bequests gifts and social security this paper analyses the very long run or stationary state impact of an unfunded social security system we use an overlapping generations model framework a key feature is that while parents care about their children and can leave non negative bequests to them children also care about their parents and can make non negative gifts to them we show that the possibility of negative net bequests may make social security less harmful to private wealth accumulation than would otherwise be the case a subsidiary finding is that risk loving behaviour may emerge for some households due to the nature of intergenerational transfers within family lines

compulsory savings in the welfare state according to a widely held belief compulsory savings are justified on efficiency grounds because they alleviate the following free rider problem if the welfare state grants a minimum income to older persons some of the young may find it optimal not to provide for retirement the literature argues that compulsory savings can be used in order to overcome this problem however potential free riders consider compulsory savings as if they were payroll taxes this holds even if the pension system is actuarially fair if the resulting labour market distortions are important it is optimal to accept the free rider problem rather than to introduce a compulsory pension system 2000 elsevier science s a all rights reserved

when is foreign aid policy credible aid dependence and conditionality the author studies foreign aid policy within a principal agent framework he shows that one reason for foreign aid s poor overall record may be a moral hazard problem that shapes the aid recipient s incentive to undertake structural reform the model s basic prediction is a two way relationship disbursements of foreign aid are guided in part by the needs of the poor anticipating this recipients have little incentive to improve the welfare of the poor preliminary econometric work shows that the data support this hypothesis in principle conditionality could partly solve this problem but only if the donor can make a binding commitment to increase disbursements in good relative to bad states without such a commitment technology aid disbursements remain guided by the needs of the poor and recipient countries maintain a low effort to reduce poverty contrary to the conventional wisdom found in the aid literature the author shows that the welfare of all parties might be improved by using tied project aid or by delegating part of the aid budget to an international agency with less aversion to poverty

transfer pricing in a dynamic marketing operations interface abstract a transfer price mechanism is proposed to coordinate the strategies of the marketing and operations functional areas operating in a dynamic interface environment in a decentralized firm marketing and operations are strategic decision makers in a differential game in which marketing has price and advertising and operations has production as control variables and advertising goodwill and production backlog are state variables a constant transfer price is entered into the objective functionals for marketing and operations and subgame perfect feedback strategies are derived for price advertising and production as functions of the state variables the feedback strategies allow a solution for the dynamic system involving goodwill and backlog and the total payoff to the firm the sum of the payoffs to marketing and operations is determined as a function of the transfer price finally for certain parameter conditions an interior maximum of the payoff function is achieved and the optimal transfer price is identified

international trade in a differentiated good trade elasticities in the world rice market in many previous rice trade models the commodity has been regarded as a homogeneous product however homogeneity is not an appropriate assumption given the various types of rice that are traded and consumed parameters estimated from these models therefore do not reflect the real world market for rice and hence may mislead decision makers who use the results for policy evaluation purposes this study uses an armington approach to model the world rice trade as a differential good market and to derive trade elasticity parameters

altruism within the family reconsidered do nice guys finish last this paper criticizes the view that altruism either increases the benefits of group interactions or improves the allocation of resources within families the authors identify a variety of circumstances in which members of a group would prefer to interact with less altruistic individuals and in which the efficiency of resource allocation is inversely related to the prevailing degree of altruism reasons that altruism might be a counter productive social force include 1 it can alter the social utility possibility frontier in surprising and sometimes unfortunate ways 2 it can entail exploitability causing family members to behave in ways that leave all parties worse off 3 altruists may take inefficient actions to preempt exploitation and 4 family members may establish efficient resource allocation by punishing selfish behavior a rise in the level of altruism may lead to the exclusion of certain punishment strategies on the grounds of credibility 1 general positive result is that sufficiently high levels of altruism almost always lead to efficient resource allocation one should not necessarily expect to find strong altruistic linkages between spouses nor should altruism necessarily contributed to marital stability in addition to the connections between this work and the literature on family behavior this analysis has broader implications concerning the role of altruism in society and the evolution of social conscience

