determinants of off farm work and its effects on farm performance the case of norwegian grain farmers limited attention has been given in the literature to the impact of off farm work on farm performance more knowledge about the determinants of part time farming and its effects on farm performance could help policymakers to introduce better targeted rural development policies the aim in this article is to fill part of the above mentioned gaps by analyzing factors that influence the choices of off farm work by either the farmer alone or jointly by both the farmer and partner and simultaneously examining how off farm work influences farm performance these analyses were based on an unbalanced panel data set from norwegian grain farms during 1991 to 2005 among the determinants of off farm work hours we found that in addition to demographic time trend and some regional effects there was a significant negative effect of farm output on farmers off farm work hours the production function results revealed that off farm work had a positive effect on farm output at first increasing but then decreasing with increase in hours spent in off farm work furthermore our analysis revealed no systematic effect of off farm work on farm technical efficiency

can financial ignorance be bliss financial illiteracy is widespread and leads to bad financial decisions individuals cannot answer basic questions about inflation compounding and diversification this article argues that financ

trade and direct investment in producer services and the domestic market for expertise foreign producer services can provide substantial benefits for domestic firms we build on earlier monopolistic competition models of intermediate producer services in this paper results show that 1 while foreign services are partial equilibrium substitutes for domestic skilled labour they may be general equilibrium complements 2 service trade can provide crucial missing inputs that reverse comparative advantage in final goods 3 the optimal tax on imported services may be a subsidy and 4 in our dynamic formulation there may be earnings losses for immobile workers along a transition path that suggest potentially important equity consequences of reform jel classification f12 f16 f23 commerce international et investissement direct dans les services de production et le marche interieur de l expertise les services de production en provenance de l etranger peuvent engendrer des avantages substantiels pour les entreprises domestiques dans ce memoire les auteurs construisent sur la base de certains modeles anterieurs de concurrence monopolistique de services de production intermediaires les resultats montrent que 1 alors que les services de l etranger sont des substituts pour le travail domestique specialise en equilibre partiel en equilibre general ils peuvent etre des complements 2 le commerce de services peut fournir des intrants cruciaux qui manquent et ce faisant renverser les avantages comparatifs dans les produits finaux 3 la fiscalite optimale imposee sur les services importes peut etre une subvention et 4 dans la formulation dynamique du modele il peut y avoir perte de revenus pour les travailleurs immobiles le long du sentier de transition ce qui suggere qu il peut y avoir des consequences importantes au plan de l equite associees a certaines reformes

borrowing constraints human capital accumulation and growth abstract borrowing constraints increase aggregate savings and therefore may increase growth this paper argues however that by reducing human capital accumulation borrowing constraints also have negative effects on growth these effects are discussed in an overlapping generations model with endogenous growth empirical evidence for oecd and developing countries lend support to the main predictions of the model

valuing lost home production of dual earner couples using a life cycle model in which women divide their time between home and market work we establish a link between retirement wealth and the value of forgone home production we use data from the health and retirement study to estimate the model s parameters and adjust the growth rate of gdp to reflect reductions in non market output we find that the value of forgone home production is modest about 25 percent of women s measured earnings

interdependency of personal savings and labour force participation of the elderly and social security wealth a time series analysis using japanese annual time series data covering the period 1950 1982 our study shows that social security wealth during this period depressed personal savings as a result there was a reduction of approximately 79000 yen of wealth per capitain real terms from 1960 to 1980 however the declining labour force participation of elderly males brought about for example by earlier retirement stimulated personal savings by an estimated 13000 yen over the same period the results indicate that the benefit effect tends to outweigh the retirement effect furthermore this study has identified a negative interdependency between the level of personal savings and the retirement behaviour of elderly males a typical male worker saves more before retirement if that individual expects to stay a shorter time in the labour market retirement behaviour is less responsive to a change in personal savings behaviour than vice versa

the strategic equivalence of rent seeking innovation and patent race games abstract we establish the strategic equivalence of a variety of rent seeking contests innovation tournaments and patent race games the results allow us to disentangle negative and positive externalities and to apply theorems and results intended for rent seeking games to other games and vice versa we conclude with several examples that highlight the practical utility of our results

determinants of household saving in taiwan growth demography and public policy this article examines the determinants of household saving in the process of economic development in the light of the taiwanese experience during the period 1952 99 the methodology involves the estimation of a saving rate function derived within the life cycle framework it is found that the household saving rate rises with both the level and the rate of growth of household disposable income the real deposit rate has a significant positive impact but the magnitude of the impact is modest public saving seems to crowd out private saving but less than proportionately while both old and young dependency in population have a negative impact on the saving rate the magnitude of the impact of the former is far greater than that of the latter increased availability of social security provisions and enhanced credit availability also seem to reduce saving as regards methodological implications the study casts doubt on the usual practice of lumping together public corporate and household savings in savin

the scope and limits of financial liberalisation in developing countries a critical survey this article reviews the growing literature on financial reform in developing countries we draw both on the theoretical contributions outlining the case for and against liberalisation as well as on the experience of many developing countries with liberalisation we argue that the existence of market failures in financial markets hampers the liberalisation process and indeed suggests that the simple liberalising strategy envisaged in much of the literature is inappropriate we argue instead for an alternative strategy which integrates some aspects of liberalisation with the development of appropriate financial institutions designed to serve best the needs of the real economy

