the role of information revelation in elimination contests in this article we investigate how information revelation rules affect the existence and the efficiency of equilibria in two round elimination contests we establish that no symmetric separating equilib rium exists under the full revelation rule and find that the non existence result is very robust we then characterise a partially efficient separating equilibrium under the partial revelation rule when players valuations are uniformly distributed we finally investigate the no revelation rule and find that it is both most efficient and optimal in maximising the total efforts from the contestants within our framework more information revelation leads to less efficient outcomes contests are widely used by various organisations wishing to select the best person or the best team sports for example are undoubtedly always in the form of contests science contests in schools are another example we can consider a contest as an auction in which players compete for prizes by submitting bids these bids once submitted have to be paid regardless of winning or losing rd 2 in political competition e g for the us presidency candidates first spend resources to secure their party s nomi nation and later if they are nominated spend more resources to get elected and 3 science contests among university or high school students e g the mathematics olympiad

regional variations in us consumer response to price changes in home heating fuels the northeast and the south 1987 regional variations in us consumer response to price changes in home heating fuels the northeast and the south applied economics vol 19 no 9 pp 1261 1268

inflation and welfare in a monetary economy it is in everyone s private interest to try to get someone else to hold non interest bearing cash and reserves but someone has to hold it all so these efforts must simply cancel out all of us spend several hours per year in this effort and employ thousands of talented and highly trained people to help us these person hours are simply thrown away wasted on a task that should not have to be performed at all

a noncooperative analysis of hotelling s location game abstract we study the location equilibrium in hotelling s model of spatial competition as d aspremont et al have shown with quadratic consumer transportation cost the two sellers will seek to move as far away from each other as possible we show that the location game possesses an infinity of mixed strategy nash equilibria in these equilibria coordination failure invalidates the principle of maximum differentiation and firms may even locate at the same point journal of economic literature classification numbers c72 d43 l11

specialization the terms of trade and the international transmission of monetary policies the ricardian model with a continuum of goods is extended to a cash in advance environment with variable labor supply which allows domestic monetary policy to influence real activity through an inflation tax channel and to be internationally transmitted to real activity abroad the continuum of goods feature of the model allows for the international transmission of monetary policies to occur at both intensive and extensive margins at the intensive margin monetary policy is internationally transmitted via its impact on relative employment levels at home and abroad this in turn alters the terms of trade thereby affecting the range of commodities in which the home country has a comparative advantage monetary policies are thus transmitted at the extensive margin by influencing international patterns of trade and specialization

targeting nominal income in a dynamic model the author analyzes the choice of monetary policy rule in a perfect foresight planning model maximizing agents plan their lifetime consumption decisions in the face of two rigidities first households hold money to aid trade second today s price level is inherited from past contracting decisions so that changes in nominal aggregate demand fall on output in the short run given these rigidities the central bank can set real balances in the short run and the author compares two mu percent rules his theoretical results suggest that the choice between fixed money growth and fixed nominal income growth rules is an empirical assessment that depends on the distribution of shocks to the economy copyright 1990 by ohio state university press

time consistent collection of optimal seigniorage a unifying framework this paper reviews the existing literature on the time consistency problem of seigniorage collection when monetary policy is determined by optimal taxation considerations it develops a unifying accounting framework and suggests a general measure for seigniorage which encompasses the standard measures employed in the literature in addition the ex ante optimal solution to the optimal taxation problem is derived and interpreted in relation to the ramsey principle we show that the different recommendations of the public finance literature i e the friedman rule of optimal deflation moderately positive inflation and seigniorage maximizing inflation are specific solutions to the optimal taxation problem the paper continues with a formal illustration of the time consistency problem of the ex ante optimal policy and the characterization of the time consistent solution under discretion as possible solutions to the time consistency problem we consider reputational forces institutional reforms that establish central bank independence and specific ways of asset and debt management in particular it is formally shown that a modified version of the asset and debt management scheme suggested by persson persson and svensson is not only necessary but also sufficient for optimality although this did not hold in their model

the optimal inflation tax when money reduces transactions costs abstract it has been argued that if money acts as an intermediate good the optimal inflation tax is zero this paper reexamines such a claim in the context of a model in which money reduces transactions costs it is shown that modeling money as an intermediate good does not necessarily imply that the optimal inflation tax is zero the optimality of a zero inflation tax depends on the properties of the transactions costs technology in particular if the transactions costs technology does not exhibit constant returns to scale it is optimal to resort to the inflation tax