just luck an experimental study of risk taking and fairness choices involving risk significantly affect the distribution of income and wealth in society this paper reports the results of the first experiment to our knowledge to study fairness views about risk taking specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes we find that even though many participants focus exclusively on ex ante opportunities most favor some redistribution ex post many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices these findings apply to both stakeholders and impartial spectators

the wealth effects of premium subsidies on moral hazard in insurance markets abstract insurance premium subsidies are present in many insurance markets the swiss government for example paid out chf 4 26 billion or 0 72 of the swiss gdp for health insurance premium subsidies in 2011 analyses of premium subsidies have often highlighted that the increased insurance demand due to premium subsidies increases the effects of moral hazard in the market other consequences of premium subsidies however have mostly been neglected by the literature we show in our theoretical model that the wealth effects of premium subsidies decrease the sensitivity of the insured towards the monetary consequences of losses this leads to less prevention efforts by the insured and thus increases moral hazard in the market the effect is preserved if the subsidy is financed through proportional taxation using two alternative models we show that providing state dependent subsidies can either increase or reverse this effect depending on which state subsidies are paid we argue that whether demand effects or wealth effects of premium subsidies will dominate the insured s behavior depends on the market structure

coping with rational prodigals a theory of social security and savings subsidies das argument rationaler verschwendung das haufig zur rechtfertigung der gesetzlichen rentenversicherung dient wird im rahmen eines zweitbestansatzes mit endogenem arbeitsangebot betrachtet rationale verschwendung fuhrt dazu das ubliche politiken zeitinkonsistent sind wir analysieren zeitkonsistente verfahren und zeigen das eine lohnsteuer ausreicht um verschwendung als rationale strategie auszuschliesen sparsubventionen konnen das ergebnis allerdings weiter verbessern derartige subventionen fallen mit steigendem einkommen eine zwangsversicherung bei der die beitrage mit steigendem einkommen zunehmen ist keinesfalls notwendig

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

welfare effects of unfunded pension systems when labor supply is endogenous abstract a mandatory unfunded pension system can lead to welfare losses if the contributions are levied in such a way that the labor supply decision of the individuals is distorted this is shown in an overlapping generations model for a closed economy furthermore it is shown that under certain conditions a gradual abolition of unfuded pensions using lump sum contributions in the transition phase can lead to an intergenerational pareto improvement thus the paper extends a result recently derived by homburg for a small open economy to the closed economy case

fair transfer price and inventory holding policies in two enterprise supply chains abstract a key issue in supply chain optimisation involving multiple enterprises is the determination of policies that optimise the performance of the supply chain as a whole while ensuring adequate rewards for each participant in this paper we present a mathematical programming formulation for fair optimised profit distribution between echelons in a general multi enterprise supply chain the proposed formulation is based on an approach applying the nash bargaining solution for finding optimal multi partner profit levels subject to given minimum echelon profit requirements the overall problem is first formulated as a mixed integer non linear programming minlp model a spatial and binary variable branch and bound algorithm is then applied to the above problem based on exact and approximate linearisations of the bilinear terms involved in the model while at each node of the search tree a mixed integer linear programming milp problem is solved the solution comprises inter firm transfer prices production and inventory levels flows of products between echelons and sales profiles the applicability of the proposed approach is demonstrated by a number of illustrative examples based on industrial processes

rice trade liberalization and implications for u s policy the u s government s rice program treats rice as a homogeneous commodity even though rice s two primary subspecies indica and japonica are differentiated commodities in world markets trade liberalization under the uruguay round of gatt is expected to increase demand for japonica more than for indica we develop a u s rice model which treats rice as a differentiated product u s government programs are modeled and trade liberalization scenarios are analyzed under alternative policies compared to the current policy a more flexible u s policy that treats rice as a differentiated commodity could result in both higher farm incomes and lower government expenditures after trade liberalization

