contagion as a wealth effect financial contagion is described as a wealth effect in a continuous time model with two risky assets and three types of traders noise traders trade randomly in one market long term investors provide liquidity using a linear rule based on fundamentals convergence traders with logarithmic utility trade optimally in both markets asset price dynamics are endogenously determined numerically as functions of endogenous wealth and exogenous noise when convergence traders lose money they liquidate positions in both markets this creates contagion in that returns become more volatile and more correlated contagion reduces benefits from portfolio diversification and raises issues for risk management during the f inancial panic associated with the default of the russian government in august 1998 and the subsequent collapse of the hedge fund long term capital management numerous hedge funds banks and securities firms tried simultaneously to reduce exposures to a variety of financial instruments such as russian bonds brazilian stocks u s mortgages spreads between on therun and off the run government securities and spreads between swaps and u s treasuries although the fundamental values of these positions would appear to have little correlation during this financial crisis the asset prices in these markets exhibited the following common empirical pattern 1 financial intermediaries suffered losses as prices moved against their positions 2 market depth and liquidity decreased simultaneously in several markets 3 the volatility of prices increased simultaneously in several markets and

measuring value change in western industrialized societies the impact of unemployment during the past two decades a four item battery administered in biannual eurobarometer surveys has been used to measure changing value priorities in western european countries we provide evidence that the measure is seriously flawed pooled crosssectional time series analyses for the 1976 86 period reveal that the euro barometer postmaterialist materialist value index and two of its components are very sensitive to short term changes in economic conditions and that the failure to include a statement about unemployment in the four item values battery accounts for much of the apparent growth of postmaterialist values in several countries after 1980 the aggregate level findings are buttressed by analyses of panel data from three countries

the interrelationships between television viewing values and perceived well being a global perspective do global marketing efforts for example those using television as a medium impact on the values and life satisfaction of people and if so is the process similar or different in various regions of the world we empirically examine the relationship between television viewing core values i e religiosity and materialism and perceived well being factors e g perceived socioeconomic status and relative life satisfaction data collected from the western developed nations e g united states and new zealand and several culturally homogeneous regions including new europe latin america the middle east and the far and southeast support the prevalence of diverse consumptionscapes with multiple global consumer cultures rather than a single global culture globalization and advances in technology have not created global norms and homogenized our identities but behavioral patterns and regional identities that are surprisingly durable specifically materialism was shown to influence perceived socioeconomic status both positively for two regions and negatively for two regions and relative life satisfaction except in new europe while perceived socioeconomic status had a positive influence on relative life satisfaction except in new europe and latin america the quantity of television viewing was positively shown to influence materialism directly in some cases as well as through perceived realism in others providing limited support for the cultivation theory effect finally religiosity was shown to play a countervailing role in negatively influencing materialism only in latin american and middle eastern countries and a positive influence on relative life satisfaction only in latin america the rationale behind the differences across regions was also explored the overall results can perhaps be best explained by postmodern epistemologies in which people worldwide are increasingly implicated and in which new traditions are constantly being invented

financial contagion and attention allocation this paper explains financial contagion between two stock markets with uncorrelated fundamentals by fluctuations in international investors attention allocation we model the process of attention allocation that underlies portfolio investment in international markets using investors who face information processing constraints investors optimally allocate more attention to a region hit by a financial crisis to the detriment of other markets the resulting endogenous increase in uncertainty causes a reduction in the capacity to bear risks by international investors that induces them to liquidate their positions in all risky assets hence there is a collapse in stock prices around the world we show that the degree of non anticipation of a crisis is crucial for the existence of contagion using data from the east asian crisis and the number of news stories about thailand in the financial times relative to news stories about argentina brazil and chile as a proxy for the relative attention allocated to the asian stock market we find evidence consistent with two key predictions of our model first the higher the volatility of the originator market the more relative attention allocated to this market and second the more relative attention allocated to the originator market the higher the volatility of the other markets our findings support the attention reallocation channel as a transmission mechanism of financial crises between regions during the period from january 1997 to july 1998

a framework to update hofstede s cultural value indices economic dynamics and institutional stability this study offers an update of the hofstede cultural value dimensions we argue that changes in economic conditions are the source of cultural dynamics while the endurance of institutional characteristics provides the foundation for cultural stability it is found that national wealth measured by gdp per capita has a curvilinear relationship with individualism long term orientation and power distance scores relatively speaking uncertainty avoidance and masculinity mainly reflect some rather stable institutional traditions such as language religion climate ethnic homogeneity and legal origin and are less likely to change over time

asymmetric price movements and borrowing constraints a rational expectations equilibrium model of crises contagion and confusion this study proposes a rational expectations equilibrium model of crises and contagion in an economy with information asymmetry and borrowing constraints consistent with empirical observations the model finds 1 crises can be caused by small shocks to fundamentals 2 market return distributions are asymmetric and 3 correlations among asset returns tend to increase during crashes the model also predicts 1 crises and contagion are likely to occur after small shocks in the intermediate price region 2 the skewness of asset price distributions increases with information asymmetry and borrowing constraints and 3 crises can spread through investor borrowing constraints

