global warming economics in the long run a conceptual framework economic models of climate change typically analyze its short run effects for example up to the year 2100 or for a doubling of atmospheric co2 this is a potentially serious shortcoming since under a business as usual scenario atmospheric co2 concentrations could more than quadruple we introduce a framework that endogenously accounts for long run climate change and examine the implications of alternative mitigation strategies one in which the rates of annual emissions are reduced and one that places absolute limits on the total amount of carbon released we discuss alternative valuation frameworks drawing on the debate surrounding the stern review

the effect of fair trade affiliation on child schooling evidence from a sample of chilean honey producers we evaluate the impact of fair trade ft affiliation on child schooling within a sample of chilean honey producers with a retrospective panel data approach from a theoretical point of view we argue that ft should have a positive effect on child schooling since it generates a short run pure income effect together with a medium run productivity effect on both adult and child wages on the other hand because of the higher productivity generated by the medium run effect the opportunity cost of child education increases if they work with their parents the direction of the impact of ft affiliation on child schooling is therefore uncertain and requires empirical testing our econometric findings document a positive and significant impact of affiliation years on child schooling after controlling for endogeneity and heterogeneity between the treatment and control sample

new evidence on targets for monetary policy monetary policy involves the federal reserve s use of select policy instruments to influence general economic conditions of the major policy instruments required reserve ratios the discount rate and open market operations open market operations are commonly manipulated to affect economic conditions open market purchases and sales are employed to achieve the operational targets i e levels of free reserves and or the monetary base the operational targets influence market interest rates the monetary aggregates and or credit aggregates the so called indicators or intermediate targets of monetary policy the intermediate targets then impact upon the general economic policy goals e g real growth gnp the aggregate price level fellner 8 and davidson hafer 6 argue that a variable is appropriate as an intermediate target if it is closely related to the objectives considered of substantial importance is causally prior to such objectives or goals and follows changes in the policy instruments in a predictable manner i e it is controllable the appropriate choice of a variable as the intermediate target is the source of great debate 20 19 1 16 this debate involves the ability of the federal reserve to control the target variable as well as the relation of the target with the goal variables time series techniques are now utilized to examine both aspects of this debate timeseries examinations of the control problem appear in bomhoff 4 johannes rasche 15 and davidson hafer 6 time series examinations of the target goal relationship are presented in davidson hafer 6 friedman 10 and mcmillin fackler 18 with the exception of the vector autoregressive var procedures reported in friedman 10 and mcmillin fackler 18 all researchers employ single equation procedures bivariate techniques fail to permit possible feedback from a wide array of sources many of which are believed to be important this research employs a multiple autoregressive moving average marma technique to examine the appropriateness of several intermediate target candidates the marma procedure is more general than and hence generally preferred to var or univariate procedures see section iii equally important however is our simultaneous examination of

some evidence on selecting an intermediate target for monetary policy the purpose of monetary policy is to influence the evolution of the economy this influence may be expressed in the oft heard phrases of reducing inflation promoting real economic growth and lowering unemployment these are the goals of policy action how are these goals to be achieved the federal reserve is limited in its power in that there are only a few policy vehicles over which it exercises dominance although the main policy instrument of the fed has differed over time during the past few decades fed policy has been exerted primarily through its control of the banking system s reserves via open market operations the difficulty faced by the policymaker is to know just what effect the changes in the instruments are having on the economy since data on the goal variables generally are received with a lag it is useful to find an intermediate variable that is more timely in its availability and that acts as a good proxy for the goal variable in other words changes in the intermediate variable should reliably predict changes in the goal measure if however a measure is unduly influenced by the goal variable then its usefulness in policy decisions is diminished greatly this is because movements in the intermediate measure might emanate from policy actions from changes in the goal measure or both for a measure to be useful as an intermediate target therefore it should have the feature of being exogenous or causally prior to the goal variable in addition to having minimal feedback from the goal measure the intermediate target measure also should respond predictably to changes in the direction of policy for example an intermediate target that responds randomly to changes in the policy instrument

