correlations between biofuels and related commodities before and during the food crisis a taxonomy perspective abstract in this paper we analyze the relationships between the prices of biodiesel ethanol and related fuels and agricultural commodities with a use of minimal spanning trees and hierarchical trees to distinguish between short term and medium term effects we construct these trees for different frequencies weekly and monthly we find that in short term both ethanol and biodiesel are very weakly connected with the other commodities in medium term the biofuels network becomes more structured the system splits into two well separated branches a fuels part and a food part biodiesel tends to the fuels branch and ethanol to the food branch when the periods before and after the food crisis of 2007 2008 are compared the connections are much stronger for the post crisis period this is the first application of this methodology on the biofuel systems

the political economics of redistribution inequality and tax avoidance a central result in the political economy of taxation is that the degree of redistribution is positively linked to income inequality however empirical evidence supporting such a relationship turns out to be mixed this paper shows how the different empirical reactions can be rationalized within a simple model of tax avoidance and costly tax enforcement by focusing on structure induced equilibrium in which taxpayers vote over the size of the income tax and the level of tax enforcement we show that more inequality may well reduce the extent of redistribution depending on two opposing effects the standard political effect and a negative tax base effect working through increases in the average level of tax avoidance and the share of enforcement expenditures in total tax revenue

intergenerational economic mobility in the united states 1940 to 2000 we estimate trends in intergenerational economic mobility by matching men in the census to synthetic parents in the prior generation we find that mobility increased from 1950 to 1980 but has declined sharply since 1980 while our estimator places greater weight on location effects than the standard intergenerational coefficient the size of the bias appears to be small our preferred results suggest that earnings are regressing to the mean more slowly now than at any time since world war ii causing economic differences between families to become more persistent however current rates of positional mobility appear historically normal

a distributional theory of government growth this article presents a closed form solution for time consistent taxation and public spending in a dynamic game between government and median voter extending meltzer and richard s static analysis of government size the article offers a theory of growth of government at low stages of economic development the median voter identified as a relatively poor worker prefers to have no or only small redistributive taxation in order to foster savings through this channel he expects improvements of his labor productivity and wage at higher stages of development however when capital is relatively abundant and prospects of further labor productivity gains through capital accumulation are smaller the incentive to tax and redistribute income rises yet in line with previous work on growth and infrastructure spending the median voter prefers a constant share of productive public spending at all times hence government growth is solely driven by an expanding welfare state

antebellum tariff politics regional coalitions and shifting economic interests abstract throughout u s history import tariffs have been put on a sustained downward path in only two instances from the early 1830s until the civil war and from the mid 1930s to the present this paper analyzes the political economy of tariff reductions in the antebellum period tariff politics was highly sectional the north supported high tariffs the south favored low tariffs and the west was a swing region in the 1820s a coalition between the north and west raised tariffs by exchanging votes on import duties for spending on internal improvements president andrew jackson delinked these issues by vetoing several internal improvements bills the nullification crisis led to the compromise tariff of 1833 which phased out tariffs above 20 percent over a 9 year period by this time transportation improvements gave the west access to foreign markets giving the region a stake with the south in maintaining a low tariff equilibrium thus the west s changing position on trade policy helps explain the

tests of a rational theory of the size of government in many countries the political party holding power changes more frequently than the trend growth rates in government spending and taxes shifts of political power are often preceded by rhetoric about meeting needs or cutting taxes which post election performances rarely match yet changes in the size of government up and down occur on average the size of government measured by the share of taxes or spending to output has increased in many countries during the past century but changes in size occur at diffrent rates and at times the relative size of government declines

a general equilibrium model of congressional voting in this paper we specify a model in which congressmen constituents and campaign contributors simultaneously decide on behavior constituents and contributors desire to influence the voting behavior of congressmen congressmen on the other hand want to be elected and vote accordingly we empirically test this model using roll call voting on eight bills dealing with economic regulation and find support for the model our results indicate that part of the voting behavior of congressmen may be explained by noneconomic factors we also find that unions and businesses as campaign contributors are sometimes influential unions are more often influential than is business ideological factors are also important in explaining voting

understanding the reductions in us corn ethanol production costs an experience curve approach the us is currently the world s largest ethanol producer an increasing percentage is used as transportation fuel but debates continue on its costs competitiveness and energy balance in this study technological development of ethanol production and resulting cost reductions are investigated by using the experience curve approach scrutinizing costs of dry grind ethanol production over the timeframe 1980 2005 cost reductions are differentiated between feedstock corn production and industrial ethanol processing corn production costs in the us have declined by 62 over 30 years down to 100 2005 tonne in 2005 while corn production volumes almost doubled since 1975 a progress ratio pr of 0 55 is calculated indicating a 45 cost decline over each doubling in cumulative production higher corn yields and increasing farm sizes are the most important drivers behind this cost decline industrial processing costs of ethanol have declined by 45 since 1983 to below 130 2005 m3 in 2005 excluding costs for corn and capital equivalent to a pr of 0 87 total ethanol production costs including capital and net corn costs have declined approximately 60 from 800 2005 m3 in the early 1980s to 300 2005 m3 in 2005 higher ethanol yields lower energy use and the replacement of beverage alcohol based production technologies have mostly contributed to this substantial cost decline in addition the average size of dry grind ethanol plants increased by 235 since 1990 for the future it is estimated that solely due to technological learning production costs of ethanol may decline 28 44 though this excludes effects of the current rising corn and fossil fuel costs it is also concluded that experience curves are a valuable tool to describe both past and potential future cost reductions in us corn based ethanol production

spend it like beckham inequality and redistribution in the uk 1983 2004 a main activity of the state is to redistribute resources standard political economy models predict that a rise in inequality will lead to more redistribution this paper shows that for the uk in the period 1983 2004 a plausibly exogenous rise in income inequality has not been associated with increased redistribution we explore this example of the paradox of redistribution using attitudinal data we show that standard political economy models of the individual demand for redistribution do have explanatory power but that other attitudes and beliefs are also very important moreover these attitudes and beliefs change quite quickly so are very important in explaining variation in the demand for redistribution

