slow down the impetus for farm restructuring in particular the drive for privatization of land as demanded by potential new farmers however after pursuing rather liberal agricultural policies at the beginning of the transition period some ceec s in recent years have reintroduced higher levels of support stefan tangerman 1996 in this paper based on estimates of various support indicators for the period beginning roughly in 1994 i will address some of the more important questions regarding agricultural support what has been the impact of trade and price policy interventions on the net income of farmers and government budgets how level has the playing field been since the reintroduction of support does the current economic environment provide an appropriate and sound basis for adjustment toward a more competitive agricultural sector this analysis is part of a comparative study by the world bank which covers bulgaria poland romania ukraine and russia in progress plus germany and turkey two reference cases geographically located at the border of the ceec s for each country employing the same methodology the study considers approximately eight commodities which are representative of the country s major import competing and export products

nonconvexity efficiency and equilibrium in exhaustible resource depletion we consider the problem of efficiency and existence of a competitive equilibrium in exhaustible resource markets where extraction costs are nonconvex nonconvexity is shown to imply that 1 efficient extraction ceases to the left of the minimum efficient scale i e where average costs exceed marginal costs and 2 a competitive equilibrium does not exist introduction of a backstop technology which induces a flat portion of the industry demand curve restores both existence and efficiency provided that the backstop price is sufficiently low if firms face even a small amount of uncertainty regarding their rivals stocks a backstop technology is sufficient to restore existence of competitive equilibrium even if the backstop price is very high in this case however the competitive equilibrium is not efficient

a microeconometric test of the theory of exhaustible resources abstract this paper generalizes extant developments of the economic theory of exhaustible resource production derives and extends a halvorsen and smith 1991 quarterly journal of economics 106 123 140 type test of the theory and applies the test to a sample of natural gas resources to facilitate our empirical test we extend the model developed in chermak and patrick 1995 journal of environmental economics and management 28 174 189 to explicitly account for the fact that the extracted resource gross product must be processed to obtain the final saleable product duality theory is used to derive econometric models with which the theory is statistically tested using panel data from 29 natural gas wells shadow prices of the resource stock through time which are generally unobservable but necessary for the test are estimated via the indirect cost function contrary to the extant literature we find inter alia that i at any point in time ceteris paribus the in situ resource price a decreases with gross production and b increases with final production and ii we cannot reject the theory of exhaustible resources i e producer behavior is consistent with the theory

competitive equilibria in exhaustible resource markets with decreasing costs a comment on eswaran lewis and heaps s demonstration of nonexistence in a recent article eswaran lewis and heaps 1983 elh correctly pointed out that many analyses of exhaustible resource markets assume the existence of a competitive equilibrium for the industry without checking to see if such an equilibrium is consistent with the behavior of the industry s constituent mining firms elh have attempted to rectify this situation by analyzing the behavior of an industry s firms and seeing if that behavior is consistent with the existence of a competitive equilibrium elh reach the startling conclusion that it takes nothing more than firms with u shaped average cost curves implying an initial range of increasing returns to scale to eliminate the existence of a competitive equilibrium on its own terms elhi s analysis is sound and provides a needed corrective to a major oversight in the literature however given the dramatic nature of their conclusion the assumptions on which elh s analysis is based require careful scrutiny on this score it seems to me that elh s assumptions are implicitly at odds with the conditions that economists usually think of as characterizing competitive price taking behavior to show this elh s analysis is summarized in section i so as to emphasize that their results depend crucially on the assumption that the number of producing firms cannot be treated as a continuously changing variable over time in section ii intertemporal equilibrium is characterized for the case where the number of producing firms is treated as a continuous variable and it is argued that this assumed continuity is not only convenient but actually required for consistency with the assumption of competitive price taking behavior then to further demonstrate the dependence of the nonexistence result on continuity assumptions an equilibrium solution is computed for a specific case set in discrete time section iii contains conclusions

government social spending and gdp has there been a change in social policy government social spending gss is made up of a very heterogeneous range of variables monetary transfers for retirement or illness unemployment benefits family services active labour market policies and health expenditure we believe that each of these components is of enormous importance to the economic development of a country as has often been affirmed however gss is one of the economic aggregates most sensitive to the ups and downs of economic growth in moments of crisis sharp cuts are almost immediate and these may or may not be recovered when times are good in this article we examine the sensitivity of gss to the evolution of gross domestic product gdp in order to reveal the relationship between the two

