nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

a cost function of greek non ferrous metal industry abstract a translog cost function in the form of a third order series taylor expansion was used for the estimation of cost in the greek non ferrous metal industry which is based on an annual time series for the period 1969 1990 concerning the price of production factors the production volume and the total cost of production the estimated cost function permit us to have average and marginal cost curves of typical form for each time point also it is useful for projecting costs and the optimum scale of production under conditions which concern 1 i the development of prices production and product factors and 2 ii demand

environmental regulation technological innovation and energy consumption a cross region analysis in china abstract china has encountered the environmental issues and energy pressures in the middle income stage strengthening environmental regulation is a crucial measure to prevent environment deterioration and energy dilemma this paper investigates the three types of environmental regulations on energy consumption using feasible generalized least squares method during 1997 2015 in direct and indirect path the main conclusions are as follows in the direct path the economical and supervised types of environmental regulations have inhibited energy consumption whilst legal environmental regulation has no significant impact as for indirect path the rebound effect of energy is greater than the energy conservation generated by technological innovation which is embodied as an inhibitory effect the effects of environmental regulation display regional difference the legal and supervised types of environmental regulations have significant cost effect and rebound effect on energy consumption in the entire samples on the contrary the economical environmental regulation shows the opposite sigh in eastern regions the counterfactual simulation results show that the net effects of environmental regulations on energy consumption are negative which is beneficial for relieving energy pressures based on the findings this paper provides pertinent policy implications

frameworks for analyzing the effects of risk and environmental regulations on productivity three separate effects of regulatory policies on enterprise decisions can be distinguished first increased regulatory penalties will diminish output and profits in static models or equivalently in multiperiod models in which investments are completely reversible as is well known second if investment commitments are irreversible there will be an additional effect of a known schedule of changes in the regulatory policy which will depress output even further finally the addition of uncertainty with regard to regulatory policy produces a third effect resulting in expected opportunity losses for firms both output and quality investments will be depressed by regulatory policy lotteries regulations influence current enterprise decisions not only through their current level but through their expected future level and the degree of uncertainty regarding these future regulatory policies 9 references 1 figure

the role of energy in productivity growth the objective of this paper is to analyze the role of energy in the growth of productivity the special significance of energy in economic growth was first established in the classic study energy and the american economy 1850 1975 by sam schurr and his associates 1960 at resources for the future for the period from 1920 to 1955 schurr noted that energy intensity of production had fallen while both labor and total factor productivity were rising the simultaneous decline in energy intensity and labor intensity of production ruled out the possibility of explaining the growth of productivity solely on the basis of substitution of less expensive energy for more expensive labor since the quantity of both energy and labor inputs required for a given level of output had been reduced technical change is also a critical explanatory factor an alternative explanation for growth of output with declining energy and labor intensity required an examination of the character of technical change this examination was motivated by the fact that from 1920 to 1955 the utilization of electricity had expanded by a factor of more than ten while consumption of all other forms of energy only doubled the two key features of technical change during this period were that the thermal efficiency of conversion of fuels into electricity increased by a factor of three and that the unusual characteristics of electricity had made it possible to perform tasks in altogether different ways than if the fuels had to be used directly schurr 1983 p 3 schurr 1982 has recently extended the analysis of energy and the american economy through 1981 for the period through 1969 his conclusions are as follows although the inverse relationship between total factor productivity and energy intensity virtually disappeared during the 1953 1969 period it is still noteworthy that high rates of improvement in total factor productivity were essentially not associated with increases in energy intensity 1982 p 6 schurr 1982 has analyzed the experience of the u s economy in the aftermath of the oil embargo of 1973 he points out that energy intensity of production has fallen steadily since 1973 and that the rate of decline accelerated sharply after the second oil price shock in 1979 following the iranian revolution he goes on to point out that

plant vintage technology and environmental regulation abstract we use data on productivity and pollution abatement costs at individual pulp and paper mills to test whether the impact of environmental regulation on productivity differs by plant vintage and technology plants with higher pollution abatement costs have significantly lower productivity levels this relationship differs greatly based on a plant s technology with productivity at integrated mills being greatly affected by abatement costs while the impact at non integrated mills is negligible plant vintage does not seem to matter with older and newer plants showing similar impacts reported abatement costs appear to substantially understate the true costs of abatement accounting for the impact of technology differences makes some difference in the estimated overall impact of environmental regulation

effects of local and civil environmental regulation on green total factor productivity in china a spatial durbin econometric analysis this paper employs metafrontier malmquist luenberger index and a spatial durbin model to investigate the influence of both local and civil environmental regulation and its spatial spillover effect on green total factor productivity in 273 cities of china in 2003 2013 according to city political attribute and regional differences this article divides the sample city into six categories the results show that effect of local environmental regulation on green total factor productivity is significantly positive in high political attribute cities a1 and a2 zone but negative effects in lower political attribute cities b2 and b3 zone moreover the race to the top results in significantly positive spatial spillover effects from local environmental regulation on green total factor productivity in high political attribute cities a1 and a2 zone while the race to the bottom causes significantly negative spatial spillover effects in lower political attribute cities b2 and b3 zone as for civil environmental regulation it has positive direct and indirect effects in promoting green total factor productivity we further find that environmental regulation inhibits the original technological innovation of enterprises which suggests that government should reduce market intervention improve enterprise flexibility of market change and promote enterprises to carry out the original technological innovation thus the government and citizen should make targeted pollution reduction policies for the green total factor productivity increase