a political economic analysis of u s rice export programs to japan and south korea a game theoretic approach the uruguay round agreement on agriculture ur has contributed to the increase in u s and world rice trade since 1994 despite this the japanese and korean rice markets continue to be characterized by high levels of trade intervention this paper attempts to analyze both import markets incorporating econometric estimates and public choice theory in a game theoretic framework various scenarios are analyzed the results show that the overall nash equilibrium occurs with a 4 tariff reduction for japan and korea under the u s market development program which includes the market access program and foreign market development program

an operational profit sharing and transfer pricing model for network manufacturing companies abstract new age companies are forging partnerships with other firms to market products that have been assembled through manufacturing activities distributed at different locations these locations belong to more than one company and the product passes through these different sites during its manufacturing stages this manufacturing collaboration is known as network manufacturing according to the network philosophy companies form alliances to manufacture a product and share in its operating profits this paper proposes a framework and methodology for profit sharing and transfer pricing between network companies we propose a paradigm that enables maximization of operating profits by the manufacturing network in its larger supply chain suggesting a departure from the model that maximizes profits for the individual company within the sphere of its own supply chain

on the contribution of economics to the evaluation and formation of social insurance policy if one had to choose a single policy that best characterizes the postwar behavior of governments it might well be their expansion of social insurance today s citizen of a typical developed country is insured through government programs against unemployment disability medical expenses impoverishment in youth and middle age through welfare systems impoverishment in old age through old age pensions loss of spousal support due to divorce through social security dependent benefits fluctuating earnings through progressive tax systems early death of a spouse via survivor s insurance and late death via annuity insurance the remarkable growth of social insurance has occurred against a backdrop of increased geographic mobility dramatic changes in demographics and at least in the united states a dissolution of the family the extent to which social insurance has been the cause of family decline and demographic change or its result is one of many complex questions that economics or any other social science is unlikely to ever fully answer economic analysis while not being able to discover the precise recipe leading to our social insurance institutions has at least been able to taste many of the key ingredients economics has and can provide real insight into a the need for social insurance programs b the appropriate size of such programs and c how social insurance programs affect the economy this paper seeks to illustrate each of these three kinds of economic contributions to the evaluation and formation of social insurance policy section i drawing on my 1987 article presents an efficiency argument for compulsory saving through a progressive social security system section ii drawing on my paper with avia spivak and laurence summers 1982 and on alan auerbach s and my 1987b paper illustrates an analysis of the appropriate size of social insurance programs examining in turn the questions of whether households save enough and buy enough life insurance or whether more government intervention in these matters is appropriate section iii drawing on my 1989 book illustrates how social insurance programs can affect the economy by discussing potential savings effects of health insurance particularly an asset tested medicaid scheme section iv concludes the paper with suggestions for future research and policy options as indicated the paper draws on my own and coauthored research and it provides only limited references for no better reason than easing my task and saving space in so doing i do not pretend to suggest that this is more than a very small subset of a huge volume of research sparked in the 1970s in large part by martin feldstein

gray market trade with product information service in global supply chains abstract this paper investigates the economic effects of a product information service when potential consumers who are segmented by their taste exist in gray markets specifically we construct an economic model that considers a multinational firm mnf who expands business to a country and chooses whether to provide information service regarding product characteristics if receiving the information consumers in a specific segment whose taste suits the characteristics have positive utility from consuming the product while those in other segments have no utility by contrast consumers in all segments have positive expected utility before consuming the product without information with these settings we demonstrate that there arises the equilibrium that the mnf provides no information service when gray market trade i e parallel trade is allowed in the country leading to lower consumer welfare than when it is prohibited a primary finding in the equilibrium is that such a situation arises especially when potential consumers are less segmented in this situation the regulator in the country should ban the parallel imports so as to enhance consumer welfare the result is counterintuitive and notable because one might intuitively infer that gray market trade is less desirable when customers are more minutely segmented and the product information service is thus more specific and necessary