alternative estimators of cointegrating parameters in models with nonstationary data an application to us export demand this article presents monte carlo simulations which compare the empirical performance of two alternative single equation estimators of the equilibrium parameters in a dynamic relationship the estimators considered are stock and watson s dynamic ordinary least squares dols estimator and bewley s transformation of the general autoregressive distributed lag model the results indicate that the bewley transformation produces a lower mean square error as well as superior serial correlation properties even with lower truncation lags for the lagged variables included in the estimation equation an application is then provided which examines the nature of the equilibrium relationship between aggregate us exports world trade and the us real exchange rate this confirms that estimation of the equilibrium parameters of this relationship by the bewley transformation produces results which are superior to estimation by dols

competition in markets for depletable resources with setup costs this paper analyzes the impact on exhaustible resource markets of setup costs a sparsely analyzed category of nonconvex production technologies this paper proves that even under idealized circumstances for competition a competitive equilibrium will fail to exist in the presence of setup costs for any utility and cost functions such that a planner would exploit exhaustible resource pools sequentially

price scarcity rent and a modified r per cent rule for non renewable resources since hotelling s seminal paper on the optimal depletion of exhaustible resources much has been published yet confusion remains about whether scarcity rent and price increase or decrease as a resource is depleted when costs tend to rise with depletion we show that hotelling s fundamental results of rising scarcity rent and price paths are sustained and that the path of scarcity rent converges on the r per cent rule provided the objective function is concave predictions of non monotonic or declining scarcity rent paths are due to implicit assumptions that lead to a non concave objective function we identify the sources of these non concavities jel classification q30 d90 c60 prix rente de rarete et une regle modifiee du r pourcent pour les ressources non renouvelables malgre la volumineuse litterature specialisee qui a fleuri depuis qu hotelling a ecrit son memoire fondateur sur l epuisement optimal des ressources renouvelables une grande confusion regne toujours quand il faut etablir si la rente de rarete et le prix augmentent ou chutent a proportion que la ressource s epuise quand les couts tendent a croitre avec l epuisement ce memoire montre que les resultats fondamentaux obtenus par hotelling quant aux sentiers de croissance de la rente de rarete et du prix tiennent toujours et que le sentier de croissance de la rente de rarete converge vers la regle du r pourcent pourvu que la fonction objective soit concave les predictions de sentiers de croissance non monotone ou de declin de la rente de rarete presentees dans la litterature specialisee sont attribuables a des postulats implicites qui engendrent une fonction objective non concave les auteurs identifient les sources de ces non concavites

health care expenditures and gdp panel data unit root test results abstract this short paper presents unit root test results for time series on per capita national health care expenditures and gross domestic product in the oecd unlike the country by country test used by hansen p king a 1996 the determinants of health care expenditure a cointegration approach j health econ 15 127 137 the test we employ exploits the panel nature of the oecd data using this approach we are able to reject the null hypothesis that these series contain unit roots no single test is likely to be definitive in this rapidly evolving area of econometric research however our results help to mitigate concern that panel data analyses of national health care expenditures are misspecified

does higher government debt link to higher social expenditure new method new evidence abstractscholars believe that higher social expenditures are usually linked with higher government debts whereas higher debts reduce social expenditures however it is reasonable to speculate that higher government debt may contribute to higher social spending while fiscal deficits occur during a recession which commonly creates greater demand for social expenditure for a deeper investigation this paper revisits the dynamic relationship between social spending and public debts in the time frequency domain using the novel wavelet coherency analysis as well as the phase difference technique to derive the co moved and causal relationships between social spending and public debts in 13 oecd countries the evidence identifies a dynamic relationship between variables while higher social expenditures increase government debts the shocks from government debts to social expenditures are conversely uncertain we discover that higher government debt does reduce social expenditures but it may be linked to h

exhaustible resources non convexity and competitive equilibrium theoretical underpinnings of competitive equilibrium in an exhaustible resource market with non convex u shaped costs are proposed the analysis extends to intertemporal production novshek and sonnenschein s approximation of static competitive equilibrium by limits of cournot equilibria a problem with using novshek and sonnenschein s method is that oligopolistic equilibrium even an open loop equilibrium to which limits might be applied does not exist when there is a non convex technology using epsilon equilibrium as the equilibrium concept finesses this problem there are two types of limiting competitive equilibrium a third type of competitive equilibrium that has been prominent in the literature is found to be inconsistent with limiting approximations

testing the efficiency of extraction from a stock resource the theoretical conditions for efficient extraction from a known stock resource by a competitive mining firm are reviewed these conditions are tested using proprietary data from a mining firm output price data and coefficient estimates from a translog cost system are used to compute the in situ value of the resource and the stock effect changes in the in situ value over time are then statistically compared with the expected price path the results reject the hypothesis that the data are consistent with the theoretical model and the maintained hypotheses variations of the basic model that incorporate a time varying discount rate an alternative expected price series and a constraint on the rate of output are also tested and rejected 46 references 10 tables