collateral damage exchange controls and international trade abstract while new conventional wisdom warns that developing countries should be aware of the risks of premature capital account liberalization the costs of not removing exchange controls have received much less attention this paper investigates the negative effects of exchange controls on trade to minimize evasion of controls countries often intensify inspections at the border and increase documentation requirements thus the cost of conducting trade rises the paper finds that a one standard deviation increase in the controls on trade payment has the same negative effect on trade as an increase in tariff by about 14 percentage points a one standard deviation increase in the controls on fx transactions reduces trade by the same amount as a rise in tariff by 11 percentage points therefore the collateral damage in terms of foregone trade is sizable

reciprocity and resistance to comprehensive reform comprehensive reforms often fail despite being beneficial to society politicians may block comprehensive reforms in an attempt to form vote trading coalitions in which they benefit from a piecemeal reform at the expense of others because formal commitment devices for vote trading are frequently missing trust and reciprocity among legislators can play an important role for vote trading we investigate in a laboratory experiment whether legislators will impede comprehensive reforms in an attempt to form vote trading coalitions even if formal commitment devices for vote trading after reform failure are missing we find that open ballots allow for vote trading without commitment based on trust and reciprocity in turn legislators frequently reject efficient comprehensive reforms in such institutions

optimal voting schemes with costly information acquisition a group of individuals with identical preferences must make a decision under uncertainty about which decision is best before the decision is made each agent can privately acquire a costly and imperfect signal we discuss how to design a mechanism for eliciting and aggregating the collected information so as to maximize ex ante social welfare we first show that of all mechanisms a sequential one is optimal and works as follows at random one agent at a time is selected to acquire information and report the resulting signal agents are informed of neither their position in the sequence nor of other reports acquiring information when called upon and reporting truthfully is an equilibrium we next characterize the ex ante optimal scheme among all ex post efficient mechanisms in this mechanism a decision is made when the precision of the posterior exceeds a cut off that decreases with each additional report the restriction to ex post efficiency is shown to be without loss when the available signals are sufficiently imprecise on the other hand ex post efficient mechanisms are shown to be suboptimal when the cost of information acquisition is sufficiently small

capital controls on inflows exchange rate volatility and external vulnerability abstract we use high frequency data and a new econometric approach to evaluate the effectiveness of controls on capital inflows we focus on chile s experience during the 1990s and investigate whether controls on capital inflows reduced chile s vulnerability to external shocks we recognize that changes in the controls will affect the way in which different macro variables relate to each other in particular we consider the case where controls co exist with an exchange rate band aimed at managing the nominal exchange rate we develop a methodology to deal explicitly with the interaction between these two policies the main findings may be summarized as follows a a tightening of capital controls on inflows depreciates the exchange rate and b we find that a tightening of capital controls increases the unconditional volatility of the exchange rate but makes it less sensitive to external shocks

how effective are capital controls a number of authors have recently argued that in order to avoid financial instability emerging countries should rely on capital controls two type of controls have been considered controls on capital outflows and controls on capital inflows in this paper i review the historical evidence on the effectiveness of these two type of controls i argue that controls on outflows have been ineffective they are circumvented and breed corruption i also analyze chile s recent experience with controls on inflows and i argue that their effectiveness has been exaggerated

the effects of logrolling on congressional voting the theoretical public choice literature suggests that vote trading is an important determinant of congressional voting behavior yet empirical voting models do not allow for vote trading these models recognize that observed ideology may influence legislative behavior but do not correct for unobserved ideology this study devises new tests for logrolling and ideology the empirical model controls for logroll agreements and unobserved ideological interest via the correlation of unobserved variables the results reflect the presence of vote trading coalitions on some votes but not on others the results cast doubt on the importance of personal ideological interests of legislators copyright 1992 by american economic association

voting behavior and information aggregation in elections with private information we analyze two candidate elections in which voters are uncertain about the realization of a state variable that affects the utility of all voters each voter has noisy private information about the state variable we show that the fraction of voters whose vote depends on their private information goes to zero as the size of the electorate goes to infinity nevertheless elections fully aggregate information in the sense that the chosen candidate would not change if all private information were common knowledge equilibrium voting behavior is to a large extent determined by the electoral rule i e if a candidate is required to get at least x percent of the vote in order to win the election then in equilibrium this candidate gets very close to x percent of the vote with probability close to one finally if the distribution from which preferences are drawn is uncertain then elections will generally not satisfy full information equivalence and the fraction of voters who take informative action does not converge to zero

instability of collective decisions testing for cyclical majorities the issues of cyclical majorities and instability of collective choices have been in the fore front in the discussion of social choice mechanisms cycling lack of equilibria and so called chaos theorems have been prevalent in the public choice literature whether cycling actually occurs in processes that are decided by majority rule has been a long standing question however cycling has not been made quantifiable nor has it been clear how one would determine empirically whether majorities are cyclical in this paper cycling has been given an empirical meaning this paper provides a method to test for cyclical majorities and applies it to decisions made in the us congress the test results indicate stability and the presence of persistent winners and losers in congress

constitutional rules and fiscal policy outcomes we investigate the effect of electoral rules and forms of government on fiscal policy outcomes in a large sample of democracies we rely on different estimation methods to address prospective problems of statistical inference due to non random selection of these constitutional rules the findings are consistent with our theoretical priors presidential regimes induce smaller governments than parliamentary democracies while majoritarian elections lead to smaller governments and smaller welfare programs than proportional elections

the macroeconomics of the great depression a comparative approach recently research on the causes of the great depression has shifted from a heavy emphasis on events in the united states to a broader more comparative approach that examines the interwar experiences of many countries simultaneously in this lecture i survey the current state of our knowledge about the depression from a comparative perspective on the aggregate demand side of the economy comparative analysis has greatly strengthened the empirical case for monetary shocks as a major driving force of the depression an interesting possibility suggested by this analysis is that the worldwide monetary collapse that began in 1931 may be interpreted as a jump from one nash equilibrium to another on the aggregate supply side comparative empirical studies provide support for both induced financial crisis and sticky nominal wages as mechanisms by which nominal shocks had real effects still unresolved is why nominal wages did not adjust more quickly in the face of mass unemployment this abstract was borrowed from another version of this item

