toward a reconstruction of keynesian economics expectations and constrained equilibria a two period model of temporary equilibrium with rationing is presented paying particular attention to agents expectations of future constraints it is shown that with arbitrary constraint expectations many different types of current equilibrium may be consistent with the same set of current and expected future wages and prices and that constraint expectations exhibit bootstraps properties e g a higher expectation of keynesian unemployment tomorrow increases the probability that it will prevail today in addition the concept of rational constraint expectations i e perfect foresight of future constraints is introduced and shown to enhance rather than reduce the effectiveness of government policy

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

buying votes vs supplying public services political incentives to under invest in pro poor policies this paper uses unique survey data to provide for the first time in the literature direct evidence that vote buying in poor economies is associated with lower provision of public services that disproportionately benefit the poor various features of the data and the institutional context allow the interpretation of this correlation as the equilibrium policy consequence of clientelist politics ruling out alternate explanations such as for example poverty driving both vote buying and health outcomes the data come from the philippines a country context that allows for measuring vote buying during elections and services delivered by the administrative unit controlled by winners of those elections the data reveal a significant robust negative correlation between vote buying and the delivery of primary health services in places where households report more vote buying government records show that municipalities invest less in basic health services for mothers and children and quite strikingly as a summary measure of weak service delivery performance a higher percentage of children are severely under weight

wealth effects distribution and the theory of organization abstract we construct a general equilibrium model of firm formation in which organization is endogenous firms are coalitions of agents providing effort and investment capital effort is unobservable unless a fixed monitoring cost is paid and borrowing is subject to a costly state verification problem because incentives vary with an agent s wealth different types of agents become attractive firm members under different circumstances when borrowing is not costly firms essentially consist of one type of agent and are organized efficiently but when the costly state verification problem is sufficiently severe firm organization will depend on the distribution of wealth with enough inequality it will tend to be dictated by incentives of rich agents to earn high returns to wealth even if the chosen organizational form is not a technically efficient way to provide incentives journal of economic literatureclassification numbers d2 d31 j41 l2

did the commodity price spike increase rural poverty evidence from a long run panel in bangladesh we assess the effects of the dramatic rise in agricultural commodity prices during 2007 2008 on income dynamics and poverty among rural households in bangladesh a unique panel data set allows us to put the effects of recent events in the context of long run trends in income and poverty we use data from a nationally representative longitudinal survey of rural households in bangladesh collected in four waves in 1988 2000 2004 and 2008 nargis and hossain nargis n hossain m 2006 income dynamics and pathways out of rural poverty in bangladesh 1988 2004 agric econ 35 425 435 analysed income dynamics and poverty incidence for the first three waves finding a declining trend in both the incidence and severity of poverty aided in particular by human capital development and off farm employment opportunities we update and extend the analysis to include data collected in 2008 at the height of a spike in agricultural prices we find that the price of a balanced food basket increased by more than 50 during 2000 2008 while household income rose only 15 as a result the incidence and severity of rural poverty in bangladesh sunk to pre 2000 levels during 2004 2008 thus the price spikes in 2007 2008 helped push an additional 13 million people into poverty in rural bangladesh moreover we find that the determinants of poverty have not been time invariant in particular agricultural production which had previously been associated with a higher incidence of poverty served as a hedge against higher food prices during 2004 2008

international coordination in the design of macroeconomic policy rules abstract the paper examines international issues that arise in the design and evaluation of macroeconomic policy rules it begins with a theoretical investigation of the effects of fiscal and monetary policy in a two country rational expectations model with staggered wage and price setting and with perfect capital mobility the results indicate that with the appropriate choice of policies and with flexible exchange rates demand shocks need not give rise to international externalities or coordination issues price shocks however do create an externality and this is the focus of the empirical part of the paper using a simple seven country model consisting of canada france germany italy japan the united kingdom and the united states optimal cooperative and non cooperative nash policy rules to minimize the variance of output and inflation in each country are calculated the cooperative policies are computed using standard dynamic stochastic programming techniques and the non cooperative policies are computed using an algorithm developed by finn kydland the central result is that the cooperative policy rules for these countries are more accommodative to inflation than the non cooperative policy rules

