analysts weighting of private and public information using both a linear regression method and a probability based method we find that on average analysts place larger than efficient weights on i e they overweight their private information when they forecast corporate earnings we also find that analysts overweight more when issuing forecasts more favorable than the consensus and overweight less and may even underweight private information when issuing forecasts less favorable than the consensus further the deviation from efficient weighting increases when the benefits from doing so are high or when the costs of doing so are low these results suggest that analysts incentives play a larger role in misweighting than their behavioral biases copyright 2006 oxford university press

benefit incidence public spending reforms and the timing of program capture assessments of the distributional effects of public spending reforms have generally been based on average rates of program participation by income or expenditure group this practice can be deceptive because the socioeconomic composition of participants can change as a social program expands or contracts the geographic variation found in 1993 94 household survey data for rural india is used to estimate the marginal odds of participating in schooling and antipoverty programs the results suggest early capture of these programs by the non poor it is shown that conventional methods for assessing benefit incidence underestimate the gains to the poor from higher public outlays and underestimate the losses from cuts

cash transfer programs with income multipliers procampo in mexico abstract cash transfer programs create multiplier effects when recipients put the money they receive to work to generate further incomes when this is the case the ultimate income effects are multiples of the amounts transferred we analyze the procampo program in mexico that was introduced to compensate farmers for the anticipated negative effect of nafta on the prices of basic crops the transfer rules and the timing of the panel data collected allow unique control of biases in this impact analysis we find that the multiplier among ejido sector recipients is in the range 1 5 2 6 multipliers are higher for households with medium and large farms low numbers of adults in the household nonindigenous backgrounds and located in the center and gulf regions high multipliers reflect income opportunities that had remained unrealized due to liquidity constraints that are relaxed by the transfers opportunities come from the asset endowments that these households received through the land reform particularly irrigated land and they are enhanced by access to technical assistance

on measures of excess burden and their application abstract new measures of the additional excess burden of a tax reform are proposed and are shown to be useful in three key policy applications these new measures induce a unique measure of marginal excess burden meb among its interesting properties meb is uniformly zero for a proportional tax on inelastically supplied labor problems in applying the standard measures of total excess burden are demonstrated it is concluded that the induced measure of the marginal cost of funds mcf should be regarded as the most useful concept in applied tax analysis

welfare dominance an application to commodity taxation in this paper the authors propose a method to identify commodity tax changes that will be favored by all individuals who can agree on certain weak assumptions with regard to the social welfare function the method is based on an extension of the criterion of second degree stochastic dominance and is illustrated using data from israel copyright 1991 by american economic association

household s preferences and monetary policy inertia abstract interest rates set by central banks puzzlingly move with a certain inertia we show that household s preferences can be important determinants of the optimal interest rate inertia due to their impact on the efficiency of the monetary policy transmission mechanism

marginal commodity tax reforms a survey as noted 30 years ago by martin feldstein optimal taxes may be useless for practical purposes and emphasis should instead be placed on the possibility of enhancing welfare by reforming existing tax rates in this perspective marginal commodity tax reforms are gaining increasing attention due to political and economic constraints on large reforms of direct or indirect taxation in this paper we summarize the main features and results of the literature on marginal commodity tax reforms pioneered by ahmad and stern further developed by yitzhaki and thirsk and recently reinterpreted by makdissi and wodon we establish new links to other fields of research namely the literature on the use of equivalence scales and on poverty measurement we also critically examine some issues associated with the implementation of marginal tax reforms with special reference to the calculation of welfare weights and revenue effects finally we suggest directions for future research on poverty reducing commodity tax reforms

dalton improving indirect tax reform a tax reform is dalton improving if it improves social welfare for all possible social welfare functions that conform to hugh dalton s principle of transfers according to this principle there exists a prior social ranking of households and a transfer is approved if it it distributes from high ranking rich to low ranking poor households without altering the ranking itself in this paper the authors develop a procedure for identifying marginal dalton improving reforms in the context of indirect taxation the methodology is illustrated using data on excise taxes in the united kingdom copyright 1995 by american economic association