does the median voter model explain the size of government evidence from the states despite an attempt by its own authors it is difficult to argue that the influential model of the size of government developed by meltzer and richard 1981 has had convincing empirical backing in this paper we adapt that model to a model of state government size the main testable hypothesis is that as income inequality grows government size as measured by the percentage of income devoted to government redistribution grows we test the model using panel data from the us states from 1979 1991 in contrast to the results found by meltzer and richard 1983 we find little evidence to support the model the results are robust to several model specifications and estimation techniques

international aspects of the great depression and the crisis of 2007 similarities differences and lessons we focus on two international aspects of the great depression financial crises and international trade and try to discern lessons for the current economic crisis both downturns featured global banking crises which were generated by boom slump macroeconomic cycles during both crises world trade collapsed faster than world incomes and the trade decline was highly synchronized across countries during the depression income losses and rises in trade barriers explain trade s collapse owing to vertical specialization and more intense trade in durables today s trade collapse is due to uncertainty and small shocks to trade costs hitting international supply chains so far the global economy has avoided the global trade wars and banking collapses of the depression perhaps owing to improved policy even so the global economy remains susceptible to large shocks owing to financial innovation and technological

the new competition for land food energy and climate change abstract the paper addresses the new competition for land arising from growing and changing demand for food when combined with increasing global demand for transport energy under conditions of declining petro chemical resources and the urgent need to reduce greenhouse gas emissions the paper starts from the premise of a food energy and environment trilemma tilman et al 2009 where all demands to expand the area of cultivated land present high risks of increasing the carbon footprint of agriculture having reviewed the main drivers of demand for food and for liquid transport fuels the paper weighs the controversies surrounding biofuels arising from food price spikes the demand for land and consequent direct and indirect land use change it suggests that we need a more complex and geographically differentiated analysis of the interactions between direct and indirect land use change the paper then reviews evidence of land availability and suggests that in addition to technical availability in terms of soil water and climate political social and technological factors have significantly shaped the competition for land in different global regions particularly the three major biofuel producing ones of the usa brazil and europe this point is further developed by reviewing the different innovation pathways for biofuels in these three regions the main conclusion of this review is firstly that any analysis requires an integrated approach to the food energy environment trilemma and secondly that strategic political direction of innovation and sustainability regulation are required to bring about major shifts in agriculture leading to sustainable intensification of cultivation royal society 2009 rather than the continued expansion of cultivated area the consequent perspective is one of considerable global variety in technologies agricultural productive systems and use of natural resources this contrasts sharply with the world of a dominant global and integrated technology platform based on petro chemicals to which we have become accustomed

trade blocs currency blocs and the reorientation of world trade in the 1930s we analyze the impact of commercial and financial policies on the reorientation of trade in the 1930s we report evidence that commercial policies attenuated prior connections between income growth and trade and that exchange rate instability marginally discouraged international trade in contrast the tendency toward regionalization commonly ascribed to the formation of trade and currency blocs was already evident to a considerable extent prior to the regional policy initiatives of the 1930s this reorientation is more properly attributed to ongoing historical forces such as commercial and financial links between countries forged over many years

congressional voting on term limits between 1990 and 1995 twenty three states unilaterally imposedterm limits on their own delegations tocongress in 1995 the house ofrepresentatives defeated a constitutionalamendment that would have limited the termsfor all of congress only weeks later thesupreme court struck down the individualstate laws in 1997 the house againbrought the issue to a vote which alsofailed this paper models congressionalvoting on term limits with a simple gamewithin an interest group theory withlegislators as imperfect agents ofconstituents the game foremost predictsthat members from term limited states wouldbe more likely to support term limits inthe first vote but no more likely on thesecond vote the empirical section employsprobit multinomial logit and orderedprobit maximum likelihood estimations toconfirm the stated hypotheses among otherresults in particular both the joint andconditional probability of a yea on thefirst vote and a subsequent nay on thesecond vote is higher for members fromstates that had unilaterally self imposedterm limits the results are robust tomodel specification estimator andalternative sampling implications areproposed in the concluding comments

term limits causes and consequences this paper consults multiple literatures to specify andevaluate the economic rationales for term limitation particularly on congress i first consider theories that aroseto explain among related issues why individual states mightunilaterally self impose term limits on their own delegationsto congress next i consider two main lines of argument foruniversal limits both of which begin with the empiricalphenomenon of high and rising congressional tenure first supporters of term limits argue that higher tenure biaseslegislatures toward inefficiency big government highspending second higher tenure creates inefficient anti competitive conditions in the legislative election market term limitation would remedy these inefficiencies by virtue ofdecreasing average tenure these claims are then evaluated inlight of the evidence amassed in the literature based on theliterature reviewed this paper finds that while term limitswill reduce average tenure there is no evidence to suggestthat term limits will affect the underlying causes of theseinefficiencies further research on a more general reform which would strike deeper at these underlying causes isimplied