behavioral responses to risk in rural china does risk perpetuate poverty in a credit constrained economy jalan and ravallion study portfolio and other behavioral responses to measured risk using household panel data for rural china one quarter of wealth is held in unproductive liquid forms but only a small share of this appears to be a precaution against income risk the authors estimate that eliminating income risk would reduce the share of wealth held in liquid form by less than 1 percentage point moreover that effect is confined largely to middle income groups high income households do not it seems need to hold unproductive cautionary wealth and the poor probably cannot afford to do so the authors find no evidence that income risk discourages schooling but risk does inhibit the out migration of labor generally the results provide only limited support for the idea that uninsured risks promote unproductive portfolio behavior in this setting there is such an effect but it is small in magnitude and cannot be deemed an important cause of poverty

vote suppression and insecure property rights abstract while it is commonly understood that land is a political tool there is surprisingly little empirical research on how insecure property rights affect political outcomes in this paper we show how a dominant political party can use insecure property rights to ensure politically compliant voter behavior and how this power is frustrated after the introduction of a land certification program we test this hypothesis on data covering 10 000 mexican municipal elections during the country s democratic transition exploiting the gradual rollout of a large scale land certification program we find that land titles significantly raised the number of votes for the main opposition parties importantly this effect disappears once the dominant party the institutional revolutionary party pri has already lost at least one election in the municipality these results provide an additional explanation of the pri s downfall and more generally illuminate the relationship between political power institutions and resource allocation

a household model of on farm storage under price risk we present an agricultural household model of consumption storage savings and labor decisions and argue that food crop storage under price risk cannot be fully explained by risk taking or speculative behavior alone as the commodity storage literature suggests often and especially in the case of small farmers the explanation lies in the household s aversion to risk and in food security considerations the empirical analysis using icrisat quarterly panel data from shirapur provides evidence against risk neutral preferences we find that risk response is particularly significant in the storage and labor decisions of small farm households

precautionary behavior migrant networks and household consumption decisions an empirical analysis using household panel data from rural china abstract we develop a test of precautionary behavior in the consumption decisions of rural agricultural households among surveyed households facing a median level of consumption risk 10 of savings can be attributed to a precautionary motive and this increases to 15 for households with consumption per capita below the poverty line we next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases

testing theories of consumption behavior using information on aggregate shocks income seasonality and rainfall in rural india we develop an integrated framework for testing theories of consumption behavior by examining how agricultural households in rural india respond to anticipated and unanticipated seasonal income fluctuations using information on village level rainfall surprises we estimate idiosyncratic unanticipated income shocks by allowing weather risk to impact households differently depending on observable characteristics in applying our methodology to unique panel data on consumption debt and intrahousehold gift exchanges we address a number of shortcomings in previous tests of theories of consumption behavior yet we find no evidence against the hypothesis that households smooth idiosyncratic fluctuations in their income our approach also uncovers several interesting features of rural credit and insurance markets

elections governments and parliaments in proportional representation systems this paper presents a theory of parliamentary systems with a proportional representation electoral system a formateur selected based on party representation in parliament and parties that cannot commit to the policies they will implement once in government government formation involves efficient proto coalition bargaining and elections yield unique strong nash equilibrium outcomes depending on the status quo minimal majority surplus or consensus governments can form if parties and voters are myopic and the status quo is subject to shocks consensus governments and centrist policies occur only in a crisis otherwise governments are minimal winning and policies reflect only the preferences of the government parties

simple solutions to the initial conditions problem in dynamic nonlinear panel data models with unobserved heterogeneity i study a simple widely applicable approach to handling the initial conditions problem in dynamic nonlinear unobserved effects models rather than attempting to obtain the joint distribution of all outcomes of the endogenous variables i propose finding the distribution conditional on the initial value and the observed history of strictly exogenous explanatory variables the approach is flexible and results in simple estimation strategies for at least three leading dynamic nonlinear models probit tobit and poisson regression i treat the general problem of estimating average partial effects and show that simple estimators exist for important special cases copyright 2005 john wiley sons ltd

using national statistics to increase transparency of large land acquisition evidence from ethiopia the 2007 08 commodity price boom triggered a rush for land in developing countries yet many affected countries lacked the regulatory infrastructure to cope with such demand and reliable data on investors performance this study uses the example of ethiopia to show how simple improvements in administrative data collection can help to address this by i allowing assessment of the productivity of land use and taking measures to increase it ii comparing productivity between large and small farms to identify spillovers and ways to improve these and iii setting in motion a process of continuing improvement implications for global investment in this area are drawn out