efficiency enhancing signalling in the samaritan s dilemma suppose an altruistic person a is willing to transfer resources to a second person b if b comes upon hard times if b anticipates that a will act in this manner b will save too little from both agents point of view this is the samaritan s dilemma this paper shows that the undersaving result is mitigated if we relax the standard assumption of complete information because if a is uncertain about how big b s need for support is b will have an incentive to signal that he is in great need by saving more than he otherwise would have done

lobbying incentives and the pattern of protection in rich and poor countries in seeking to explain why poor countries tend to choose policies that tax agriculture relative to manufacturing while rich countries do the opposite archetypical parameters for a poor agrarian economy and a rich industrial one are inserted in a computable general equilibrium model to simulate the medium term effects on income distribution of policies that distort the relative prices of tradables the model includes a non tradables sector and intermediate inputs realistic features that ensure even greater skewness in the distributional effects of protection than simpler models suggest the magnitude of the results helps explain the tendency for countries to change gradually from taxing to subsidizing agriculture relative to manufacturing as their economies develop the paper draws out the implications of the analysis for agricultural and trade policy reform in the 1990s this abstract was borrowed from another version of this item

samaritan versus rotten kid another look abstract we set up a two stage game with sequential moves by one altruist and n selfish agents the samaritan s dilemma rotten kid theorem states that the altruist can only reach her first best when the selfish agents move after before the altruist we find that in general the altruist can reach her first best when she moves first if and only if a selfish agent s action marginally affects only his own payoff the altruist can reach her first best when she moves last if and only if a selfish agent cannot manipulate the price of his own payoff

intrafirm trade arm s length transfer pricing rule and coordination failure abstract this paper demonstrates that uniform imposition of the arm s length principle on transfer pricing leads to coordination failure among countries in terms of economic welfare if the countries trade products in the form of intrafirm transactions by multinational firms mnfs to highlight this implication we first show that imposition of the arm s length principle on an mnf induces it to transfer a product among subordinate divisions at marginal cost i e the competitive price which is consistent with the purpose of the principle nonetheless if regulators in each country impose the principle on mnfs all of the following economic welfare measures decrease compared with the situation where the principle is not imposed 1 consumer welfare in each of the trading countries 2 profit of each mnf and thus 3 total world economic welfare this result indicates that it is possible that enforcement of the principle has no positive effect at all in the world because economic welfare of all economic agents deteriorates when the principle is imposed a numerical analysis demonstrates that this possibility arises in a broad range of circumstances even including the situation where a giant economic world power and a small underdeveloped country mutually trade products in these circumstances an agreement among trading countries that no country imposes the arm s length principle may encourage pareto improvement of the world economy

wto negotiations on agriculture and the distributional impacts for us rice farm households abstract the policies of wealthy countries have proven the most difficult to reform in the wto doha round negotiations considerable emphasis has been placed on developing country impacts but a gap in the literature remains on the stakes for rich country farmers despite the large role these countries play in global agricultural protection the research here considers the particular case of us rice households and their sensitivity to japanese market access reform using an applied general equilibrium model with multiple farm households we highlight the distributional impacts among these producers we argue that concessions to japan on market access make domestic reforms in rice a difficult political sale in the us since the wealthiest producers bear the largest losses improving our understanding of the distributional impacts and political realities of the richest countries is critical to informing the negotiating process because the gains to the world s poor can only be realized with creative policy redress in these rich nations

implications of the uruguay round on the world rice economy abstract this paper examines the implications of the agreement on agriculture for the rice economy and reviews its impact on world rice production trade consumption and international prices the agreement is potentially beneficial for the international rice market and especially for developing countries considerable uncertainties however exist as to whether the full benefits will be realized as they hinge mainly on the implementation of market access provisions in a limited number of countries tariffication as it finally evolved under the agreement would not result in any significant expansion in trade and international trade in rice would remain distorted up to the year 2000 as the level of export subsidies in some countries could well remain above that in 1986 1990 in assessing the impact of the agreement the paper assumes that there will be full compliance with the commitments made some alternative scenarios are also examined