taxes torts and the toxics release inventory congressional voting on instruments to control pollution i introduction governments can choose from a wide variety of policy instruments to control pollution including tax and subsidy schemes marketable permits information provision programs liability systems with well defined property rights and command and control selection of emission standards or technologies economists throughout the 1980s devoted significant effort to modeling the relative merits of these instruments the question of why politicians would prefer one manner of controlling pollution over another also attracted attention starting with buchanan and tullock s 1975 positive theory of externality control in which polluters find direct regulatory controls on emissions more profitable than pollution taxes theories of instrument selection have been developed in which politicians choose policies based on the relative costs and benefits to shareholders workers and environmentalists are affected by the constraints imposed by political institutions and are driven to select the most efficient policy instrument to achieve a given level of redistribution 1 to date however there have been few empirical tests of what drives instrument selection in environmental policy there is a large empirical literature devoted to explaining the level of support for environmental programs in congress most articles focus on the degree to which a legislator s stand on a given environmental bill can be explained by narrow district interests generally the material interests of constituents or by ideology either constituents or the member s own policy preferences studies of voting on environmental legislation by ackerman and hassler 1981 crandall 1983 pashigian 1985 and yandle 1989 offer evidence that legislators actions are in part explained by the district or state level impacts of proposed legislation on their constituents kalt and zupan 1984 find that after controlling for constituents material self interest in proposed strip mining legislation the ideology of constituents and the personal ideologies of their representatives influence voting on this aspect of environmental preservation as grier 1993 demonstrates debate over the general role of the legislator s specific ideology in voting continues in studying votes in the house and senate on the proposed size of the superfund during debate over the program s renewal hird 1993 concludes that congressional voting on superfund is found to represent legislator s environmental and liberal ideologies as much as if not more than narrowly defined self interest he links the importance of ideology to voting on superfund in part to the bill s symbolic environmental appeal in environmental legislation the final impact of a bill on industry and the environment often depends on issues resolved through technical amendments downs s theory of rational ignorance and arnold s theory of the degree to which constituents will link congressional actions with real world outcomes predict that members of congress may be less constrained by general constituent interests on amendment votes since these votes are less likely to be covered in the media than are final legislative votes as denzau and munger 1986 and grier and munger 1991 note groups with specific interests such as affected industries may find it less costly to persuade a member of congress to vote their way on a measure if the representative s constituents are supportive of or indifferent to the measure in the case of technical amendments affected parties may be more influential than on highly visible votes because the lack of media coverage translates into a lower probability that the vote will become a major campaign issue in future elections this implies that voting on the instruments to control pollution will be driven in part by the specific district level costs and benefits of these measures while voting on the final passage of a bill will be more driven by general constituent interests

voting under ignorance of job skills of unemployed the overtaxation bias abstract usual models on voting over basic income flat tax schedules rest on the assumption that voters know the whole distribution of skills even if at equilibrium some individuals do not work if individuals productivity remains unknown until they work it may be more convincing to assume that voters have only beliefs about the distribution of skills and that a learning process takes place in this paper at each period individuals vote according to their beliefs which are updated when getting new information from the job market the voting process converges towards some steady state equilibrium that depends on both the true distribution of skills and the initial beliefs the equilibrium tax rate is higher than or equal to the tax rate achieved in the perfect information framework an illustration is provided on french data if voters are over pessimistic as to the potential productivity of unemployed people majority voting may lock the economy in an informational trap with a high tax rate and a high level of inactivity

debt and default in the 1930s causes and consequences abstract this paper studies interwar experience with external debt and default it begins with a description of the contours of international borrowing and lending in the 1920s we then use some empirical models from recent literature on the 1970s to describe the interwar data macroeconomic variables for over 20 countries are related to cross section variations in borrowing and debt during the period from the end of the 1920s to 1938 the paper then considers the incidence and correlates of sovereign default for 1934 1938 using regression to determine the association between standard measures of economic structure and performance and subsequent interruptions to debt service such variables as the magnitude of the debt burden the deterioration of the terms of trade during the great depression and the stance of monetary and fiscal policies provide a remarkably accurate explanation of the incidence of default we go on to provide a long run perspective on default and on the remedies available to creditors the provisions of loan contracts are reviewed with an eye toward analyzing the scope for renegotiation the discussion emphasizes the contrast between the regime of bond finance that prevalied in the interwar years and the current regime of bank lending we analyze the roles of governments banks and bondholders protective committees in the negotiation process we then present new estimates of the ex post realized rates of return on british and american foreign lending in the 1920s this empirical analysis uncovers a striking contrast in the returns realized on loans floated in the two countries while the nominal internal rate of return on dollar loans was less than 1 per annum the comparable return on sterling loans was in excess of 5 the paper concludes with a discussion of factors which help to account for this dramatic difference

what do campaign contributions buy deciphering causal effects of money and votes in the 1987 1988 election cycle political action committees pacs spent 176 6 million on candidates who competed for a seat in the house of representatives what do pacs buy when contributing this money if campaign contributions are rational allocations of a contributor s income campaign expenditures could increase both the probability that the contributor s preferred candidate is elected and the likelihood that if elected the candidate will vote in the interest of the contributor most studies do not find that incumbents expenditures have a significant positive effect on the number of votes incumbents receive 11 14 15 17 29 the evidence that contributions influence congressional votes is mixed most studies find weak or no support for this hypothesis for example kau rubin and keenan 17 find that contributions from businesses mattered in only two of the eight votes they analyzed others argue that campaign expenditures play no important role in the voting decision of congressmen 5 9 12 31 the lack of finding of significant effects of money on votes has been explained with the need for better models to explain campaign contributions 5 however the theoretical developments of for example ben zion and eyton 4 bental and ben zion 3 and baron 2 have not been incorporated in the empirical analysis of the effect of campaign contributions on the voting behavior of legislators empirical models that test this relationship must allow for the endogeneity of campaign contributions for the dichotomous nature of the dependent vote variable and the nonnegativity constraint of campaign contributions most empirical work in this area utilize models that do not incorporate these restrictions in this study i plan to incorporate these aspects of the data generating process into a more detailed model of the effects of campaign contributions on congressional votes of all the reported empirical studies on this issue only chappell 5 uses a model which can properly assess the impact of money on votes chappell finds that campaign contributions do not affect votes in congress when his more detailed econometric technique is used the best test of the theory results if votes have a clear economic payoff to contributors benefits of the votes are concentrated and costs are

retrospectives cost benefit analysis and the classical creed cost bene t analysis provides the dominant economic approach with whicheconomists talk to each other to government bureaucrats and to the general laityabout the desirability of public programs and investment projects cost bene tstudies have pushed economic thinking into public debates and reciprocally havebrought an uncommon level of public scrutiny to the technical deliberations ofeconomists precisely because cost bene t analysis addresses serious real world decisions this widely used and frequently abused tool of applied economics has had a bumpyhistory last year newspaper headlines across the country announced that apentagon investigation had found systematic manipulation of net bene t estimatesat the army corps of engineers for example grunwald 2000 the corps hasbeen the political godfather of cost bene t analysis in the united states but ithas also long been suspected of an institutional bias in favor of projects that canadd signi cantly to its own budget allocations re ecting on the early record of

