introducing incentives in the market for live and cadaveric organ donations we evaluate the introduction of monetary incentives in the market for live and cadaveric organ donations we show that monetary incentives would increase the supply of organs for transplant sufficiently to eliminate the very large queues in organ markets and the suffering and deaths of many of those waiting without increasing the total cost of transplant surgery by more than about 12 percent we build on the value of life literature and other parts of economic analysis to estimate the equilibrium cost of live transplants for kidneys and livers we also show that market price for kidneys will be determined by the cost of live donations even though most organs will come from cadavers

capital gains and after tax internal rates of return net present value models are constructed by discounting the after tax cash flows of a challenging investment by the after tax internal rates of return irrs of a defending investment after tax irrs calculated for a defending investment are shown to depend on the defender s capital gains and allowable depreciation the often recommended adjustment to the before tax irrs of one minus the marginal income tax rate is not generally applicable failure to correctly adjust the discount rates the defender s irrs for taxes may result in incorrect inferences from comparative static models and incorrect investment valuations from empirical models tax rate adjustments for farmland stocks and bonds are shown to be different and to have varied over time

squaring the circle the domestic sources of international cooperation most theorists of international affairs would argue that international cooperation is a good thing private regarding behavior creates efficiency but some public goods are needed for optimal results be they in producing peace or prosperity it is in the logic of markets and of decentralized systems such as international relations to undersupply those public goods arms races beggar thy neighbor economic policies environmental degradation these are but some examples of actions that take place in the absence of mechanisms to enforce cooperative agreements regimes that can punish defectors are able to do better a good security regime avoids arms races a good trade regime avoids tariffs a good monetary regime avoids aggressive devaluations and instability a good regulatory regime prevents particularistic mercantilism all these arrangements require international cooperation how do we get international cooperation in two ways first through a convergence of policy objectives agreement on the substance of what is sought in trade security or other issues second by credible commitment to institutions that manage policy disputes put in the negative nations conflict when they cannot agree on policy or when they are unable to sustain commitment to agreements that they may make for nations to cooperate on a trade or monetary regime they must agree to the regime convergence of policy preference and they must agree that they will not cheat and will adhere to the regime and to a process of resolving disputes that may occur credibility of commitment

sacred values the effect of information on attitudes toward payments for human organs abstract are attitudes about morally controversial and often prohibited market transactions affected by information about their costs and benefits we address this question for the case of payments for human organs we find in a survey experiment with us residents n 3 417 that providing information on the potential efficiency benefits of a regulated price mechanism for organs significantly increased support for payments from a baseline of 52 percent to 71 percent the survey was devised to minimize social desirability biases in responses and additional analyses validate the interpretation that subjects were reflecting on the case specific details provided rather than just reacting to any information

cash rents and land values in u s agriculture a firm level land valuation model is deduced which depends on the expected growth rate in net cash returns to land inflation expectations and property income and capital gains taxes it is then aggregated to obtain an aggregate two sector land valuation model that model is then estimated for twenty four individual states for the period 1960 81 in addition a pooled cross sectional regression model is estimated combining the twenty four state data the model results demonstrate that significant state differences exist in the land market and that in many states agricultural land values are influenced by nonagricultural demand for land

markets and morality it is common knowledge that adam smith the acknowledged father of economics as we know it had written the theory of moral sentiments 1759 before he wrote the wealth of nations 1776 more sophisticated students of economics today would also know that adam smith held the chair in moral philosophy from 1752 after a year as professor of logic at glasgow university therefore that economics has evolved from moral philosophy and has affinity by birth with it and therefore is a moral science should not surprise anyone yet the analysis of the interaction between economics and moral philosophy or perhaps simply morality has raised interesting issues over time in the following i concentrate on a few salient ones today