parametric and nonparametric statistical modelling of crop yield implications for pricing crop insurance contracts this article considers alternative methods to calculate the fair premium rate of crop insurance contracts based on county yields the premium rate was calculated using parametric and nonparametric approaches to estimate the conditional agricultural yield density these methods were applied to a data set of county yield provided by the statistical and geography brazilian institute ibge for the period of 1990 through 2002 for soybean corn and wheat in the state of parana in this article we propose methodological alternatives to pricing crop insurance contracts resulting in more accurate premium rates in a situation of limited data

the optimum quantity of money rule in the theory of public finance this paper examines optimal tax policy in a monetary economy in which money serves as an intermediate good that helps facilitate the conversion of scarce resources into tinal consumption goods by enabling consumers to economize on the costs of transacting it is shown that in such an environment even though distorting taxes must be levied for revenue purposes the optimal tax structure calls for abstaining from inflationary finance and adopting the optimum quantity of money rule

asymmetric equilibria in spatial competition abstract the main purpose of this paper is to study the impact of consumer concentration around the market center on the equilibrium locations of location price games in the case of symmetric triangular density it is shown that no symmetric equilibrium exists however we demonstrate the existence of asymmetric equilibria in pure strategies these equilibria are also characterized our secondary purpose is to study the sequential entry of two firms when the location space is not restricted to the market space this leads us to uncover a substantial first mover advantage which has been neglected in the literature

the competitive effects of price floors using hotelling s model of locational competition we show that a moderate price floor destroys the maximal differentiation equilibrium resulting in minimum differentiation equilibrium prices are lower than prices in the absence of a floor a low price floor can lead to multiple equilibria with both minimum and maximum differentiation as possible outcomes

mixed strategy equilibria in a quality differentiation model abstract this paper shows that the standard quality differentiation duopoly model has in addition to the two well known pure strategy equilibria of maximum quality differentiation an infinity of mixed strategy equilibria in which firms choose mixed strategies in the first stage quality game in these equilibria maximum quality differentiation does not occur due to coordination failure total expected consumer surplus is the same at all mixed strategy equilibria and is higher than that under either pure strategy equilibrium total expected industry profit is the same at all mixed strategy equilibria and is lower than that under either pure strategy equilibrium

public transportation demand in a border metropolitan economy empirical research for public transport demand has uncovered numerous interesting commonalities across metropolitan economies this study examines the demand for municipal bus services over time in el paso texas usa el paso is one of the largest metropolitan economies in the usa located directly adjacent to an international boundary with another country this study not only models the demand for municipal bus services as a function of traditional variables such as price income and weather but also includes regressors designed to measure the potential impacts of cross border economic conditions on el paso ridership results from a linear transfer function ltf modelling approach indicate that rider volumes are affected by domestic as well as international economic conditions in this border metropolitan area

agricultural disaster payments in the southeastern us do weather and climate variability matter governments around the world are forced to react to disasters caused by weather the agricultural sector is particularly susceptible to weather extremes and adverse climate conditions in the us agricultural disaster payments account for a significant part of total agricultural subsidies the payments and their distribution are more important in the areas most affected by disastrous weather events usually coinciding with areas of pronounced impact of the el nino southern oscillation enso in this article the impact of weather and climate as well as some economic variables on disaster payments is analysed using county level data from four states in the southeastern united states the results suggest that weather and climate variables explain most of the crop disaster payments at the county level while socioeconomic variables do not suggesting that advancements in weather and climate forecasts could be helpful in planning for disaster compensation

residential electricity demand in spain new empirical evidence using aggregate data this paper presents an empirical analysis on residential demand for electricity this analysis has been performed using aggregate panel data at the province level for 47 spanish provinces for the period from 2000 to 2008 for this purpose we estimated a log log demand equation for electricity consumption using a dynamic partial adjustment approach this dynamic demand function has been estimated using a two step system gmm estimator proposed by blundell and bond 1998 the purpose of this empirical analysis is to highlight some of the characteristics of spanish residential electricity demand particular attention has been paid to the influence of price income and weather conditions on electricity demand the estimated short and long run own price elasticities are negative as expected but lower than 1 furthermore weather variables have a significant impact on electricity demand

