revealing space in spatial externalities edge effect externalities and spatial incentives abstract this paper analyzes the spatial incentives created by distance dependent negative spatial externalities titled edge effect externalities it illustrates standard externality results in a spatial context and derives several new results while the externality creates an incentive for a recipient to distance himself from the externality generating land use this distance is too small from a social standpoint rationalizing buffer zones imposed by regulatory authorities further the market rental rate of land for the externality recipient is higher than socially optimal resulting in a potential barrier to entry for the impacted land use finally although the recipient understands and can geographically avoid externality damage standard market failure occurs results are demonstrated using graphical and land rent interpretations of familiar aspatial general equilibrium conditions the paper thus strives to provide a more thorough exposition of the spatial impacts of this class of externalities than provided elsewhere in the literature

foreign direct investment and the dark side of decentralization countries differ in their government architecture some countries are characterized by a high degree of concentration of fiscal administrative judicial executive and lawmaking powers whereas others have decentralized many functions and responsibilities of government to different jurisdictions and various levels of government the cross country differences in the organization of government are also not static but have been subject to substantial change in many countries the co existence of different organizational patterns of government has created an important debate regarding the determinants of particular government structures as well as questions regarding the optimality of different forms of organization

spatial variation of the marginal utility of income and unequal treatment of equals in one of the most famous contributions to the new urban economics literature mirrlees 6 showed that a utilitarian planner able to control the distribution of income or endowments across households the consumption of land or housing and the distribution of population over space would treat households with identical tastes unequally in the sense that utility levels would vary among them at the planner s optimum similar results were obtained by dixit 2 who showed that even more inequality averse social welfare functions than the utilitarian one would result in unequal treatment he concluded that only the rawlsian maximin welfare function would produce the equal treatment outcome 2 this result has generated considerable attention see e g mills and mackinnon 5 because of its apparently paradoxical nature the purpose of this note is to present a new way of thinking about and making plausible the unequal treatment result 3 to develop the intuition recall that in monocentric city models where equals are treated equally that is where households have equal endowments a market equilibrium with free mobility is characterized by equal utilities for all assuming identical preferences as is well known in the absence of congestion or other market failures this market equilibrium is pareto efficient producing the maximum feasible common level of utility imagine now a mirrlees planner coming across such an equal utility equilibrium under what conditions would the planner not want to disturb the market equilibrium clearly a necessary condition for equal treatment to be utilitarian optimal is that the marginal utility of income be the same for all households in the market equilibrium otherwise freezing the allocation of resources in every other respect social

residential spatial growth with perfect foresight and multiple income groups abstract this paper presents explicit solutions for expanding monocentric cities with two or more income groups housing is durable but deteriorates over time and redevelopment cannot take place landlords have perfect foresight the utility function and housing technology are cobb douglas population per capita income and transportation costs per mile change at constant percentage rates the model is solved analytically using an infinite time horizon as development proceeds outward a constant fraction of land is developed with high income housing and the remaining land is reserved for future low income development at any time housing is constructed at one distance for high income consumers and at a lesser distance for low income consumers high income housing is first occupied by high income consumers then filters to low income consumers and is ultimately abandoned low income housing is first occupied by low income households and ultimately abandoned

production externalities and urban configuration abstract we formally explore jacobs idea that uncompensated knowledge spillovers are crucial for agglomeration by modeling location dependent interfirm production externalities in a general equilibrium linear city framework good and factor allocation firms and households locational choice and wages and land rents are all endogenously determined the unique equilibrium urban configuration may be concentrated with monocentric firm locations dispersed with completely mixed firm household locations or a combination depending on the population of firms transportation cost and firm interaction parameters due to distance dependent production externalities firms will be clustered together in any equilibrium thus ruling out the possibility of any multicentric urban configuration journal of economic literature classification numbers d51 r12

do liberal cities limit new housing development evidence from california traditional explanations for why some communities block new housing construction focus on incumbent home owner incentives to block entry local resident political ideology may also influence community permitting decisions this paper uses city level panel data across california metropolitan areas from 2000 to 2008 to document that liberal cities grant fewer new housing permits than observationally similar cities located within the same metropolitan area cities experiencing a growth in their liberal voter share have a lower new housing permit growth rate

coordinating regime switches the canonical model of strategic complementarities between individual actions which exhibits multiple equilibria under perfect information is extended with heterogeneous agents and imperfect information agents observe their own cost of action and the history of the levels of aggregate activity the distribution of individual characteristics evolves through a random process and individuals are rational bayesians under plausible conditions there is a unique equilibrium with phases of high and low activity and random switches applications may be found in macroeconomics and revolutions