analyst forecasts and herding behavior the use of analyst forecasts as proxies for investors earnings expectations is commonplace in empirical research an implicit assumption behind their use is that they reflect analysts private information in an unbiased manner as demonstrated here this assumption is not necessarily valid there is shown to be a tendency for analysts to release forecasts closer to prior earnings expectations than is appropriate given their information further analysts exhibit herding behavior whereby they release forecasts similar to those previously announced by other analysts even when this is not justified by their information these results are shown to have interesting empirical implications article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

targeting the poor using roc curves abstract this paper compares the performance of targeting indicators to identify the poor if the roc curve of one indicator lies above that of another the first indicator dominates the second for all social welfare functions based on the two types of errors involved in targeting the method is applied to bangladesh fifteen indicators are used including location land ownership education occupation demographics age family structure and housing the analysis is applied at the national urban and rural levels with two poverty lines education dominates land ownership in urban areas the ranking is reversed in most cases in rural areas

an asset allocation puzzle comment the purpose of this note is to look at the rationale behind popular advice on portfolio allocation among cash bonds and stocks we argue that the typical investment advice is not inconsistent with the behavior of risk averse expected utility maximizers we propose an additional solution to the asset allocation puzzle posed by niko canner et al 1997 who argue that popular advice contradicts financial theory because it is inconsistent with the capital asset pricing model capm mutual fund separation theorem the capm asserts that investors should hold the same selection of risky assets while popular advice is that investors should hold a proportion of bonds to stocks that increases with risk aversion using mean variance mv analysis and the capm canner et al show that recommended portfolios are far from optimal and that losses from the apparent failure of optimization are not substantial however they failed to explain the popular advice within an economic model we offer a rational model based on stochastic dominance to demonstrate that all popular financial advice portfolios belong to the efficient set for all risk averse investors using the historical annual real returns on bonds and stocks in canner et al we cannot ascertain that investment advisors indeed offer bad advice rather we maintain that acting as agents for numerous clients advisors recommend portfolios that are not inefficient for all risk averse investors i overview

following the leader a study of individual analysts earnings forecasts abstract this paper develops and tests procedures for ranking the performance of security analysts based on the timeliness of their earnings forecasts the abnormal trading volume associated with these forecasts and forecast accuracy our framework provides an objective assessment of analyst quality that differs from the standard approach which uses survey evidence to rate analysts we find that lead analysts identified by our measure of forecast timeliness have a greater impact on stock prices than follower analysts further we find that performance rankings based on forecast timeliness are more informative than rankings based on abnormal trading volume and forecast accuracy we also present evidence that analyst s forecast revisions are correlated with recent stock price performance suggesting that security analysts use publicly available information to revise their earnings forecasts

welfare analysis of tax reforms using household data abstract this paper discusses a methodology for calculating the distribution of gains and losses from a policy change using data for a large sample of households estimates are based on the equivalent income function which is money metric utility defined over observable variables this enables calculations to be standardised and a computer program to compute the statistics presented in the paper is available for a general demand system equivalent income is related to measures of deadweight loss and standard errors are computed for each of the welfare measures an application to u k data for 5 895 households is given which simulates a reform that involves eliminating housing subsidies

analyzing the analysts career concerns and biased earnings forecasts this paper examines the career concerns of security analysts we relate long histories of their earnings forecasts to job separations we find that relatively accurate past forecasts lead to favorable career outcomes such as remaining at or moving up to a high status large prestigious brokerage house controlling for accuracy optimistic forecasts relative to the consensus increase the chances of favorable job separations job separations depend much less on accuracy for analysts who cover stocks that are underwritten by their brokerage houses such analysts are also much more likely to be rewarded for optimistic forecasts than other analysts furthermore job separations were much less sensitive to accuracy and somewhat more sensitive to optimism during the stock market mania of the late 1990s these findings suggest that the well documented analyst forecast optimism bias is likely due to incentives to promote stocks

ethically flexible measures of poverty this paper introduces new measures of both relative and absolute poverty using the notion of representative income of a community corresponding to the censored income distribution these new measures satisfy the monotonicity and transfer axioms proposed by sen 1976 in all cases