transition from a pay as you go to a fully funded pension system the case of differing individuals and intragenerational fairness abstract in recent contributions to the theory of public pension systems it was argued that a pareto improving transition from an established unfunded pension system to a funded one is possible this result is derived in an overlapping generations model with identical individuals in the present study an extended model with differing individuals of an intragenerationally fair unfunded pension scheme is introduced within this more realistic framework it is shown that in general a pareto improving transition to a funded system is not possible because any instrument applied to the financing of pensions in the transition phase involves intragenerational redistribution

understanding declining mobility and inter household transfers among east african pastoralists we model interhousehold transfers between nomadic livestock herders as the state dependent consequence of individuals strategic interdependen ce resulting from the existence of multiple opposing externalities a public good security ext ernality among individuals sharing a social e g ethnic identity in a potentially hostile en vironment creates incentives to band together self interested interhousehold wealth transfers fro m wealthier herders to poorer ones may emerge endogenously within a limited wealth space as a mea ns to motivate accompanying migration by the recipient the distributional reach and size o f the transfer are limited however by a resource appropriation externality related to the use of com mon property grazing lands when this effect dominates it can induce transfers from households who want to relieve grazing pressures caused by others herds our model augments the extant li terature on transfers and is perhaps more consistent with the limited available empirical evi dence on heterogeneous and changing transfers patterns among east african pastoralists the core principles of our model possibly apply more broadly for example to long distance migrants or e ven among foot soldiers in street gangs

the evolution of medical spending risk how has the economic risk of health spending changed over time for u s households we describe trends in aggregate health spending in the united states and how private insurance markets and public insurance programs have changed over time we then present evidence from consumer expenditure survey microdata on how the distribution of household spending on health that is out of pocket payments for medical care plus the household s share of health insurance premiums has changed over time this distribution has shifted up over time households spend more on medical care and insurance than they used to but for the purposes of measuring change in risk it is not the mean but the dispersion of this distribution that is of interest we consider two measures of dispersion that serve as proxies for household risk the standard deviation of the distribution of household health spending and the ratio of the 90th percentile of spending to the median the so called 90 50 gap we find surprisingly that neither has increased despite the rapid rise in aggregate health spending this conclusion holds true for broad subgroups of the population for example the nonelderly as a group but not for some narrowly defined subgroups for example low income families with children we next consider how much risk households should face from the perspective of economic efficiency household risk may not have changed much over the past several decades but do we have any evidence that this level represents either too much or too little risk finally we discuss implications for public policy in particular for current debates over expanding health insurance coverage to the uninsured

the distributional effect of the rice policy in japan 1986 2010 abstract this study aims to evaluate the distributional effect of the governmental rice policy in japan on producers consumers and government expenditures from 1986 to 2010 using a partial equilibrium model policy measures include government purchase of rice output payment and acreage control the simulation result shows that acreage control has been the principal policy measure for transferring income to producers especially since the enforcement of the wto agreement on agriculture acreage control is the policy measure with the lowest total efficiency and highest budgetary efficiency this result implies that the government s goal of transferring income to producers with minimum government cost has been achieved through a combination of policy measures

a fresh look at the rotten kid theorem and other household mysteries gary becker s rotten kid theorem asserts that if all family members receive gifts of money income from a benevolent household member then even if the household head does not precommit to an incentive plan for family members it will be in the interest of selfish family members to maximize total family income i show by examples that the rotten kid theorem is not true without assuming transferable utility i find a simple condition on utility functions that is necessary and sufficient for there to be the kind of transferable utility needed for a rotten kid theorem while restrictive these conditions still allow one to apply the strong conclusions of the rotten kid theorem in an interesting class of examples