lag length selection and tests of granger causality between money and income one of the most widely accepred relationships in macroeconomics is the positive relationship between the rate of growth of the money supply and the rate of growth of income a diversity of opinion arises however with the attempt to identify a causal relationship between these variables while friedman and schwartz 1963 initiated the empirical investigation of money income causality sims 1972 made the most significant contribution to this literature with a practical application of the criterion developed by granger 1969 for identifying a causal relationship since the appearance of sims s approach and an alternative one advanced by sargent 1976 many researchers have applied these techniques to the investigation of the causal relationship between money and income l with two exceptions hsiao 1981 and mcmillin and fackler 1984 these researchers have arbitrarily chosen the lengths of their distributed lags the purpose of this paper is to test for granger causality between money and income this paper differs from previous work in that considerably more attention is focused on the effect of the lag specification on the test results in particular we investigate the extent to which rules of thumb arbitrary lag specifications and

the dynamics of fair trade as a mixed form market this article analyses the fair trade sector as a mixed form market i e a market in which different types of players in this case nonprofit co operative and for profit organizations coexist and compete the purposes of this article are 1 to understand the factors that have led fair trade to become a mixed form market and 2 to propose some trails to understand the market dynamics that result from the interactions between the different types of players we start by defining briefly fair trade its different dimensions including the fair quality of the products and its organizational landscape focusing on the distinction between the pioneer alternative trading organizations and the second mover companies then we recall the theoretical emergence factors for each type of organization nonprofit co operative and for profit and apply these emergence factors to the context of fair trade this analysis allows us to capture the specificities of each type of operator with regard to fair trade and thus to have a better understanding of the dynamics in the sector such dynamics includes competition but also conflict and partnership our analysis includes elements on ethical imitation consumers behaviors effects on welfare and the role of the government

the political economy of ec regionalism abstract many observers have noted a recent proliferation of regional trade agreements primarily centred in or on europe the paper analyses the causes and consequences of ec regionalism it begins by examining the development and importance of the phenomenon it finds that although the ec maintains preferential trade arrangements with virtually all countries preferential trade accounts for no more than 25 of total ec trade the paper investigates the causes of ec regionalism focusing on the determinants of both the demand by third countries and the supply by the ec lastly it examines future options

the efficiency paradox bureaucratic and organizational barriers to profitable energy saving investments abstract the paradox of why profitable energy saving investments are not undertaken continues to provoke debate the underlying phenomenon might be called the efficiency paradox because it represents a case in which business firms which are often presumed or taken axiomatically to be economically efficient make decisions that do not maximize profits new data from one of the us environmental protection agency s voluntary pollution prevention programs enables this paradox to be explored statistically the data show that both the level and variation in returns to lighting upgrade investments cannot be explained by standard economic models substantial gains in energy efficiency can be achieved without sacrificing profitability both economic and organizational factors account for some of the variation in observed returns to these investments but the results suggest a need for improved and more comprehensive theories of the investment behavior of firms and other organizations

the political economy of global carbon emissions reductions abstract the discussion about what reductions in greenhouse gas emissions are required and how the emissions rights might be distributed globally has fostered the belief that there is a fundamental conflict between the rich nations of the north and the poor but populous nations of the south the argument is that grandfathering the rights will only reinforce existing global inequalities while per capita distribution of the rights would lead to such huge transfers of wealth to the south as to be unacceptable to the north however a very simple general equilibrium model highlighting key elements of the global economy shows that this perception is incorrect under a plausible interpretation of the goal of the united nations framework convention on climate change to avoid dangerous anthropogenic interference with the climate system instead of using an economic damage function to determine the optimal level of emissions reductions the model s utility functions are calibrated to reflect scientific understanding of what would be required to stabilize the atmosphere at safe concentrations of greenhouse gases among policy options that would accomplish this the united states has a preference for grandfathering the allocation of emissions rights over a per capita allocation but this preference is not strong and could be offset by other geopolitical considerations