understanding the deviation of australian policy rate from the taylor rule this investigation aims to explain and quantify the deviations of the australian policy rate set by reserve bank of australia from the taylor rule a three step econometric procedure designed to reflect the data rich environment in which central banks operate is proposed using information for 229 macroeconomic series this procedure can be applied to data for any economy with inflation targeting monetary rule our application with australian data shows that approximately 65 of australia s policy rate deviation from the taylor rule can be explained systematically with international factors and a domestic factor accounting for 41 9 and 22 5 respectively of the total variation in deviation from the rule

revisiting the sen poverty index a modification of the official sen poverty index yields an index which is not only continous in individual incomes and consistent with the transfer axiom but also admits a geometric interpretation in terms of the area beneath a graph called the inverse generalized lorenz curve for normalized poverty gaps by jenkins and lambert 1993 or the poverty gap profile by shorrocks 1994

guidelines on searching for a dalton improving tax reform this article documents the search for a dalton improving tax and expenditure reform using a methodology developed by yitzhaki and slemrod 1991 and mayshar and yitzhaki 1995 the methodology overcomes the need to define a specific social welfare function by searching instead for reforms that improve each social welfare function belonging to a wide class of functions the authors apply the method to the energy sector of indonesia ignoring distributional constraints and find that both the subsidy on kerosene and the tax on gasoline should be reduced but taking distributional concerns into account the present structure of energy taxes is reasonable and the country may benefit by increasing the subsidy to kerosene taxing electricity and reducing the gasoline tax these conclusions are robust to changes in the relevant parameters representing the indonesian economy

taylor rules omitted variables and interest rate smoothing in the us abstract we test for the presence of interest rate smoothing in forward looking taylor rules in first differences we also consider financial and asymmetric preferences indicators we find that interest rate smoothing is not induced by an omitted variable bias

the effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural kenya1 this study estimates the effects of a large discrete maize price increase on the welfare of a sample of rural kenyan households the usual first order welfare approximation formula is extended to a second order formula that allows for supply and demand responses to the price change results show that many rural households are not affected greatly by the price change and there are about as many gainers as losers however these full sample results mask important differences across regions welfare gains generally take place in major production areas while losses are in areas where most households are net buyers of maize semiparametric methods are used to investigate the relationship between income and the size of the welfare effect and poverty dominance techniques are applied to study the impacts of the maize price increase on rural poverty

uncovering regulator s implicit social welfare weights under price cap regulation abstract this paper provides a simple procedure that can be used in empirical works aimed at uncovering the preferences of regulators over consumers the inverting procedure proposed by ross 1984 ross t w 1984 uncovering regulator s social welfare weights rand journal of economics 15 152 155 is adapted to a regulatory situation characterised by price cap regulation

financial analyst characteristics and herding behavior in forecasting this study classifies analysts earnings forecasts as herding or bold and finds that 1 boldness likelihood increases with the analyst s prior accuracy brokerage size and experience and declines with the number of industries the analyst follows consistent with theory linking boldness with career concerns and ability 2 bold forecasts are more accurate than herding forecasts and 3 herding forecast revisions are more strongly associated with analysts earnings forecast errors actual earnings forecast than are bold forecast revisions thus bold forecasts incorporate analysts private information more completely and provide more relevant information to investors than herding forecasts

do analysts herd an analysis of recommendations and market reactions this article develops and implements a new test to investigate whether sell side analysts herd around the consensus when they make stock recommendations our empirical results support the herding hypothesis stock price reactions following recommendation revisions are stronger when the new recommendation is away from the consensus than when it is closer to it indicating that the market recognizes analysts tendency to herd we find that analysts from larger brokerages analysts following stocks with smaller dispersion across recommendations and analysts who make less frequent revisions are more likely to herd the author 2009 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oxfordjournals org oxford university press

policy regime changes judgment and taylor rules in the greenspan era this paper investigates policy deviations from linear taylor rules motivated by the risk management approach followed by the fed during the greenspan era we estimate a nonlinear monetary policy rule via a logistic smoothing transition regression model where policy makers judgment proxied by economically meaningful variables drives the transition across policy regimes we find that ignoring judgment induced nonlinearities while estimating taylor rules has remarkable costs in terms of fit above 250 bps in 10 quarters although linear taylor rules describe well the broad contours of monetary policy they fail to detect relevant policy decisions driven by policy makers judgment