liquidity profiles of poor mexican households summary buffer stock savings theories predict that more vulnerable households build up liquid savings in order to cope with income variability using data from 1801 marginalized mexican households this paper examines how household liquidity levels vary by income level and use of banking the paper finds strong evidence of buffer stock savings in poor and vulnerable households it also shows that membership in a financial cooperative is a determinant of higher household liquidity levels financial instruments are used more to confront idiosyncratic shocks than systemic shocks idiosyncratic shocks and remittances are important determinants of liquidity levels in unbanked households

a parametric approach to efficiency measurement using a flexible profit function although the idea of measuring productive efficiency goes back to farrell 8 the econometric estimation of it began with aigner lovell and schmidt 1 and meeusen and van den broeck 17 in aigner lovell and schmidt 1 and meeusen and van den broeck 17 and their extensions which incorporate either cost minimizing or profit maximizing behavior efficiency is measured relative to a frontier an alternative to the frontier approach that started with hopper 10 and lau and yotopoulos 15 is to measure efficiency mostly allocative without estimating any frontier in the latter approach allocative inefficiency defined as the deviations of the first order conditions of profit maximization or cost minimization is modeled through shadow virtual prices which are parametric functions of observed prices the shadow price approach is extensively used in the literature on efficiency measurement because it has an advantage over the frontier approach which requires distributional assumptions on the error terms especially in cross sectional models in empirical studies on the efficiency of regulated utilities it has been argued that due to the presence of rate of return and other regulations these firms optimize with respect to shadow prices instead of observed prices these studies often fail to consider the possibility that the firms under question may be technically inefficient as well which can affect allocation of inputs 1 this issue is important in both cost minimization and profit maximization cases this paper uses a profit maximization framework and develops a generalized profit function approach that accommodates both technical and allocative inefficiencies in the context of a panel data model the relationship between production technical inefficiency loss of output due to technical inefficiency and profit technical inefficiency profit loss due to technical inefficiency is derived for a flexible production function presently it is believed that the derivation of this relationship is only possible for the self dual production functions we show that if the profit function is translog some popular approaches used in modeling technical and allocative inefficiency are incorrect in particular we show that i models that fail to include technical inefficiency and consider only allocative inefficiency yield biased and inconsistent parameter estimates ii if technical inefficiency is neglected the measure of technical change will be biased the generalized profit function developed here is capable of distinguishing between technical change and time varying technical inefficiency such a distinction is not possible if for example one uses

stackelberg versus cournot oligopoly equilibrium abstract we compare an m firm cournot model with a hierarchical stackelberg model where m firms choose outputs sequentially the stackelberg equilibrium price is lower so output and total surplus are higher total profits are lower while the first mover in a stackelberg duopoly earns more than a cournot duopolist this is not necessarily true for m 2 we find a surprisingly simple relation which determines whether cournot profit exceeds the stackelberg leader s finally we consider a game with firms choosing whether to reveal their outputs which includes stackelberg and cournot as possible outcomes the equilibrium is stackelberg

the impact of macroeconomic variables demographic structure and compulsory superannuation on share prices the case of australia this paper investigates the impact of the population in the 40 64 age band on share prices using an annual time series data set for the period 1965 2002 and the impact of the superannuation fund on share prices using quarterly time series data for the period 1988 q1 to 2002 q4 in accordance with poterba s suggestion we have also used real gdp interest rates and inflation as control variables in both models using cointegration and the error correction mechanism we found that the specified models are robust the variables under study for both models are cointegrated and long run relationships exist between the variables we also found that the population in the 40 64 age band and the superannuation fund positively and significantly affect share prices separately in the long run

the determinants of private saving in india abstract this paper examines the determinants of private saving in the process of economic development in the light of the indian experience it is found that the saving rate rises with both the level and the rate of growth of disposable income the real interest rate on bank deposits has a significant positive impact but the magnitude of the impact is modest public saving seems to crowd out private saving but less than proportionately furthermore the spread of banking facilities in the economy and the inflation rate have a positive impact and changes in the external terms of trade a negative impact on private saving

portfolio choice with puts evidence from variable annuities this study investigated the asset allocation behavior of individuals who select an out of the money long dated longevity put option on their investment funds the asset allocations of these people within their variable annuity subaccounts are 5 30 percent more risky than the allocations of those who do not choose this protection investors who do not choose the longevity put option follow the classic life cycle age phased reduction in equity a rudimentary model of utility maximizing behavior is suggested that justifies the increased allocation to risk as long as the investor understands the payoff structure of the longevity put and is willing and able to exercise the annuity option if and when it matures in the money

introducing individual transferable quotas on nitrogen in danish fresh water aquaculture production and profitability gains abstract the purpose of this paper is to investigate the potential gains from changing the existing regulatory framework for fresh water aquaculture production in denmark the regulatory framework is changed from an input regulation based on farm specific feed quotas to an individual transferable quota system on nitrogen pollution the regulatory change is analyzed using data envelopment analysis to model the underlying production structure the effect of allowing trading of nitrogen quotas on production and profitability is analyzed in a joint production model with good and bad output under different behavioral and technical assumptions whilst keeping the overall pollution level of nitrogen constant furthermore the effect of a catchment area restriction on nitrogen is analyzed to comply with the eu water framework directive the paper quantifies the gains of a policy change from a command and control system to an incentive based system the estimated results suggest that the changed regulation could increase danish aquaculture production by 16 to 55 whilst actual profitability could be increased 5 to 10 times