is the friedman rule optimal when money is an intermediate good in contrast to the recent literature on the optimal inflation tax we show that in models where money reduces transactions costs it is optimal to set the inflation tax to zero when seigniorage is replaced by revenue from distortionary taxes the main reasons for this result are that the variable costs of supplying real balances are negligible and the inflation tax is a unit tax we also show that the intermediate good optimal taxation rules in the public finance literature cannot be directly applied both when money is costless and when it requires resources to be produced

viewpoint a microfoundation of monetary economics in this lecture i explain what the microfoundations of money are about and why they are necessary for monetary economics then i review recent developments of a particular microfoundation of money commonly known as the search theory of money finally i outline some unresolved issues dans cette presentation l auteur explique ce que sont les microfondations de la monnaie et pourquoi elles sont necessaires a l economie monetaire ensuite il passe en revue certains developpements recents d une microfondation particuliere de la monnaie connue sous le nom de theorie de la recherche de la monnaie enfin l auteur fait le tour d un ensemble de problemes qui restent sans solution pour le moment

alternating monopoly and tacit collusion this paper considers the use of the alternating monopoly strategy ams as a tacit collusion device we show that firms may choose this strategy in particular environments when other collusive strategies are also feasible in particular we stress how the presence of an observable move entry distinct from the competitive stage price setting can serve as a coordination device reducing monitoring costs in incomplete information environments the paper thus shows that ams may be preferable to the classic market sharing strategy mss and in some cases it is the only collusive equilibrium

the demand for alcohol in the united kingdom using the aids model we show that there exists for the uk a stable long run relationship between expenditure shares on beer cider spirits and wine alcohol prices total alcohol expenditure and a range of non economic variables relating to advertising licensing the employment social class and demographic characteristics of consumers and climate our estimates of key price and income elasticities generally lie between those found from other time series studies which exclude most of these non economic variables and those found from cross section studies which generally include them however the restrictions required for separability homegeneity and symmetry although not those for perfect price aggregation are decisively rejected

non optimality of the friedman rule and optimal taxation in a growing economy with imperfect competition abstract this paper shows that if capital generates production externality there exists a wedge between returns to money and to capital driving the friedman rule is not optimal however in the absence of capital externality the friedman rule may be valid even under imperfect competition

dynamic behavior of capital accumulation in a cash in advance model abstract this paper analyzes the dynamic behavior of capital accumulation in stockman s cash in advance model if the cash in advance constraint applies only to consumption then money is superneutral along the transition path as well as in the long run alternatively if the cash in advance constraint applies to gross investment as well as consumption then a permanent increase in the rate of monetary growth reduces the steady state capital stock the effect on the speed of adjustment depends on the sign of a certain simple function of the parameters of preferences and technology

what do we learn from the weather the new climate economy literature a rapidly growing body of research applies panel methods to examine how temperature precipitation and windstorms influence economic outcomes these studies focus on changes in weather realizations over time within a given spatial area and demonstrate impacts on agricultural output industrial output labor productivity energy demand health conflict and economic growth among other outcomes by harnessing exogenous variation over time within a given spatial unit these studies help credibly identify i the breadth of channels linking weather and the economy ii heterogeneous treatment effects across different types of locations and iii nonlinear effects of weather variables this paper reviews the new literature with two purposes first we summarize recent work providing a guide to its methodologies datasets and findings second we consider applications of the new literature including insights for the damage function within models that seek to assess the potential economic effects of future climate change jel c51 d72 o13 q51 q54

inflation employment and welfare in the presence of transactions costs for some time now two issues of primary importance in macroeconomics and monetary theory have been the relation between inflation and unemployment the phillips curve and the optimum rate of inflation the optimum quantity of money in both of these areas the work of friedman and phelps has been influential friedman 1968 and phelps 1970 emphasized the role of inflationary expectations in generating a short run phillips curve like tradeoff but argued that in the long run the phillips curve is vertical that is friedman and phelps claimed that in the long run defined as the time period within which expectations fully adjust to actual circumstances inflation and employment should be uncorrelated more recently friedman 1977 has argued that since the rate of inflation and its variability tend to be positively related inflation and employment may be negatively related in the long run this is the positively sloped phillips curve phenomenon in recent years the link between inflation and employment has continued to receive considerable attention the vast rational expectations literature on the role of monetary policy and the equilibrium approach to the business cycle are in large part an outgrowth of the earlier phillips curve controversy the notion that there is an inverse long run relation between inflation and employment has recently received theoretical support from barro and santomero 1976 stockman 1981 and aschauer and greenwood 1983 related studies concerning the real effects of inflation have been undertaken by jovanovic 1982 stockman 1984 and abel 1985 the common element running through all of these papers is that the real effects of inflation arise from the transactions technology that underlies money demand l