strategic trade and investment policies implications for the study of international political economy b usiness gurus point out that successful firms often carefully strategise about what to sell where to sell how to sell and how and where to manufacture their goods and services suppose a country drawing inspiration from such firms were to formulate a set of economic policies to become globally competitive in leading economic sectors how specific or encompassing would such policies be and what might be the justifications for them even though the theory and practicality of such policies the strategic trade and industrial policies stips is contested they retain their appeal for politicians and policymakers in this paper we discuss how and why stips have created a new agenda for the study of international political economy state intervention to directly guide industrial activity is called industrial policy and to guide foreign trade is called trade policy industrial policies differ from macroeconomic policies in that they target only a subset of the economy whereas macroeconomic policies such as tax rates level of deficit spending and interest rate policies generally do not discriminate among types of firms or industries industrial policies such as r d subsidies tax subsidies preferential loans and credit allocations are targeted at specific firms or industries

an analysis of growth of u s farmland prices 1963 82 increases in expected inflation or real growth in net rental income to land have been proposed as alternative explanations of the dramatic real growth in u s farmland prices in the 1970s in this paper the effect of inflation is shown to be theoretically ambiguous an empirical analysis using u s and international farmland prices suggests that most of the real land price growth can be explained by real growth in net rental income to land increases in expected inflation have had a negative effect on real land prices but the effect of inflation has been comparatively small

agricultural income tax expenditures a microeconomic analysis annual agricultural tax expenditures tax subsidies for farms in the sample increased dramatically from 2 430 in 1967 72 to 8 590 in 1973 78 tax expenditures were beneficial to all major enterprises and farm sizes while large farmers received nearly three times the value of small farm tax savings small farmers received more tax expenditures per dollar of farm sales tax progressivity declined during the sample period based on adjusted gross and economic measures of income and combined state income and self employment taxes exceeded federal income taxes during 1973 78 also tax expenditures far exceeded direct government payments to sample farmers during 1973 78

managing domestic differences in international negotiations the strategic use of internal side payments when nations negotiate often the toughest bargaining is not between nations but within them the reason is simple proposed international agreements no matter how much in the national interest inevitably have differential effects on factional concerns threatening to make winners of some and losers of others potential losers often have the power to prevent agreements not to their liking thereby limiting what is possible in international negotiations this article uses a negotiation analytic framework to analyze the consequences of such limits it argues that limits need not be a liability for a divided country under some circumstances they may provide a bargaining advantage and demonstrates circumstances under which intracountry differences are desirable and undesirable from a national perspective more specifically the article shows that the effect of domestic differences on international negotiations depends on the configuration of domestic interests on the nature of domestic political processes and on characteristics of the international bargain it then explores a particular dimension of the domestic process the ability to link issues which allow factions to make internal side payments it demonstrates that internal issue linkage can have profound effects on the external bargain and explores the strategic implications of side payments for those who would manage domestic differences in international negotiations

one chance in a million altruism and the bone marrow registry stem cell transplants save lives of many patients with blood diseases donation is painful but rarely has lasting adverse effects patients can accept transplants only from donors with compatible immune systems those lacking a sibling match must seek donations from the general population the probability that two unrelated persons are compatible is less than 1 10 000 health authorities maintain a registry of several million genetically tested potential donors who agree to donate if asked we find that the benefits of adding registrants of every race exceed costs we also explore the peculiar structure of voluntary public good provision that faces potential donors jel d64 h41 i11 aq 1

getting more organs for transplantation the united states and most other nations suffer from a shortage of human organs for transplant in the united states over 120 000 people are on waiting lists for organ transplant and every year over 10 000 people die while waiting organ procurement and transplantation network there are a number of fronts on which research has made progress to address this shortage but there is still significant work to be done we describe how organs are acquired and allocated strategies that have been implemented to increase the number or organ donations for transplantation from living donors and work we are conducting to understand how we can recover more organs from deceased donors for example how organs are allocated can moderate their scarcity not just through efficiencies in allocation but also through changes in donor behavior we will describe a market design being explored in israel to increase organ donor registration by providing priority on organ waiting lists for individuals who previously registered as organ donors we will also report results that raise concern over policies that have recently been implemented in the united kingdom and several us states namely changing the way the organ registration question is asked to a mandated choice frame organs for transplant can be recovered from living donors and deceased donors living donors give an organ while alive living donation of kidneys which represented 96 per cent of all us living organ donations in 2012 optn is possible since humans have two kidneys but can live a healthy life with only one allowing the other to be removed and donated