oligarchy democracy inequality and growth abstract this paper analyses the dynamics of inequality democratization and economic development in a political economy model of growth where education is both the engine of growth and a determinant of political participation in a context with imperfect capital markets we investigate the incentives for an educated oligarchy to subsidize the poor s education and to initiate a democratic transition we characterize the equilibrium patterns of political institutions income distribution and growth as a function of the initial income and inequalities in particular we identify circumstances under which the elite promotes the endogenous emergence of a middle class for purely political economy reasons a simple linear infinite horizon framework is then presented in this setting we discuss the importance of historical dependence for long run social stratification and redistribution

the effect of clean water regulation on profitability testing the porter hypothesis previous theoretical research provides opposing arguments regarding the effect of environmental regulation on profitability this study provides empirical evidence on this debated effect by testing the strong version of the porter hypothesis we employ panel data analysis to examine the effect of water regulation as measured by permitted wastewater discharge limits on the profitability of publicly held firms operating within the chemical manufacturing industries we find that tighter water regulation meaningfully lowers profitability by reinterpreting profitability in terms of sales and costs the results demonstrate that tighter water regulation increases costs conditioned on a given level of sales

measuring global and country specific uncertainty abstract motivated by the literature on the capital asset pricing model we decompose the uncertainty of a typical forecaster into common and idiosyncratic uncertainty using individual survey data from the consensus forecasts over the period of 1989 2014 we develop monthly measures of macroeconomic uncertainty covering 45 countries and construct a measure of global uncertainty as the weighted average of country specific uncertainties our measure captures perceived uncertainty of market participants and derives from two components that are shown to exhibit strikingly different behavior common uncertainty shocks produce the large and persistent negative response in real economic activity whereas the contributions of idiosyncratic uncertainty shocks are negligible

the economic costs of environmental regulation in u s dairy farming a directional distance function approach analyses of the costs of regulating greenhouse gas emissions from dairy production which could be used to assess the effectiveness of alternative policy measures is a missing link in the literature this article addresses this gap by establishing the economic impact associated with a hypothetical greenhouse gas environmental regulatory regime across major dairy producing counties in the united states in doing so the article makes three important contributions to the literature first it develops a comprehensive pollution index based on environmental protection agency methodologies which contrasts with previous studies that rely on partial measures based only on surplus nitrogen stemming from the over application of fertilizer second the article uses a directional output distance function an approach that has not been employed previously to evaluate polluting technologies in the u s dairy sector third the article incorporates a four way error approach that accounts for unobserved county heterogeneity time invariant persistent technical efficiency time varying transient technical efficiency and a random error the results indicate that regulating greenhouse gas emissions from dairy farming would induce a 5 percentage point increase in average technical efficiency in addition the economic costs of implementing this hypothetical regulatory framework exhibit significant spatial variation across counties in the united states

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

a theory of political transitions we develop a theory of political transitions inspired by the experiences of western europe and latin america nondemocratic societies are controlled by a rich elite the initially disenfranchised poor can contest power by threatening revolution especially when the opportunity cost is low for example during recessions the threat of revolution may force the elite to democratize democracy may not consolidate because it is redistributive and so gives the elite an incentive to mount a coup highly unequal societies are less likely to consolidate democracy and may end up oscillating between regimes and suffer substantial fiscal volatility

political selection and persistence of bad governments we study dynamic selection of governments under different political institutions with a special focus on institutional flexibility a government consists of a subset of the individuals in the society the competence level of the government in office determines collective utilities e g by determining the amount and quality of public goods and each individual derives additional utility from being part of the government e g rents from holding office we characterize the dynamic evolution of governments and determine the structure of stable governments which arise and persist in equilibrium in our model perfect democracy where current members of the government do not have veto power over changes in governments always leads to the emergence of the most competent government however any deviation from perfect democracy to any regime with incumbency veto power destroys this result there is always at least one other less competent government that is also stable and can persist forever and even the least competent government can persist forever in office we also show that there is a nonmonotonic relationship between the degree of incumbency veto power and the quality of government in contrast in the presence of stochastic shocks or changes in the environment a regime with less incumbency veto power has greater flexibility and greater probability that high competence governments will come to power this result suggests that a particular advantage of democratic regimes with a limited number of veto players may be their greater adaptability to changes rather than their performance under given conditions finally we show that royalty like dictatorships may be more successful than junta like dictatorships because in these regimes veto players are less afraid of change

public regulations and the slowdown in productivity growth a time series regression model of the us manufacturing sector is developed to estimate the direct and indirect relationships of public regulations and productivity for the 1973 to 1977 period preliminary results show that 12 to 21 of the productivity slowdown is blamed on regulation other contributing factors are a reduced non labor to labor input 15 average cyclical impact 0 to 15 and a combination of changes in labor composition expenses for research and development and shifts in sectoral output the study focuses on measured productivity and the results have little implication to true productivity growth 14 references 24 tables dck