on the salience of ethnic conflict ray acknowledges support from the national science foundation under grants 0421852 and 0617827 esteban is a member of barcelona economics xrea and is grateful for support from the generalitat de catalunya and the cicyt sej 2006 00369 this research is part of the polarization and conflict research project cit2 ct 2004 506084 funded by the european commission dg research sixth framework program

the logic of political violence this paper offers a unified approach for studying political violence whether it emerges as repression or civil war we formulate a model where an incumbent or opposition can use violence to maintain or acquire power to study which political and economic factors drive one sided or two sided violence repression or civil war the model predicts a hierarchy of violence states from peace via repression to civil war and suggests a natural empirical approach exploiting only within country variation in the data we show that violence is associated with shocks that can affect wages and aid as in the theory these effects are only present where political institutions are non cohesive

short and long term effects of united nations peace operations earlier studies have shown that united nations peace operations make a positive contribution to peacebuilding efforts after civil wars but do these effects carry over to the period after the peacekeepers leave and how do the effects of un peace operations interact with other determinants of peacebuilding in the long run the author addresses these questions using a revised version of the doyle and sambanis dataset and applying different estimation methods to estimate the short term and long term effects of un peace missions he finds that un missions have robust positive effects on peacebuilding in the short term un missions can help parties implement peace agreements but the un cannot fight wars and un operations contribute more to the quality of the peace where peace is based on participation than to the longevity of the peace where peace is simply the absence of war the effects of un missions are also felt in the long run but they dissipate over time what is missing in un peacebuilding is a strategy to foster the self sustaining economic growth that could connect increased participation with sustainable peace

political bias and war we examine the incentives for countries to go to war as they depend on the comparison between how much their pivotal decision makers have at risk and how much they stand to gain from a war how this ratio compares to the country at large is what we term political bias if there is no political bias then there are always payments that one country would like to make to the other that will avoid a war in the presence of commitment or enforceability of peace treaties if there is a bias on the part of one or both countries then war can result and in some cases cannot be prevented by any transfer payments we examine how war technology and relative wealth levels interact with political bias in determining whether countries make transfers go to war and form alliances our results shed some new light on the uneven contender paradox and the interpretation of the democratic peace

arms races and negotiations two players simultaneously decide whether or not to acquire new weapons in an arms race game each player s type determines his propensity to arm types are private information and are independently drawn from a continuous distribution with probability close to one the best outcome for each player is for neither to acquire new weapons although each prefers to acquire new weapons if he thinks the opponent will there is a small probability that a player is a dominant strategy type who always prefers to acquire new weapons we find conditions under which the unique bayesian nash equilibrium involves an arms race with probability one however if the probability that a player is a dominant strategy type is sufficiently small then there is an equilibrium of the cheap talk extension of the game where the probability of an arms race is close to zero copyright 2004 wiley blackwell

conflict and deterrence under strategic risk we examine the determinants of cooperation and the effectiveness of deterrence when fear is a motive for conflict we contrast results obtained in a complete information setting with those obtained in a setting with strategic risk where players have different information about their environment these two strategic settings allow us to identify and distinguish the role of predatory and preemptive incentives as determinants of cooperation and conflict in our model weapons unambiguously facilitate peace under complete information in contrast under strategic risk we show that increases in weapon stocks can have a nonmonotonic effect on the sustainability of cooperation we also show that under strategic risk asymmetry in military strength can facilitate peace and that anticipated peacekeeping interventions may improve incentives for peaceful behavior

miracles and debacles in defence of trade openness the central theme of this paper is that sustained rapid growth cannot be achieved without rapid growth in trade a review of the experience during the past four decades offers virtually no examples of countries achieving sustained rapid growth called miracles in this paper without simultaneously experiencing sustained rapid growth in trade in the presence of low or high but declining barriers to trade simultaneously the claim that opening to trade leads to sustained income losses is unfounded a review of the experience of the countries that have faced stagnation or declining per capita incomes on a long term basis called debacles in this paper reveals no connection to a sustained surge in imports

causes of sprawl a portrait from space we study the extent to which u s urban development is sprawling and what determines differences in sprawl across space using remote sensing data to track the evolution of land use on a grid of 8 7 billion 30 30 meter cells we measure sprawl as the amount of undeveloped land surrounding an average urban dwelling the extent of sprawl remained roughly unchanged between 1976 and 1992 although it varied dramatically across metropolitan areas ground water availability temperate climate rugged terrain decentralized employment early public transport infrastructure uncertainty about metropolitan growth and unincorporated land in the urban fringe all increase sprawl