golden fetters the gold standard and the great depression barry eichengreen oxford university press new york 1992 pp xix 448 39 95

costs of taxation and the size of government existing theory on the form of government suggests that a parliamentary system promotes a larger size of government than does a presidential system this paper extends the existing theory by allowing for distortionary taxation a main result is that if taxation is sufficiently distortionary the parliamentary system may promote a smaller size of government than the presidential system the proposed mechanism appears consistent with several empirical patterns in the data that cannot be explained by other theories

redistributive public employment abstract politicians may use disguised redistributive policies in order to circumvent opposition to explicit tax transfer schemes first we present a theoretical model that formalizes this hypothesis next we provide evidence consistent with the prediction of the model namely that in u s cities politicians use public employment as such a redistributive device we find that city employment is significantly higher in cities where income inequality and ethnic fragmentation are higher

the cotton influence index an examination of u s cotton subsidies given the lack of a bill or amendment specific to cotton we introduce a cotton influence index to capture legislators influence in championing the cause of the cotton growers during the hearings of the farm security and rural investment act of 2002 regression analyses reveal a relationship between cotton influence index and campaign contributions cotton farmland party affiliation and ideology tobit analysis indicates a significant relationship between different actions and participations by representatives to advance the interest of cotton that is components of this index and their future cotton political action committees pacs contributions to them copyright 2006 oxford university press

anatomy of a crisis the causes and consequences of surging food prices although the potential causes and consequences of recent rising international food prices have attracted widespread attention many existing appraisals are superficial and or piecemeal this article attempts to provide a more comprehensive review of these issues based on the best and most recent research as well as on fresh theoretical and empirical analysis we first analyze the causes of the current crisis by considering how well standard explanations hold up against relevant economic theory and important stylized facts some explanations turn out to hold up much better than others especially rising oil prices the depreciation of the u s dollar biofuels demand and some commodity specific explanations we then provide an appraisal of the likely macro and microeconomic impacts of the crisis on developing countries we observe a large gap between macro and micro factors which when identifying the most vulnerable countries often point in different directions we conclude with a brief discussion of what ought to be learned from this crisis

us monetary and fiscal policy in the 1930s the paper provides a survey of fiscal and monetary policies during the 1930s under the hoover and roosevelt administrations and how they influenced the policies during the recent great recession the discussion of the causal impacts of monetary policy focuses on papers written in the last decade and the findings of scholars using dynamic structural general equilibrium modelling the discussion of fiscal policy shows why economists do not see the new deal as a keynesian stimulus describes the significant shift toward excise taxation during the 1930s and surveys estimates of the impact of federal spending on local economies the paper concludes with discussion of the lessons for the present from 1930s monetary and fiscal policy

social mobility and the demand for redistribution the poum hypothesis this paper examines the often stated idea that the poor do not support high levels of redistribution because of the hope that they or their offspring may make it up the income ladder this prospect of upward mobility poum hypothesis is shown to be fully compatible with rational expectations and fundamentally linked to concavity in the mobility process a steady state majority could even be simultaneously poorer than average in terms of current income and richer than average in terms of expected future incomes a e rst empirical assessment suggests on the other hand that in recent u s data the poum effect is probably dominated by the demand for social insurance in the future everyone will be world famous for e fteen minutes andy warhol 1968

the impact of rising ethanol production on the brazilian market for basic food commodities an econometric assessment the controversial debate on the impacts of rising biofuel production on food commodity markets is of great policy relevance in brazil this paper contributes to the discussion by applying panel data regression models with fixed effects using ols our dataset comprises annual production harvested area data for sugar ethanol and five other staple commodities ranging from 1981 to 2009 for 24 brazilian states our results indicate that rising ethanol production exerts statistically significant positive impacts on sugarcane negative impacts on rice beans and soybeans acreage but no statistically significant effect on the areas for corn and manioc the negative impacts on commodities acreage have implications for the associated prices ceteris paribus rising ethanol production puts some upward pressure on the prices for rice beans and soybeans however the economic implication of these direct land use effects is attenuated due to the moderate scale of any effect

the relationship between congressional spending and tenure with an application to term limits whether term limits would increase or decrease federal spending depends on the reason for the causal relationship between tenure and spending we investigate this subject by empirically studying congressional spending and tenure for all united states house and senate members who entered congress between the 94th and 102nd congresses 1975 1992 as our measure of congressional spending we use the national taxpayers union s congressional spending scores our study finds that a statistically significant relationship exists between congressional spending and tenure for some groups of congressmen we then test three hypotheses relating tenure and spending no single hypothesis is consistent with all of our empirical results nevertheless the small sizes of the empirical effects estimated in this study suggest that term limits would have an inconsequential impact on the level of federal spending at least via the moral hazard mechanisms described in this paper

food energy and environment is bioenergy the missing link abstract we study price linkages between the food energy and bioenergy markets a vertically integrated multi input multi output market model allows us to derive testable hypothesis which we test by applying time series analytical mechanisms to nine major traded food commodity prices along with one weighted average world crude oil price the data consists of 939 weekly observations from january 1993 to december 2010 the empirical findings confirm the theoretical hypothesis that the prices for crude oil and food commodities are interdependent a usd 1 barrel increase in oil prices and food commodity prices increase by between usd 0 09 tonne and usd 1 65 tonne

land use change impacts of biofuels near var evidence from the us abstract the present paper studies the land use change impacts of fuels and biofuels we test the theoretical hypothesis which says that changes in fuel prices cause changes in land use both directly and indirectly and that because of price inter dependencies biofuels reinforce the land use change impacts we apply time series analytical mechanisms to five major traded agricultural commodities the cultivated area of agricultural land and crude oil price our data consists of yearly observations extending from 1950 to 2007 for the us the empirical findings confirm that markets for crude oil and cultivated agricultural land are interdependent an increase in oil price by 1 dollar barrel increases land use between 54 000 and 68 000 ha we also find that the increase of bioenergy sector accelerates land use change in the us i e food commodities are being substituted for bioenergy crops