why democracies may actually be less reliable allies recent research builds on the observation that democracies have more durable alliances to argue that democracies make more reliable allies this need not be the case alliances serve as commitment devices adding ex ante credibility to states claims about ex post behavior variation in alliance durability must reflect differences in the desirability of formalizing alignments put simply democracies are most improved by formal commitments we offer two related explanations for why democracies might actually be less reliable alliance partners information costs for participating in policymaking and the advantages of organized interest groups combined with distributional incentives generated by the periodic turnover of governments may conspire to make informal commitments on the part of democracies problematic determining the net effect of democratic virtue and vice is best done empirically we test alliance reliability by focusing on intervention rather than on the duration or the number of commitments our results suggest that democracies make less reliable allies

the value of risk measuring the service output of u s commercial banks rather than charging direct fees banks often charge implicitly for their services via interest spreads as a result much of bank output has to be estimated indirectly in contrast to current statistical practice dynamic optimizing models of banks argue that compensation for bearing systematic risk is not part of bank output we apply these models and find that between 1997 and 2007 in the u s national accounts on average bank output is overestimated by 21 percent and gdp is overestimated by 0 3 percent moreover compared with current methods our new estimates imply more plausible estimates of the share of capital in income and the return on fixed capital

the political economy of nontariff barriers a cross national analysis nontariff barriers to trade are most pervasive when deteriorating macroeconomic conditions give rise to demands for protection by pressure groups when countries are sufficiently large to give policymakers incentives to impose protection and when domestic institutions enhance the ability of public officials to act on these incentives statistical results based on a sample of advanced industrial countries during the 1980s support the argument that the incidence of nontariff barriers tends to be greatest when the preferences of pressure groups and policymakers converge more attention should be devoted to the interaction between societal and statist factors in cross national studies of trade policy

institutions and investors the politics of the economic crisis in southeast asia the most dramatic development in the international political economy during the 1990s the asian economic crisis deserves our attention given that asia s rapid economic rise spawned so many debates in the literature it is peculiar that a radical interruption to asia s economic development has not engendered more theoretical argument among political scientists economists have engaged in furious and productive debate but have been unable to deal with the political dimensions of the crisis in this article i make a strong claim about the importance of politics in explaining one of the big puzzles in the overall saga why the investment reversal was greater in some countries than in others i argue that a tight focus on political institutions yields a remarkable degree of analytic purchase in explaining why some countries coped better than others during the crisis specie cally i stress the distribution of veto authority highlighting the way this shaped the overall character of the policy environment and in turn affected investors i identify two policy syndromes rigidity and volatility that are at opposite ends of a continuum and are severely suboptimal for investors particularly during times of crisis i show that these two syndromes can be directly linked to the institutional framework of government the wider the dispersal of veto authority the greater the risk of policy rigidity conversely the tighter the concentration of veto authority the greater the risk of policy volatility these two policy syndromes bear directly on the differing responses of governments to the crisis much of the best literature on the asian crisis has come from economists and falls into one of three theoretical clusters variants of e rst generation currency crisis models that emphasize imbalances in macroeconomic fundamentals variants of

neither miti nor america the political economy of capital liberalization in japan compared with japan no other industrialized country has so adamantly denied foreign investors direct access to its domestic markets japan continued to deny such market access until domestic constituencies finally championed foreign demands and successfully pressured a reluctant state for concessions the initiative for these concessions came neither from japan s principal government negotiators in the ministry of international trade and industry miti nor from public policymakers in america rather it came from american and other multinational corporations mncs seeking to exploit imperfect markets for the technology and related assets which they alone controlled and which a few japanese oligopolists demanded these local oligopolists served as manipulative intermediaries between mncs and the nationstate and in that position determined both the timing and the substance of their country s long march toward capital liberalization between the legislation of capital controls in 1950 and the de jure elimination of those controls in 1980 what began as an extension of limited concessions to individual mncs eventually aided by small regulatory loopholes gradually encompassed all foreigners supplying broad product groups during the intervening thirty years the mncs examined in this article including coca cola ibm texas instruments and the big three u s automakers finally gained limited access to the japanese market for them the formal liberalizations of the late 1960s and early 1970s proved significant but not always decisive as japanese oligopolists moved both to replace public regulations with private restrictions and to mesh their ongoing political influence domestically with their emerging economic power internationally thus de facto liberalization proceeded slowly and unevenly at least through 1980 and foreign direct investment in japan continued to languish what capital liberalization did occur had little to do with the pressures exerted on miti and the japanese state by the u s government and the international organizations that america then controlled rather american diplomacy proved successful in forcing concessions from japan only when it was backed up both by the economic power of american mncs and by the active support of japanese business