empirical application of optimal commodity tax theory to taxation of alcoholic beverages this paper concerns the calculation of optimal taxes on commodities which contain a common externality generating component the first best solution is characterized by a form of marginal cost pricing with production costs increased according to the harm content of commodities valued at marginal external cost an application to finnish alcohol consumption data is made to indicate how the tradeoff between control and revenue requirements affects taxes by bootstrapping the estimates taxes are found to be less sensitive than compensated elasticities

herding in analysts recommendations the role of media abstract this study investigates the impact of media on analysts herding behavior when making stock recommendations we find three main results first we find that analysts herd less when stocks are covered more in the media second when the firm has negative media sentiment analysts tend to herd more third higher disagreement in the media is associated with a higher tendency to herd among analysts these findings are robust to the confounding effect of news flows on returns as well as to alternative explanations in addition we find that the effect of media on the herding behavior is conditional on analyst characteristics

do security analysts speak in two tongues why do security analysts issue overly positive recommendations we propose a novel approach to distinguish strategic motives e g generating small investor purchases and pleasing management from nonstrategic motives genuine overoptimism we argue that nonstrategic distorters tend to issue both positive recommendations and optimistic forecasts while strategic distorters speak in two tongues issuing overly positive recommendations but less optimistic forecasts we show that the incidence of strategic distortion is large and systematically related to proxies for incentive misalignment our two tongues metric reveals strategic distortion beyond those indicators and provides a new tool for detecting incentives to distort that are hard to identify otherwise

measuring changes in poverty a methodological case study of indonesia during an adjustment period analysis of the effects of policy changes on the poor is often hindered by the difficulties inherent in measuring poverty and comparing levels of poverty before and after policy changes this article outlines two techniques which can overcome many of these measurement problems stochastic dominance conditions which can facilitate a robust poverty ranking of distributions of living standards and a decomposable poverty index which allows measured changes in aggregate poverty to be disaggregated into their various components such as the changes among population subgroups and growth and redistributive components these techniques can be applied to a wide range of indicators of economic well being and poverty lines and to assumptions about the poor the approaches are illustrated using household survey data from indonesia before and after external shocks and the subsequent structural adjustment program in the mid 1980s the study finds that favorable initial conditions and pro poor pattern of growth enabled indonesia to maintain its momentum in poverty alleviation during the period

the theory of reform and indian indirect taxes abstract given a set of value judgements an initial state and a model of the economy one can ask whether some feasible tax change would increase welfare we do this by defining the marginal cost in terms of welfare of raising an extra rupee from the i th good the inverse optimum problem is the calculation of non negative welfare weights on households which imply that the initial state is optimum if no such welfare weights exist then a pareto improvement is possible we illustrate the concepts and results using data from the indian economy for 1979 1980 directions of tax reform for a number of specific social welfare functions and for pareto improvements are presented

corporate social responsibility and media coverage abstract in this study we examine whether firms that act more socially responsible receive more favorable media coverage and we consider whether firms use csr to actively manage their media image we focus on all news stories about a firm not just those that report on specific csr initiatives and find that more socially responsible firms receive more favorable news reportage overall i e they have a more positive media image these findings are robust after controlling for potential endogeneity further consistent with firms actively managing their media image we find a stronger relation between csr and media favorability when incentives to improve a firm s media image are high e g among firms in sin industries during periods of low investor sentiment and prior to seasoned equity offerings finally we find that for firms that demonstrate superior social responsibility and receive more favorable news reporting there is a significant interaction between social responsibility and media favorability that increases decreases a firm s equity valuation cost of capital our results are consistent with the media slanting their reporting in favor of good performing csr firms overall we contribute to the literature by showing that firms can influence their media coverage through a relatively subtle channel csr performance

how does the european central bank react to oil prices monetary policy may constitute a short term explanation of the non linearity in the relationship between oil prices and output the role of oil prices in the ecb reaction is thus investigated with an extended taylor rule including several oil prices indicators