standard auctions with financially constrained bidders we develop a methodology for analyzing the revenue and efficiency performance of auctions when buyers have private information about their willingness to pay and ability to pay we then apply the framework to scenarios involving standard auction mechanisms in the simplest case where bidders face absolute spending limits first price auctions yield higher expected revenue and social surplus than second price auctions the revenue dominance of first price auctions over secondprice auctions carries over to the case where bidders have access to credit these rankings are explained by differences in the extent to which financial constraints bind in different auction formats

the interest elasticity of savings in developing countries the existing evidence abstract this paper presents a critical analysis of some of the most recent empirical work on the interest elasticity of savings in developing economies supported by a set of empirical results the paper argues that a the real interest elasticity of savings is not easily detected using the existing empirical models which generally yield insignificant interest rate parameters in the seventies b the existing models suffer from serious defects that make if very difficult to interpret the estimated parameters

the level and distribution of global household wealth the level of average household wealth in all countries is estimated via the determinants of assets and debts for 39 countries which have balance sheet or survey data the distribution of wealth in all countries is inferred from information on the pattern of wealth ownership for 20 countries covering 59 of world population combining the level and distribution figures suggests that median global wealth was ppp 8 635 in the year 2000 and that ppp 518 361 was needed to belong to the top percentile the top decile owned 71 of world wealth and the global gini value was 0 802

bequest and wealth accumulation are some pieces of the puzzle missing the lively debate between laurence j kotlikoff and franco modigliani presented in the spring 1988 issue of this journal concerns an old question what is the main motivation for saving and therefore for the accumulation of wealth more specifically what are the respective contributions to aggregate wealth of 1 saving for retirement also known as hump saving 2 precautionary savings and unintended bequests due to uncertainty about the length of life and 3 planned bequests of course other wealth holding motives are possible but let us follow kotlikoff and modigliani in setting them aside for now if modigliani s life cycle hypothesis is to be viewed as a close to approximation of reality then the bulk of existing wealth should have resulted from some combination of hump and precautionary saving our comment on this dispute attempts to advance two issues first the controversy involves an enormous gap between empirical estimates of the share of inherited wealth in total accumulation even though the estimates are often based on the same data we hope to clarify why the estimates vary so widely second the kotlikoff modigliani dispute is presented as an american issue with little extension abroad we will present some results from other countries that bear on the controversy some of the estimates from kotlikofi s paper originated in a 1981 paper he wrote with lawrence summers which is why we sometimes refer to his position as the kotlikoff summers argument in this comment the problem of conceptualizing the contribution of bequest to aggregate savings can be summarized with a thought experiment assume all bequests were confiscated

determinants of private savings behaviour in turkey this study investigates the effects on private saving rates of a number of policy and non policy variables the analysis covers the period 1968 1994 the empirical private saving model for turkey is estimated the findings support the hypothesis that private saving rates have strong inertia the evidence indicates that government saving does not tend to crowd out private savings and the ricardian equivalence does not hold strictly income level has a positive impact on private saving rate and growth rate of income is not statistically significant from a policy point of view financial depth and development measures in turkey suggest that countries with deeper financial systems tend to have higher private saving rates private credit and real interest rates try to capture the severity of the borrowing constraints and the degree of financial repression for turkey moreover the negative impact of life expectancy rate lends support to the life cycle hypothesis the precautionary motive for saving is suppor

aggregate spending and the terms of trade is there a laursen metzler effect this paper investigates the spending and current account effects of terms of trade shifts in a model where households maximize utility over an infinite planning period in the framework developed here an economy specialized in production must experience a fall in aggregate spending and a current surplus as a result of an unanticipated permanent worsening in its terms of trade the paper s model thus provides a setting in which the current account deficit predicted by laursen and metzier harberger and others fails to materialize

can high costs justify weak demand for the home equity conversion mortgage home equity conversion mortgages hecms implicitly bundle nondefaultable credit lines with put options that let borrowers or their heirs sell mortgaged homes for the credit line limit when borrowers move or die the put option s value net of closing costs bounds hecm s value to borrowers below older homeowners weak demand is commonly attributed to hecm s high costs and the government prices insurance intending to avoid subsidy however simulations indicate put value has often exceeded closing costs even ignoring other embedded options and using backward looking expectations near the recent price cycle peak these results make weak demand more puzzling

on the long run evolution of inheritance france 1820 2050 this paper attempts to document and account for the long run evolution of inheritance we find that in a country like france the annual flow of inheritance was about 20 25 of national income between 1820 and 1910 down to less than 5 in 1950 and back up to about 15 by 2010 a simple theoretical model of wealth accumulation growth and inheritance can fully account for the observed u shaped pattern and levels using this model we find that under plausible assumptions the annual bequest flow might reach about 20 25 of national income by 2050 this corresponds to a capitalized bequest share in total wealth accumulation well above 100 our findings illustrate the fact that when the growth rate g is small and when the rate of return to private wealth r is permanently and substantially larger than the growth rate say r 4 5 vs g 1 2 which was the case in the 19th century and early 20th century and is likely to happen again in the 21st century then past wealth and inheritance are bound to play a key role for aggregate wealth accumulation and the structure of lifetime inequality contrarily to a widely spread view modern economic growth did not kill inheritance