new wine in old bottles the changing socioeconomic attributes of sprawl during building boom and stagnation abstract european cities are shifting towards scattered urban models with important transformations in the local socioeconomic context with the aim to identify relevant associations with different urban patterns the present study compares the socioeconomic profile of districts with respectively continuous and discontinuous settlements along the urban gradient in rome italy during building boom early 1970s and economic stagnation late 2000s non parametric correlation statistics and multivariate techniques were used to investigate the spatio temporal evolution of 24 indicators population settlement labor market economic structure and 14 land use environmental and topographic indicators at the municipal scale the socioeconomic context discriminating discontinuous from continuous settlements in the early 1970s was significantly different from what was observed in the late 2000s in the early 1970s economic structure and labor market indicators have played a major role while demographic variables and heterogeneity in the natural landscape surrounding discontinuous settlements were particularly important in the late 2000s policies oriented to urban sustainability and sprawl containment may benefit from an in depth understanding of the different socioeconomic contexts associated with scattered settlements in expansion and recession times

trade openness and environmental quality international evidence we examine the relationship between trade openness and the environment in a cross country panel using the emission of particulate matter pm10 as the basic indicator of environmental quality the panel cointegration test results show a long run relationship between particulate matter emissions trade openness and economic growth we find that increased trade openness leads to environmental degradation for the global sample however the results differ according to the income of countries trade openness has a benign effect on the environment in high income countries but a harmful effect in middle and low income countries these results are generally robust to different measures of trade openness and environmental quality interestingly and significantly the results are consistent with the popular notion that rich countries dump their pollution on poor countries finally we find evidence of a feedback effect between trade openness and particulate matter emissions for the global sample as well as different income groups of countries

war is in the error term at least since thucydides students of international relations have sought rational explanations for the advent of war rationalist explanations assume purposive action states are said to make reasoned decisions about the use of force although rationalist explanations have proven persuasive durable and offer the basis for cumulative theorizing they also imply substantial limits on what we can know about war i show that the most general rationalist explanation for war also dictates that the onset of war is theoretically indeterminate we cannot predict in individual cases whether states will go to war because war is typically the consequence of variables that are unobservable ex ante both to us as researchers and to the participants thinking probabilistically continues to offer the opportunity to assess international conflict empirically however the realization that uncertainty is necessary theoretically to motivate war is much different from recognizing that the empirical world contains a stochastic element accepting uncertainty as a necessary condition of war implies that all other variables however detailed the explanation serve to eliminate gradations of irrelevant alternatives we can progressively refine our ability to distinguish states that may use force from those that are likely to remain at peace but anticipating wars from a pool of states that appear willing to fight will remain problematic for example we may achieve considerable success in anticipating crises but our ability to predict which crises will become wars will probably prove little better than the naive predictions of random chance the need for uncertainty to account for war means that the same conditions thought to account for war must also exist among states not destined to fight otherwise states themselves will differentiate between opponents in a way that either removes the motives for war or restores uncertainty it has long been accepted that social processes possess an element of uncertainty but the centrality of uncertainty to rationalist explanations for war means that the advent of war is itself stochastic war is literally in the error term

occupational choice and the spirit of capitalism the british industrial revolution triggered a socioeconomic transformation whereby the landowning aristocracy was replaced by industrial capitalists rising from the middle classes as the economically dominant group we propose a theory of preference formation under financial market imperfections that can account for this pattern parents shape their children s preferences in response to economic incentives middle class families in occupations requiring effort skill and experience develop patience and a work ethic whereas upper class families relying on rental income cultivate a refined taste for leisure these class specific attitudes which are rooted in the nature of preindustrial professions become key determinants of success once industrialization transforms the economic landscape i introduction the industrial revolution was more than capital accumulation and growth it also set off a social and political transformation that redefined hierarchies in society and reshaped the distribution of income and wealth before the onset of industrialization in eighteenth century britain wealth and political power were associated with the possession of land over the course of the nineteenth century a new class of entrepreneurs and businessmen emerged as the economic elite for the most part the members of this class rose from humble beginnings and had their social origins in the urban middle classes the landed elite was left behind and eventually lost its political and economic predominance many observers of the time linked this reversal in economic fortunes to differences in values attitudes and ultimately preferences across social classes there are countless examples both in scholarly and in fictional writing of portrayals of members of the landowning class as averse to work unwilling to save ill disposed tocommercialactivity andunabletoconsidermoneyassomething

optimal spatial growth of employment and residences abstract this paper examines the location patterns of employment and residences in an urban area characterized by irreversible land use commitments and smoothly growing population it is assumed that all output is shipped to the center of the urban area and that workers have commuting costs of getting to work the optimal solution which is also the equilibrium solution minimizes the present discounted value of aggregate shipping costs plus commuting costs the residential area expands outward over time but a constant fraction of the land is always reserved for future employment development