altruism the samaritan s dilemma and government transfer policy this paper shows that altruism provides an efficiency rationale for public provision of insurance to the poor the framework is one in which there are rich altruists and risk averse poor who face some possibility of loss the government represents the rich and makes transfers on their behalf with unconditional transfers the poor may forgo insurance and rely on private charity to bail them out in the event of loss this reliance on private charity has adverse efficiency effects these may be avoided if the government makes in kind transfers of insurance copyright 1995 by american economic association

international charity under asymmetric information abstract international charity is often subject to moral hazard and adverse selection problems we show that the burden of informational asymmetries are borne by the most needy countries even when charities design incentive contracts which limit the rents that some countries can extract

impacts of liberalizing trade in the world rice market a multi product quadratic programming model is used to investigate impacts of trade liberalization on the world rice market recognizing product differentiation and allowing substitution among various rice types and qualities model simulations predict a large increase in both trade volumes and prices for all rice types and a significant welfare gain for most rice exporters and importers japan south korea philippines taiwan and brazil would be the major importers trade liberalization would increase total u s export revenue by 109 movement to free trade by japan has significant effects on world rice trade and on japanese rice production

impact of rice tariffication on japan and the world rice market the uruguay round agreement of the world trade organization wto and other trade agreements such as nafta and mercosur have contributed to the increase in u s and world rice trade since 1994 rice however continues to be one of the most highly protected agricultural commodities with current tariff rates in several developing countries ranging from 50 to 230 protectionist policies for rice include tariffs tariff rate quotas state trading and various domestic government programs amponsah colyer and jolly before implementation of the uruguay round agreement japan and south korea maintained an almost complete ban on rice imports to begin opening these markets the uruguay round provided special minimum market access ma rules with the goal of eventually shifting to tariffication the grace period for tariffication was set at six years for japan 1995 to 2000 and ten years for south korea 1995 to 2004 south korea received additional time for tariffication and a lower

public pensions as optimal social contracts abstract a simple overlapping generations model is modified to allow for an externality experienced by the young from consumption by the elderly this sets up a game between generations in which one generation s strategy may be to save too little and rely on gifts from the young e g public assistance for retirement income social security can therefore be viewed as a pareto optimal contract to restore efficient intertemporal allocation a funded public pension plan corresponds to forced saving but is vulnerable in that the next young generation may stop contributing rely on its children for retirement assistance and meanwhile reap the consumption externality from the current elderly s social security benefits this suggests a forced giving or pay as you go type of compulsory pension plan such as exists in most nations which also has the advantage of aiding the initial old generation and therefore generating an immediate consumption externality for the initial young the approach can also be used to explain other aspects of existing social security

kinship incentives and evolution we analyze how family ties affect incentives with focus on the strategic interaction between two mutually altruistic siblings the siblings exert effort to produce output under uncertainty and they may transfer output to each other with equally altruistic siblings their equilibrium effort is non monotonic in the common degree of altruism and it depends on the harshness of the environment we define a notion of local evolutionary stability of degrees of sibling altruism and show that this degree is lower than the kinship relatedness factor numerical simulations show how family ties vary with the environment and how this a ects economic outcomes

a simple dynamic decentralized leadership model with private savings and local borrowing regulation abstract this paper considers a simple dynamic decentralized leadership model with local borrowing and regional productivity enhancing investment in this model the central government is benevolent but cannot commit to ex post intergovernmental transfer policies while local governments act strategically after accounting for the ex post motives of the central government we then investigate inefficiency in the subgame perfect equilibrium we analyze the effect of central control on local borrowing and show that central control is of no benefit because ex ante local taxation works to offset it we find the model yields different policy implications that central control is effective when extended to the case of residential mobility