logrolling in the u s congress i introduction a long standing question in political science is whether exchange occurs in legislatures as it is expected in any economy where the intensity of demand varies the issue was originally raised by buchanan and tullock 1962 and expanded by coleman 1966 and mueller 1967 the subsequent literature has produced numerous models of vote trading haefele 1971 riker and brams 1973 koford 1982a much of the work suggests that vote trading leads to chaotic results see for example riker and brams 1973 kramer 1977 and mckelvey 1976 currently vote trading s quantitative importance and optimality are unknown references to logrolling go back to the early literature in political science bentley 1907 refers to it and since then scholars such as mayhew 1966 and ferejohn 1974 have provided primarily anecdotal evidence for logrolling the economic analysis of logrolling has mostly been theoretical and little work has been done to assess the qualitative and quantitative importance of vote trading in legislatures however much might be learned from such analysis given the apparent puzzle that for most roll calls votes on parts of bills only a minority of districts stand to gain yet such proposals get passed until recently vote trading has not been identified empirically stratmann 1992 is the only paper that identifies vote trades statistically and it looks only at vote trades among agricultural interests however it would be interesting to know whether logrolling is prevalent in circumstances other than farm commodity programs we need to identify logrolling coalitions to assess how widespread logrolling agreements are we expect them to be common if the intensity of demand for legislation varies related to the issue of vote trading is the question of what factors determine congressional voting behavior major elements in a legislator s voting decision are constituency interests ideology party and perhaps vote trading one segment of the literature on congressional voting has focused on the role of political parties as an important force determining a legislator s voting decision some authors have argued that parties provide an organizational framework within which logrolling will happen see for example fiorina 1974 koford 1987 weingast and marshall 1988 johnson and stratmann 1992 alternatively lindsay and maloney 1988 suggest that party discipline forces a legislator to vote for or against a piece of legislation the latter view implies that on some issues party affiliation forces the legislator to vote against constituency interests 1 whether party affiliation is a signal to constituencies of one s overall propensity to vote on bills or a means to build coalitions or whether both elements are important is an unresolved question voting along party lines can be due to party loyalty or party pressure promoting the interests of one s constituency or logrolling within the party to answer questions about voting along party lines and about vote trading and coalitions within a quantitative framework one has to distinguish empirically between party loyalty and logrolling coalitions that are organized within a party empirical studies have typically included a party dummy variable in regression equations however if logrolling coalitions are organized within a party such a dummy variable will measure both potential party loyalty or potential party discipline and membership in a logrolling coalition this paper uses a different approach to separate the logrolling variable from the party loyalty variable and so distinguishes between voting for a proposal because of membership in a log rolling coalition organized by a party and because of potential party discipline this paper analyzes a broad range of votes where logrolling has been reported the analysis spans two congresses 1959 to 1962 and examines trades between interests favoring subsidies for city interests labor interests and farm interests

the political economy of the fair labor standards act of 1938 this paper examines the congressional passage of the american minimum wage law the fair labor standards act of 1938 voting on the act is modeled as a function of the concentration of the constituencies for minimum wage legislation north south differentials and legislator ideology it is shown that the house radically altered the final content of the bill abandoning a proposed wages and hours board with discretionary powers to determine minimum wages in favor of a flat rate following the objections of several interest groups north south divisions over the bill had little influence over congressional voting and the influence of constituent groups increased relative to legislators ideology as the bill became an important election issue

ideology tactics and efficiency in redistributive politics we model the electoral politics of redistribution when voters and parties care about inequality in addition to their private concerns for consumption and votes respectively ideological concerns about income redistribution lead each party to adopt a general proportional income tax adjusted to appeal to the ideological leanings of high clout groups with disproportionately many swing voters which the parties also ply with pork barrel projects our results relate to director s law which says that redistributive politics favors middle classes at the expense of both rich and poor

uncertainty and the size of government abstract voters decide on a proportional income tax uncertainty about government revenue can lead to a larger or smaller tax rate depending on the voters degree of prudence it is possible for rich voters to be better off under uncertainty

imperfect information and the meltzer richard hypothesis standard majority voting models predict that redistribution is positively linked to the mean to median income ratio but empirical evidence is mixed this paper shows that the different empirical reactions to rising mean to median income ratios can be rationalized in a simple romer roberts meltzer richard framework with imperfect information in such a model it is important to consider the source of rising mean to median ratios income growth of the poor can lead to less redistribution as more agents perceive themselves to be rich which tends to reduce the support for redistribution an empirical application reveals that the model can explain a substantial part of the first reagan tax cut

logrolling under fragmented authoritarianism theory and evidence from china this paper provides a rigorous theoretical and empirical analysis of the effect of logrolling between interest groups on social welfare in a non democratic political system in particular we focus on china where bureaucratic interest groups are separate vertical organizations reaching down from beijing to the provinces and cities the key question in this paper is what are the effects of the logrolling of parochial interest groups on state policies and social welfare in autocracies we address this question both theoretically and empirically the theory predicts a specific distortion in resource allocation because of logrolling while the empirical results confirm the theoretical prediction we find policy outcomes under logrolling are characterized by excessive spending on all the interest groups preferred goods and insufficient spending on public goods we test the existence of logrolling between the ministry of civil affairs and ministry of health in china our result shows logrolling between the two ministries lead to inefficiencies in social security and health care policies

capital controls and recovery from the financial crisis of the 1930s abstract we examine the first widespread use of capital controls in response to a global or regional financial crisis in particular we analyze whether capital controls mitigated capital flight in the 1930s and assess their causal effects on macroeconomic recovery from the great depression we find evidence that they stemmed gold outflows in the year following their imposition however time shifted difference in differences dd estimates of industrial production prices and exports suggest that capital controls did not accelerate macroeconomic recovery relative to countries that went off gold and floated countries imposing capital controls also appear to perform similar to the gold bloc countries once the latter group of countries finally abandoned gold time series analysis suggests that countries imposing capital controls refrained from fully utilizing their newly acquired monetary policy autonomy