decentralization duplication and delay we argue that although decentralization has advantages in finding low cost solutions these advantages are accompanied by coordination problems which lead to delay or duplication of effort or both consequently decentralization is desirable when there is little urgency or a great deal of private information but it is strictly undesirable in urgent problems when private information is less important we also examine the effect of large numbers and find that coordination problems disappear in the limit if distributions are common knowledge

method in the madness a political economy analysis of the ethnic conflicts in less developed countries this paper is an attempt from a political economist s point of view to look for some clear patterns in the horrendous complexities of the ethnic and sectarian conflicts that are raging in less developed countries we emphasize the importance of some institutional failures such as the decline of mediating institutions or of preexisting structures of credible commitment rather than mere cultural and historical animosities behind the collapse of interethnic understandings and compromises the rise in ethnic conflicts is not always associated with economic deterioration sometimes quite the contrary the effects of market expansion are also ambiguous in our discussion of policy lessons we have tried to look for various ways both political and economic of constructing institutionalized incentives for conciliatory actions

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

social mobility and redistributive politics just like economists voters have conflicting views about redistributive taxation because they estimate its incentive costs differently we model rational agents as trying to learn from their dynastic income mobility experience the relative importance of effort and predetermined factors in the generation of income inequality and therefore the magnitude of these incentive costs in the long run left wing dynasties believing less in individual effort and voting for more redistribution coexist with right wing dynasties this allows us to explain why individual mobility experience and not only current income matters for political attiitudes and how persistent differences in perceptions about social mobility can generate persistent differences in redistribution across countries

the welfare economics of land use planning abstract this paper presents an empirical methodology for the evaluation of the benefits and costs of land use planning the technique is applied in the context of the town and country planning system of the uk and examines the gross and net benefits of land use regulation and their distribution across income groups the results show that the welfare and distributional impacts can be large

the international effects of china s growth trade and education booms china s international trade flows have increased by 500 since 1992 far outstripping gdp growth likewise tertiary education enrollments have increased by 300 we simulate these changes using a multi sector growth model of the chinese and usa economies a decade of trade biased growth in china is found to have a large effect on the usa economy raising gdp approximately 3 4 5 percentage points we also show that the trade bias in china s growth accounts for more than half of the observed growth in tertiary enrolments in china in contrast neutral growth has practically no effect on usa incomes or china s stock of skilled labour finally the simulations reveal that china s education boom per se has practically no long run impact on the usa economy the results thus indicate that the pattern of productivity growth in exports sectors as might be caused by falling trade costs has been critical in transmitting benefits of chinese growth to the world economy they also point to an important link between falling trade costs and human capital formation

homework in development economics household production and the wealth of nations we introduce home production into the neoclassical growth model and examine its consequences for development economics in particular we study the extent to which one can account for international income differences with differences in policies that distort capital accumulation in models with home production such policies not only reduce capital accumulation but also change the mix of market and nonmarket activity hence these models can generate larger differences in output than standard models for a given policy differential we also show how the welfare implications change when we incorporate home production

contagious development neighbor interactions in deforestation article i nfo we estimate neighbor interactions in deforestation in costa rica to address simultaneity and the presence of spatially correlated unobservables we measure for neighbors deforestation using the slopes of neighbors and neighbors neighbors parcels we find that neighboring deforestation significantly raises the probability of deforestation policies for agricultural development or forest conservation in one area will affect deforestation rates in non targeted neighboring areas correct estimation of the interaction reverses the naive estimate s prediction of multiple equilibria

a simple theory of smart growth and sprawl abstract this paper considers the simultaneous determination of residential density and the supply of local versus remote retail services possible equilibrium development patterns either correspond closely to what anti sprawl activists describe as smart growth or to its opposite equilibrium and optimal patterns of development do not always coincide when equilibrium and optimal patterns of development diverge optimal density is always discretely as opposed to marginally higher than equilibrium density this occurs in the absence of congestion externalities and is due to a free rider problem and a coordination problem the analysis indicates that a tax on large lots or a subsidy for small lots may be welfare improving under certain conditions

the rise of china and east asian export performance is the crowding out fear warranted this paper examines how china s emergence as a major trading nation is affecting export performance of its east asian neighbours following a stage setting overview of trends and patterns of china s export performance it probes china competition in third country markets and emerging patterns of imports the east asian export experience is examined in a wider global context against the backdrop of the ongoing process of global production sharing the findings indicate that the china threat has been vastly exaggerated in the contemporary policy debate china s rapid market penetration in traditional labour intensive manufactured goods has occurred mostly at the expense of the high wage east asian countries without crowding out the export opportunities of low wage countries in the region more importantly china s rapid integration into global production networks as a major assembly centre has created new opportunities for the other east asian countries to engage in various segments of the value chain in line with their comparative advantage