the contribution of weather variability to economic sectors every day people make economic decisions based on the weather affecting sales of companies in a wide range of economic sectors in many cases the impact of weather on sales is not constant from

can consumer confidence forecast household spending evidence from the european commission business and consumer surveys 1 introductionthe analysis of the impact of consumer attitudes on consumer spending has been an area of sustained interest in the macroeconomics literature this interest in consumer attitudes reflects a popular belief that macroeconomic outcomes depend heavily on consumers expectations of future economic conditions reinforcing this belief is the fact that consumer spending accounts for 60 to 70 of the gross domestic product of highly industrialized countries such as the g 7 during the past few decades a number of single country investigations have attempted to assess the predictive power of consumer confidence in forecasting household spending for example in the united states mishkin 1978 reports that the index of consumer sentiment ics published by the university of michigan possesses good explanatory power for changes in durable goods carroll fuhrer and wilcox 1994 also find that the michigan ics has good predictive capability with regard to household expenditure but that its forecasting power decreases considerably when the index is used along with other macroeconomic variables 1 kwan and cotsomitis 2004 examine the robustness of carroll fuhrer and wilcox s 1994 findings when alternative measures of consumer confidence are used in their prediction equations they report that use of the michigan index of consumer expectations improves on the estimation results of carroll fuhrer and wilcox 1994 bram and ludvigson 1998 and ludvigson 2004 compare the forecasting performance of the michigan ics and the u s conference board s index of consumer confidence icc their findings indicate that the conference board s index provides additional information about future consumer consumption that is not captured by the michigan index however chopin and darrat 2000 utilizing a multivariate causality framework report that the conference board s icc is an unreliable predictor of u s retail sales as regards other studies using non u s data acemoglu and scott 1994 employ granger causality and regression analyses to determine if consumer confidence as measured by the gallup poll in the united kingdom can predict future consumption they find that consumer confidence is a leading indicator of future consumption growth in a subsequent study delorme kamerschen and voeks 2002 examine whether consumer confidence and rational expectations are the same in the united kingdom as they are in the united states they report that the predictive ability of the u k consumer confidence index is greater than that of the united states belessiotis 1996 using french data also reports that the consumer confidence index provides decent explanatory power for future consumer spending in canada kwan and cotsomitis 2005 find that although consumer sentiment is a reliable predictor of consumer expenditures at the national level results obtained using regional data are quite mixed fan and wong 1998 find that unlike the case in the united states or the united kingdom confidence indicators in hong kong have little or no explanatory power in forecasting household spending the existing studies on the ability of consumer confidence to predict household spending have produced mixed results the results vary depending on the sample period chosen the frequency of observations monthly or quarterly and the different survey methodologies employed to gauge consumer attitudes moreover most of these studies confine their attention to single country investigations given the diversity of results it is important to investigate the predictive power of consumer confidence on the basis of comparable time series data for as many countries as possible this paper presents a first formal attempt to study the ability of consumer confidence to forecast household spending within a multicountry framework to this end we use two confidence indices namely the consumer confidence indicator cci and the economic sentiment indicator esi both of which are derived from the european commission business and consumer survey ecbcs

the effect of customer satisfaction on consumer spending growth abstract predicting aggregate consumer spending is vitally important to marketing planning yet traditional economic theory holds that predicting changes in aggregate consumer spending is not possible previous attempts to predict consumer spending growth using standard macroeconomic predictor variables have met with little success the authors show that the lagged change in customer satisfaction which contributes to future demand has a significant impact on spending growth however this impact is moderated by increases in consumers debt service ratio a key budget constraint that affects consumers ability to spend using an asymmetric growth model more than 23 of the variation in the one quarter ahead spending growth is explained which represents a notable improvement over prior specifications