biofuels and land use change sugarcane and soybean acreage response in brazil scientists and economists are increasingly worried that biofuels production is leading to land use changes in the form of competition with food crops or loss of natural ecosystems i estimate acreage conversion in response to shocks in sugarcane a biofuels feedstock and soybean thought to be affected by united states corn ethanol production prices in brazil at a national and regional level using county level data from 1973 to 2005 i consider a dynamic panel data model of input demand for agricultural land conditioning on price changes of other commodities the short run crop price elasticity of sugarcane acreage in brazil is estimated to be approximately zero whereas the elasticity of soybean acreage is 0 9 when both spot and futures prices change the regional estimates for soybeans show considerable variation and are highest in areas of ecological importance such as the cerrado sugarcane estimates are more homogeneous these results should be taken into account in impact assessments of biofuels

the political economy of redistribution under asymmetric information abstract this paper examines the political economy of redistribution when voters have asymmetric information about the redistributive preferences of politicians and the latter cannot make credible policy commitments the candidates in each party are endogenously selected by a process of nash bargaining between the competing factions in equilibrium there is partial convergence of redistributive policies support for director s law the possibility of policy reversals across the parties and inter term tax variability political budget cycles during the tenure of a politician the effect of inequality on the magnitude of the redistributive activity depends in important ways on the incentives and constraints facing politicians

legislative voting and the economic theory of politics empirical studies of legislative voting have multiplied since the mid 1970s early work 13 distinguished two modes of representation delegates who vote as voters want and trustees who use their own judgment more recently researchers have considered only delegates claiming that legislators who use their own ideology are shirking following principal agent theory representatives are conceived as conduits through which citizens transmit and express interests empirical work on this question however has found that the legislator s ideology explains more variation in vote choices than is explained by measures of constituent interest the seeming contradiction has led some 9 10 17 to reject the economic theory of legislator behavior as erroneous the truth is that no such theory has ever been fairly stated much less tested estimating equations have been ad hoc and the usual approach to measuring ideology has imposed correlation between the equation error and an explanatory variable 8 in both cases the result is

agenda control and reciprocity in sequential voting decisions we study how reciprocity affects the extent to which a chair can exploit her control over an agenda if a committee votes sequentially on a known series of binary proposals we show in a parsimonious laboratory experiment that committee members form vote trading coalitions favoring early proposals not only when the sequence of proposals is exogenously given but also when a chair controls the sequence of proposals vote trading occurs even though chairs manipulate the agenda in their favor punishment for chairs exploiting agenda control is weak as chairs reciprocate support by others more frequently than nonchairs jel c92 d71 d72

farm acreage shocks and crop prices an svar approach to understanding the impacts of biofuels the last 10 years have seen tremendous expansion in biofuels production particularly in corn ethanol in the united states at the same time that commodity prices e g corn have experienced significant spikes while supporters claim that biofuels are renewable and carbon friendly concerns have been raised about their impacts on land use and food prices this paper analyzes how us crop prices have responded to shocks in acreage supply these shocks can be thought of as a shock to the residual supply of corn for food using a structural vector auto regression framework we examine shocks to a crop s own acreage and to total cropland this allows us to estimate the effect of dedicating cropland or non crop farmlands to biofuels feedstock production a negative shock in own acreage leads to an increase in price for soybeans and corn our calculations show that increased corn ethanol production during the boom production year 2006 2007 explains approximately 27 of the experienced corn price rise

the impact of biofuels on commodity food prices assessment of findings for years agriculture has provided most of the fuel for vehicular transportation concerns about availability of fuels balance of trade and climate change led to the introduction of biofuel programs in the united states brazil europeanunion eu andothercountries the impacts of these programs and the relationship between the food and fuel markets have become major topics of economic research this paper summarizes the main findings of alternative lines of research on the relationship between the food and fuel markets and identifies gaps and quandaries that warrant further research this is not meant to be a complete survey and it emphasizes several of our studies within the broader literature the paper distinguishes between two bodies of literature one on the relationship between food and fuel prices and another on the impact of the introduction of biofuel on commodity food prices while biofuel prices do not seem to affect food commodity prices we explain why the introduction of biofuel does moreover biofuelshavenotbeenthemostdominant contributor to the recent food price inflation and different biofuels have different impacts

sustainable and integrated bioenergy assessment for latin america caribbean and africa sibyl lacaf the path from feasibility to acceptability abstract uncertainties in evaluating bioenergy projects have lead policymakers to adopt a restrictive approach or even refuse to evaluate projects when the available information is limited or a clear perception of its benefits and impact is lacking indeed despite its potential advantages a bioenergy system poses several conceptual and operational challenges for academic as well as practical scrutiny because the inherent relationship and the intersection of areas related to energy production and agricultural activity requires a deeply integrated assessment the aim of this paper is to review the available works in this field and propose an approach for supporting policymakers in the taking decision process of deploying sustainable bioenergy systems the sibyl lacaf framework provides a comprehensive framework for addressing the inherent complexity of the subject and its sustainability and acceptability as part of the evaluation process with this approach different and complementary evaluation methods are reviewed and set in a logical and sequential structure to draw a group of indicators used for assessing a given project with the help of a strengths weaknesses opportunities and threats swot matrix when acceptability is identified as an issue a public consultation and communication pc c scheme can complement this process the suggested application for mozambique indicate that an acceptable outcome is possible even when considering the data requirements and constraints of developing countries thus the potential of this integrated approach outweighs such limitations

contagion and trade why are currency crises regional abstract currency crises tend to be regional they affect countries in geographic proximity this suggests that patterns of international trade are important in understanding how currency crises spread above and beyond any macroeconomic phenomena we provide empirical support for this hypothesis using data for five different currency crises in 1971 1973 1992 1994 and 1997 we show that currency crises affect clusters of countries tied together by international trade by way of contrast macroeconomic and financial influences are not closely associated with the cross country incidence of speculative attacks

preferences for redistribution in the land of opportunities this paper explores how individual preferences for redistribution depend on future income prospects in addition to estimating the impact of individuals socioeconomic background and of their subjective perceptions of future mobility we employ panel data to construct dobjectivet measures of expected gains and losses from redistribution for different categories of individuals we find that such measures have considerable explanatory power and perform better than dgeneral mobilityt indexes we also find that preferences for redistribution respond to individual beliefs on what determines one s position in the social ladder ceteris paribus people who believe that the american society offers equal opportunities are more averse to redistribution d 2004 published by elsevier b v