japanese foreign economic policy formation explaining the reactive state the concept of the reactive state is useful in understanding the foreign economic policy behavior of japan and certain other middle range powers deeply integrated in the global political economy particularly during periods of economic turbulence when international regimes do not fully safeguard their economic interests the essential characteristics of the reactive state are two fold 1 it fails to undertake major independent foreign policy initiatives although it has the power and national incentives to do so 2 it responds to outside pressure for change albeit erratically unsystematically and often incompletely in the japanese case reactive state behavior flows from domestic institutional characteristics as well as from the structure of the international system domestic features such as bureaucratic fragmentation political factionalism powerful mass media and the lack of a strong central executive have played an especially important part in japanese financial energy trade and technology policy formation since 1971

from domestic to international justice the welfare state and foreign aid foreign aid often is interpreted as an international projection of domestic income redistribution mechanisms and many authors suggest that differences between welfare states account for variations in donor behavior a new understanding of the welfare state can improve traditional explanations of this linkage existing studies of the welfare aid relationship use two welfare state indicators domestic spending and partisan politics we propose a third type of indicator the institutional attributes of the welfare state and demonstrate its relevance the level of foreign aid provided by a country varies with social spending but even more so with the degree to which its welfare state embodies socialist attributes this finding helps explain how domestic political institutions influence the evolution of international cooperation and specifically how welfare principles institutionalized at the domestic level shape the participation of developed countries in the international aid regime

democratic reliability precommitment of successor governments and the choice of alliance commitment given frequent leadership turnover and leaders need to appeal to voters democracies should face difficulties in maintaining their alliance commitments yet the empirical evidence predominantly shows that they do make reliable allies democratic governments can increase reliability by binding future administrations through the choice of alliance commitment while defense pacts precommit future leaders to close military cooperation with an ally consultation pacts leave more room for discretion this research note examines when precommitment through a defense pact is likely to occur a government should be more likely to conclude a defense pact if potential successors have different preferences regarding the alliance if the government believes that it will lose power soon and if the costs of precommitment are not too high i test the theoretical expectations using the alliance treaty obligations and provisions atop data between 1945 and 2003 the findings support the argument and suggest an answer to the puzzle of why states sometimes conclude whole hearted commitments and other times seemingly half hearted ones

anarchy hierarchy and the variety of international relations security relations between states vary along a continuum from anarchic alliances to hierarchic empires this continuum in turn is defined by the parties rights of residual control the state s choice between alternatives is explained in a theory of relational contracting as a function of the expected costs of opportunism which decline with relational hierarchy and governance costs which rise with relational hierarchy a comparison of early postwar relations between the united states and western europe and the soviet union and eastern europe illustrates the theory

domestic institutions and the credibility of international commitment japan and the united states the domestic politics of great powers significantly influence the fate of such multilateral regimes at the general agreement on tariffs and trade and the north atlantic treaty organization unless great powers can make credible commitments to support those regimes few countries will offer more than token support domestic political constraints may bind national leaders to good faith adherence to multilateral regimes even if international circumstances do not compel adherence domestic politics also influence the ability of other countries to monitor national adherence to agreements case studies of u s and japanese responses to multilateral regimes show how the nature of the national electoral system the division of powers in the government and the transparency of the national political system influence credibility and lead to special features of multilateral economic and security regimes