a further exploration in the theory of exchange rate regimes in an interesting paper in this journal elhanan helpman 1981 develops a simple two country model to compare the welfare levels that are achieved under different exchange rate regimes in a world characterized by perfect foresight his basic finding is that equilibrium consumption allocations and hence welfare levels are identical under a floating exchange rate system and a one sided peg fixed exchange rate regime this result is due to helpman s assumption that output is determined exogenously which allows a separation of the real and monetary sides of the economy the purpose of this paper is to extend helpman s model by making two alterations in his setup 1 to allow production to be endogenously determined as a function of labor force participation and 2 to allow welfare levels to be dependent on labor service as well as on consumption the main conclusion then obtained is that a country may achieve a higher welfare level under a flexible exchange rate regime than under a fixed exchange rate regime since it is able to choose an optimal rate of inflation or currency depreciation

characterization of the optimal tax on money when it functions as a medium of exchange abstract this paper compares the relative efficiency of the implicit taxation of money and the explicit taxation of real commodities to finance a given amount of government expenditures in the model used money has the property of reducing transactions costs a sufficient condition for a tax on money to be welfare dominated by a linear tax on consumption expenditures is characterized in terms of a few parameters very familiar in macroeconomics this characterization is especially useful in the cases of heterogeneous consumers and increasing returns to scale in transactions since then the optimal tax on money may in principle be positive

optimal monetary policy in an economy with incomplete markets and idiosyncratic risk abstract this study investigates an incomplete markets economy in which the saving behavior of a continuum of infinitely lived agents is influenced by precautionary saving motives and borrowing constraints agents can use two types of assets interest bearing ious and money to smooth consumption money is valued because of a timing friction in the bond market in particular the bond market closes before agents observe their idiosyncratic productivity shock i find that the friedman rule is not optimal for this economy the results indicate that the optimal allocation has a rate of inflation of 10 and a positive amount of private credit held by the government a positive inflation rate transfers resources from agents with big endowments to those holding bonds which improves risk sharing and therefore welfare however for higher rates of inflation agents economize on money holdings offsetting the insurance effects and causing a reduction in welfare furthermore higher rates of inflation discourage agents from borrowing and the endogenous lower bound on bond holdings is higher than the exogenous borrowing limit high rates of inflation therefore exacerbate frictions in the bond market

a seasonal analysis of asian tourist arrivals to australia rapid economic growth in south east and east asia has seen a surge in tourist arrivals from this region to australia in the 1990s prior to the currency crisis in late 1997 the purpose of the paper is to use autoregressive integrated moving average arima models to explain the nonstationary seasonally unadjusted quarterly tourist arrivals from hong kong and singapore to australia from 1975 1 to 1996 4 as the tourist arrivals series display strong seasonal patterns deterministic and stochastic seasonality are examined as possible explanations for variations in the international tourist arrivals series the hylleberg et al journal of econometrics 99 pp 215 38 1990 test for seasonal unit roots is used to examine stochastic seasonality in the various series

attendance and promotions in minor league baseball the carolina league this empirical study investigates determinants of attendance at minor league baseball games in the carolina league in 2006 the focus of the analysis is on the effect of a wide variety of game day promotions on attendance on a game by game basis rather than aggregate attendance during the season the ordinary least square ols results imply that attendance is positively a function of per capita income in the city or county hosting the team runs scored by the home team friday and saturday games and promotions that provide cost reduced food or beverages low and high value merchandise and post game fireworks attendance is negatively a function of home team errors monday games and possibly rainy conditions during the game an unusual finding with respect to minor league baseball is that team performance variables affect attendance however home team runs scored and home team errors contribute to the overall entertainment experience for the home team fans and thus yield plausible effects on attendance

revenue maximizing inflation abstract a classic monetary policy result is that revenue maximization entails setting the inflation tax rate equal to the inverse of the interest semi elasticity of the demand for money the standard approach underlying cagan s rule is partial equilibrium in nature treating money demand as being given from outside the model and abstracting from the real effects of inflation this paper reconsiders the question of the revenue maximizing inflation rate in a general equilibrium framework with a labor leisure choice where money is held because it reduces transactions costs in this framework the revenue maximizing inflation tax rate is lower than that implied by cagan s rule

stochastic trend weather and us corn yield variability regional corn yield models incorporating stochastic trends prices and weather variables are estimated hypothesis tests suggest yield variability has increased because of an increase in error variance and an increase in weather related effects decomposition of the error variance shows much of its increase is due to an increased correlaion between regional yields

