nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

long run welfare under externalities in consumption leisure and production a case for happy degrowth vs unhappy growth in this paper we contribute to the debate on the relationship between growth and well being by examining an endogenous growth model where we allow for externalities in consumption leisure and production we analyze three regimes a decentralized economy where each household makes isolated choices without considering their external effects a planned economy where a myopic planner fails to recognize both leisure and consumption externalities but recognizes production externalities and a planned economy with a fully informed planner we first compare the balanced growth paths under the three regimes and then we numerically investigate the transition to the optimal balanced growth path we provide a number of findings first in a decentralized economy growth or labor or both are greater than in the regime with a fully informed planner and hence are sub optimal from a welfare standpoint second a myopic intervention which overlooks consumption and leisure externalities leads to more growth and labor than in both the decentralized and the fully informed regime third we provide a case for happy degrowth a transition to the optimal balanced growth path that is associated with downscaling of production a reduction in private consumption and an ongoing increase in leisure and well being

the drivers of structural change the main goal of this paper is to provide an integrated survey of the literature devoted to identifying the drivers of structural change broadly defined as the process of reallocation of economic activity across the three broad sectors agriculture manufacturing and services using the ggdc 10 sector database this paper first presents the empirical facts associated with structural change in different regions of the world that is europe and the usa asia latin america and africa then reviews four determinants of structural change i changes in income ii changes in relative sectoral prices iii changes in input output linkages and iv changes in comparative advantage s via globalization and trade

consumption externalities and monetary policy with limited asset market participation this article explores the interaction between consumption externalities and limited asset market participation lamp in the standard new keynesian model we assess the performance of simple taylor type interest rate rules with respect to a equilibrium determinacy b the model s ability to simultaneously generate output and inflation volatility similar to the pre volcker era and c the model s response to a technology shock we find that when individual preferences are affected by average household consumption aggregate consumption externality stronger externalities increase the range of lamp for which multiple equilibria arise even if the policy rule satisfies the taylor principle the interaction of lamp and externalities can generate vast inflation output relative volatility in line with the one observed in the data in the 1970s according to our analysis consumption externalities also affect the responses of endogenous variables to total factor productivity shocks jel e4 e5

does community participation produce dividends in social investment fund projects summary social investment funds sifs aim to strengthen local capacity for design implementation and maintenance of social and economic infrastructure projects and to increase community participation in ways that will promote their sustainability and effectiveness we explore key features of recent sifs intended to promote decentralized participatory decision making and management of projects in sif led education projects in honduras we investigate empirically whether efforts to implement a participatory approach improve the outcomes of these projects and community members perceptions of their effectiveness the findings identify elements of the participatory methodology which were associated with increased household and community participation and better household opinions of the projects and also show a link between participation and the probability of children s regular school attendance

tax policy and aggregate demand management under catching up with the joneses this paper examines the role for tax policies in productivity shock driven economies with catching up with the joneses utility functions the optimal tax policy is shown to affect the economy countercyclically via procyclical taxes i e cooling down the economy with higher taxes when it is overheating in booms and stimulating the economy with lower taxes in recessions to keep consumption up thus models with catching up with the joneses utility functions call for traditional keynesian demand management policies but for rather unorthodox reasons

welfare implications of the interaction between habits and consumption externalities we analyze the welfare properties of the equilibrium path of a growth model where both habits and consumption externalities affect the utility of consumers our analysis highlights the crucial role played by complementarities between externalities and habits in order to generate an infficient dynamic equilibrium in particular we show that the competitive equilibrium is inefficient when consumption externalities and habit adjusted consumption are not perfect substitutes

women s participation in local organizations conditions and constraints abstract civic organizations have a capacity to contribute to economic growth and an equitable distribution of welfare by reducing information asymmetries and transaction costs while donors increasingly recognize that group based projects are a means to advocate organizational capacities of target groups it is not clear whether group based organizations always increase efficiency and equity this article analyses the determinants of participation in local development groups ldgs using data from two projects funded by undp in kashmir and gtz in chad a major result of the empirical analysis is the identification of a middle class effect of participation the exclusion of the majority of the poor can be explained by high opportunity costs to join the group especially for income earning women in addition it can be shown that an existing social network is a pre condition for participation finally the assumption has been confirmed that bargaining power of the members is important for their decision to participate in groups

household contributions to community development in indonesia summary critical to the success of community development is the degree to which citizens contribute their resources the paper develops regression models to examine the effects of household and community characteristics on household contributions of time and money to three types of participatory community development efforts governance social welfare and environmental infrastructure households with indicators of lower socio economic status generally contributed less time and money to community development integration into social networks was also a strong predictor of the amount of time a household contributed because most of the community development efforts analyzed rely on reciprocity where participants contribute resources in order to receive benefits the findings raise doubts about the extent to which these efforts help the poor and socially excluded

the value of shelf registration for new debt issues the securities and exchange commission sec rule 415 shelf registration allows eligible firms to register securities that they intend to issue in the next two years once the registration is declared effective firms can enter the market instantaneously ineligible issuers however are required to notify the sec at least forty eight hours before entry supporters of the shelf rule contend that the rule provides valuable flexibility in timing issues the authors examine this contention by comparing the market timing performance of shelf and nonshelf debt issues the results indicate that the shelf rule does provide valuable market timing flexibility copyright 1989 by the university of chicago