redistributing income under proportional representation although majoritarian decision rules are the norm in legislatures relatively few democracies use simple majority rule at the electoral stage adopting instead some form of multiparty proportional representation moreover aggregate data suggest that average income tax rates are higher and distributions of posttax income flatter in countries with proportional representation than in those with majority rule while there are other differences between these countries this paper explores how variations in the political system per se influence equilibrium redistributive tax rates and income distributions a three party proportional representation model is developed in which taxes are determined through legislative bargaining among successful electoral parties and the economic decision for individuals is occupational choice political economic equilibria for this model and for a two party winner take all majoritarian system are derived and compared

precautionary saving under liquidity constraints evidence from rural pakistan this paper investigates precautionary saving under liquidity constraints in pakistan using household panel data in particular while we estimates kimball s 1990 prudence parameter we deviate from dynan s 1993 framework by explicitly considering liquidity constraints as in zeldes 1989 by doing so we attempt to differentiate the standard precautionary saving caused by uncertainty from the one due to liquidity constraints furthermore endogenous liquidity constraints are considered to resolve issues of selection biases in this study we document substantial evidence of the presence of precautionary saving in pakistan more specifically the estimated prudence is significantly higher for liquidity constrained households as compared with unconstrained ones the results support the emerging view that facilitating saving may often be more important than finding better ways of lending to the poor

shaping democratic practice and the causes of electoral fraud theory and evidence from pre 1914 germany why is there so much alleged electoral fraud in new democracies most scholarship focuses on the proximate cause of electoral competition this article proposes a different answer by constructing and analyzing an original dataset drawn from the german parliament s own voluminous record of election disputes for every parliamentary election in the life of imperial germany 1871 1912 after its adoption of universal male suffrage in 1871 the article analyzes the election of over 5 000 parliamentary seats to identify where and why elections were disputed as a result of election misconduct the empirical analysis demonstrates that electoral fraud s incidence is significantly related to a society s level of inequality in landholding a major source of wealth power and prestige in this period after weighing the importance of two different causal mechanisms the article concludes that socio economic inequality by making new democratic institutions endogenous to preexisting social power can be a major and underappreciated barrier to democratization even after the adoption of formally democratic rules

crop diversity household welfare and consumption smoothing under risk evidence from rural uganda abstract in the wake of climate change there is now a resurgence of interest in the promotion of crop diversification as a climate smart agricultural practice in sub saharan africa the development economics literature suggests that increasing crop diversity is an effective risk management and consumption smoothing strategy in a context characterized by repeated exposure to shocks but weak institutional innovations using panel survey data from rural uganda merged with historical weather data this paper sheds light on the household welfare and consumption smoothing effects of crop diversity we employ instrumental variables methods to control for unobserved heterogeneity and potential reverse causality our study finds that crop diversification is a welfare enhancing strategy that increases consumption and aggregate household diets instrumental variables quantile regression results show that crop diversification generates higher consumption benefits for poorest households in the lower quantile of the consumption distribution than for relatively richer households crop diversification also improves consumption smoothing through reducing households reliance on less effective strategies such as informal insurance and involuntary diet changes as risk coping mechanisms overall the findings suggest that transforming agriculture towards a more diversified cropping system is a viable pathway for improving diets welfare risk management and the resilience of rural households

how much income redistribution an explanation based on vote buying and corruption this paper studies how income tax rates are determined and how they are related to government corruption in the form of fund capture a model is presented where rich voters can block redistribution by buying the votes of some poor voters in equilibrium there is only limited redistribution and income tax rates are a negative function of government corruption when rich voters can bribe the government an additional equilibrium with zero taxation is possible the link between corruption and tax rates is tested using cross country data the empirical evidence is fully consistent with the predictions of the model

household inventories and marketed surplus in semisubsistence agriculture a model of semisubsistence agriculture explicitly accounting for the ability of farm households to hold inventories of staple foods is developed comparative statics analysis highlights the potential importance of wealth effects attributable to price induced changes in the value of household inventories empirical results for three groups of households in an indian village confirm that failure to account for household inventories leads to an overstatement of the responsiveness of both consumption demand and marketed surplus

consumption versus asset smoothing testing the implications of poverty trap theory in burkina faso abstract despite solid theoretical foundations for the notion that poor borrowing constrained households will intertemporally manage assets to smooth consumption the consumption smoothing hypothesis has not always withstood empirical scrutiny this paper reassesses the intertemporal asset management problem with a poverty trap model and shows that we would expect to see asset smoothing not consumption smoothing in the neighborhood of critical asset levels at which optimal accumulation behavior bifurcates we then employ threshold estimation techniques to empirically confirm the co existence of consumption and asset smoothing regimes using a household panel data set from west africa households above the estimated threshold almost completely insulate their consumption from weather shocks whereas those below the threshold do not these results not only indirectly provide evidence of the existence of poverty traps but also speak to the level and incidence of the costs of uninsured risk