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

habit seasonality and time aggregation in consumer behaviour habitual behaviour in consumer demand analysis is generally portrayed via some form of a lagged dependent variable model the purpose of this paper is to explore the implications for habit behaviour of time aggregation this is done by specifying both habit and seasonal components in demand relations the results indicate that much of what has traditionally been identified as habitual behaviour is in fact seasonal effects

weather derivatives structuring and pricing a sustainable agricultural approach in africa abstractthe objective of this article is to calculate the price of weather derivatives for different african countries with payout depending on temperature a new approach for computing degree day contracts is shown and gives another scale to the numerical relevance and practical implementation of the findings with historical data for each country a stochastic process based on continuous time with mean reversion representing the evolution of the temperature is determined focusing on the monte carlo simulation method the price of each contract and the potential implications to solve several aspects of the threatened african economy are presented

partial collusion fosters minimum product differentiation we investigate a spatial duopoly in which the firms simultaneously select locations at the beginning of time once chosen the locations are fixed forever but the firms will choose prices in each of a countably infinite succession of time periods we are interested in equilibrium behavior when the firms will collusively arrange a trigger strategy equilibrium in prices and will select their locations knowing that a particular such trigger strategy price equilibrium will ensue specifically we restrict our attention to prices that support an outcome on the profit possibility frontier at which the ratio of firm 1 s profits to those of firm 2 is positively related to the similar ratio of profits at the single shot noncooperative equilibrium for these profit sharing rules the resulting location equilibrium is unique and involves the pairing of firms at the market center

college football attendance a panel study of the football bowl subdivision panel data with an instrumented real ticket price are used to estimate a regular season game day attendance and per cent of capacity regression equations better team performance whether short term season wins intermediate term bowls games in last 10 years or long term lifetime winning percentage higher undergraduate enrolment traditional rivalries and video coverage increase per cent of capacity used poor weather more rain or cloud cover higher travel costs and larger local population decrease it fan interest wanes as a season progresses but this is offset as a team wins more games games played near a national football league stadium those with conference opponents non fbs opponents and non bcs opponents have lower stadium utilization the substantive results of the analysis do not change when attendance is used as the dependent variable rather than per cent of capacity

on the nature of equilibria in a downsian model with candidate valence abstract i analyze mixed strategy equilibria in a downsian model with two office motivated candidates in which one candidate is endowed with a sufficiently large valence advantage that a voter might prefer this candidate even if the voter strictly prefers the other candidate s policies there is a discrete one dimensional policy space and the preferences of the median voter are uncertain i show that there is a range of moderate policies with no gaps that are optimal for the advantaged candidate there is also a range of liberal policies with no gaps and a corresponding range of conservative policies with no gaps that are optimal actions for the disadvantaged candidate the upper and lower bounds on these ranges of policies vary in predictable ways with the size of the advantaged candidate s advantage

optimality of the friedman rule in economies with distorting taxes abstract we find conditions for the friedman rule to be optimal in three standard monetary models our main contribution is to shed light on two issues in the literature first the conventional view maintains that when money is a final good its services should be taxed moreover if money demand is interest inelastic its services should be taxed heavily we show that this view is incorrect second there is an ongoing controversy about whether the optimality of the friedman rule is connected to the intermediate goods result from public finance we resolve this controversy by showing a deep connection between these results

estimating bivariate yield distributions and crop insurance premiums using nonparametric methods modelling crop yield distribution is crucial in crop insurance premium setting the correlation between different crop yields due to rotations or systemic risks requires estimation of joint yield distribution for multiple crops in this article we apply a nonparametric method to estimate bivariate yield distributions using farm level yield data of wheat and corn in shandong province in china then the simulated yields are used to evaluate the expected indemnity of one traditional and one hypothetical crop insurance programme our results reveal that the nonparametric bivariate method is very flexible in shaping the yield probability density functions to estimate local idiosyncrasies and correlation between two crops it is also feasible to simulate the nonparametric yield distributions at a satisfying level of accuracy the simulation results show that the hypothetical two crop insurance contract can be more affordable to farmers than traditional individual crop insurance contracts