finite horizons life cycle savings and time series evidence on consumption abstract this paper develops an explicitly aggregated life cycle model which allows for finite horizons and declining individual labor supply the model can generate a common upward trend in aggregate consumption labor income and nonhuman wealth without relinquishing hall s random walk at the micro level life cycle factors are shown to imply that consumption changes should be a predictable and b smoother than in the infinite horizon model econometric evidence using postwar u s data suggests that neither consumption s predictability nor its excess smoothness can be fully accounted for by life cycle considerations

tariffs and capacity utilization by monopolistically competitive firms abstract this paper examines the effect of a tariff imposed on a monopolistically competitive mc sector on firm output in a 2 2 2 model with nonhomothetic technology if the mc sector is capital intensive then a tariff will improve the terms of trade lower home firm demand elasticity but raise firm output relative to foreign firms if the mc sector is labor intensive then excess supply for firm output may be decreasing in price so the tariff may worsen the home country s terms of trade home firm demand elasticity falls but firm output rises relative to the partner country these results qualify conclusions based on single sector and single country models

recycling energy taxes impacts on a disaggregated labour market abstract this paper analyses the impacts of energy taxes whose revenue is recycled to reduce gross wages and increase employment the main novel feature of this paper is the attempt to assess the effectiveness of this fiscal reform by using a labour market model in which both skilled and unskilled workers are used in the production process this segmentation enables us to compare a policy which aims at reducing unskilled workers wages as in the original delors white book with a policy in which the environmental fiscal revenue is used to reduce the gross wage of all workers moreover two policy scenarios will be considered a non co operative one in which each country determines the optimal domestic energy tax to achieve a given employment target and a co operative one in which the energy taxes are harmonised to equalise marginal abatement costs in the eu and in which the employment target is set for the eu our results show that i an employment double dividend can be achieved in the short run only even if a trade off between environment and employment always exists ii the effect on employment is larger when the fiscal revenue is recycled into all workers gross wages rather than into unskilled workers only iii a co operative policy leads to even larger benefits in terms of employment provided that an adequate redistribution of fiscal revenues is adopted by eu countries

scandinavian evidence on growth and age structure the age distribution is seldom taken into consideration in macroeconometric papers in spite of the fact that established economic theories predict that demographic factors will affect the aggregate economy this paper investigates empirically the influence of age variables on growth unlike recent papers on the subject the focus here is on investigating the relationship on annual data for individual scandinavian countries estimations of a typical growth specification augmented with age variables are run and the results indicate that economic growth is indeed affected by the age distribution where the demographic structure catches the mediumrun trend in the growth rate the robustness of this finding is first checked by instrumental variable regressions to control for the potential endogeneity of the economic variables and then by running ridge regressions to mitigate the collinearity between the age variables rarement les etudes macro economiques considerent la distribution de la population par ge

world real interest rates a global savings and investment perspective over the past 15 years long term interest rates have declined to levels not seen since the 1970s this article explores possible shifts in global savings and investment that have led to this fall in the world real interest rate there are several key findings first the authors identify the relative weakness in investment demand as more important than the relative increase in desired global savings to explain the decline in global interest rates second the results indicate that the key factors explaining movements in savings and investment are variables that evolve relatively slowly over time such as labour force growth and age structure the conclusions suggest that over the coming years world real interest rates are likely to continue to adjust slowly reflecting long term trends

parametric estimation of technical and allocative inefficiency with panel data the error components approach to estimating allocative inefficiency imposes restrictive assumptions on the distributions of the errors and functional form the parametric approach does not require special assumptions about the error distribution or technology but typically assumes technical efficiency or restrictive functional forms the parametric approach also allows for systematic firm responses to shadow prices the authors generalize the parametric approach to a panel data setting and show that input and firm specific allocative inefficiency as well as firm specific technical inefficiency can be identified and estimated using a flexible functional form this is demonstrated empirically with an application to u s airlines copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

structural change and economic growth this paper presents a model in which a country s measured average propensity to save endogenously rises when its economy industrializes the model has agricultural and manufacturing sectors only agriculture uses land if at early dates income per capita is low agricultural consumption is important land is valuable and capital gains on land may constitute most wealth accumulation leaving the country s nipa aps low if exogenous technological progress raises incomes over time engel s law shifts demand to manufactured goods then land s portfolio importance relative to reproducible capital diminishes and the national income and products account saving rate can rise this paper presents a model illustrating that structural change due to the operation of engel s law can systematically affect an economy s measured saving rate according to the model a country s national income and product account average propensity to save will rise naturally if and when technological progress sufficiently lifts its income per capita this suggests a new interpretation of time series evidence while saving rates historically tend to be higher after industrialization than before one cannot automatically infer that changing wealth accumulation behaviour led to modernization rather structural change accompanying growth may have caused the rise in saving rates this paper also warns that international trade could lead to a contrasting pattern in cross sectional data highincome nations might contemporaneously have lower measured saving rates than poor countries recent work by mankiw romer and weil 1992 islam 1995 mankiw 1995 and others investigates long run patterns the analyses assume that each economy has attained or is moving toward a steady state equilibrium as in solow 1956 a country s steady state level of per capita gdp depends on its average propensity to save aps its rate of population growth the efficiency of its production sector etc regression outcomes seem consistent with the solow model s prediction that a higher aps will ceteris paribus lead to a higher level of income per capita the idea is that heterogeneity of exogenous preferences leads to international differences in aps s and in turn to long run differences