the depressing effect of agricultural institutions on the prewar japanese economy why didn t the japanese miracle take place before world war ii the culprit we identify is a barrier that kept prewar agricultural employment constant using a standard neoclassical two sector growth model we show that the barrier induced sectoral distortion and an ensuring lack of capital accumulation account well for the depressed output level without the barrier japan s prewar gnp per worker would have been at least about a half of that of the united states not about a third as in the data the labor barrier existed because we argue the prewar patriarchy forced the son designated as heir to stay in agriculture

overlapping neighborhoods and housing externalities abstract this paper explores the roles of distance and feedback in neighborhood effects conventional models employ positive feedback and feature neighborhoods that stand apart like islands when neighborhoods overlap a change in land use in one location can induce changes in land use across the city furthermore equilibrium land use is unlikely to be symmetric with negative feedback indirect neighborhood effects can lead to comparative static changes in density and price that cycle these cycles can reduce the ability of coarse zoning to achieve an optimum and can make measurement of neighborhood effects a difficult undertaking

the effect of downzoning for managing residential development and density this study analyzes the effect of a downzoning policy on both the probability and the density of residential development using a difference in differences did approach spatially explicit panel data on subdivisions are exploited to estimate average treatment effects for downzoned areas our results indicate that although downzoning does not significantly alter the probability of development it does strongly affect the density of development the did model results suggest that the lower probability of development in agricultural zoning relative to the urban residential control area is not attributable to downzoning but rather to baseline differences that exist prior to policy adoption

ethnicity and conflict an empirical study this paper examines the impact of ethnic divisions on conict the empirical specication is informed by a theoretical model of conict esteban and ray 2011 in which equilibrium conict is related to just three distributional indices of diversity ethnic polarization ethnic fractionalization and a greenberg gini index constructed across ethnic groups our empirical ndings verify that these distributional measures are signicant correlates of conict the underlying theory permits us to use these results to make inferences about the relative importance of public goods in conict as well as the extent of within group cohesion in conictual activity these eects are further strengthened as we introduce country specic measures of group cohesion and the relative importance of public goods and combine them with the distributional measures exactly as specied by the theory

linking conflict to inequality and polarization in this paper we study a behavioral model of conflict that provides a basis for choosing certain indices of dispersion as indicators for conflict we show that a suitable monotone transform of the equilibrium level of conflict can be proxied by a linear function of the gini coefficient the herfindahl hirschman fractionalization index and a specific measure of polarization due to esteban and ray jel classification d74 d31

workers warriors and criminals social conflict in general equilibrium we incorporate appropriation activities social conflict into canonical models of trade and study how economic shocks and policies affect the intensity of conflict we show that not all shocks that could make society richer reduce conflict positive shocks to labor intensive industries diminish conflict while positive shocks to capital intensive industries increase it the key requirement is that conflict activities be more labor intensive than the economy as this determines how shocks affect the returns and costs of conflict our theory is consistent with several observed patterns of conflict and implies that empirical work should take into account the relative factor intensities of the productive and conflict sectors in each country incorporating appropriation into a canonic general equilibrium model affects what policies may be deemed desirable in order to reduce conflict and generate pareto improvements policy must be distortionary while reforms that appear efficiency enhancing under the unrealistic assumption of perfect property rights may backfire this offers one explanation for why reforms based on traditional models without appropriation may be delayed and become unpopular when implemented and why societies may sympathize with seemingly inefficient redistribution

regulation and distrust in a cross section of countries government regulation is strongly negatively correlated with social capital we document this correlation and present a model explaining it in the model distrust creates public demand for regulation while regulation in turn discourages social capital accumulation leading to multiple equilibria a key implication of the model is that individuals in low trust countries want more government intervention even though the government is corrupt we test this and other implications of the model using country and individual level data on social capital and beliefs about government s role as well as on changes in beliefs and in trust during the transition from socialism

exploring sprawl results from an economic agent based model of land and housing markets this paper uses an economic agent based model of land use in a growing community on the urban fringe to explore the importance of key economic variables on the spatial patterns of development over time understanding dispersed patterns of urban development is important for designing policies for mitigating the environmental and other adverse effects of urban sprawl the model includes as agents heterogeneous farmer landowners and housing consumers and a representative developer who buys land and builds houses underlying economic behavior of consumer utility maximization and developer and farmer profit maximization is assumed a unique feature of the model is that housing is characterized by variation in both lot size and house size allowing for exploration of the effects of changes in key parameters on both land and housing markets and the interaction between them the paper explores the relative importance of consumer preferences spatial distribution of agricultural productivity and travel costs in creating sprawling development patterns consumer preferences for large lots do result in more land in development and lower density but leap frog development in the model appears to be driven by other economic influences as well and in general more stable housing prices mute the effect of more variable land prices and tend to dampen the effects of economic shocks to the urbanizing area