the sources of labor productivity variation in u s manufacturing 1947 80 the determinants of measured labor productivity hereafter simply productivity have been the subject of many recent papers denison s survey 1979b for example cites dozens of relevant studies despite the volume of research however there remain broad areas of disagreement about the sources of productivity change one reason for the disagreements has been the tendency of researchers to concentrate on the identification and explanation of long run productivity trends as opposed to shorter run changes this emphasis on long run trends is a natural response to policy concerns about possible secular declines in productivity and growth unfortunately trends and trend breaks are notoriously difficult to identify with any confidence furthermore when the interval of observation is say a decade instead of a year or a quarter there are fewer effective data points to use in discriminating between competing explanations thus many empirical questions of importance have remained unresolved a second source of disagreement is that very little of the recent research is based on completely specified structural models of productivity change for example the popular method of growth accounting is usually either totally non structural or derived from production function considerations alone although they may be descriptively useful methods which exclude elements such as factor supply and the demand for final output have limited capacity to distinguish between different hypotheses about the causes of changes in productivity 2 the present paper takes a different and rather experimental approach to studying the determinants of productivity first it puts aside for the time being the attempt to explain long run trends in productivity concentrating instead on the other half of productivity change that is on the variations in productivity levels around the long run trend these shorter term specifically annual changes are interesting economic phenomena worth studying for themselves moreover understanding these variations would seem to be a useful preliminary step toward an eventual explanation of long term trends a second feature of our research is that it is based on a complete although very simple model of productivity variation as suggested above this should be a more useful approach if one wants to examine causal relationships or to make policy recommendations use of a complete model also permits relevant information to be extracted from auxiliary variables such as wages and prices a barrier to structural analysis of productivity change is that many of the key exogenous variables which affect productivity e g technological progress the determinants of product demand or labor supply the costs of non labor inputs may be quite difficult to measure 3 a contribution of this paper is the application to this problem of an econometric approach which allows exogenous factors to be treated as unobservables but which still permits the identification of structural parameters the basic idea is to use the structural relationship of observed endogenous variables to the unobserved exogenous variables as a means of placing restrictions on the variance covariance matrix of the observed variables a maximum likelireceived for publication july 21 1981 revision accepted for publication august 16 1982 stanford university the author would like to thank r e hall and anonymous referees for helpful comments research support was provided by the national science foundation growth accounting was introduced by denison 1974 but is used by others e g kendrick 1979 and norsworthyharper kunze 1979 many other productivity studies bear conceptual similarities to growth accounting see for example jorgenson griliches 1967 or nadiri 1980 2 methods based on incomplete models are also of limited use in the making of policy see baily 1981 for an example of the dangers of drawing policy conclusions from simple correlations of productivity and capital growth 3this in itself has been a major factor behind the lack of consensus on productivity

effects of pollution control on industry productivity a factor demand approach four major manufacturing industries are examined the abatement effect on capital and labor productivity are determined from parameters of a system of factor demand equations which allow for disequilibrium in factor markets the system is estimated for each industry with annual time series data from 1960 to 1980 abatement requirements were found to retard both average capital productivity and average labor productivity in three of the four industries paper chemicals and primary metals for several industries in which factor productivity was slower after 1973 environmental controls accounted for a significant proportion of that slow down

price changes supply elasticities industry organization and dairy output distribution long run price elasticities of milk supply are decomposed into price elasticities of yield herd size and farm population for northeastern u s dairy farms these elasticities are shown to vary with farm size because of size related differences in capital intensity specialization yield and herd size variability and rates of entry exit into dairy in the short run price responsiveness is shown to decrease with farm size in the long run large farms are shown to be most price responsive results suggest that lower milk prices could make revenue distribution less equal in both the short and long run by altering output and population distributions

political losers as a barrier to economic development per capita income in many sub saharan african countries such as chad and niger is less than 1 30th of that of the united states most economists and social scientists suspect that this is in part due to institutional failures that stop these societies from adopting the best technologies a particularly interesting historical example comes from the diffusion of railways in the 19th century while railways are regarded as a key technology driving the industrial revolution there were large lags in their diffusion for example in 1850 the united states had 14 518 km of track britain 9 797 km and germany 5 856 km in the russian and hapsburg empires there were just 501 km and 1 357 kim respectively all data from brian r mitchell 1993 why do societies as in this example fail to adopt the best available technologies one answer is that existing powerful interest groups block the introduction of new technologies in order to protect their economic rents and societies are able to make technological advances only if they can defeat such groups economic monopolies may be one example a monopolist might wish to block the introduction of a new technology by a rival that will capture the market this idea which we call the economic losers hypothesis was discussed by simon kuznets 1968 developed at length by joel mokyr 1990 in the context of technology adoption and formalized by per krusell and jose victor rios rull 1996 and stephen l parente and edward c prescott 1997 related ideas are widely discussed in the literature on international trade policy with many formal models e g gene m grossman and elhanan helpman 1994 there are problems with this story however first despite the intuitive appeal of the idea there are relatively few instances where major economic change was blocked by economic losers mokyr 1990 emphasizes the attempts of many skilled artisans to block the introduction of new machines the most famous example is the luddites skilled weavers who were thrown out of work by mechanization interestingly however many of these groups including the luddites were ultimately unable to block economic progress equally important the economic losers hypothesis relies on the presumption that certain groups have the political power to block innovation but if so why not use this power to simply tax the gains generated by the introduction of the new technology this might be because there are limits on the nature of fiscal instruments though it seems plausible that groups with sufficient political power to block innovation would be able subsequently to lobby effectively for redistribution a more important reason however may be that the introduction of new technology and economic change more generally may simultaneously affect the distribution of political power we argue that the effect of economic change on political power is a key factor in determining whether technological advances and beneficial economic changes will be blocked in other words we propose a political loser hypothesis we argue that it is groups whose political power not economic rents is eroded who will block technological advances if agents are economic losers but have no political power they cannot impede technological progress if they have and maintain political power i e are not political losers then they have no incentive to block progress it is therefore agents who have t discussant gene grossman princeton university

environmental regulations and productivity growth the case of fossil fueled electric power generation this paper measures and analyzes the effect of sulfur dioxide emission restrictions on the rate of productivity growth in the electric power industry over the 1973 79 business cycle a firm specific measure of regulatory intensity is developed which depends on the severity of the emission standard the extent of enforcement and the unconstrained emission rate relevant to each utility the results indicate that emission regulations result in significantly higher generating costs primarily from the increased use of low sulfur fuels the average rate of productivity growth was reduced by 0 59 percentage points per year for constrained utilities