self confidence and personal motivation the maintenance and enhancement of self esteem has always been identified as a fundamental human impulse philosophers writers educators and of course psychologists have all emphasized the crucial role played by self image in motivation affect and social interactions the aim of this chapter is to bring these concerns into the realm of economic analysis and show that this has important implications for how agents process information and make decisions conversely the tools of economic modelling can help shed light on a number of apparently irrational behaviours documented by psychologists

what should government do problems of social cost externalities and all that public choice as a field introduced the framework for a methodical economic analysis of political markets the output of these markets of course is reflected by the role that government plays that is specifically true with respect to the organization of economic activity gordon tullock has studied a myriad of aspects of this topic for more than half a century we examine his answers to the question of what should government do and how they have influenced and are still impacting the discussion on the proper role of government in the economy

free trade fair trade strategic trade and protectionism in the u s congress 1987 88 what conditions led the one hundredth congress of the united states to enact fair trade and strategic trade policies into law during 1987 88 political partisanship is an important force with democrats supporting and republicans opposing all types of trade intervention otherwise the coalitions of support for and opposition to the various trade policies differ particularly in the senate in that body international business is associated with support for fair trade policies and with opposition to classical protectionism while domestic u s business is associated with support for classical protectionism liberalism is strongly associated with support for fair and strategic trade policies but is not associated with classical protectionism in the house of representatives the long standing protectionist coalition remains an influence few forces in support of free trade remain in u s politics changing international market conditions rapidly affect the making of u s trade policy

understanding the tax revolt eight explanations numerous explanations of the tax revolt have been offered since california s adoption of proposition 13 in 1978 unfortunately many of these explanations remain untested or have been tested inappropriately and the explanations are often jumbled together in a fashion that precludes theoretical clarity we extract eight explanations from the literature each of which assumes that the tax revolt is a systematic national phenomenon that is a function of individual level social economic and political factors having tested these explanations by means of a discriminant analysis of data from the 1978 american national election study we find little empirical corroboration for any of them this leads us to consider two alternative research programs one of which interprets the tax revolt within a symbolic politics framework

income distribution and tax structure empirical test of the meltzer richard hypothesis abstract the meltzer richard hypothesis that more unequal income distribution will create a majority for more redistribution has generated much research but little empirical support the empirical literature has concentrated on cross country studies and the size of the public sector and the results broadly do not indicate more redistribution with more inequality this analysis suggests that the hypothesis should be investigated in a more homogenous setting with comparable institutions and with an explicit decision about redistribution here tax structure new data on poll tax and property tax in decentralized government in norway are exploited we show how the multi dimensional decision can be analyzed as majority rule assuming intermediate preferences in the econometric analysis instruments are used to account for endogeneity of income level and income distribution the estimated model supports the understanding that more unequal income distribution implies a shift in the tax burden from poll tax to property taxes and thereby gives more redistribution

centralized vote trading this paper presents a model of centralized vote trading in a legislature in this model legislators trade only with party leaders who set prices at which they will buy needed vote changes and sell promises to pass or defeat particular bills each legislator trades away votes on bills of little concern to him and of high concern to leaders and purchases promises from the leaders to pass or defeat particular bills of high concern to the legislator relative to the price the leguslator must pay

inequality the politics of redistribution and the tax mix political economy literature generally predicts a positive relationship between income inequality and redistribution however there is no clear empirical evidence supporting such a relationship by incorporating an informal sector that evades income taxes we account for the tax base effect that along with the political channel determines the equilibrium redistribution and tax mix we find a non monotonic relationship between inequality and redistribution and explore under which conditions an unequal society relies more heavily on indirect taxes to finance redistribution ultimately this paper shows the limitations of the income tax to finance redistribution in developing countries even when taxes are democratically chosen

the impacts of biofuel targets on land use change and food supply a global cge assessment this study analyzes the long term impacts of large scale expansion of biofuels on land use change food supply and prices and the overall economy in various countries or regions using a global computable general equilibrium model augmented by a land use module and detailed representation of biofuel sectors the study finds that an expansion of global biofuel production to meet currently articulated or even higher national targets in various countries for biofuel use would reduce gross domestic product at the global level however the gross domestic product impacts are mixed across countries or regions the expansion of biofuels would cause significant land re allocation with notable decreases in forest and pasture lands in a few countries the results also suggest that the expansion of biofuels would cause a reduction in food supply although the magnitude of the impact on food supply at the global level is not as large as perceived earlier it would be significant in developing countries like india and those in sub saharan africa agricultural commodities such as sugar corn and oil seeds which serve as the main biofuel feedstocks would experience significant increases in their prices in 2020 compared with the prices at baseline due to the expansion of biofuels to meet the existing targets

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

the impact of ethanol production on food prices the role of interplay between the u s and brazil abstract food prices have increased rapidly in recent years and so has ethanol production some studies have claimed that there is a connection between the two the main purpose of this paper is to add to this literature by examining the influence that the interplay between brazil and the u s in ethanol production has on food prices specifically and controlling for other variables which have been shown to affect food prices we investigate whether sugarcane ethanol and corn ethanol production have similar impacts on food prices and whether ethanol productivity affects food prices we find a positive significant effect of brazilian market share in world ethanol market on relative food prices we also find that an increase of brazilian cane ethanol area has a negative effect on relative food prices

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

last place aversion evidence and redistributive implications we present evidence from laboratory experiments showing that individuals are last place averse participants choose gambles with the potential to move them out of last place that they reject when randomly placed in other parts of the distribution in modified dictator games participants randomly placed in second to last place are the most likely to give money to the person one rank above them instead of the person one rank below last place aversion suggests that low income individuals might oppose redistribution because it could differentially help the group just beneath them using survey data we show that individuals making just above the minimum wage are the most likely to oppose its increase similarly in the general social survey those above poverty but below median income support redistribution significantly less than their background characteristics would predict jel codes h23 d31 c91