structural change and poverty in africa a decomposition anakysis for cote d ivoire abstract this paper provides evidence that economic destabilization and the absence of managed structural change in an economy can be more harmful to the welfare of the poor than the process of adjustment itself evidence comes from four consecutive years of household survey data from cote d ivoire spanning both a period of adjustment and destabilization these constitute a unique data base in africa to assess the impact of structural change on the poor the analytic methodology used is that of static and dynamic decomposition of poverty measures along policy relevant dimensions

consumption and environment some conceptual issues abstract consumption ranks with population and technology as a major driver of environmental change and yet researchers and policymakers have paid it scant attention when the topic is addressed its conceptual foundations are either taken as self evident or are conflated with production overall economic activity materialism maldistribution population or technology the risk is to adopt the latest buzzword in the environmental debate stretch the concept to encompass all conceivable concerns and forfeit any advantage for analysis or for behavior change that may accrue to a new perspective on environmental problems consumption must be distinguished conceptually from other approaches to environmental problems one approach is to work within the consumption production dichotomy examining not just purchasing but product use and non purchase decisions a second approach one that challenges the prevailing dichotomy and its propensity to relegate consumption to a black box is to treat all resource use as consuming that is using up and ask what risks are entailed consumption can then be seen as material provisioning where risks increase with increasing distance from the resource as background misconsumption or overconsumption depending on the social concern raised or as a chain of decisions that compel the behaviors of restraint and resistance among producers pursuing the consumption and environment topic engenders resistance among a wide range of actors for reasons that are personal analytic and policy related nevertheless the topic appears to have the potential of helping analysts and others transcend conventional approaches to excess throughput

watershed partnerships and the emergence of collective action institutions this paper examines the emergence of local cooperative institutions watershed partnerships that resolve collective action problems involved in the management of natural resources the political contracting approach to institutional supply suggests that watershed partnerships are more likely to emerge when potential benefits outweigh the transaction costs of developing and maintaining new institutions we analyze the impact of social political economic and ecological features of watersheds that affect benefits and transaction costs on the emergence of 958 watershed partnerships in the more than 2 100 watersheds in the united states our findings demonstrate that watershed partnerships are most likely to emerge in watersheds confronting severe pollution problems associated with agricultural and urban runoff with low levels of command and control enforcement and containing the resources to offset transaction costs

estimating the elderly s returns on the farm evidence from cote d ivoire abstract it is often said that the elderly in rural developing countries are more valued by the members of the society one possible economic reason for the relative status of the elderly in rural areas is that they are likely to have accumulated substantial farm specific capital thus increasing the productivity of the farm this paper examines whether the elderly contribute to the agricultural profits of households in rural cote d ivoire in an uncertain environment we estimate the returns to having elders on the farm using panel data and find that farm specific experience mitigates the fall in profits in adverse environmental conditions particularly at the lower end of the profit distribution thereby contributing to reduce the variance of profits the results hold even after controlling for the level of household assets and household fixed effects and the presence of experienced female members

correcting for sampling bias in the measurement of welfare and poverty in the cote d ivoire living standards survey the sampling aspects of a household data set are important to analysts the early years of the cote d ivoire standards survey cilss had a sampling bias which seriously affected estimates of population statistics such as household size the bias arose from sampling procedures that overrepresented larger dwellings assuming that samples drawn in later years were unbiased a correction procedure is applied that uses weights based on household size results from the weighted data are then compared with the unweighted findings to assess the seriousness of the bias estimates of household expenditure per capita in the early years of the survey are found to be significantly underestimated resulting in an overestimation of poverty the sampling bias also resulted in an underestimation of the upward trend in poverty during 1985 88 the cilss has been a popular and fruitful data set for policy analysis these findings however cast doubt on the robustness of earlier work thus the effort to trace sampling information is particularly worthwhile for policy oriented applied research

evolutionary psychology in ecological economics consilience consumption and contentment abstract this paper makes the case that if ecological economics seeks consilience with biology it must acquaint itself with evolutionary theories about social development and human behaviour the author reviews some of the literature in this area particular attention is paid to the newly emerging discipline of evolutionary psychology which sets out a neo darwinian view of human nature in which individual and social behaviour is dominated by the evolutionary strategies of the selfish gene the paper discusses the relevance of this perspective for two specific problem areas in ecological economics the first of these is the question of consumption and consumer behaviour the second is the problem of mismatch between the pursuit of economic growth and social well being or contentment these examples illustrate that evolutionary psychology may sometimes provide a natural ally for ecological economics in particular pointing up certain failures of conventional economics on the other hand it also offers harsh lessons concerning the difficulty of changing evolved behaviour patterns the paper suggests three possible avenues of response by ecological economists to the insights of evolutionary psychology

politics and society political diversity and uniformity in households as a theoretical puzzle the authors resolve a theoretical puzzle that characterizes the political preferences of members of social groups by a demonstrating that political homogeneity is a variable to be explained b