missing public funds and targeting performance evidence from an anti poverty transfer program in indonesia abstract this paper investigates how failing to consider missing funds in public resource delivery can lead to misleading conclusions on the nature and correlates of targeting performance combining administrative data on disbursement and household survey data on receipt under indonesia s anti poverty program inpres desa tertinggal idt we find that only 69 of disbursements were actually received by the intended beneficiaries when these missing funds are ignored the distribution of idt benefits is pro poor and better targeting is found in districts with higher per capita expenditure however when the missing funds are taken into account the distribution of idt benefits in fact becomes less pro poor than universal equal distribution and better targeting is correlated with a higher proportion of female village heads and a higher level of villagers human capital these results underscore the importance of considering the size and allocation of missing funds in the analysis of targeting in public resource delivery

dalton improving tax reform when households differ in ability and needs abstract in a previous paper we suggested a method for identifying tax reforms that adhere to dalton s principle of transfers approving a small enough transfer from rich to poor however even the weak requirement from that method namely prescribing a uni dimensional ordinal ranking of households by how deserving they are of a marginal income transfer is con fining here we extend the approach by formulating a two dimensional criterion for a dalton improving tax reform when there is social approval for transfers when other things are equal from the more able to the less able and from less needy households to more needy ones the possibility of applying this extended criterion in practice and a comparison with other criteria is carried out using the example of u k excise taxes

reputation and performance among security analysts members of the institutional investor all american research team supply more accurate earnings forecasts than other analysts when forecasts are matched by the corporation followed and by the date of brokerage house issuance this contemporaneous advantage is complemented by a timing advantage all americans supply forecasts more often than other analysts stocks returns immediately following large upward forecast revisions suggest that all americans impact prices more than other analysts however there is virtually no difference in returns following large downward revisions nevertheless the collective results suggest a positive relation between reputation and performance and assuming that all americans are better paid pay and performance

a unified framework for pro poor growth analysis starting with a general impact indicator as an evaluation criterion the author offers an integrative framework for a unified discussion of various concepts and measures of pro poor growth emerging from the current literature he shows that whether economic growth is considered pro poor depends fundamentally on the choice of evaluative weights in addition the author s framework leads to a new indicator of the rate of pro poor growth that can be interpreted as the equally distributed equivalent growth rate this is a distribution adjusted rate of growth that depends on the chosen level of inequality aversion illustrations based on data for indonesia in the 1990s show a strong link between growth and poverty reduction in that country a decomposition of the observed poverty outcomes reveals the extent to which changes in inequality have blunted the poverty impacts of both growth and contraction finally the results also demonstrate that absolute and relative indicators of pro poor growth can lead to conflicting conclusions from the same set of facts

a tax programming model abstract this paper presents a new technique for analysing tax reform proposals the technique is general in the sense that it allows the user to choose the targets he thinks are the most important using this technique the israeli income tax reform of 1975 is evaluated

the effects of rising food prices on poverty in mexico we evaluate the impact of the rise in food prices during 2006 2008 on the poverty and extreme poverty rates in mexico we concentrate on the poor s consumption of staple foods and analyze the change in their consumption brought about by changed prices we also allow households receiving income from the farming and livestock sector to benefit from increases in prices of food products we find a modest increase in poverty using 2006 2007 prices however there is a daunting effect on the poor once the 2008 prices are taken into account after considering the positive effects of public policies announced in 2008 such as reduced taxes and tariffs on food products and greater subsidies to the extremely poor the poverty rate measured through consumption increases from 25 to 33 5 and the extreme poverty rate from 10 58 to 16 given the increase in food prices further analysis using the theory of optimal taxes suggests policies oriented towards relieving the food price pressure on the mexican poor should aim at lowering the prices of eggs vegetable oil milk and chicken

term structure evidence on interest rate smoothing and monetary policy inertia abstract numerous studies have used quarterly data to estimate monetary policy rules or reaction functions that appear to exhibit a very slow partial adjustment of the policy interest rate the conventional wisdom asserts that this gradual adjustment reflects a policy inertia or interest rate smoothing behavior by central banks however such quarterly monetary policy inertia would imply a large amount of forecastable variation in interest rates at horizons of more than 3 months which is contradicted by evidence from the term structure of interest rates the illusion of monetary policy inertia evident in the estimated policy rules likely reflects the persistent shocks that central banks face