aggregate health care expenditures and national income is health care a luxury good it is well known that a strong relationship exists between national expenditures on health care and national income this has been used to suggest that health care is a luxury good and that factors such as the type of health care delivery system in a country are of little importance in determining expenditure levels this paper argues that these implications rely upon the application of microeconomic analysis to macroeconomic data and that this is not appropriate as well as raising questions about the inferences drawn from previous studies new empirical evidence is presented which casts some doubts on previous findings international comparisons are based on purchasing power parity rather than exchange rate conversions underlining the importance of prices as well as quantities in the relationship and leading to the conclusion that the aggregate data show health care to be if anything a necessity rather than a luxury good

sequential development and exploitation of an exhaustible resource do monopoly rights promote conservation this paper explores the problem of sequential exploitation of exhaustible resources by a monopolist when a setup cost must be incurred to access the next pool under certain circumstances the monopolist will always follow a more conservationist path of extraction and delay the introduction of new resource pools compared to a social planner however with other forms of consumer demand the monopolist may exhaust the resource more quickly especially if many new options will follow these results may apply especially to depletable resources like antibiotics or biotech products for which significant research and development costs are required followed by monopoly rights conferred by patents

on the nonexistence of market equilibria in exhaustible resource markets with decreasing costs this paper examines the existence of competitive equilibria in markets for exhaustible resources where there are initial economies of scale in either the extraction of the resource or the utilization of the resource as an input in production in such instances which are fairly common we find that the classic hotelling rule for competitive extraction does not apply since competitive price equilibria generally do not exist this is in marked contrast to static markets where the usual textbook example of firms with u shaped average cost curves is not inconsistent with the existence of competitive equilibria furthermore oligopolistic market equilibria in which resource firms act as nash producers may also fail to exist when there are returns to scale in production

is social protection a necessity or a luxury good new multivariate cointegration panel data results the aim of this paper is to test the claim that social protection is a luxury good therefore gdp elasticity of selected social protection expenditure is estimated using a new econometric approach developed first by kao and chiang advances in econometrics 15 179 222 2000 time series properties of selected social expenditure in 18 oecd countries from 1981 to 1998 are examined using panel data cointegration tests and ols fmols and dols estimators results were found which differ from previous analyses reporting substantially higher income elasticities with the fmols selected social expenditure has income elasticities smaller than one but greater than one with the dols it is noteworthy that whether selected social expenditure is stationary or nonstationary may have critical implications for researchers and policy makers desiring to model and explain the impact of this expenditure on a country economic system

is health care really a luxury much of the work which has led to a widely held view that the income elasticity of health care spending exceeds one has been based on international cross section data or on pooled cross sections and time series in this paper we re examine this view in the context of long run equilibrium relationships between non stationary time series possibly including autonomous trends our results cast doubt upon the usefulness of pooling and upon the notion of an elasticity above one

on equilibrium in resource markets with scale economies and stochastic prices abstract in this paper i show the existence and the characteristics of equilibrium in a non renewable resource market where extraction costs are non convex and market price is subject to stochastic shocks an empirically relevant setting in my model firms may be motivated to hold inventories to facilitate production smoothing which allows them to continue producing at a smooth pace at any instant when extraction ceases e g when reserves are exhausted this aspect of the model then supports a competitive equilibrium in the presence of non convex costs casual empirical evidence is provided that supports the central features of my model for a variety of non renewable resources lending credence to the explanation for equilibrium i propose

agricultural reform in developing countries reflections for eastern europe the reform of formerly centrally planned economies involves freeing the price system developing a competitive environment and privatizing many of the state owned or controlled assets and services while simultaneously generating the social economic and legal infrastructure that undergrids a market economy this paper takes an important look at what the reforming countries of eastern europe can and cannot learn from the developing countries including discussions on a reforming prices b credit financial institutions and marketing boards c property rights land tenure and privatization d research extension and technology and e efforts to remediate environmental degradation a central dilemma in the reform of the eastern european economies is the tension between commitment and flexibility western technical assistance and international financial help can be effective only if professionals of the east and west work together as this is a process of joint learning not a pure transfer of knowledge

economic perspectives on privatization despite being one of the most fundamental issues in political economy the question of the appropriate boundary between public and private enterprise received relatively little attention in mainstream economic analysis until quite recently in the 1980s however programs of ownership reform were started in many developed and developing countries dramatic though some of these policies have been they are likely to be overshadowed in the 1990s by even greater privatization in the reforming socialist economies the opening sections of this paper are organized around three broad and interrelated questions how does ownership matter for the efficiency of enterprise performance what is the role for privatization in financing public debts and deficits what are the distributional and political implications of privatization finally we examine privatization in practice in three countries britain chile and poland