natural versus manufactured capital win lose or win win a case study of the finnish pulp and paper industry abstract the effect of investments on environmental variables has been discussed through the win win rhetoric specifically in micro level analysis on the macro level the win win rhetoric has been replaced by the arguments for and against the substitutability of natural and manufactured capital here these two concepts belonging to different levels of analysis are linked by looking at the environmental and economic effects of chosen investment strategies in a traditionally capital intensive industry over time the paper shows that rather than generalise the existence of win win situations or the substitutability of capital these positions are determined by purely situational factors as a result in the assessment of substitutability the specific operating context of the industry needs to be taken into account this implies also that environmental policy needs to be designed to be adaptive and responsive to those situational factors to create beneficial outcomes for the economy and for the environment

technological change and welfare in an open economy with distortions traditional measures of technological change such as the rate of technical change are based on producer oriented prices consumer oriented welfare measures such as the hicksian variations are more appropriate measures of the ultimate benefits of technology but they require knowledge of consumer valuations of outputs and inputs and the price impacts of the technological change the general equilibrium analysis here evaluates these price impacts and shows how the welfare gain from technological change can be decomposed into the rate of technical change plus an induced price change effect plus the effect of any ad valorem price distortions that exist in the economy the graphic interpretation of these welfare effects suggests alternatives to the usual partial equilibrium social surplus measures of the gains from technological change

the impact of pollution abatement investment on productivity change anempirical comparison of the u s germany and canada since environmental quality became an important focus of government regulations in most industrialized countries in the early 1970s many researchers have assessed the impact of these regulations on economic performance for example leontief and ford 11 and pasurka 15 investigated the impact that environmental protection costs had on prices in the u s walter 24 calculated the effect of pollution abatement expenditures on u s trade and robinson 19 measured the distributional impact of the burden of industrial pollution abatement a related issue involves the productivity consequences of environmental regulations in this paper we address this issue by considering the impact of pollution abatement investment on productivity growth

has new business creation in russia come to a halt abstract successful transformation of centrally planned economies requires not just the privatization of the existing firms but also the formation of new ones new entrants serve to correct for the central planners neglect of such sectors as services and consumer goods and their bias in favor of large firms indeed central european economies have been experiencing a rapid rate of new business creation as measured by the change in the number of small firms russia also experienced a short period of explosive growth in the number of new business however since 1994 net new business formation has stagnated this paper looks into the possible causes of this phenomenon official data on the change in the number of small businesses which serve as a proxy for net new business formation arouse justified suspicion because of the frequent changes in the definition of small enterprise like everywhere in the world some russian registered firms do not become operational and some firms that have ceased operations do not legally disband if the share of these dead souls in the total count of small firms changes over time and official statistics does not adjust its count accordingly the data may show the opposite of the actual processes this paper analyzes russian data collection procedures and other evidence and concludes that stagnation in the new business formation is a real phenomenon rather than a statistical artifact the difficulty in finding out the causes of stagnation is that empirical studies focus on the existing businesses and miss those that should have been born but were not the problems faced by the incumbents and frustrated entrants may well be different the likely causes of the end of new business creation are the increased tax and regulatory burden combined with plunder by the numerous tax and regulatory authorities other possible explanations involve the incumbents use of the authorities and or racketeers to erect barriers against new entrants

how environmental regulations affect innovation in the australian oil and gas industry going beyond the porter hypothesis the impact of environmental regulation on innovation is of central interest to many industries and policy makers alike while traditional research adopts a top down view of regulation and attempts to measure the innovation response the more bottom up view of contemporary theory argues that firms produce innovations that exceed compliance levels as a competitive strategy we approach this dichotomy by investigating innovation introduced by australian oil and gas firms in light of environmental regulatory compliance burden and firm level characteristics including competitive capabilities analyses of survey responses executive level interviews and conference proceedings reveal both regulatory top down and competitive advantage bottom up perspectives explain innovation in this industry regression analyses reveal that product service and novel innovations all types are related to a high compliance burden competitive skills research and development activity and engagement in formal collaborations interview and conference data add nuance to our findings revealing collaborative compliance frameworks result in similar innovation outcomes

the interactive effects of human capital and quality of life on economic growth abstractto bridge the gap in the quality of life qol and economic growth literature and understand the reinforcing effects of qol and human capital on economic development we examine the interactive effects of these two factors on wage growth from 2000 to 2007 at the county level across the united states first a rosen roback model is employed to estimate implicit values of amenities including climate clean air and other natural attributes which are used to generate qol indices second qol human capital represented by the share of college graduates and their interaction serve as key variables in the wage growth model an instrumental variable approach and location fixed effects are used to address endogeneity of human capital and control for location specific unobservable characteristics results suggest that human capital and qol significantly contribute to economic growth and the growth effects are even larger in nonmetropolitan counties importantly we find that the effect of human capital on

the contribution of environmental regulations to the slowdown in productivity growth abstract the radical slowdown in productivity growth since 1965 is often attributed to environmental regulations several studies varying widely in method have attempted to assess this contribution here these analyses are reviewed and critiqued and a summary appraisal of the likely contribution of environmental regulations to the observed decrease in productivity growth is offered

inefficiency in legislative policymaking a dynamic analysis this paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining the policy space incorporates both productive and distributive public spending and distortionary taxation the productive spending is investing in a public good that benefits all citizens e g national defense and the distributive spending is district specific transfers e g pork barrel spending investment in the public good creates a dynamic linkage across policymaking periods the analysis explores the dynamics of legislative policy choices focusing on the efficiency of the steady state level of