natural resources rent seeking and welfare abstract a new and very simple mechanism to explain why natural resource abundance may lower income and welfare is developed in a model with rent seeking a greater amount of natural resources increases the number of entrepreneurs engaged in rent seeking and reduces the number of entrepreneurs running productive firms with a demand externality it is shown that the drop in income as a result of this is higher than the increase in income from the natural resource more natural resources thus lead to lower welfare

the interjurisdictional effects of growth controls on housing prices institute of university of i 39 business and california at i economic research berkeley fisher center for real estate and urban economics working paper series working paper no 84 83 the interjurisdictional effects of growth controls on housing prices l by these papers are preliminary in nature their purpose is to stimulate discussion and lawrence katz comment therefore they kenneth t rosen are not to be cited or quoted in any publication without the ex press permission of the author walter a haas school of business

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

landscape preferences and patterns of residential development abstract i analyze a model of residential location choice where people derive utility from their proximity to open space when people have such landscape preferences then 1 equilibrium residential development is mixed with undeveloped land 2 equilibrium land price gradients depend sensitively on how land markets are organized are not generally monotonic and may or may not reflect the value of open space and 3 dynamic equilibria generally have the property that more remote areas are developed before more central areas finally when compared to optimal development equilibrium development houses too many residents too close together and remote areas are developed too soon these results imply that equilibrium development may not be sprawling enough and that policies to encourage infill development are not welfare improving

trade expansion and contract enforcement consider a world of traders separated in geographic economic or social space honest trade offers larger gains for more distant traders but frequencies of meetings and information flows about cheating have local bias honesty is self enforcing only between pairs of sufficiently close neighbors global honesty prevails only in a sufficiently small world the extent of self enforcing honesty is likely to decrease when the world expands beyond this size costly external enforcement is useful only if the world is sufficiently large and its net payoff need not be larger than that of a self governing small community intermediate size worlds fare worst

the survival of the welfare state this paper provides an analytical characterization of markov perfect equilibria in a model with repeated voting where agents vote over distortionary income redistribution a key result is that the future constituency for redistributive policies depends positively on current redistribution since this affects both private investments and the future distribution of voters the model features multiple equilibria in some equilibria positive redistribution persists forever in other equilibria even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period skill biased technical change makes the survival of the welfare state less likely

why india lags behind china and how it can bridge the gap though india has been growing at six per cent annually since the late 1980s it trails behind china which has been growing at ten per cent per annum since 1981 the single most important factor explaining this difference is the relatively poor performance of indian industry whereas the share of industry in china s gdp rose from 42 per cent in 1991 to 51 per cent in 2001 it remained virtually stagnant in india by contrast services grew rapidly in india expanding from 42 per cent in 1991 to 48 per cent in 2001 with the information technology sector less than two per cent of the gdp services growth was largely in the informal sector approximately 77 per cent of india s workers live in rural areas to bring a large chunk of this workforce into the modern sector india must achieve a much higher growth in the traditional unskilled labour intensive industry growth in the information technology sector gives india an extra lever but cannot be the main engine of transformation therefore the right approach is to walk on two legs traditional labour intensive industry and the modern it industry both legs need strengthening through further reforms the paper suggests four specific reforms three for industry and one for it necessary to achieve the transformation to a modern economy

war signals a theory of trade trust and conflict we construct a dynamic theory of civil conflict hinging on inter ethnic trust and trade the model economy is inhabitated by two ethnic groups inter ethnic trade requires imperfectly observed bilateral investments and one group has to form beliefs on the average propensity to trade of the other group since conflict disrupts trade the onset of a conflict signals that the aggressor has a low propensity to trade agents observe the history of conflicts and update their beliefs over time transmitting them to the next generation the theory bears a set of testable predictions first war is a stochastic process whose frequency depends on the state of endogenous beliefs second the probability of future conflicts increases after each conflict episode third accidental conflicts that do not reflect economic fundamentals can lead to a permanent breakdown of trust plunging a society into a vicious cycle of recurrent conflicts a war trap the incidence of conflict can be reduced by policies abating cultural barriers fostering inter ethnic trade and human capital and shifting beliefs coercive peace policies such as peacekeeping forces or externally imposed regime changes have instead no persistent effects