compatibility of regional and multilateral trading agreements reforming the wto process while the pillar of the world trade organization wto with respect to trade in goods services and intellectual property is nondiscrimination the cornerstone of regional trading agreements is discrimination 2 there has been a proliferation of regional trading agreements in recent years twenty nine new agreements have been notified to the general agreement on tariffs and trade gatt and the wto since 1992 27 on merchandise trade and two on trade in services this is almost half the number of agreements still in existence and notified to gatt prior to 1992 all but three wto members are parties to at least one regional agreement and some are parties to many more it is therefore not surprising that there is renewed interest in whether regional agreements compete with or complement the multilateral trading system 4 while there may be no clear answer it cannot be denied that recent regional developments have major implications for the rules based multilateral trading system one such development is that tariff preferences have or will become relatively unimportant in many regional trading agreements the reasons for this include the high proportion of trade outside many preferential agreements the limits to the coverage of the tariff preferences themselves the high share of post uruguay round tariffs that will be bound at zero and the low level of most favorednation mfn tariffs faced by non preferencereceiving countries this development is accompanied by the fact that the scope of application of many agreements has extended well beyond tariff preferences to disciplines that were traditionally the domain of gatt or may in the future be dealt with by the wto the european union eu provides a good example despite the numerous countries receiving tariff preferences its largest trading partners are outside the network of these agreements in fact 45 percent of eu imports originate in non preference receiving countries e g 17 percent in the united states and 10 percent in japan while tariff preferences are of considerable potential importance with the implementation of uruguay round commitments 51 percent of the value of imports from non preference receiving countries will enter the eu under bound duty free tariff rates further the trade weighted tariff average on manufactured imports from these countries will be 3 1 percent 6 development division world trade organization geneva switzerland helpful comments from maria pillinini of the wto are gratefully acknowledged as are those of richard snape of monash university and industries commission australia the views expressed in this article are those of the author and not the organization for which he works the wto came into existence on 1 january 1995 to inter alia facilitate the administration of the wto agreements that emerged from the uruguay round one of which is the revised 1947 general agreement on tariffs and trade i e gatt 1994b 2 unless otherwise specified the term regional trading agreements refers to both customs unions and free trade areas for trade in goods the extent of discrimination in regional agreements is related to the ease of accession of non parties and the openness of the agreements in general the three are japan korea and hong kong there were 128 members of gatt and following the completion of domestic ratification and wto accession procedures there will be approximately 160 members of the wto in the next few years there are presently 120 members 4 there are many excellent contributions to this debate see for example richard snape et al 1993 jagdish bhagwati 1995 and wto 1995 trade between the 15 members of the eu accounts for 60 percent of total eu trade the eu offers contractual preferences to 26 countries under free trade association or cooperation agreements and to 70 countries under the lom6 convention it offers noncontractual preferences to 145 countries under the generalized system of preferences gsp 6 while tariffs on agricultural products are generally higher than those on manufactured goods the agricultural sector is typically dealt with outside eu preferential agreements

the impact of global warming on agriculture a ricardian analysis reply we measure the economic impact of climate on land prices using cross sectional data on climate farmland prices and other economic and geophysical data for almost 3 000 counties in the united states we find that higher temperatures in all seasons except autumn reduce average farm values while more precipitation outside of autumn increases farm values applying the model to a global warming scenario shows a significantly lower estimated impact of global warming on u s agriculture than the traditional production function approach and in one case suggests that even without co sub 2 fertilization global warming may have economic benefits for agriculture 16 refs 5 figs 5 tabs

can the reserves approach to monetary control really work on october 6 1979 the board of governors bog of the federal reserve system announced that the federal open market committee fomc was abandoning its historical preoccupation with an interest rate approach to monetary control in favor of a reserve aggregate approach 1 underlying this new approach is the fact that at time t any money stock concept m is the product of a money multiplier m and a reserve aggregate r that is