productivity in u s food processing and distribution most productivity studies in agriculture have focused on the relation between farm inputs and farm output of equal importance however is productivity in the food processing and distribution sector farm output is an input into this process similar to other inputs such as labor transportation and packaging technical change or increases in the levels of other inputs will in general increase the marginal product of farm output freebairn davis edwards for example a new beef cutting machine will raise the marginal value product of beef and hence increase the demand for slaughter beef by processors for this and other reasons the efficiency of the marketing sector has long been of interest french the purpose of this paper is to define and measure productivity at the processing and distribution level by comparing theil tdrnqvist tat indexes of inputs and outputs the use of tat indexes is consistent with the assumption of reasonably general underlying production relations and follows the recommendations of the recent

choosing how to choose self stable majority rules and constitutions constitutional arrangements affect the decisions made by a society we study how this effect leads to preferences of citizens over constitutions and ultimately how this has a feedback that determines which constitutions can survive in a given society constitutions are stylized here to consist of a voting rule for ordinary business and possibly a different voting rule for making changes to the constitution we define an equilibrium notion for constitutions called self stability whereby under the rules of a self stable constitution the society would not vote to change the constitution we argue that only self stable constitutions will endure we prove that self stable constitutions always exist but that most constitutions even very prominent ones may not be self stable for some societies we show that constitutions where the voting rule used to amend the constitution is the same as the voting rule used for ordinary business are dangerously simplistic and there are many societies for which no such constitution is self stable we conclude with a characterization of the set of self stable constitutions that use majority rule for ordinary business

new estimates of quality of life in urban areas implicit markets capture compensation for intraurban and interregional differe nces in amenities and yield differences in housing prices and wages these pecuniary differences become preference based weights in a qual ity of life index hedonic equations are estimated using microdata fr om the 1980 census and assembled county based amenity data on climati c environmental and urban conditions ranking of 253 urban counties reveals substantial variation within as well as among the 185 urba n areas the quality of life differences across counties within one s msa is almost one half of the difference between the top and bottom ranked counties in the nation copyright 1988 by american economic association

persistence of power elites and institutions we construct a model to study the implications of changes in political insti tutions for economic institutions a change in political institutions alters the distribution of de jure political power but creates incentives for investments in de facto political power to partially or even fully offset change in de jure power the model can imply a pattern of captured democracy whereby a democratic regime may survive but choose economic institutions favoring an elite the model provides conditions under which economic or policy outcomes will be invariant to changes in political institutions and economic institutions them selves will persist over time jel d02 d72 the domination of an organized minority over the unor ganized majority is inevitable the power of any minority is irresistible as against each single individual in the majority who stands alone before the totality of the organized minor ity at the same time the minority is organized for the very reason that it is a minority

regulatory policy oecd experience and evidence in the past 20 years a key topic of public sector reform in oecd countries has been the emergence of regulatory policy during this period the nature of regulation has undergone profound and rapid change this paper reviews the development of regulatory policy in oecd countries over the last quarter century it identifies a range of tools and institutions that have been used by oecd countries to develop high quality regulation the analysis attempts to show that while there is considerable commonality on broad objectives of regulatory policy considerably diversity remains in the implementation of regulatory policy across oecd countries copyright 2006 oxford university press

comparative politics and public finance we propose a model with micropolitical foundations to contrast different political regimes compared to a parliamentary regime the institutions of a presidential congressional regime produce fewer incentives for legislative cohesion but more separation of powers these differences are reflected in the size and composition of government spending a parliamentary regime has redistribution toward a majority less underprovision of public goods and more rents to politicians a presidential congressional regime has redistribution toward powerful minorities more underprovision of public goods but less rents to politicians the size of government is smaller under a presidential regime this last prediction is consistent with cross country data

history lessons institutions factor endowments and paths of development in the new world the explanations offered for the contrasting records of long run growth and development among the societies of north and south america most often focus on institutions the traditional explanations for the sources of these differences in institutions typically highlight the significance of national heritage or religion we in contrast argue that a hemispheric perspective across the wide range of colonies established in the new world by the europeans suggests that although there were many influences factor endowments or initial conditions had profound and enduring effects on the long run paths of institutional and economic development followed by the respective economies

a dynamic theory of public spending taxation and debt this paper presents a dynamic political economy theory of public spending taxation and debt policy choices are made by a legislature consisting of representatives elected by geographically defined districts the legislature can raise revenues via a distortionary income tax and by borrowing these revenues can be used tofinance a national public good and district specific transfers interpreted as pork barrel spending the value of the public good is stochastic reflecting shocks such as wars or natural disasters in equilibrium policy making cycles between two distinct regimes business as usual in which legislators bargain over the allocation of pork and responsible policy making in which policies maximize the collective good transitions between the two regimes are brought about by shocks in the value of the public good in the long run equilibrium tax rates are too high and too volatile public good provision is too low and debt levels are too high in some environments a balanced budget requirement can improve citizen welfare

productivity growth and pollution in state manufacturing the directional output distance function chambers chung fare 1996 is used to construct a malmquist luenberger index of total factor productivity growth for manufacturing when both good and bad outputs are jointly produced the index is constructed using information on good and bad output quantities and input quantities circumventing the problem of recovering shadow price information for the bad output needed for the fisher or tornqvist type of productivity indices accounting for toxic releases in manufacturing productivity growth averages 1 4 an nually during 1988 1994 the findings also suggest that the failure to account for toxic releases in manufacturing results in a significant under statement of total factor productivity growth