dynamic reserve selection optimal land retention with land price feedbacks urban growth compromises open space and ecosystem functions to mitigate the negative effects some agencies use reserve selection models to identify conservation sites for purchase or retention existing models assume that conservation has no impact on nearby land prices we propose a new integer program that relaxes this assumption via adaptive cost coefficients our model accounts for the two key land price feedbacks that arise in markets where conservation competes with development the amenity premium and price increases driven by shifts in market equilibriums we illustrate the mechanics of the proposed model in a real land retention context the results suggest that in competitive land markets the optimal conservation strategy during the initial phase of the retention effort might be to use available dollars to buy fewer parcels with smaller total area that are under high risk of development we show that failure to capture the land price feedbacks can lead to significant losses in biological conservation the present study is the first to create a reserve selection model that captures the economic theory of competitive land markets in a dynamic framework produces tangible parcel level conservation recommendations and works on problems with thousands of potential site selection decisions and several planning periods

guns butter and openness on the relationship between security and trade sovereign states arm to defend real or hypothetical interests presumably because they cannot engage in complete long term contracting that would prevent such arming international trade therefore takes place within an essentially anarchic context and we can expect trade regimes and security policies to be related indeed many embargoes sanctions and various other forms of trade restrictions that have been used throughout history and continue to be used today can be considered extensions of security policies whereas some security policies can be attributed to trade policy the relationship between trade and security however has been barely explored within economics we could fairly characterize the prevailing view within the discipline as the classical liberal view according to which the expansion of international trade does not just increase the welfare of the trading partners but can also patch up any differences they might have over other contentious issues solomon polachek 1980 represents a rare articulation of this widely held perspective more boldly it could be argued that the expansion of trade always alleviates conflict by forcing the adoption of measures that manage conflict nevertheless one does not need to dig much into history to show that while trade and economic interdependence can contribute to the peaceful resolution of disputes they are not sufficient by themselves to guarantee the absence of war and the reduction of arming many observers before world war i for example considered that the hitherto unprecedented expansion of trade and interdependence between britain and germany made war unthinkable and impossible yet war occurred and with much ferocity and destruction furthermore as donald kagan 1995 pp 373 80 has argued the british policy of appeasement toward germany during the 1930 s was based on similar arguments about the use of economic caltots to avoid war what can inter

transportation costs and international trade in the second era of globalization while the precise causes of postwar trade growth are not well understood declines in transport costs top the lists of usual suspects however there is remarkably little systematic evidence documenting the decline this paper brings to bear an eclectic mix of data in order to provide a detailed accounting of the time series pattern of shipping costs the ad valorem impact of ocean shipping costs is not much lower today than in the 1950s with technological advances largely trumped by adverse cost shocks in contrast air shipping costs have dropped an order of magnitude and airborne trade has grown rapidly as a result as a result international trade has also experienced a significant rise in speed

the dynamic effects of open space conservation policies on residential development density abstract recent economic analyses emphasize that designated open space increases the rents on neighboring residential land and likewise the probability of undeveloped land converting to residential uses this paper addresses a different question what is the effect of local open space conservation on the rate of growth in the density of residential land a discrete choice econometric model of lakeshore development is estimated with a unique parcel level spatial temporal dataset using maximum simulated likelihood to account for i the panel structure of the data ii unobserved spatial heterogeneity and iii sample selection resulting from correlated unobservables results indicate that contrary to the intuition derived from the current literature local open space conservation policies do not increase the rate of growth in residential density and some open space conservation policies may reduce the rate of growth in residential development density this is consistent with land value complementarity between local open space and parcel size

the economics of urban yard space an implicit market model for housing attributes abstract a theoretical housing model is developed embodying the approach of the recent hedonic price literature instead of focusing on a scalar housing service consumption measure the model portrays housing as a commodity with two attributes floor space and yard space developers react to a consumer bid rent function which relates dwelling rent to floor space yard space and location in choosing the profit maximizing characteristics of their housing complexes the spatial behavior of the developer s choice variables is investigated an interesting question is whether yards are larger farther from the urban center and a comparative static analysis of the housing market equilibrium is presented

the higher educational transformation of china and its global implications this chapter documents the major transformation of higher education that has been underway in china since 1999 and evaluates its potential global impacts this has involved major new resource commitments to tertiary education and significant changes in organizational form reflecting china s commitment to continued high growth through quality upgrading and the production of ideas and intellectual property as set out in both the tenth 2001 2005 and eleventh 2006 2010 five year plans the number of undergraduate and graduate students in china has been growing at approximately 20 per year since 1999 and the total number of graduates at all levels of higher education in china has increased by more than a factor of six in the last decade entering class sizes and total student enrolments have risen fast too approximately quintupling prior to 1999 increases in these areas were much smaller much of the increased spending is focussed on elite universities and new academic contracts differ sharply from earlier ones which lacked tenure and often used annual publication quotas