analysis of the distributional impact of out of pocket health payments evidence from a public health insurance program for the poor in mexico many governments have health programs focused on improving health among the poor and these have an impact on out of pocket health payments made by individuals therefore one of the objectives of these programs is to reach the poorest and reduce their out of pocket expenditure in this paper we propose the distributional poverty impact approach to measure the poverty impact of out of pocket health payments of different health financing policies this approach is comparable to the impoverishment methodology proposed by wagstaff and van doorslaer 2003 that compares poverty indices before and after out of pocket health payments in order to escape the specification of a particular poverty index we use the marginal dominance approach that uses non intersecting curves and can rank poverty reducing health financing policies we present an empirical application of the out of pocket health payments for an innovative social financing policy implemented in mexico named seguro popular the paper finds evidence that seguro popular program has a better distributional poverty impact when families face illness when compared to other poverty reducing policies the empirical dominance approach uses data from mexico in 2006 and considers international poverty standards of 2 per person per day

food subsidies and poverty alleviation this paper formulates the problem of the optimal pattern of food subsidies in a general setting where the objective is to minimize a class of poverty indices within the framework of the mo dern public finance theory taking explicit account of the budget con straint and preferences and technologies the authors derive rules fo r retargetting food subsidies to reduce poverty many operational rul es of thumb appear as special cases of the general results the analy sis thus provides not only the microfoundations of these operational rules but also their appropriate generalizations when the conditions under which they arise are not fulfilled copyright 1988 by royal economic society

poverty dominant program reforms the role of targeting and allocation rules we propose simple graphical methods to identify poverty reducing marginal reforms of transfer programs the methods are based on program dominance curves that display cumulative program benefits weighted by powers of poverty gaps these curves can be decomposed simply as sums of targeting dominance curves and allocation dominance ones and can serve to verify whether the assessment of marginal program reforms is sensitive to the choice of poverty lines and poverty measures as well as to differences across programs in revenue sources and incentive effects

decomposition of s concentration curves for any given order of inverse stochastic dominance standard concentration curves are decomposed into three components called contribution curves those compo nents correspond to within group inequalities between group inequalities and transvari ational inequalities we prove for all orders that contribution curve dominance implies systematically welfare improving tax reforms and conversely accordingly as welfare ex pansions may be costly in terms of particular inequalities we propose targeted fiscal reforms jel classification d63 h20

herding among security analysts the paper shows that the buy or sell recommendations of security analysts have a signi cant positive in uence on the recommendations of the next two analysts this in uence can be traced to short lived information in the most recent revisions in contrast the in uence of the prevailing consensus is not stronger if the consensus accurately forecasts subsequent stock price movements this indicates consensus herding consistent with models in which analysts herd based on little information the consensus also has a stronger in uence when market conditions are favorable the resulting poorer information aggregation could cause bull markets to be intrinsically more fragilea e g bikhchandani et al j political economy 100 5 1992 992 1026 2000 elsevier science s a all rights reserved jel classixcation g11 g14 g24

does one size fit all a taylor rule based analysis of monetary policy for current and future emu members this article uses the taylor rule to examine the appropriateness of european central bank ecb interest rate policy for the initial european monetary union emu members and the 10 new emu member states some of whom are expected to join the eurozone in 2006 2007 specifically it addresses three questions 1 are there differences between the interest rate aggregated from the taylor interest rates of individual member states in the euro area and the interest rate set by the ecb 2 for which countries do the desired interest rates according to the original taylor rule and the interest rate of the euro area differ most and in which respect 3 the last question is whether the interest rate gaps change over time we find that the ecb s policy does not fit individual emu members equally well and this result is unlikely to be changed with the addition of the 10 new members which will have only a marginal effect on the ecb interest rate stance

equity regarding poverty measures differences in needs and the role of equivalence scales the paper investigates the definition of equity regarding poverty measures when there are different household types in the population it demonstrates the implications of a between type regressive transfer principle for poverty measures for the choice of poverty lines and for the measurement of living standard the role of equivalence scales which are popular in empirical work on poverty measurement is clarified ce memoire examine la definition de mesures de pauvrete fondees sur l equite quand existent differents types de menages dans la population on montre les implications d un principe de transfert regressif entre types de menages pour les mesures de pauvrete pour la definition des seuils de pauvrete et pour la mesure du niveau de vie on clarifie le role des echelles d equivalence qui sont d un usage generalise dans les travaux sur la mesure de la pauvrete