turnover statistics and federal government balances in money supply targets in the middle of the last decade congress mandated that the federal reserve announce its goals for monetary aggregates this increased emphasis on aggregates combined with the more recent financial innovations and deregulation has led to considerable discussion about the best monetary aggregate today arguments abound for every conceivable money stock or credit aggregate ranging from davidson and hafer s support of m i 5 to friedman s support of total net credit 7 given such a range of disagreement one can empathize with the frustration that prompted a congressional committee to ask can we identify a particular conception of money ml m2 or whatever with sufficient precision to allow its use as a proxy for economic performance a promising approach to the resolution of this problem has been the substitution of weighted sum monetary aggregates for the conventional simple sum aggregates in a simple sum aggregate each component is assigned a weight of one for instance one dollar of currency carries the same weight as one dollar of passbook savings but in the divisia aggregate approach 2 each component is assigned a weight which is proportional to the opportunity cost of holding that financial asset consequently a dollar of currency which earns no interest carries greater weight than a dollar of passbook savings the higher cost of holding currency directly reflects the value of its services as a medium of exchange the basic function of money a study by spindt 19 uses a second weighting system based on turnover statistics the basic assumption is that the more often a financial asset changes hands the greater its services as a medium of exchange using a st louis type reduced form model spindt discovered that his turnover weighted aggregate bore a closer relationship to gnp than did the federal reserve s mi in his detailed analysis spindt estimates some time series that are not directly measured for example the turnover of currency as a result he does not advocate the substitution of his aggregate index for the conventional aggregates nevertheless he does point out that the integration of the turnover statistics may be helpful in explaining certain anomalies in the behavior of the conventional aggregates 19 24

investment in energy efficiency do the characteristics of firms matter the literature on energy efficiency provides numerous examples of apparently profitable technologies that are not universally adopted yet according to the standard neoclassical theory of investment profit maximizing firms should undertake all investments with a positive net present value the standard theory also holds that the discount rate for computing the present value of a project should be the return available on other projects in the same risk class and therefore should not depend on characteristics of the firm this model as applied to energy saving investments is tested by examining whether firms characteristics influence their decision to join the environmental protection agency s voluntary green lights program a discrete choice regression is estimated over a large sample of participating and nonparticipating firms missing values in the data matrix are replaced with multiple imputations from a distribution estimated using the expectation maximization algorithm the results show that 1 sub

ngo performance what breeds success new evidence from south asia abstract what is the best way for nongovernment organisations ngos to make a lasting impact on poverty this paper summarizes the findings of recent research into the impact sustainability and cost effectiveness of two ngos in india and two projects implemented by save the children fund uk in bangladesh the factors determining performance are explored through the interaction of organizational decisions with the external context although these interactions are complex and dynamic some clear conclusions emerge making a difference to livelihoods and capacities among poor people depends on ngo successes in fostering autonomous grassroots institutions and linking them with markets and political structures at higher levels these conclusions question the current predilection among donor agencies to fund large scale ngo service delivery

traditional vs modern production systems price and nonmarket considerations of cacao producers in northern ecuador many factors besides profit maximization such as nonmarket ecological and social benefits influence smallholder households to adopt a specific agricultural production system or sell in a particular market thus different analytical techniques are needed that take into consideration more than monetary income to fully capture these additional benefits to better understand the production decisions of smallholder farmers we build on previous work on the household model and shadow wage estimation to develop a shadow wage for ecuadorian cacao producers that includes these nonmarket benefits we found that the shadow wage correctly indicated that on average these households would prefer to use an agroforestry production system instead of the more profitable modern system because of the nonmarket benefits received from the former system

a survey of the economics of fair trade fair trade has spread in developing countries as an initiative aimed at lifting poor smallholder farmers out of poverty by providing them with premium prices availability of credit and improved community development and social goods fair trade is also viewed as a niche market for high value products in a context of globalization and trade liberalization policies that affect smallholder farmers in developing countries the question of whether fair trade affects the welfare of rural farmers however is particularly contentious this paper provides a review of the fair trade literature both theoretical and empirical with a specific focus on the analysis of small scale producer s welfare in developing countries our review shows that while most empirical papers have focused on the impacts of fair trade on prices and income our review highlights the importance of limited market access and changes in productivity likewise little is known about the impacts of fair trade on labor markets and human capital investments persistent methodological challenges make it challenging however to assess the causal impact of this certification and labelling initiative

fighting the tide alternative trade organizations in the era of global free trade abstract this paper explores the proliferation of fair trade organizations their products services and client groups in order to establish the impact of this movement although small in volume alternative trade represents a unique response to the relentless pursuit of free trade through the gatt wto process the economic underpinnings of both fair trade and subsidy programs in general such as the eu s stabilization of exchange system are evaluated ultimately alternative trade can provide significant assistance to targeted groups within developing countries including gains in production and export proficiency on the negative side fair trade is likely to prolong the dependence of developing countries on products with poor future prospects