do juntas lead to personal rule january 2009although almost half of the world s population lives under nondemocratic regimes thequestions of how policy decisions are made and how power changes hands in nondemocra cies have received relatively little attention in the political economy literature a popularview forcefully articulated by gordon tullock 1987 is that because there are no stronginstitutions ensuring consensus and regulating the election and succession of leaders non democratic regimes rapidly degenerate into personal rule where a single dictator dominatesevery aspect of decision making tullock writes empirically the junta characteristicallyshrinks to one man p 144 and continues to explain this as the result of dynamic in teractions among the members of the junta he suggests that there will typically be anaccumulation of power by one of the junta members if this upstart member succeeds hebecomes the sole ruler if he fails he is eliminated by the other members of the junta this process continues until one member is standing tullock thus concludes it can beseen that this process would tend over time to lead the junta into becoming just one manthrough the gradual exclusion of individuals who had failed in plotting or the success of anindividual who had not p 145 tullock s account like that of many others implicitly recognizes that politics in non democratic and weakly institutionalized societies should be conceptualized as one of thedynamic coalition formations there are no rules that ensure orderly transitions of powerand no checks against some members of the ruling coalition eliminating or sidelining others however formal models of dynamic coalition formation in nondemocratic societies have notbeen developed until recently in this paper we draw on our work on dynamic coalition formation daron acemoglu georgy egorov and konstantin sonin 2008a and investigate tullock s conjecture formally 1

quality of life and spatial dimensions of the productivity slowdown this research is concerned with explaning locational variations in the productivity slowdown within the urban manufacturing sector of the united states the observed decline in labour productivity growth rates between the 1963 73 and 1973 82 subperiods is explained on the basis of both national and location specific factors an explict hypothesis examined here is that quality of life is an important area specifc influence on productivity growth and related trends statistical analyses are conducted whereby either an aggregate amenity index or its individual amenity components are utilized to examine the importance of quality of life differentials the results suggest that these amenities particularly environmental quality may be instrumental in explanining the differncial magnitude of the productivity slowdown across urban areas additional findings generally do not confirm the importance of other factors frequently cited as contributing to inter area productivity differences a regression diagnostic an

the monopoly of violence evidence from colombia many states in latin america africa and asia lack the monopoly of violence even though this was identified by max weber as the foundation of the state and thus the capacity to govern effectively in this paper we develop a new perspective on the establishment of the monopoly of violence we build a model to explain the incentive of central states to eliminate nonstate armed actors paramilitaries in a democracy the model is premised on the idea that paramilitaries may choose to and can influence elections since paramilitaries have preferences over policies this reduces the incentives of the politicians they favor to eliminate them we then investigate these ideas using data from colombia between 1991 and 2006 we first present regression and case study evidence supporting our postulate that paramilitary groups can have significant effects on elections for the legislature and the executive next we show that the evidence is also broadly consistent with the implication of the model that paramilitaries tend to persist to the extent that they deliver votes to candidates for the executive whose preferences are close to theirs and that this effect is larger in areas where the presidential candidate would have otherwise not done as well finally we use roll call votes to illustrate a possible quid pro quo between the executive and paramilitaries in colombia language en

environmental regulation cost and industry structure changes nonstationary markov analyses are used to investigate impacts of environmental regulatory costs associated with compliance on changes in market structure in pulp and paper industries results show environmental regulation expenditures have statistically significant effects on the probabilities of capacity moving to a larger company size category so industry structure is affected by environmental regulation however counter to expectations results further show consolidation occurs with higher probability when environmental costs are falling rather than when they are rising policy analyses that presume immediate policy responses to cost changes or that industry structure is unchanged may yield time inconsistent policy conclusions

the cost of regulation osha epa and the productivity slowdown the slowdown in productivity growth in the u s economy during the 1970 s has been a matter of great concern to policymakers associated as it is with inflation unemployment and declining real wage growth this paper examines the impact on productivity growth of government regulation specifically worker health and safety regulation by the occupational safety and health administration osha and environmental regulation by the environmental protection agency epa looking at data for 450 manufacturing industries between 1958 and 1978 the study finds a large negative relationship between such regulation and productivity growth using these results about 30 percent of the decline in productivity growth in manufacturing during the 1970 s may be attributed to such regulation several previous studies have looked at the contribution of regulation to the productivity slowdown many of these have inferred that the contribution must be small on the basis of the relatively small amount spent on complying with such regulations edward denison 1979 estimates that only about 16 percent of the productivity slowdown in the 1972 75 period was due to regulation 35 percentage points out of a slowdown of 2 17 percentage points paul portney 1981 notes that little of gnp is spent on pollution control under 2 percent concluding that therefore pollution regulations could have little effect on productivity growth norsworthy et al 1979 also find a small impact of pollution abatement capital expenditures on productivity growth studies based on econometric estimation of the regulation productivity relationship have found a wide range of results gregory christainsen and robert haveman 1981 find regulation reduced labor productivity growth by 27 percentage points using time series data and measures of total federal regulation robert crandall 1981 finds a strong relationship between pollution abatement capital and productivity growth but this relationship disappears when a measure of energy intensity is included robin siegel 1979 observes a significant contribution 5 percentage points from pollution control expenditures to the productivity slowdown for 1965 73 but not for later years finally frank gollop and mark roberts 1983 examine data for a set of electric utilities and find that regulation of emissions had a large impact on total factor productivity growth lowering it for regulated firms by 59 percentage points many other factors might help to explain the productivity slowdown including the rise in energy prices the long and severe recession and declines in research and development expenditures there have been a variety of studies examining the contributions of each factor to the slowdown they generally conclude that many factors contributed to the slowdown but that a sizable fraction of the slowdown remains unexplained by the estimated contributions of all the factors considered