does federal disaster assistance crowd out flood insurance abstract we empirically analyze whether federal disaster aid crowds out household purchase of disaster insurance we combine data on annual household flood insurance purchases for the united states over the period 2000 2011 with data from the two main u s post disaster federal aid programs fema s individual assistance grants and sba s low interest disaster loans estimating both fixed effects and instrumental variable models to account for the endogeneity of disaster assistance grants we find that receiving individual assistance grants decreases the average quantity of insurance purchased the following year by between 4000 and 5000 the reduction we find is roughly 3 of the mean insurance coverage in the sample but larger than the average flood related ia grant in our sample which is 2984 ia is currently limited and larger grants could have different impacts the crowding out is on the intensive margin we find no impact on take up rates likely because there is a requirement that recipients of disaster aid purchase an insurance policy we do not know how take up rates might change without such a requirement low interest post disaster government loans have no systematic effect on insurance purchases

the adequacy of savings this paper uses newly available data from the social security administration s retirement history survey to examine the adequacy of saving this data source is particularly rich survey data for respondents covering the ydars 1969 197 1 and 1953 have been matched with social security earnings records covering the years dating back to 1951 in addition to information on the path of lifetime earnhngs the survey contains extensive data on individual asset holdings the evidence indicates that surprisingly few couples currantly suffer significant reductions in their standard of living in their old age this appears due in large part to our compulsory savings institutions the social security and private pension systems these institutions have succeeded in redistributing the lifetime consumption of private individuals from their youth to their old age this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this i this abstract was borrowed from another version of this item

bequest motives social security and economic growth junxi zhang this article conducts a systematic analysis of four bequest motives in a simple model of endogenous growth it analyzes how bequest motives affect fertility savings growth and the effects of pay as you go social security it is found that altruistic and exchange motives give equivalent outcomes if the discount factors are set the same the outcome under the joy of giving motive may involve a higher bequest ratio higher saving and better growth rates than that under altruism if bequests are accidental the equilibrium values will depend on the probability of survival moreover the results provide testable implications on bequest motives jel d1 d9 h55 j1 i introduction although the importance of bequests in aggregate savings has been established by kotlikoff and summers 1981 who reported that 80 of u s household wealth is inherited wealth what bequest motives lead to inheritance remains an unsolved problem yet it is well known that bequest motives have important implications for the behavior of financial markets the macroeconomic impacts of fiscal policies and the intergenerational transmission of inequality in the distribution of wealth at least four hypotheses for the existence of bequests have been discussed in the literature 1 bequests may arise from intergenerational altruism that is parents obtain utility from their heirs utility as well as from their own consumption barro 1974 2 the prospect of bequests is used by parents to induce children to behave as desired by parents bernheim et al 1985 3 bequests may arise from the joy of giving that is parents leave bequests simply because they obtain utility directly from the bequest yaari 1964 1 and 4 bequests may be the unintentional by product of precautionary savings and a stochastic date of death in the absence of an annuity market abel 1985 following barro 1974 and becker 1974 the altruistic bequest motive has been used most frequently however the enormous empirical work using micro data has not led to conclusive evidence on the one hand bernheim et al 1985 cox 1987 and cox and rank 1992 show that bequests are more consistent with exchange than altruism altonji et al 1992 1997 also show that altruism is decisively rejected moreover wilhelm 1996 finds little support for an altruistic theory of bequests on the other hand a recent reexamination of the exchange motive by perozek 1998 shows that the finding of bernheim et al is not robust laitner and juster 1996 find some evidence of altruistic bequests therefore a definite conclusion on bequest motives seems far from over indeed though altruism has not been supported by most of those empirical studies it remains a plausible hypothesis and continues to be used frequently see e g coate 1995 and davies and zhang 1995 abel 1985 argues theoretically that although the simple life cycle model without bequest motives is an inadequate description of the savi ng behavior in the united states as found in kotlikoff and summers 1981 accidental bequests by selfish consumers can account for a sizable fraction of aggregate wealth however little formal empirical work has been done to test whether bequests are accidental or arise from joy of giving given the lack of consensus on bequest motives it is interesting to conduct a systematic theoretical analysis of different bequest motives in a particular context becker et al 1990 and caballe 1995 assume altruism in their models of economic growth wiedmer s 1996 analysis of social security and growth does not consider bequests except ihori 1994 there seems to be no analysis of other bequest motives in the context of economic growth the purpose of this article is to analyze how different bequest motives affect fertility savings and economic growth the article will also examine how the effects of pay as you go social security depend on bequest motives