life cycle savings bequest and a diminishing impact of scale on growth the present paper shows that the savings motive critically affects the size and sign of scale effects in standard endogenous growth models if the bequest motive dominates the scale effect is positive if the life cycle motive dominates the scale effect is ambiguous and may even be negative

specification and estimation of production risk risk preferences and technical efficiency this article deals with specification and estimation of risk preferences production risk and technical inefficiency it makes contribution in three separate areas of production economics first we model producers attitude toward risk and derive risk preference functions without assuming any parametric form of the utility function and any distribution of the error term representing production risk when risk arises from production uncertainty and technical inefficiency second the standard production risk model is extended to accommodate technical inefficiency and producers attitude toward risk finally the technical efficiency model is generalized to accommodate production risk and producers attitude toward risk copyright 2002 oxford university press

globalization and household saving is there a link abstractthis article proposes that globalization can affect household saving in the long run in a number of ways social interactions between different cultures can induce value changes which can result in shifts in consumption and saving behaviour international trade allows consumers to have easier access to status goods stimulating consumption and dampening saving extending from veblen s conspicuous consumption theory saving may also decrease when globalization leads to greater population mobility and fosters urbanization thus enhancing the importance of consumption as a way to display wealth in addition financial globalization reduces credit constraints and allows households to save less using cross country data from the united nations un the oecd and other sources this article finds evidence that household saving declines as globalization deepens especially in the social and cultural dimensions

aggregate consumption function and public social security the first time series study for a developing country turkey this article is the first attempt in the literature to investigate the effects of public social security on aggregate consumption in a time series setting for a developing country turkey that has one of the most generous social security systems in the organization for economic cooperation and development oecd region in order to quantify the social security variable this article uses the social security wealth ssw series calculated for turkey in a separate study this study indicates that ssw is the largest part of the household wealth in turkey and therefore should not be ignored in the aggregate consumption studies the results show that its effect on consumption is positive and robust

the effect of language on economic behavior evidence from savings rates health behaviors and retirement assets languages dier widely in the ways they encode time i test the hypothesis that languages that grammatically associate the future and the present foster future oriented behavior this prediction arises naturally when well documented eects of language structure are merged with models of intertemporal choice empirically i nd that speakers of such languages save more retire with more wealth smoke less practice safer sex and are less obese this holds both across countries and within countries when comparing demographically similar native households the evidence does not support the most obvious forms of common causation i discuss implications for theories of intertemporal choice

population age structure saving capital flows and the real exchange rate a survey of the literature this paper surveys the existing literature on the effects of population age structure on saving capital flows and the real exchange rate we build on previous surveys of age structure and saving behaviour by including extensive discussion of international linkages specifically the impact on capital flows and real exchange rates we also point to unresolved issues that need to be addressed given that population aging has serious policy implications in the developed economies these days

life cycle individual thrift and the wealth of nations this paper provides a review of the theory of the determinants of individual and national thrift that has come to be known as the life cycle hypothesis lch of saving applications to some current policy issues are also discussed part i deals with the state of the art on the eve of the formulation of the lch some 30 years ago part ii sets forth the theoretical foundations of the model in its original formulation and later amendment calling attention to various implications distinctive to it and sometimes counter intuitive it also includes a review of a number of crucial empirical tests both at the individual and the aggregate level part iii reviews some applications of lch to current policy issues though only in sketchy fashion as space constraints prevent fuller discussion this abstract was borrowed from another version of this item

saving behaviour under imperfect financial markets and the current account consequences the authors seek to establish the general empirical importance of investment motivated saving their hypothesis is that inadequate financial intermediation will induce agents to save more in order to undertake lumpy physical investment in the future the result is a positive relationship between the degree of capital market imperfection and the size of the private saving rate a simulation exercise calibrated on taiwan found a close match between the simulated and actual data regression analysis established that the private saving rate was negatively related to the level of financial market sophistication copyright 1994 by royal economic society

estimation of output and input technical efficiency using a flexible functional form and panel data the farrell 1957 concept of technical efficiency can be measured in two ways denoted output and input technical efficiency the empirical literature does not distinguish between the two measures and confusion exists regarding the required restrictions on technology for the specification of either measure with panel data the authors show how both types of efficiency when treated as fixed effects are to be specified in the context of a translog cost system technical efficiency enters the share equations only in the output case when homotheticity is not imposed the authors estimate their cost systems using panel data on u s airlines copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

optimal annuitization with stochastic mortality and correlated medical costs the conventional wisdom since yaari 1965 is that households without a bequest motive should fully annuitize their investments numerous frictions do not break this sharp result we modify the yaari framework by allowing a household s mortality risk itself to be stochastic due to health shocks a lifetime annuity still helps to hedge longevity risk but the annuity s remaining present value is correlated with medical costs such as those for nursing home care thereby reducing annuity demand even without ad hoc liquidity constraints we find that most households should not hold a positive level of annuities and many should hold negative amounts jel d14 d82 g23 i12 j14 j26