votes and violence evidence from a field experiment in nigeria following the wave of democratization during the 1990s elections are now common in low income societies however these elections are frequently flawed we investigate the nigerian general election of 2007 which is to date the largest election held in africa and one seriously marred by violence we designed and conducted a nationwide field experiment based on randomized anti violence grassroots campaigning we find direct effects on violence outcomes from exploring both subject surveying and independent data sources crucially we establish that voter intimidation is effective in reducing voter turnout and that the violence was systematically dissociated from incumbents we suggest that incumbents have a comparative advantage in alternative strategies vote buying and ballot fraud voter intimidation may be a strategy of the weak analogous to terrorism

land and power theory and evidence from chile many employment relationships concede rents to workers depending on the political institutions the presence of such rents allows employers to use the threat of withdrawing them to control their workers political behavior such as their votes in the absence of secret ballot we examine the effects of the introduction of the secret ballot in chile in 1958 on voting behavior before the reforms localities with more pervasive patron client relationships tended to exhibit a much stronger support for the right wing parties traditionally associ ated with the landed oligarchy after the reform however this difference across localities completely disappeared jel d72 n46 o13 o15 o17

the role of local officials in new democracies evidence from indonesia this paper shows that the body of appointed officials that a new democracy inherits from the previous regime is a key determinant of the extent of electoral fraud and clientelistic spending in new democracies i develop a model that predicts that appointed officials have stronger incentives to influence voters during national level elections because of their career concerns i test the implications of the model using data from indonesia s transition to democracy both the pattern of alignment of electoral results between village and district levels and the pattern of subsequent turnover of appointed village heads corroborate the predictions of the model

wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

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

value for money vote buying and politician accountability abstract the prevalence of vote buying is widely identified as a cause of poor governance in the developing world potential mechanisms for this relationship include the selection of lower quality politicians and the reduced accountability experienced by politicians once elected in this paper we present the first experimental evidence in support of the second channel of reduced accountability using data from laboratory experiments conducted in the u s and kenya we find that vote payments reduce voters willingness to hold politicians accountable holding fixed politician identity voters who receive payments are less willing to punish the politician for rent seeking and this reduction in punishment is larger in magnitude when payments are widely targeted unsurprisingly the politician then engages in a higher level of rent seeking a simple model of multi faceted social preferences encompassing reciprocity and inequality aversion is consistent with these findings

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

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

land property rights and resource allocation abstractin this paper we review the most significant empirical literature on the causal effects of land property rights the literature indicates that secure property rights boost investment in both rural and urban areas these effects however do not appear to be the result of improved credit conditions in rural areas clear land rights also lead to increases in productivity and farm earnings in contrast for urban areas the evidence for an effect on earnings is mixed we find little empirical evidence to suggest that land titling programs enhance the development of land markets finally some evidence suggests that land titling induces changes in household structure that foster human capital accumulation and may help to increase the incomes of future generations

what drives the global land rush the authors review evidence regarding the size and evolution of the land rush in the wake of the 2007 8 boom in agricultural commodity prices and authors study the determinants of foreign land acquisition for large scale agricultural investment the use of data on bilateral investment relationships to estimate gravity models of transnational land intensive investments confirms the central role of agro ecological potential as a pull factor however this finding contrasts the standard literature insofar as the quality of the destination country s business climate is insignificant and weak tenure security is associated with increased interest for investors to acquire land in the country policy implications are discussed

risk coping and starvation in rural china we use a 3 year panel from two poor provinces in southern china to examine the nature of risks to which rural households are exposed and their ability to insure calorie consumption and spending of total consumption against idiosyncratic shocks to their income we find that idiosyncratic risks are indeed the main source of income variation in the sample consumption is better insured than total spending unlike total spending where full insurance is rejected in most cases calorie intake is completely insured for both land rich and land poor households in both provinces access to even modest amounts of land significantly enhances households ability to guard against total spending land rich households are much better insured against total spending than land poor households the results are robust across model specifications although generalized method of moments gmm estimations increase the magnitude of difference in total spending between the land rich and the land poor policies targeting poverty red