dynamic version of the economic lot size model this article originally appeared in management science october 1958 volume 5 number 1 pp 89 96 published by the institute of management sciences a forward algorithm for a solution to the following dynamic version of the economic lot size model is given allowing the possibility of demands for a single item inventory holding charges and setup costs to vary over n periods we desire a minimum total cost inventory management scheme which satisfies known demand in every period disjoint planning horizons are shown to be possible which eliminate the necessity of having data for the full n periods

a market driven transfer price for distributed products using mathematical programming a distributed product has its manufacturing activities distributed among many locations these locations could belong to one or more firms in a manufacturing network often components needed to manufacture a distributed product move through different nodes in the network and sometimes across international borders hence a transfer price is needed for the purpose of estimating duties and drawbacks being aware of the fact that transfer price can be used to manipulate taxable profits many countries have instituted rules concerning transfer price estimation for example in the united sates the internal revenue service irs says that the right price is the market value but for many components it is difficult to find a free market similar products may exist in the market but they may have different attributes in such cases it is important to be able to estimate the market driven transfer price given other similar products in the open market we develop a method using a mathematical programming model and providing companies an opportunity to work proactively with the irs in a cooperative manner in order to avoid costly audit and litigation this way companies avoid penalties and also gain certainty regarding tax liability an example illustrating the method is presented

transfer pricing and decentralized dynamic lot sizing in multistage multiproduct production processes abstract this paper presents the use of a transfer pricing system to coordinate business units in a wagner whitin type model for a decentralized lot sizing problem in a dynamic multistage multiproduct environment the paper includes two major proofs 1 a transfer pricing system enabling optimal decentralized lot sizing is characterized the transfer pricing system can be interpreted as a generalization of the reciprocal method or step down allocation method in cost location accounting and 2 based on a wagner whitin type theorem and the kakutani fixed point theorem it is shown that such a transfer pricing system exists

insurance design in the presence of safety nets abstract safety net assistance and insurance exist to manage risk and improve welfare this shared goal may lead to crowding out in a new approach this paper analyzes the interaction of assistance with two dimensions of insurance design level of coverage and types of risks covered in a society of risk averse vulnerable individuals and risk neutral assistance providers pareto improvements in welfare are achieved through incompleteness in the types of risks covered the results imply that safety nets promote demand for and the emergence of incomplete insurance these results have a wide application to insurance markets where safety nets are available including health care disaster aid and social welfare

imperfect commitment altruism and the family evidence from transfer behavior in low income rural areas in this paper we examine empirically whether risk pooling is more advantageous among altruistic compared to selfish agents in a framework where individuals cannot make binding commitments in particular we incorporate altuism into a model of risk sharing under imperfect commitment and use simulation methods to establish tests of the roles of both altruism and commitment problems in determining the extent of insurance and the intertemporal movements in interhousehold transfers the tests are carried out using three panel data sets from two countries of rural south asia that provide detailed information on transfers and enable the measurement of income shocks the estimates provide strong support for the notion that imperfect commitment substantially constrains informal transfer arrangements whether kin based or not but also provide evidence that altruism plays an important role in ameliorating commitment constraints and thus in increasing the gains from income pooling

basic versus supplementary health insurance moral hazard and adverse selection this paper introduces a tractable model of health insurance with both moral hazard and adverse selection we show that government sponsored universal basic insurance should cover treatments with the biggest adverse selection problems treatments not covered by basic insurance can be covered on the private supplementary insurance market surprisingly the cost effectiveness of a treatment does not affect its priority to be covered by basic insurance