subscription of shares abstract the paper studies share subscription schemes and claims that these schemes are useful when it is desirable to let an item be held or a project be undertaken by a group of bidders examples of such instances include the privatization of state owned enterprises the introduction of strategic investors the procurement of large government construction projects the issuance of treasury bills and the resolution of the banks toxic assets i show that these share subscription schemes result in sale prices that do approach the fundamental value as the number of bidders increases this is in contrast to share auctions in wilson 1979 in which the nash equilibrium sale price can yield a significantly lower sale price than a unit auction

the determinants of household and private savings in thailand a broad set of possible determinants of household and private savings behaviour is examined through an in depth case study of thailand during the period 1960 to 2004 results suggest that an increase in economic growth inflation and terms of trade all have a significant positive impact on household and private saving rates in contrast the availability of bank credit tends to reduce household and private saving rates while an increase in both old and young dependency has a negative impact on household and private saving rates the magnitude of the impact on the former is far greater than that on the latter furthermore public saving seems to crowd out household and private saving but less than proportionately this reflects a possible role of fiscal policy in increasing national savings in the economy over and above these variables corporate saving is another important determinant of household saving an increase in the former brings about a significant reduction in the latter

savings of the elderly and desired bequests cross section data often show that the wealth of the elderly increases with age even at advanced ages these and other results suggest that the life cycle hypothesis of consumption should be augmented to include a bequest motive for saving in this paper the author proposes a model of bequests and a test for a bequ est motive using panel data he finds that over a ten year period the elderly in the data set dissaved in contradiction to most cross section results the test offers no support for a bequest motive copyright 1987 by american economic association

do the rich save more a new view based on intergenerational transfers do richer people have higher saving rates the short run and long run consumption functions have different answers to this important question which results in an important consumption puzzle that was a focus of macroeconomic research in the 1950s and 1960s in a recent empirical contribution dynan skinner and zeldes 2004 revive this old question and make this consumption puzzle more intriguing by showing that the average propensity to consume decreases not only with current income but also with lifetime income this paper provides a model that helps resolve this puzzle from an intergenerational perspective

data base for development analysis data base for development analysis an overview the paper provides an overview of the situation with respect to the quality and comparability of data commonly used in development analysis a section each is devoted to a discussion of macroeconomic i e national income and its components savings and investment exports and imports data demography population life expectancy fertility and mortality nutrition and health labour force employment and unemployment poverty and income distribution validation and cross checking of data from different sources the discussion is illustrated with examples drawn mainly from india the paper concludes with a set of recommendations for the improvement of data

economic inefficiency and environmental impact an application to aquaculture production abstract in industries characterized by frequent innovation and high productivity growth substantial variation in produced quantity and input use may occur leading to increased costs an effect that has received little attention is that inefficiency can exacerbate environmental impacts this effect is particularly important if environmentally damaging inputs are overused in addition to increasing firms costs such inefficiency can also increase the environmental impact of the firm s activity this makes the degree of inefficiency in an industry an issue for environmental regulators in this paper we estimate technical and allocative efficiency for a sample of norwegian salmon farmers our results show that both technical and allocative inefficiency on average are significant in explaining the level and variation in farm costs and that the main environmental impact due to inefficiency from the norwegian salmon aquaculture industry has its origin in technical inefficiency

social efficiency of bubbles in the grossman and helpman endogenous growth model abstract using a particular specification of the expectation process i show that a weak but permanent over evaluation of financial assets may exist in the grossman and helpman 1991 innovation and growth in the global economy mit press cambridge ma endogenous growth model with horizontal produce differentiation and that the resulting competitive equilibrium is socially optimal

perfect competition as the limit of a hierarchical market game abstract it is shown that competitive equilibrium can be seen as the limit of some hierarchical game in which the rights or information of the players can be strictly ordered

the impact of bad writing in economics we find significant style differences between articles written by economists for their professional journals and articles by the same economists in the wall street journal we find no evidence that style influences the professional success of economists which suggests that the private rewards to improving the quality of writing are low indeed each community of scholars has probably adopted a professionally correct writing style from which its members diverge little however scholars do alter their rhetorical style to communicate effectively with audiences other than the professional community this suggests that intra and inter group written communication by economists is efficient

on the share of inheritance in aggregate wealth europe and the usa 1900 2010 this paper provides historical series on the evolution of the share of inherited wealth in aggregate private wealth in europe france the uk germany sweden and the usa over the 1900 2010 period until 1910 the inheritance share was very high in europe 70 80 it then fell abruptly following the 1914 45 shocks down to about 30 40 during the 1950 80 period and is back to 50 60 and rising since around 2010 the us pattern also appears to be u shaped albeit less marked and with significant uncertainty regarding recent trends due to data limitations we discuss possible interpretations for these long run patterns

the modigliani puzzle abstract we find a surprisingly robust medium to long run relationship between investment and unemployment both over time as well as across countries these findings provide empirical support for models of the natural rate of unemployment that treat labour as a quasi fixed asset

the savings growth nexus for the malaysian economy a view through rolling sub samples the purpose of this study is to re investigate the savings growth nexus for the malaysian economy using bounds testing approach to cointegration and toda and yamamoto 1995 and dolado and lutkepohl 1996 tydl granger causality test this study covered the sample period from 1971 q1 to 2008 q4 the cointegration results suggest that the variables are moving together in the long run and the tydl granger causality results indicate that the relationship between savings and economic growth is bilateral in addition the rolling sub samples tydl granger causality test exhibited a relatively stable causal relationship running from savings to economic growth in malaysia particularly before the onset of asian financial crisis in 1997 1998