the lucky few amidst economic decline distributional change in cote d ivoire as seen through panel data sets 1985 88 this article is an exploratory exercise in using panel data sets to investigate distributional change in cote d ivoire during the second half of the 1980s the panels made it possible to highlight and quantify mobility of the same households across poverty classes over time we found that there were a lucky few who improved their standard of living amid general decline detailed investigations revealed that the lucky few were fairly numerous and the probability of escaping poverty was quite high even for the very poorest these lucky few were widespread regionally although in some socio economic groupings the poor had higher chances of escaping poverty

temporal risk and the nature of induced preferences abstract it has been known since the work of h markowitz portfolio selection efficient diversification of investments yale univ press 1959 and j mossin amer econ rev 59 1969 172 174 that even an individual whose underlying preferences satisfy the von neumann morgenstern axioms will not choose over delayed i e temporal risky prospects in a manner which can be modelled as expected utility maximizing since most economically important instances of risk taking insurance real investment agriculture career training involve delayed as opposed to immediately resolved risk the standard use of expected utility theory to model such decisions must be questioned in this paper the technique of generalized expected utility analysis m j machina econometrica 50 1982 277 323 and the theory of support functions r t rockafellar convex analysis princeton univ press 1970 are applied to exactly model and hence determine the nature of preferences over temporal risky prospects

recovering comparable poverty estimates in cote d ivoire recent studies on cote d ivoire show a four fold increase in poverty rates between 1985 and 2008 however multiple revisions in the survey design questions the validity of the ivorian poverty trend in this paper we follow two simple steps to recover the comparable poverty trend first we construct a common consumption basket over time second we follow a two stage method of moments framework tarozzi 2007 to re estimate poverty headcounts on average the adjusted trend shows a two percentage point difference in poverty rates from 1985 to 2008 a number of robustness checks provide robust support to this revised poverty trend

economic security and value change confirming inglehart s prediction 1971 of an intergenerational shift toward postmaterialist values a time series analysis controlling for the joint effects of inflation and unemployment demonstrates that there is a statistically significant trend toward postmaterialism in all eight west european countries for which data are available over the past two decades evidence from the 1981 83 and 1990 91 world values surveys indicates that this value shift occurs in any society that has experienced sufficient economic growth in recent decades so that the preadult experiences of younger birth cohorts were significantly more secure than those of older cohorts large intergenerational differences tend to be found in societies that have experienced rapid growth in gross national product per capita and are negligible in societies that have had little or no growth accordingly postmaterialism increased in 18 of the 20 societies on five continents for which we have comparable data over the past decade

on the measurement of poverty official statistics in the united states and the united kingdom show a rise in poverty between the 1970 s and the 1980 s but scepticism has been expressed with regard to these findings in particular the methods employed in the measurement of poverty have been the subject of criticism this paper re examines three basic issues in measuring poverty the choice of the poverty line the index of poverty and the relation between poverty and inequality one general theme running through the paper is that there is a diversity of judgments which enter the measurement of poverty and that it is necessary to recognize these explicitly in the procedures adopted there is likely to be disagreement about the choice of poverty line affecting both its level and its structure in this situation we may only be able to make comparisons and not to measure differences and the comparisons may lead only to a partial rather than a complete ordering the first section of the paper discusses the stochastic dominance conditions which allow such comparisons illustrating their application by reference to data for the united states the choice of poverty measure has been the subject of an extensive literature and a variety of measures have been proposed in the second section of the paper a different approach is suggested considering a class of measures satisfying certain general properties and seeking conditions under which all members of the class which includes many of those proposed give the same ranking those sceptical about measures of poverty often assert that poverty and inequality are being confounded the third section of the paper distinguishes four different viewpoints and relates them to theories of justice and views of social welfare

the effect of economic priorities on the measurement of value change new experimental evidence the euro barometer values battery has provided much of the empirical evidence for the thesis that a shift from materialist to postmaterialist values has occurred in advanced industrial societies over the past two decades it has been argued however that this widely used instrument is seriously flawed because of its sensitivity to current economic conditions we present data from experiments in canada and germany that tested the performance of the values battery in an era of joblessness analyses reveal that 1 substituting an unemployment statement for the standard inflation statement in the battery has major consequences for the classification of respondents as materialist or postmaterialist and 2 answers to the battery are conditioned by the interaction between its content and respondents economic issue concerns these findings support the argument that much of the shift from materialist to postmaterialist values recorded by the euro barometer since the early 1980s is a measurement artifact

a new class of tests of contagion with applications a new class of tests of contagion is proposed identifying transmission channels of financial market crises through changes in higher order moments of the distribution of returns such as coskewness applying the framework to test for contagion in real estate and equity markets following the hong kong crisis in 1997 1998 and the u s subprime crisis in 2007 shows that the coskewness based tests of contagion detect additional channels not identified by the correlation based tests implications of contagion in pricing exchange options where there is a change in higher order comoments of returns on the underlying assets are also investigated

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

information aggregation in a noisy rational expectations economy abstract this paper analyzes a general equilibrium model of a competitive security market in which traders possess independent pieces of information about the return of a risky asset each trader conditions his estimate of the return both on his own private source of information and price which in equilibrium serves as a noisy aggregator of the total information observed by all traders a closed form characterization of the rational expectations equilibrium is presented a counter example to the existence of fully revealing equilibrium is developed