the virtues of hesitation optimal timing in a non stationary world in many economic political and social situations circumstances change at random points in time reacting is costly and reactions appropriate to present circumstances may become inappropriate upon future changes requiring further costly reaction waiting is informative if arrival of the next change has non constant hazard rate we identify two classes of situations in the first delayed reaction is optimal only when the hazard rate of further changes is decreasing in the second it is optimal only when the hazard rate of further changes is increasing these results in semi markovian decision theory provide motivations for building delay into decision systems jel c61 d72 d82 d83 k10 m11

the impact of rules of origin on trade flows a great deal of post war trade liberalization resulted from regional preferential trade agreements preferential trade agreements cut tariffs on goods originating only in those nations that have signed the agreement therefore they need rules of origin to determine which goods benefit from the tariff cut rules of origin have long been ignored for two good reasons they are dauntingly complex and at first sight appear mind numbingly dull the third standard reason for ignoring them the assertion that they do not matter much turns out to be wrong we show that rules of origin are important barriers to trade moreover such rules are emerging as an important trade issue for three additional reasons first preferential trade deals are proliferating worldwide second the global fragmentation of production implies complex international supply chains which are particularly constrained and distorted by rules of origin third the extent to which regionalism challenges the wto based trading system depends in part on incompatibilities and rigidities built into rules of origin our empirical results exploit a natural experiment that was created by technical changes to europe s lattice of rules of origin roos in 1997 this change known as diagonal cumulation relaxed the restrictiveness of rules of origin on trade among the eu s free trade agreement fta partners without changing the degree of tariff preference our analysis allows us to establish a lower bound and upper bound estimate of trade impact of roos reduced trade among the eu s trade partners the lower bound we find is something like 10 while the upper bound is around 70 the second part of the paper draws the policy lessons that arise from considering the implications of our empirical findings the most direct lessons are for fta writers we argue that europe s implementation of cumulation is a good way of reducing the welfare reducing impact of overlapping rules of origin without gutting their fraud fighting ability we also suggest a three part procedure for establishing a more multilateral framework for rules of origin which would be more transparent flexible administratively feasible and negotiable patricia augier michael gasiorek and charles lai tong

money income and causality the japanese case sims 20 provided evidence of a unidirectional causal relationship running from the money supply to nominal income with u s data by a statistical test now called sims s test however williams goodhart and gowland 21 derived an ambiguous result using u k data namely the possibility of a weak unidirectional causal relationship running from income to money to resolve these apparently inconsistent findings putnam and wilford 18 considered the role of the pound and the dollar in the world market that is the u s can control its own money supply since the dollar serves as a reserve currency under a fixed exchange rate regime while the u k cannot since the price level in the u k is determined in the world market and the u k money supply is adjusted accordingly as individuals in the u k seek to maintain their equilibrium money balances thus according to their analysis it is only in the u s that money can cause income while in other countries money and income are simultaneously determined further testing mundell s theoretical implication 12 that monetary policy cannot affect income but rather income fluctuations produce accommodating monetary flows 11 24 mills and wood found a unidirectional causal relationship running from income to money for the u k for the gold standard period 1870 1914 1 on the other hand mehra 9 examined the causal relationship among the variables of the money demand equation while real money demand is exogenously explained by distributed lags of real income and interest rates the results indicate no conclusive relationship among nominal money demand nominal income interest rates and price as a result he reaffirms the usual practice of inferring the causal structure between two variables within the bivariate distributed lag framework 6 228