management of climate risks in agriculture will weather derivatives permeate it is a matter of common knowledge that weather represents the major source of uncertainty in crop production it is to be expected that weather fluctuations will increase in the future due to climate change traditionally farmers tried to protect themselves against weather related yield variations by buying insurances more recently there has been a discussion regarding the use of weather derivatives to safeguard against volumetric risks although weather derivatives display advantages over traditional insurances there is only a relatively small market for these products in agriculture this is partly attributed to the fact that it is unclear whether and to what extent weather derivatives are a useful instrument of risk management in agriculture this study applies real yield and weather data from northeast germany in order to quantify the risk reducing effect that can be achieved in wheat production by using precipitation options to do so stochastic simulation is used the hedging effectiveness is c

inflation and welfare in the steady state this is a paper on expected inflation and welfare in steady state equilibrium the demand for money is an inventory demand with an endogenous payment period the clower constraint is not imposed higher inflation reduces welfare by reducing consumption as people devote more of their real income to maintaining lower average money holdings high inflation does not necessarily promote an increase in the capital stock the mundell tobin effect is absent the policy conclusion is standard deflate at the rate of time preference because capital is held socially optimal consumption falls short of its golden rule level if inside money is allowed it drives out fiat money and welfare is again at a maximum

optimal fiscal and monetary policy under sticky prices this paper studies optimal fiscal and monetary policy under sticky product prices the theoretical framework is a stochastic production economy without capital the government finances an exogenous stream of purchases by levying distortionary income taxes printing money and issuing one period nominally risk free bonds the main findings of the paper are first for a miniscule degree of price stickiness i e many times below available empirical estimates the optimal volatility of inflation is near zero this result stands in stark contrast with the high volatility of inflation implied by the ramsey allocation when prices are flexible the finding is in line with a recent body of work on optimal monetary policy under nominal rigidities that ignores the role of optimal fiscal policy second even small deviations from full price flexibility induce near random walk behavior in government debt and tax rates third sluggish price adjustment raises the average nominal interest rate above the one called for by the friedman rule finally an interest rate feedback rule whereby the nominal interest rate depends on inflation and output fits well the data emanating from the ramsey economy however the fitted rule is not of the taylor type for the implied inflation coefficient is less than one and close to zero and the output coefficient is negative jel classification e52 e61 e63

here comes the rain again weather and the intertemporal substitution of leisure i revisit the intertemporal labor supply framework using exogenous variations in daily weather to see how time at work varies with rain in my model a rainy day is associated with a lower enjoyment of leisure effectively increasing wages and bringing more hours at work i test the model using data from the american time use survey supplemented with daily weather i find that on rainy days men shift on average 30 minutes from leisure to work computations give a rough estimate of the intertemporal elasticity of labor supply of around 0 01 in line with the rest of the literature

insurance and rural welfare what can panel data tell us assessing the scope for insurance in rural communities usually requires a structural model of household behaviour under risk one of the few empirical applications of such models is the study by rosenzweig and wolpin 1993 who conclude that indian farmers in the icrisat villages would not benefit from the introduction of formal weather insurance in this article we investigate how models such as theirs can be estimated from panel data on production and assets we show that if assets can take only a limited number of values the coefficients of the model cannot be estimated with reasonable precision we also show that this can affect the conclusion that insurance would not be welfare improving

estimating sensitivities of temperature based weather derivatives pricing of temperature based weather derivatives has been studied in the literature however there is no analysis of the estimation of the sensitivities of weather derivatives in a stochastic model of temperatures we use pathwise derivative and kernel methods to derive monte carlo estimators for the sensitivity greeks of temperature based weather derivatives these sensitivities can be used by investors for choosing the most suitable weather contracts for partial hedging or speculation temperature data from new york atlanta and chicago are used in the discussion of numerical results

product differentiation decisions under ambiguous consumer demand and pessimistic expectations abstract this paper studies product differentiation decisions in a spatial duopoly with limited information on consumer demand in particular a situation is discussed in which the firms do not know the exact distribution of the random location of consumer demand and its responsiveness to price changes measured by the scale of transport costs but resolve the resulting ambiguity using the maxmin or minimax regret criteria when the firms are sufficiently pessimistic is high enough results are in contrast with the existing literature in particular an increase of demand location uncertainty decreases the equilibrium product differentiation intensifying the second stage competition in prices although the effect is dampened by uncertainty about transport costs endogenizing the choice of objective function leads to the dominance of an extreme form of pessimism which turns out to be socially optimal