trade and the variety of democratic institutions students of comparative politics have long acknowledged the importance of such institutional factors as electoral systems parliamentary versus presidential rule and the strength of parties but they have either regarded the institutions as given or have explained them entirely in domestic terms associating proportional representation for example with the intensity of social cleavages in economically advanced democracies however these institutional aspects can be plausibly linked to dependence on trade proportional representation the parliamentary system strong parties and large electoral districts have survival value for developed democracies exposed to trade that the recently revived agitation for proportional representation in the united kingdom has been cast explicitly in terms of economic necessity and dependence on trade adds force to this argument and suggests the need for further historical research on other cases of institutional adaptation and change

veto points veto players and international trade policy much of the literature on foreign economic policy focuses on the preferences of societal groups to explain policy decisions here however the author emphasizes the effects of domestic political i

altruism fertility and the value of children health policy evaluation and intergenerational welfare abstract this paper accounts for the value of children and future generations in the evaluation of health policies this is achieved through the incorporation of altruism and fertility in a value of life type of framework we are able to express adults willingness to pay for changes in child mortality and also to incorporate the welfare of future generations in the evaluation of current policies our model clarifies a series of puzzles from the literature on the value of life and on intergenerational welfare comparisons we show that by incorporating altruism and fertility into the analysis of the recent u s experience the estimated welfare gain of a young adult from reductions in mortality easily doubles

educational inequality and public policy preferences evidence from representative survey experiments abstract to study how information about educational inequality affects public concerns and policy preferences we devise survey experiments in representative samples of the german population providing information about the extent of educational inequality strongly increases concerns about educational inequality it also affects support for equity oriented education policies which have high baseline support although effects are quantitatively small on average however instrumental variable estimates suggest substantial effects of concerns on policy preferences among the compliers whose concerns are shifted by the information treatment there are substantial effects on support for compulsory preschool which increases further if respondents are informed about policy effectiveness

the elasticity of taxable income during the 1990s new estimates and sensitivity analyses author affiliation seth h giertz sgiertz2 unl edu acknowledgment the author wishes to thank david weiner ed harris bob dennis doug hamilton tom woodward emmanuel saez chris bollinger and three anonymous referees for their comments and assistance 1 introductioneconomists have long recognized that taxation creates economic inefficiency by distorting relative prices often between leisure and all other goods in the economy even a broad based income tax can have substantial efficiency costs so long as leisure remains untaxed harberger 1964 uses this as motivation for comparing the efficiency implications of direct versus indirect taxation in so doing he shows how labor supply elasticities can be used to measure the efficiency implications of income taxation 1 harberger s analysis had a profound influence on public and labor economists spurring increased research into labor supply elasticities which were seen as proxies for the efficiency costs from taxation more than two decades after harberger economists began to emphasize the variety of other margins over which taxes can distort behavior in addition to hours worked these economists noted that these other behavioral responses may too have important implications for efficiency an important building block in the evolution of this literature was set forth by slemrod 1990 who presented a hierarchy of behavioral responses to taxation slemrod divided behavior into three categories based on their responsiveness to taxes his least responsive category real responses includes individuals changing consumption and work patterns and businesses altering investment and production decisions second in order of responsiveness is circumvention which includes both illegally evasion and legally avoidance bypassing the tax system 2 in the case of evasion income is concealed from tax authorities or factors that offset tax liabilities such as expenses and deductions are inflated beyond what is legally permitted in the case of avoidance income is shifted in order to receive more favorable tax treatment diverting income into a tax deferred retirement account is an example of avoidance 3 included in circumvention is the expenditure of time and money necessary to avoid or evade taxation third on the hierarchy and the most responsive is the timing of income receipt which includes pulling the receipt of income into the previous year or pushing it into the next in order to take advantage of more favorable tax treatment while not altering real behavior 4 slemrod further recognizes that the type of behavioral response could have implications for both tax revenue and tax incidence and in some cases efficiency predating slemrod s insights lindsey 1987 produced elasticity estimates for taxable income although what lindsey termed taxable income more closely approximates adjusted gross income agi instead of labor supply 5 lindsey s estimated elasticities were much larger than the labor supply literature would have suggested lindsey emphasized the revenue implications of the elasticity of taxable income eti but not its efficiency implications building on slemrod and lindsey feldstein 1995 produced eti estimates but went much further than lindsey in describing the behaviors that could affect taxable income he argued that many of these behaviors were not captured by labor supply elasticities furthermore feldstein posited that income taxation creates economic inefficiency not only by distorting the relative price between labor and leisure but more broadly by distorting the relative price between goods or activities that are taxed and those that are not taxed since leisure is not the only untaxed activity for example in response to taxes not only work hours but also work effort might change