barriers to investment in polarized societies i present a tractable dynamic model of political economy where disagreements about the composition of public spending result in implementation of short sighted policies the relative price of investment to consumption is excessively large in equilibrium due to over taxation investment rates are too low which slows down growth along the transition in the long run this results in output consumption and welfare being inefficiently low the larger is the degree of polarization the greater is the inefficiency political stability mitigates the effects of polarization by making the incumbent internalize the dynamic inefficiencies introduced by the choice of growth retarding policies

fluctuations in uncertainty this review article tries to answer four questions i what are the stylized facts about uncertainty over time ii why does uncertainty vary iii do fluctuations in uncertainty matter and iv did higher uncertainty worsen the great recession of 2007 2009 on the first question both macro and micro uncertainty appears to rise sharply in recessions on the second question the types of exogenous shocks like wars financial panics and oil price jumps that cause recessions appear to directly increase uncertainty and uncertainty also appears to endogenously rise further during recessions on the third question the evidence suggests uncertainty is damaging for short run investment and hiring but there is some evidence it may stimulate longer run innovation finally in terms of the great recession the large jump in uncertainty in 2008 potentially accounted for about one third of the drop in gdp

raw materials profits and the productivity slowdown a factor price frontier framework is used to clarify the analogy of an increase decrease in raw material prices with autonomous technological regress progress factor price profiles are estimated for the manufacturing sector of the united states the united kingdom germany and japan the production model in conjunction with estimates obtained from the factor price frontier attributes much of the slowdown in manufacturing productivity to the rise in relative raw material prices part of the apparent productivity riddle may have to do with the use of double deflated national accounting measures of value added which have an inherent measurement bias

why did the west extend the franchise democracy inequality and growth in historical perspective during the nineteenth century most western societies extended voting rights a decision that led to unprecedented redistributive programs we argue that these political reforms can be viewed as strategic decisions by the political elite to prevent widespread social unrest and revolution political transition rather than redistribution under existing political institutions occurs because current transfers do not ensure future transfers while the extension of the franchise changes future political equilibria and acts as a commitment to redistribution our theory also offers a novel explanation for the kuznets curve in many western economies during this period with the fall in inequality following redistribution due to democratization i introduction the nineteenth century was a period of fundamental political reform and unprecedented changes in taxation and redistribution britain for example was transformed from an oligarchy run by an elite to a democracy the franchise was extended in 1832 and then again in 1867 and 1884 transferring voting rights to portions of the society with no previous political representation the decades after the political reforms witnessed radical social reforms increased taxation and the extension of education to the masses moreover as noted by kuznets inequality which was previously increasing started to decline during this period the gini coefficient for income inequality in england and wales had risen from 0 400 in 1823 to 0 627 in 1871 but fell to 0 443 in 1901 two key factors in the reduction in inequality were the increase in the proportion of skilled workers williamson 1985 and the redistribution of income toward the poorer segments of the society for example taxes rose from 8 12 percent of national product in 1867 to 18 8 percent by 1927 and the progressivity of the tax system increased substantially see lindert 1989

do environmental regulations hamper productivity growth how accounting for improvements of plants environmental performance can change the conclusion abstract many economists maintain that environmental regulations hamper productivity growth a view supported by several empirical studies on industry or state level data however there is little research of the relationship between the stringency of environmental regulation and productivity growth at the plant level and the results of the few existing studies are ambiguous moreover the measures of productivity growth applied in previous studies do not credit plants for emission reductions and this may result in understatement of productivity growth we perform regression analyses of productivity growth on regulatory stringency using plant level data to credit a plant for emission reductions we include emissions as inputs when calculating an environmental malmquist productivity index emi and do not include emissions when calculation the traditional malmquist productivity index mi the regression analyses show that the overall effect of the regulatory stringency faced by plants on plants productivity growth is statistically insignificant when mi is applied to measure productivity growth however when we apply emi the effect is positive and statistically significant this indicates that not accounting for emission reductions when measuring productivity growth can result in too pessimistic conclusions regarding the effect of regulatory stringency on productivity growth

institutions and growth in limited access societies we build a dynamic political economy model with a two class society workers and the elite in which the elite formation the innovation rate and fiscal policy are endogenous the model generates a mapping between institutions and patterns of growth consistent with empirical evidence ex ante when facing constraints in choosing institutions the elite may delegate policy control to some of its members even though such delegation exacerbates the conflict within the elite and causes policy failures committing to such institutional arrangements prevents more harmful outcomes such as rapid entry and subsequent deterioration of the elite s economic and political power

the impact of pollution charges on productivity growth in canadian brewing this article presents an econometric analysis of the productivity impact of pollution charges on firms in the canadian brewing industry we estimate a translog cost function that allows for differences between regulated and unregulated plants productivity is measured by the standard residual method the empirical work which is based on plant level data from a single industry suggests that pollution charges have a negative impact on productivity growth this however is not necessarily undesirable since accompanying these costs are definite benefits in terms of a cleaner environment

credit intermediation and the transmission of macro financial uncertainty international evidence abstract this paper introduces a novel measure of global macro financial uncertainty and examines the state dependent transmission of uncertainty to economic activity we show that global uncertainty shocks have adverse and nonlinear macroeconomic effects with the nonlinearity being driven by different levels of country specific banking sector distress both macroeconomic and financial market uncertainty are associated with lower economic activity with the latter exerting stronger effects the state dependency of the effect is prevalent in both cases our findings have important policy implications highlighting both the state of the banking sector as well as the origin of uncertainty as crucial factors in the transmission of uncertainty