an econometric analysis of health care expenditure a cross section study of the oecd countries this paper is an empirical examination of the determinants of aggregate health care expenditure the paper presents a systematic analysis of relationships across 19 oecd countries showing the effects of aggregate income institutional and socio demographic factors on health care expenditure the results indicate that institutional factors of the health systems in addition to per capita gross domestic product gdp contribute significantly to the explanation of the health care expenditure variation between countries for example the way physicians in outpatient care are paid and the mixture of public private funding and inpatient outpatient care

a panel project on purchasing power parity mean reversion within and between countries abstract previous time series studies have shown evidence of mean reversion in real exchange rates deviations from purchasing power parity ppp appear to have half lives of approximately four years however the long samples required for statistical significance are unavailable for most currencies and are potentially inappropriate because of regime changes in this study we re examine deviations from ppp using a panel of 150 countries and 45 annual post wwii observations our panel shows strong evidence of mean reversion that is similar to that from long time series ppp deviations are eroded at a rate of approximately 15 annually i e their half life is around four years such findings can be masked in time series data but are relatively easy to find in cross sections

the determinants and effects of health expenditure in developed countries previous studies of international differences in health spending have been restricted to the use of relatively small samples of cross sectional data our objective here is to re examine the results of previous work using a sample of 560 pooled time series and cross section observations results confirm the importance of gdp as a determinant of health spending with an estimated income elasticity at or around unity but also suggest that oecd countries should not be regarded as a single homogeneous group the importance of some non income variables is also confirmed although the direct effect of these factors appears to be small

implications of alternative options for future levels of support for agriculture in central and eastern europe in the process of political economic and social transformation since 1989 agriculture in the central and eastern european countries the ceecs is undergoing dramatic changes privatization and decollectivization of farms not yet completed in all ceecs are creating a completely new structure of the farming industry buckwell replacement of central planning by market forces has uprooted commercial relationships between farms and upstream and downstream industries and has caused problems in input supplies to and marketing opportunities for agriculture brooks et al the persistence of monopoly structures in the food chain has resulted in high marketing margins depriving farms of some of the revenues they could earn in a more competitive economy ivanova et al oecd 1995a a significant decline in domestic food demand and even more pronounced shrinking export demand from other countries in the former council of mutual economic assistance above all the former soviet union have grossly reduced the size of the market to which ceec agriculture can sell jackson and swinnen karp and stefanou in addition to these and other fundamental changes in the economic environment of agriculture in the ceecs agricultural support as provided by domestic and trade policies has kept changing during the transformation process swinnen in the prereform period agriculture was heavily subsidized in most ceecs when the reforms began most ceecs rapidly began to open up their markets liberalize prices and eliminate subsidies as a result support to agriculture declined drastically real producer prices for farm products dwindled and farm incomes decreased at the same time and as a consequence of these changes in the economic environment agricultural output in the ceecs dropped in the process farmers began to lobby for more support and governments in most ceecs responded positively to these political demands they introduced policies such as intervention purchases guaranteed minimum prices higher tariffs variable levies export subsidies and input and credit subsidies as a result agricultural support which had declined sharply during the early stages of the transition process is on the rise again in many ceecs for example the net producer subsidy equivalent pse in poland s agriculture fell from 36 in 1986 to minus 18 in 1990 and rose again to positive 16 in 1993 oecd 1995b when ceec governments began to intervene again in agricultural markets to provide more support to their farmers one of the explanations they gave for this change in policy direction was that they had to prepare for joining ultimately the european union eu and hence that they needed to harmonize their policies with the common agricultural policy cap of the eu swinnen indeed some of the agricultural policy measures introduced in recent years in the ceecs resemble though often only vaguely the policies that have been employed by the cap for a long time no timetable has so far been set for eastern enlargement of the eu nor is it clear in which sequence the individual

a note on extraction with nonconvex costs in a recent article eswaran lewis and heaps 1983 elh model a market for an exhaustible resource in which each firm owns r units of the resource and can extract at a rate of q units for a cost of c q c o 0 and average extraction costs c q q are assumed to exhibit economies of scale initially and reach a minimum at q q marginal cost is always positive but it decreases until q q and then increases i e total cost is not convex the resource cannot be stored once it has been extracted demand does not change over time if extraction proceeds at a rate q at time t then price is p q at time t all firms are assumed to know the entire time path of prices at which the resource will be sold time is taken to be continuous firms are assumed to be price takers in the sense that no firm can influence the time path of prices elh conclude that this model has no equilibrium however the model contains some assumptions that are not reasonable this note relaxes those unreasonable assumptions adds a simplifying assumption and produces an equilibrium the conclusion that there is no equilibrium follows from two of elh s most basic conclusions no firm will ever extract at a rate be