the state as strategist in international business research no matter what strategy managers choose cross national differences in states strategic capabilities and objectives affect multinational corporations capabilities to manage interdependent operations in this paper we develop four attribute dimensions along which states strategic economic capabilities vary we then apply these dimensions to show how they contribute to familiar international business models of managerial process mnc strategy and organizational structure and country competitiveness

monetary policy and the global housing bubble what caused the housing boom of the 2000s a number of researchers have suggested that loose monetary policy during the first half of the 2000s was a primary cause of the substantial run up in house prices in many countries however using a common statistical approach we find that monetary policy was not the main factor that should not be surprising although low interest rates raise house prices the increase in prices during the mid 2000s was much larger than the historical relationship between the two variables would suggest instead we investigate further the link between the marked loosening in terms and standards for mortgage credit and the most rapid increases in house prices this link provides some evidence for a story where credit provision and the demand for housing fed on each other and helped spur the housing boom our work suggests a greater role for macroprudential regulation rather than monetary policy in managing asset price booms jane dokko brian m doyle michael t kiley jinill kim shane sherlund jae sim and skander van den heuvel

perspectives on positive political economy this volume serves as an introduction to the field of positive political economy and the economic and political processes with which it is concerned this new research tradition is distinct from both normative and historical approaches to political economy grounded in the rational actor methodology of microeconomics positive political economy is the study of rational decisions in a context of political and economic institutions more analytical than traditional approaches it is concerned with the derivation of principles and propositions against which real world experience may be compared its focus is on empirical regularities and its goal is theoretical explanation the field has focused on three main areas of research models of collective action constraints on competitive market processes and the analysis of transaction costs developments in all of these areas are covered in the book the first part of the volume surveys the field while the second part displays positive political economy at work examining a variety of subjects the final part contains essays by leading political economists on the theoretical foundations of the field

multilateralism with small and large numbers multilateralism international governance of the many was defined by the united states after 1945 in terms of certain principles particularly opposition to bilateral and discriminatory arrangements that were believed to enhance the leverage of the powerful over the weak and to increase international conflict postwar multilateralism also expressed an impulse to universality john ruggie s generalized organizing principles that implied relatively low barriers to participation in these arrangements a ticket of admission was always required whether acceding to the general agreement on tariffs and trade gatt or joining the international monetary fund imf and the world bank nevertheless the price of that ticket was not set so high that less powerful or less wealthy states could not hope to participate

u s politics and greater regulation of inward foreign direct investment an analyst of u s foreign economic policy observes that each wave of antiforeign sentiment associated with the surge of foreign direct investment fdi coming into the united states washes ashore a flotsam of restrictive and exclusionary laws that recedes slightly or becomes buried and forgotten in the sand only to advance again with a new wave during the late 1980s the controversy generated by the sharp rise of japanese acquisitions in the united states washed ashore the latest flotsam of regulatory measures and further advanced the tangle of rules and regulations targeting inward foreign direct investment ifdi of the various types of fdi the present study is concerned mainly with the policy change toward foreign investment in an already established domestic business this type of investment often involves merger or acquisition and is distinct from a greenfield investment where the foreign investor establishes from scratch a new business in the host economy

how information affects support for education spending evidence from survey experiments in germany and the united states to study whether current spending levels and public knowledge of them contribute to transatlantic differences in policy preferences we implement parallel survey experiments in germany and the united states in both countries support for increased education spending and teacher salaries falls when respondents receive information about existing levels treatment effects vary by prior knowledge in a manner consistent with information effects rather than priming support for salary increases is inversely related to salary levels across american states suggesting that higher salaries could explain much of germans lower support for increases information about the tradeoffs between specific spending categories shifts preferences from class size reduction towards alternative purposes additional german experiments indicate that information effects extend to specific reform proposals and to other areas of public spending