are fair trade goods credence goods a new proposal with french illustrations in the literature fair trade ft goods are usually associated with other products differentiated by process attributes such as organic food genetically modified gm food or child labour free clothing all of these products are regarded as credence goods this classification refers to the simplified definition of credence goods which describes product attributes which consumers cannot evaluate even after having consumed the good focusing on the characteristics of ft goods this article proposes a reassessment of the link between ft goods and credence properties as defined by darby and karni we first demonstrate that 1 the usual classification masks important particularities of ft goods compared to other goods with process attributes and 2 the full definition of credence goods may even provide a better description of the quality of ft goods however and this is our second theoretical contribution the lack of consensus among experts concerning ft standards and their level of efficiency encourage us to consider ft goods as indeterminate goods as defined by lupton this result leads us to suggest a new typology of product attributes summarized in an innovative diagram it sheds light on how competition between the different ft approaches works and why the ft market is still confined to a niche if not threatened with collapse we mainly illustrate our theoretical analysis with observations relating to the french ft market and institutions

a regional dynamic general equilibrium model of alternative climate change strategies outcomes and noncooperative equilibria this study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries and that high income countries may be the major losers from cooperation jel h41 q4 q2 q20

the pure effects of european integration on intra eu core and periphery trade this paper analyses the effects of eu integration on intra eu trade volumes with a special focus on the evolution of trade within and between the core and the periphery countries in the early phases of eu integration there have been sizable trade creation and diversion effects with respect to efta countries both the creation and the diversion effects of eu membership have declined as the eu and efta have integrated in all phases of eu integration both core periphery and intraperiphery growth of trade have experienced stronger positive effects than intracore trade hence the eu enlargements did not cause any kind of intra eu peripherality

trade matters in the fight against poverty narratives perceptions and lack of evidence in the case of fish trade in africa two opposing views exist in the literature on the potential role that international fish trade plays in economic development while some claim that fish trade has a pro poor effect others denounce the negative effect of fish export on local populations food security and doubt its contributions to the macro economy in this paper we explore this debate in sub saharan africa our analysis did not find any evidence of direct negative impact of fish trade on food security neither did it find evidence that international fish trade generates positive pro poor outcomes this paper discusses the possible reasons for this apparent lack of development impact and highlights the unsupported assumptions underlying the current discourse about international fish trade we suggest that given lack of evidence for the development benefits of fish trade between africa and developed countries fisheries policy could consider support for regional africa to africa trade that meets the growing african demand for lower value fish means of overcoming barriers to intra african trade in fish are discussed

confronting the coffee crisis can fair trade organic and specialty coffees reduce small scale farmer vulnerability in northern nicaragua summary this paper links changing global coffee markets to opportunities and vulnerabilities for sustaining small scale farmer livelihoods in northern nicaragua changing governance structures corporate concentration oversupply interchangeable commodity grade beans and low farm gate prices characterize the crisis in conventional coffee markets in contrast certified fair trade and organic are two alternative forms of specialty coffee trade and production that may offer opportunities for small scale producers a research team surveyed 228 farmers to measure the impact of sales on organic and fair trade markets the results suggest that participation in organic and fair trade networks reduces farmers livelihood vulnerability 2004 elsevier ltd all rights reserved

integrating economic analysis and the science of climate instability abstract scientific understanding of climate change and climate instability has undergone a revolution in the past decade with the discovery of numerous past climate transitions so rapid and so unlike the expectation of smooth climate changes that they would have previously been unbelievable to the scientific community models commonly used by economists to assess the wisdom of adapting to human induced climate change rather than averting it lack the ability to incorporate this new scientific knowledge here we identify and explain the nature of recent scientific advances and describe the key ways in which failure to reflect new knowledge in economic analysis skews the results of that analysis this includes the understanding that economic optimization models reliant on convexity are inherently unable to determine an optimal policy solution it is incumbent on economists to understand and to incorporate the new science in their models and on climatologists and other scientists to understand the basis of economic models so that they can assist in this essential effort

information processing and organizational structure abstract standard economic theories of the firm and other organizations stress profit maximization as the foundation for derivation of predictable behavior yet statistical and case study evidence continues to accumulate that real firms do not act as required by the neoclassical framework instead of being represented by ever more elaborate maximization models the firm can be modeled simply as a network of information processing agents the actions of the firm are then a function only of the network structure and the information processing capabilities of the agents this approach can be used to explain a number of features of organizational behavior including the process of technological diffusion it also suggests that derivation of the optimal organizational structure may be computationally complex with a number of implications for economic theory and policy development