guidelines on searching for a dalton improving tax reform an illustration with data from indonesia this article documents the search for a dalton improving tax and expenditure reform using a methodology developed by yitzhaki and slemrod 1991 and mayshar and yitzhaki 1995 the methodology overcomes the need to define a specific social welfare function by searching instead for reforms that improve each social welfare function belonging to a wide class of functions the authors apply the method to the energy sector of indonesia ignoring distributional constraints and find that both the subsidy on kerosene and the tax on gasoline should be reduced but taking distributional concerns into account the present structure of energy taxes is reasonable and the country may benefit by increasing the subsidy to kerosene taxing electricity and reducing the gasoline tax these conclusions are robust to changes in the relevant parameters representing the indonesian economy

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

security analysts career concerns and herding of earnings forecasts several theories of reputation and herding see e g scharfstein and stein 1990 suggest that herding among agents should vary with career concerns our goal in this paper is to document whether such a link exists in the labor market for security analysts specifically we look at the relationship between an analyst s job tenure a proxy for career concerns and various measures of stock earnings forecast performance we establish the following key results 1 older analysts are more likely to produce earnings forecasts of firms before younger ones 2 their forecasts also deviate more from the consensus forecast than their younger counterparts we argue that these results are consistent with some reputational models of herding we also establish a number of auxiliary findings regarding the relationship between forecast accuracy and frequency of forecast revisions with job tenure

risk management driven policy rate gap abstract we employ real time data available to the us monetary policy makers to estimate a taylor rule augmented with a measure of financial uncertainty over the period 1969 2008 we find evidence in favor of a systematic response to financial uncertainty over and above that to expected inflation output gap and output growth however this evidence regards the greenspan bernanke period only focusing on this period the risk management approach is found to be responsible for monetary policy easings for up to 75 basis points of the federal funds rate

when a journalist is assassinated do financial markets care the market s reaction to journalist murders using comprehensive data on journalist assassinations around the world we study the effect of journalist killings on stock returns our event study results show an average price drop of 0 46 fol

linking yitzhaki s and dagum s gini decompositions in this article we show that the gini coefficient is simultaneously decomposable both by sources of income and by populations of income receivers for nonoverlapping income distributions the so called first best gini multi decomposition we show that this multidimensional decomposition is useful for many reasons i it is related to the degree of inequality aversion of the decision maker ii it is especially well suited to study inequalities between poor and nonpoor people iii it enables one to measure the impact of marginal tax reforms on within and between group inequalities respectively

measurement of income inequality experimental test by questionnaire abstract we reconsider some of the basic assumptions of the literature on inequality analysis students views on the meaning of inequality comparisons were elicited by means of a questionnaire involving both numerical and verbal questions the responses suggest that two important axioms the principle of transfers and decomposability are not universally accepted

canadian interest rate setting the information content of canadian and u s central bank communication we explain canadian target rate decisions using macroeconomic variables as well as bank of canada and federal reserve communication indicators econometrically we employ an ordered probit model of a taylor rule to explain and predict 60 target rate decisions between 1998 and 2006 we find that communications especially speeches and testimony by canadian governing council members provide a significant and robust explanation of canadian target rate decisions however prior to the introduction of fixed announcement dates canadian communications contained more information on upcoming policy moves finally communications by the u s federal reserve bank which are much more frequent outperform our canadian communication indicators in explaining canadian interest rate decisions

minimum distribution sensitivity poverty aversion and poverty orderings abstract this paper introduces a measure of distribution sensitivity which is similar to arrow pratt s measure of risk aversion for a poverty index the measure also gauges poverty aversion and has a clear and straightforward interpretation using this measure we can define various classes of minimum distribution sensitive poverty indices we show that the ordering condition for such a class of poverty indices is simply a generalized poverty deprivation profile dominance properties and implications of this dominance condition are analyzed and poverty orderings by different classes of poverty measures are compared journal of economic literature classification number i32

consumption dominance curves testing for the impact of indirect tax reforms on poverty abstract a new tool is presented to test for the robustness of the impact on poverty of marginal tax reforms for pairs of commodities consumption dominance curves exist for every order of stochastic dominance an illustration is provided with bolivian data