consumption and the timing of income risk abstract when formulating a plan for savings does the timing of income risks matter should one be concerned with whether uncertainty in income is in the near term or the distant future of course and the impact of the timing of income risk is the subject of this article using a three period framework we provide approximate solutions for optimal consumption choices for preferences that display constant relative risk aversion and derive the relationship between innovations to income and innovations to consumption growth these results are contrasted with those for quadratic preferences and preferences that display constant absolute risk aversion we analyze consumption saving plans for several different situations of near term and distant future income risk and different kinds of preferences we conclude with a demonstration of the high degree of accuracy of our consumption approximations by comparing them to exact values computed by stochastic simulation

clientelism in indian villages abstract we study the operation of local governments panchayats in rural maharashtra india using a survey that we designed for this end elections are freely contested fairly tallied highly p

voting as communicating this paper develops a model where voters trade off two different motives when deciding how to vote they care about current decision making they are strategic but they also care about communicating their views about their most preferred candidate so as to influence future elections by influencing other voters opinion and or party positioning in effect voters in this model are intermediate between strategic and sincere voters of conventional models in elections with more than 2 candidates this allows us to better investigate the relative efficiency of various electoral systems our main conclusion is that since voting is used as a communication device electoral systems should be designed to facilitate efficient communication e g by opting for 2 round systems rather than 1 round systems

inequality and insurgency maldistribution of land in agrarian societies is commonly thought to be an important precondition of mass political violence and revolution others argue that because of the difficulty of mobilizing rural populations for political protest land maldistribution is irrelevant except as part of an inegalitarian distribution of income nationwide these rival inequality hypotheses have significant implications with respect to the kinds of reforms likely to reduce the potential for insurgency in a society they are tested using the most comprehensive cross national compilation of data currently available on land inequality landlessness and income inequality support is found for the argument that attributes the greater causal import to income inequality moreover the effect of income inequality on political violence is found to hold in the context of a causal model that takes into account the repressiveness of the regime governmental acts of coercion intensity of separatism and level of economic development

electoral competition and special interest politics have fixed positions on some issues but vary their positions on others in order to attract votes and campaign contributions in this context we examine whether special interest groups are governed by an electoral motive or an influence in their campaign giving and how their contributions affect the equilibrium platforms we show that each party is induced to behave as if it were maximizing a weighted sum of the aggregate welfares of informed voters and members of special interest groups the party that is expected to win a majority of seats caters more to the special interests

the importance of the savings device in precautionary savings empirical evidence from rural bangladesh we test if precautionary behavior in the consumption decisions of rural households differs across the forms of savings using monthly panel data from bangladesh we find that on average the savings device does not matter but that the effect of income on savings indeed depends on the savings device precautionary savings in the form of staple grain are relatively constant across income quartiles while nongrain precautionary savings vary across income quartiles previous studies which treat these two types of savings devices as fungible misdiagnose the reasons for and by extension the market failures behind a large percentage of the precautionary savings held by rural households

reflections on macroeconomics the turmoil that has characterized macroeconomics for at least a decade originated with the inflation that emerged in the late 1960 s and persisted stubbornly throughout the 1970 s the inability of the neoclassical synthesis to model inflation convincingly spawned the new classical models because they infer macroeconomic results more directly from principles of maximizing behavior they appeal to some as more rigorous many others reject them as irrelevant because neither the microeconomic behavior that these models postulate nor their macroeconomic implications are realistic the central postulates are that all agents are price takers and that all markets clear in the sense of walrasian auction markets in a dynamic or multiperiod context this means markets clear in rationally expected future prices the most controversial implications are policy ineffectiveness and in some versions the proposition that inflation could be eliminated with little cost in real output as one of those who was unimpressed with these more provocative postulates and implications i was distressed that anyone took them seriously and that the profession became so divided over important policy issues but it is also true that some more interesting ideas that were originally linked with the auction market model by robert lucas and other authors might not have been developed without the controversy one is that the rational expectations methodology should be applied in a thorough way to macroeconomic relations another is that private agents behavior will depend on the rules governing the conduct of policy or the policy regime i am optimistic that we are on the verge of generating more light and less heat than we have been recently the interesting new ideas and methodology that have developed in the course of the past decade s debates will continue to be explored but inevitably i believe these and other ideas will be examined within the framework of an economy that in crucial ways does not operate with auctionlike markets both the lack of empirical success with the classical postulates and the intellectual challenge of developing a more general micro foundation to supplant the auction model are pushing in this direction with this development the gap between rigor and reality should narrow as researchers differ less about the basic postulates underlying macro models