violent crime does social capital matter this paper examines empirically the effect of some commonly used indicators of social capital such as the prevalence of trust on community members and the participation in voluntary secular and religious organizations on the incidence of violent crimes this is a cross country study whose basic sample consists of 39 developed and developing countries and whose dependent variable is the national intentional homicide rate the paper identifies and deals with three challenges in the empirical estimation of the effect of social capital on the incidence of violent crimes the omittedvariable problem is dealt with by including income inequality and economic growth as additional determinants of a country s violent crime rate the joint endogeneity or reverse causation problem is accounted for by using instrumental variables for social capital in the crime regression the specificity problem that is the potentially opposite effects of group specific and society wide social capital is noted and addressed only indirectly by emphasizing the results applied to the social capital indicators that have application for society as a whole the main result of the paper is that only the component of social capital measured by trust on community members has the effect of reducing the incidence of violent crimes the results regarding measures of other indicators of social capital are rather unclear this may be due to a combination of limited samples inability to fully control for reverse causation and most likely the opposite effects that society wide and group specific social capital may have on violent crime lederman and menendez are economists with the office of the chief economist for latin america and the caribbean of the world bank loayza is a senior economist with the research department of the central bank of chile and he is currently on leave from the development economics research group of the world bank the opinions expressed herein should not be attributed to the world bank the authors are grateful to ed glaeser jeff grogger gale johnson sanjay marwah steve messner nicholas sambanis and an anonymous referee for invaluable comments and suggestions the authors are responsible for any remaining errors

china s economic growth 1978 2025 what we know today about china s economic growth tomorrow summary this paper examines china s future growth prospects and the potential drivers of future growth using two approaches it first asks in how far china s recent economic development matches standard growth patterns identified in development economics and trade theory second gdp is decomposed into income components which in turn are explained for the reform period by the quantity and quality of labor future gdp can then be re composed from future labor data available today overall china s economic growth is likely to continue at current rates through 2015 before it gradually slows such a growth has numerous implications

voting on open space what explains the appearance and support of municipal level open space conservation referenda in the united states abstract numerous communities in the united states have been willing to use public funds to protect open space the amount of money allocated for open space protection by local and state governments exceeds the budget of the largest federal land protection program in the u s the conservation reserve program this paper analyzes what types of municipalities hold open space referenda and the level of support for these referenda factors that increased the probability of a municipality holding an open space referendum from 2000 to 2004 were large population low population density rapid growth of the surrounding area and highly educated and environmentally concerned residents increases in median household income up to 100 000 increased the likelihood of a vote but further increases in income beyond 100 000 decreased the likelihood for municipalities holding an open space referendum factors that increased support for passage of the referendum were rapid growth low unemployment rates highly educated residents and no new taxes given high levels of support for open space referenda 76 of municipal level referenda held from 2000 through 2004 passed the spatial pattern of locally managed open space will be largely determined by the factors that affect referenda appearance on a municipal ballot this conclusion suggests that locally managed conservation hotspots will cluster around fast growing affluent communities with highly educated residents such hotspots may or may not align with overall conservation priorities non governmental and environmental organizations should focus efforts on helping communities in locally managed conservation coldspots secure open space

growth speculation and sprawl in a monocentric city abstract an economic theory of sprawl in a growing monocentric city is presented where decision makers have perfect foresight leapfrog development and discontinuous land rent functions may occur and be efficient in both an ex post and ex ante sense where the extent of future growth is uncertain decision makers become speculators and the spatial pattern of development is more complicated ex post inefficiency generally occurs

malthus to solow a unified growth theory is developed that accounts for the roughly constant living standards displayed by world economies prior to 1800 as well as the growing living standards exhibited by modern industrial economies our theory also explains the industrial revolution which is the transition from an era when per capita incomes are stagnant to one with sustained growth the authors use a standard growth model with several technologies the first denoted the malthus technology requires land labor and reproducible capital as inputs the second denoted the solow technology does not require land the authors show that in the early stages of development only the malthus technology is used and due to population growth living standards are stagnant despite technological progress eventually technological progress causes the solow technology to become profitable and both technologies are employed at this point living standards improve since population growth has less influence on per capita income growth in the limit the economy behaves like a standard solow growth model excerpt

urban development with lags abstract this paper specifies a model of urban development under uncertainty when there is a lag between the decision to begin a project and its completion these lags have three important effects first the deterrent effect of uncertainty on development is smaller with lags than without them second in some cases development occurs later under uncertainty than with certainty third lags may lead to leapfrog development when distant land is developed prior to nearby land