a direct test of the buffer stock model of saving recent models with liquidity constraints and impatience emphasize that consumers use savings to buffer income fluctuations when wealth is below an optimal target consumers try to increase their buffer stock of wealth by saving more when it is above target they increase consumption this important implication of the buffer stock model of saving has not been subject to direct empirical testing we derive from the model an appropriate theoretical restriction and test it using data on working age individuals drawn from the 2002 and 2004 italian surveys of household income and wealth one of the most appealing features of the survey is that it has data on the amount of wealth held for precautionary purposes which we interpret as target wealth in a buffer stock model the test results do not support buffer stock behavior even among population groups that are more likely a priori to display such behavior the saving behavior of young households is instead consistent with models in which impatience relative to prudence is not as high as in buffer stock models jel d91

intergenerational wealth mobility and the role of inheritance evidence from multiple generations this study estimates intergenerational correlations in mid life wealth across three generations and a young fourth generation and examines how much of the parent child association that can be explained by inheritances using a swedish data set we find parent child rank correlations of 0 3 0 4 and grandparents grandchild rank correlations of 0 1 0 2 conditional on parents wealth grandparents wealth is weakly positively associated with grandchild s wealth and the parent child correlation is basically unchanged if we control for grandparents wealth bequests and gifts strikingly account for at least 50 per cent of the parent child wealth correlation while earnings and education are only able to explain 25 per cent

the value of environment across efficiency quantiles a conditional regression quantiles analysis of rangelands beef production in north eastern australia in agricultural systems the value of environmental inputs can be measured using the production function approach whereby the marginal contributions of factors are associated with a shadow value under perfect competition and rationality assumptions however empirical studies show that inefficiency in production is common indicating that the rationality assumption is not met furthermore substantial evidence exists to suggest that the contributions of environmental inputs in particular may be differentiated across the efficiency distribution this means that the frontier technology may not be an appropriate reflection of the technology in use by inefficient enterprises this article presents the use of conditional regression quantiles to consider how the value of environmental inputs measured by their contributions to production vary across efficiency quantiles we employed a case study of rangelands beef production in australia to consider how environmental health differentially contributes to production values across efficiency quantiles our approach generates detailed insights into the nature of environmentally sourced technical inefficiency and suggests that conditional quantile regression approaches are ideal for consideration of issues wherein substantial heterogeneity exists limiting the information content of conditional mean based analyses

anticipation and the valuation of delayed consumption this paper presents a model of intertemporal choice that incorporates savoring and dread i e utility from anticipat ion of delayed consumption the model explains why an individual with positive time preference may delay desirable outcomes or get unpleas ant outcomes over with quickly contrary to the prediction of convent ional formulations of intertemporal choice implications of savoring and dread for savings behavior empirical estimation of discount rate s and public policy efforts to combat myopic behavior are explored the model provides an explanation for common violations of the indepe ndence axiom as applied to intertemporal choice copyright 1987 by royal economic society

regional differences in personal savings regional data on consumers expenditure and disposable income are analysed using a conventional error correction specification in an attempt to explain regional disparities in the average propensity to save pooling time series and cross section data the model is quite successful though some degree of remaining ignorance is reflected in a few significant regional dummy variables arising out of the covariance model among the important determinants of saving and consumption are regional unemployment and housing wealth the latter gives limited support to the proposition that burgeoning house prices in the south east may be fuelling a consumption and import boom

estimating the household consumption function in saudi arabia an error correction approach abstractwe estimate a micro founded life cycle consumption model for saudi arabia over the period 1970 2017 using error correction model procedures dynamic adjustments are significant and both in

a test of the relative income hypothesis the original permanent income and life cycle models were constructed around the view that savings rates are independent of the level of long run income 19 since then it has been well documented using household data that savings rates rise with long run income to be consistent with the empirical evidence modigliani suggests modifying the life cycle hypothesis to include a bequest motive his hypothesis however is that the share of lifetime resources that a household plans to devote to bequests is an increasing function of its lifetime resources relative to others in the same age cohort 17 the share of resources devoted to bequests is made a function of the relative and not the absolute level of resources so as to be consistent with menchik and david s empirical study of the bequest function 16 but if saving for bequests is influenced by relative income why not other forms of saving a simple model in which all types of saving are influenced by relative income was proposed by duesenberry in 1949 4 his basic hypothesis was that households are concerned about community consumption standards and that this concern leads to savings rates being an increasing function of a household s position in the income distribution although a per se desire for status is seen by some economists as inconsistent with rational behavior it is clear that a relative advantage is often instrumental in achieving absolute goals 6 7 10 11 22 while several policy implications of the relative income hypothesis have come to light 2 6 it has rarely been analyzed empirically the purpose of this paper is to present a test of the relative income model the hypothesis is that if income rank is really the variable driving savings rates then it should be possible to hold the level of income constant and still see the average propensity to save aps moving with income rank section ii presents a simple model of the savings decision in which concern for relative standing in the current consumption hierarchy is integrated into a permanent income framework the model is then used to explore the issue of functional form section iii discusses the data the equation to be estimated and the regression results section iv presents a summary and concluding remarks