shocks and asset dynamics in ethiopia abstractthis article uses household survey panel data of 416 rural households to study asset dynamics in the northern highlands of ethiopia and the response of assets to shocks the period under examination 1996 2003 was marked by severe environmental shocks including a series of droughts the article empirically studies the nature of household asset paths over time using as the point of departure the theory on precautionary savings behavior results indicate that the response of assets to weather shocks the differential effect of these shocks on liquid and less liquid forms of wealth holdings and the nature of asset dynamics are all consistent with the implications of a precautionary motive for holding wealth

welfare impacts of improved chickpea adoption a pathway for rural development in ethiopia we analyse the impact of improved chickpea adoption on welfare in ethiopia using three rounds of panel data first we estimate the determinants of improved chickpea adoption using a double hurdle model we apply a control function approach with correlated random effects to control for possible endogeneity resulting from access to improved seed and technology transfer activities to instrument for these variables we develop novel distance weighted measures of a household s neighbours access to improved seed and technology transfer activities second we estimate the impact of area under improved chickpea cultivation on household income and poverty we apply a fixed effects instrumental variables approach where we use the predicted area under cultivation from the double hurdle model as an instrument for observed area under cultivation we find that improved chickpea adoption significantly increases household income while also reducing household poverty finally we disaggregate results by landholding to explore whether the impact of adoption has heterogeneous effects adoption favoured all but the largest landholders for who the new technology did not have a significant impact on income overall increasing access to improved chickpea appears a promising pathway for rural development in ethiopia s chickpea growing regions

beyond the machine clientelist brokers and interest organizations in latin america organizational membership is one of the strongest yet overlooked predictors of vote buying across latin america we argue that this relationship is driven by the fact that politicians outsource some of their vote buying efforts to interest associations in contrast to the existing literature that focuses on party brokers who are loyal to a single political machine we introduce the concepts of organizational brokers who represent interest associations and renegotiate ties to political parties between election cycles and hybrid brokers who split their loyalties between an interest association and a single political party we illustrate the operation of these alternative broker types through case studies of street vending organizations in an uninstitutionalized party system colombia and peasant organizations in an institutionalized party system mexico attention to the role of brokers and the organizations that they represent has implications for political accountability collective action and the

risk and household grain management in developing countries a dynamic model is presented of a household s joint production storage and trade decisions when facing transaction costs and risk in prices and yields grain management decisions balance the goals of maximising profits and reducing consumption price risk model solutions calibrated to chinese data show that grain s consumption role makes it an attractive form of precautionary saving even when households have access to credit the joint nature of production and savings decisions limits the income loss associated with risk coping and the desire to store grain can explain why subsistence households are frequently net purchasers but rarely net sellers of grain

political connections and social networks in targeted transfer programs evidence from rural ethiopia abstractdespite increasingly large scale social protection programs in africa we have limited evidence on the local political economy of their allocation we investigate community based processes for food aid allocation and the role of political and social networks using the case of ethiopia in the aftermath of a serious drought in 2002 local political authorities are in charge of food transfers in terms of free food aid or food for work programs we find that although targeting is clearly imperfect free food aid is responsive to need as well as targeted to households with less access to support from relatives or friends we also find a strong correlation with political connections households with close associates in official positions have more than a 12 higher probability of obtaining free food than households that are not well connected this effect is large someone without political connections has the same probability of getting food aid as someone more than twice as rich but with these conne

empowerment and efficiency tenancy reform in west bengal the paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity theoretically the net impact of tenancy reform is shown to be a combination of two effects a bargaining power effect and a security of tenure effect analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the indian state of west bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there

the political value of land political reform and land prices in chile in this article we argue that when patron client relations are grounded in economic relationships such as between landlord and worker we should expect clientelism to influence not just how public policy the state and the political system work but also how the economy works we develop a simple model of the economic consequences of electoral clientelism when voting behavior can be observed landlords patrons provide economic rents to workers and in exchange workers vote for parties favored by landlords as votes are used by the landlords to accumulate political rents vote control increases the demand for labor and for land the model implies that the introduction of the australian ballot which destroys this form of clientelism should lead to a fall in the price of land in those areas where patron client relationships are strongest we test the predictions of the model by examining in detail the evolution of land prices in chile around may 31 1958 for which we collected original data a characteristic of rural chile at this time were patron client relations based on the inquilinaje system by which a worker the inquilino entered into a long term often hereditary employment relationship with a landlord and lived on his landlord s estate we show that the introduction of the australian ballot in 1958 led to a fall of about 26 in land prices in the areas where these patron client relationships were predominant