optimal portfolios in good times and bad recent experience with emerging market investments and hedge funds has highlighted the fact that risk parameters are unstable to address this problem we introduce a procedure for identifying multivariate outliers and use the outliers to estimate a new covariance matrix we suggest that a covariance matrix estimated from outliers characterizes a portfolio s riskiness during market turbulence better than a full sample covariance matrix we also introduce a procedure for blending an inside sample covariance matrix with one from an outlier sample this procedure enables one to express views about the likelihood of each risk regime and to differentiate one s aversion to them our framework collapses to the markowitz mean variance model if 1 we set the probabilities of the inside and outlying covariance matrixes equal to their empirical frequencies 2 we are equally averse to both risk regimes and 3 we estimate the inside and outlying covariances around the full sample s mean

material productivity in food manufacturing material prices have risen in food manufacturing resulting in material productivity growth this study estimates material productivity indexes for new jersey s foodmanufacturing sector a 21 material productivity growth is indicated for the 1964 84 period the mechanism of material productivity growth is also investigated results suggest that greater material efficiency is encouraged by rising material prices wage rates and regulation and by declining food prices short run impacts on material productivity are caused by input substitution beyond the short run impacts are caused by material saving technological change in some food manufacturing subsectors higher material prices may bring lower revenues to material suppliers

democratization or repression abstract regimes controlled by a rich elite often collapse and make way for democracy amidst widespread social unrest such regime changes are often followed by redistribution to the poor at the expense of the former elite we argue that the reason why the elite may have to resort to full scale democratization despite its apparent costs to themselves may be that lesser concessions would be viewed as a sign a weakness and spur further unrest and more radical demands the elite may therefore be forced to choose between repression and the most generous concession a transition to full democracy

an economic analysis of technology in the meat products industry the meat products industry underwent significant structural change during the last two decades the relocation and expansion of commercial cattle feeding stimulated development of new single species slaughtering facilities to replace older multi species plants an essentially new processing industry arose specializing in breaking and packaging carcasses this forward integration has significantly changed distribution methods of slaughtering and fabricating firms increased emphasis on coordination of inputs led to interest in backward integration from packing into cattle feeding the steer and heifer slaughtering sector which was decentralized and competitive in the 1950s has turned toward centralization and concentration although the largest firm accounted for only 13 of total u s steer and heifer slaughter in 1977 it had more than doubled its share since 1970 in 1978 this firm slaughtered more than twice as many steers and heifers as its nearest competitor in addi

pricing for the clean air evidence from chinese housing market abstract air pollution is widely believed to cause healthy risks and influence nations economic dimensions this paper investigates the impact of air pollution on housing prices in china s 286 prefectural level cities during 2005 2013 to address the endogeneity problem of pm2 5 concentrations in our regression we propose an instrument variable strategy based on ventilation coefficient the estimation results suggest that a 10 increase in pm2 5 concentrations causes a 2 4 reduction in local housing prices air pollution also hinders the progress of urbanization limits cities human capital formation and changes people s expectations of housing prices that we interpret as three potential mechanisms behind our main findings

environmental innovations and firm profitability unmasking the porter hypothesis we examine impacts of different types of environmental innovations on firm profits following porter s sci am 264 4 168 1991 hypothesis that environmental regulation can improve firms competitiveness we distinguish between regulation induced and voluntary environmental innovations we find that innovations which do not improve firms resource efficiency do not provide positive returns to profitability however innovations that increase a firm s resource efficiency in terms of material or energy consumption per unit of output have a positive impact on profitability this positive result holds for both regulation induced and voluntary innovations although the effect is greater for regulation driven innovation we conclude that the porter hypothesis does not hold in general for its strong version but depends on the type of environmental innovation our findings rest on firm level data from the german part of the community innovation survey 2008 cis 2008

a simple model of inefficient institutions this paper develops a simple model of economic and political institutions that lead to poor aggregate economic performance in the model economy groups with political power the elite choose policies to increase their income and to directly or indirectly transfer resources from the rest of society to themselves the resulting equilibrium is generally inefficient because of three distinct mechanisms 1 revenue extraction 2 factor price manipulation and 3 political consolidation in particular the elite may pursue inefficient policies to extract revenue from other groups they may do so to reduce the demand for factors coming from other groups in the economy thus indirectly benefiting from changes in factor prices finally they may try to impoverish other groups competing for political power the elite s preferences over inefficient policies translate into inefficient economic institutions the notable exception to this general picture emerges when long term investments are important thus creating a commitment holdup problem whereby equilibrium taxes and regulations are worse than the elite would like them to be from an ex ante point of view in this case economic institutions that provide additional security of property rights to other groups can be useful

the impact of environmental regulations on industry productivity direct and indirect effects abstract the paper develops an approach to measuring the impact of environmental regulations on total factor productivity growth which is less restrictive than a simple growth accounting approach environmental regulations have a direct impact on productivity growth due to the diversion of resources toward required abatement capital there can be a further indirect effect however as conventional inputs and production processes are changed in response to requirements to purchase abatement capital we estimate this indirect effect using a flexible functional form cost function total factor productivity and the direct and indirect productivity effects of environmental regulations are presented for five polluting industries we find that the indirect effect can be either positive or negative and in all industries is energy using the net impact of environmental regulations on total factor productivity growth is fairly small given that these are the most polluting industries they account for about 10 30 of the productivity decline of the 1970s in these industries