annuitization and asset allocation this paper examines the optimal annuitization investment and consumption strategies of a utility maximizing retiree facing a stochastic time of death under a variety of institutional restrictions we focus on the impact of aging on the optimal purchase of life annuities which form the basis of most defined benefit pension plans due to adverse selection acquiring a lifetime payout annuity is an irreversible transaction that creates an incentive to delay under the institutional all or nothing arrangement where annuitization must take place at one distinct point in time i e retirement we derive the optimal age at which to annuitize and develop a metric to capture the loss from annuitizing prematurely in contrast under an open market structure where individuals can annuitize any fraction of their wealth at anytime we locate a general optimal annuity purchasing policy in this case we find that an individual will initially annuitize a lump sum and then buy annuities to keep wealth to one side of a separating ray in wealth annuity space we believe our paper is the first to integrate life annuity products into the portfolio choice literature while taking into account realistic institutional restrictions which are unique to the market for mortality contingent claims

credit rationing and capital accumulation with investment and consumption loans revisited abstract a simple model is developed to evaluate the roles of credit rationing and government policies of financial repression in the process of capital accumulation in the model credit rationing on both investment and consumption loans decreases as capital accumulates but increases as the government imposes policies of financial repression to a greater extent while a reduction in credit rationing on consumption loans impedes capital accumulation such a reduction on investment loans facilitates it we find that developing countries may be trapped at a low capital stock steady state while developed countries converge to a high capital stock steady state instead of adopting policies of financial liberalization interestingly this paper finds that policies of financial repression may enable developing countries to escape the development trap

psychological characteristics and household savings behavior the importance of accounting for latent heterogeneity abstract we employ a finite mixture model with maximum likelihood ml estimation to analyze latent heterogeneity in the relationship between psychological characteristics and household savings behavior in a one step ml estimation approach we estimate a class membership model and a behavioral model of the classes jointly adopting this approach enables us to simultaneously assess how socio demographic characteristics affect class membership probabilities and estimate class specific regression coefficients to test whether psychological characteristics predict savings behavior differently across latent classes we apply this approach to a representative sample of uk households n 3382 and identify two different latent classes striving versus established households we find that the relationship between psychological characteristics and savings behavior differs across these two classes demonstrating the importance of accounting for latent heterogeneity when studying the drivers of savings behavior our results have implications for policymakers attempting to improve household savings behavior

is the consumption income ratio stationary in african countries evidence from new time series tests that allow for structural breaks abstractthis article examines whether the consumption income ratio is stationary in 50 african countries we use the residual augmented least squares rals lm unit root test that allows for struct

why are latin america s savings rates so low an international comparative analysis abstract this paper presents a theoretical and empirical assessment of the determinants of savings rates with special emphasis on latin american savings rates the study is based on international comparisons using data from 36 countries for 1970 1992 a distinction is made between private and public savings the later are endogenously determined by economic and political variables per capita income growth is the most important determinant of private and public savings public savings are lower in countries with higher political instability public savings crowd out private savings but less than proportionately low latin american savings are due to the magnitudes of their determinants rather than structural differences

factor shares in olg models of growth abstract in standard infinite horizon optimizing models of balanced growth aggregate savings are positively related to private rates of return on investment or for a given technology to the share of accumulated factors of production in aggregate income a relationship of opposite sign may however obtain in overlapping generations olg models where higher rates of return on older agents wealth imply lower disposable income for young laborers with high saving propensity this paper explores such issues in the context of a continuous time olg model deriving simple parametric restrictions conductive to results of either type and discussing how infinite horizon results may carry over to olg settings

profiting from agglomeration evidence from the salmon aquaculture industry asche f roll k h and tveteras r profiting from agglomeration evidence from the salmon aquaculture industry regional studies even though most celebrated clusters seem to be in high cost areas many econometric studies represent agglomeration externalities as increased primal productivity or reduced cost while this certainly can be consistent with some observed agglomeration effects it may be insufficient for the growth of a cluster the key condition for this is that profitability is higher the paper tests for agglomeration effects using a profit function approach this may be particularly important for firms in high cost clusters where revenue effects can be as important as productivity and cost effects the paper tests for both intra and inter industry agglomeration externalities using firm level data

explaining the wealth holdings of different cohorts productivity growth and social security in this paper we explore the reasons why different generations accumulate different amounts of wealth we use basic economic theory to propose two indicators of the economic conditions under which households accumulate wealth the first one represents productivity differences across cohorts the aggregate level of gross national product per capita around the time the head of the household entered the labor market the second measure summarizes the changes in social security during the head of household s working life using panel data from the dutch socio economic panel we show that productivity growth can explain all the cohort effects present in income data while productivity growth and the generosity of social security can explain all the cohort effects present in household net worth we also find a limited offset of social security on wealth holdings

crash and wait the impact of the great recession on the retirement plans of older americans this study uses data from pre and post crash surveys from the cognitive economics study to examine the impact of recent stock and labor market wealth losses on the planned retirement ages of older americans regression estimates imply that the average wealth loss between july 2008 and may june 2009 is associated with an increase in planned retirement age of approximately 2 5 months furthermore pessimism about future stock market returns is found to amplify the impact of wealth losses on retirement timing