impacts of access and benefit sharing on livelihoods and forest case of participatory forest management in ethiopia the introduction of participatory forest management pfm may involve the exclusion of previous forest users from accessing forest resources this is the case for pfm in the two ethiopian pioneer sites dodola and chilimo that represent two distinct pfm approaches in ethiopia this paper analyses how pfm after controlling pre pfm differences affects members of forest user groups fugs and non members total annual incomes forest incomes expenditures and livestock asset holdings income and asset data were collected from 635 randomly selected households data were analysed using propensity score matching models results show that in dodola where commercial timber harvest is allowed the introduction of pfm means that fugs have higher livestock assets and forest income than non members the average total income and the expenditure for members and nonmembers however were not significantly different in chilimo site the result is the opposite the introduction of pfm means that fug members have lower total incomes and assets than non members based on our findings we recommend that the pfm scaling up approaches in ethiopia which currently allow fugs only subsistence use from forest resources need to be revised

are positional concerns stronger in some domains than in others for more than one hundred years economists have discussed the concept of positional goods that the utility conferred by many perhaps even most goods depends not only on the amount the individual consumes but also on the amount others consume e g thorstein veblen 1899 james duesenberry 1949 john k galbraith 1958 robert frank 1985 while economic interest in positional goods is increasing e g mark pingle and mike mitchell 2002 kenneth arrow et al 2004 ed hopkins and tatiana kornienko 2004 the literature remains largely theoretical rather than empirical if status concerns affect all items in the utility function equally leisure as well as goods the positional effect would operate like a lump sum tax reducing well being without changing the allocation of time or money arrow et al 2004 however if positional concerns are stronger for some things than for others then in order to understand how people can become better off in well being not simply in wealth we must investigate how interpersonal competition interacts with material gains frank 1997 evidence about what goods are more positional than others is essential for correct policy recommendations gregory besharov 2002 but little is actually known about the relative positional rankings of items in the typical consumer s utility function four hypotheses proposed in the literature are

stepping into formal politics women s engagement in formal political processes in irrigation in rural india summary gender quotas decentralization of irrigation management and reliance on mgnrega for labor provision challenge the traditional patriarchal canal management system by institutionalizing women as formal decision makers and members of the irrigation labor force in northern india based on a survey of 592 women in rural himachal pradesh this paper quantitatively analyses how these policies affect women s engagement in formal political processes results indicate that factors from the private and individual domains influence female participation in formal political processes most importantly india s gender inclusive policies provide women with the opportunity to legitimately engage in formal political processes governing resource management

optimal emissions tax rates under habit formation and social comparisons abstract the existing climate models ignore the behavioral anomalies of households and conclude that the optimal environmental tax rate should comove with business cycles however this assumption has received extensive criticism recently to this end this paper studies the optimal emissions tax rate when households are bounded rational in particular we calculate the optimal climate policy in a dynamic stochastic general equilibrium dsge model that features households with habit formation internal habits and social comparisons external habits compared to the benchmark model without consumption externality the social comparisons model amplifies consumption volatility but produces a similar response of pollutant emissions in the presence of the three types of economic shocks considered in contrast the habit formation model decreases the volatility of both consumption and pollutant emissions in contrast to the previous result that the optimal emissions tax rate should be procyclical we find that the social comparisons model largely mitigates the procyclicality of optimal emissions tax rates and the optimal emissions tax rates under the habit formation model remain constant in response to all the economic shocks considered

an inquiry into power and participatory natural resource management decentralised environmental governance based on community participation is increasingly replacing top down natural resource management there is increasing awareness however that such mechanisms might fail to ensure effective participation by all stakeholders and be prone to producing and or perpetuating power inequalities against this backdrop we claim that power should be positioned at the centre of analyses of natural resource management in this paper we provide a taxonomy of positions to analyse participatory decision making in natural resource management we operationalise this framework to analyse two failures of participatory natural resource management in turkey focusing on reasons for failure and the role of power asymmetries our results are based on case studies comprising in depth interviews focus groups and a survey administered to 944 individuals we conclude that participatory mechanisms are highly unlikely to bring democratic and equitable outcomes unless power relations are addressed at both institutional and local levels copyright oxford university press

monetary policy stock prices and consumption externalities abstract we study interest rate rules responding to stock prices in a sticky price sticky wage new keynesian framework subject to consumption externalities for given wage rigidity such rules are beneficial to equilibrium determinacy if households preferences feature sufficiently strong keeping up with the joneses externalities

liquidity maturity and the yields on u s treasury securities the efrect8 of aaaet liquidity on expected retuma for ts with infinite maturities toc ka are eumined for bonda treuury notes and bills with matched maturities of lellll than 6 months the yield to maturity ill higher on notes which have lower liquidity the yield di1ferential between notes and billa is a decreuing and convex function of the time to maturity the results provide a robult confirmation of the liquidity effect in auet pricing this paper studies empirically the effects of the liquidity of capital assets on their prices amihud and mendelson 1986 1989 proposed that liquidity affects asset prices because investors require a compensation for bearing transaction costs transaction costs paid whenever the asset is traded form a sequence of cash outflows the discounted value of this cost stream proxies for the value 1088 due to illiquidity which lowers the asset s value for any given cash flow that the asset generates 1 as a result the return on assets should be an increasing function of their illiquidity other things equal for stocks the illiquidity effect is expected to be strong because their transaction cost sequence is infinite amihud and mendelson 1986 1989 demonstrated that common stocks with lower liquidity yielded significantly higher average returns after controlling for risk and for other factors these results on the importance of liquidity in the pricing of stocks raise additional questions i does the liquidity effect depend on the specific controls used by amihud and mendelson 1986 1989 1 ii does illiquidity have a similarly strong effect on the pricing of bonds whose maturities are finite and iii if liquidity affects bond yields how is this effect related to the bond s time to maturity

optimal taxation when consumers have endogenous benchmark levels of consumption i examine optimal taxes in an overlapping generations economy in which each consumer s utility depends on consumption relative to a weighted average of consumption by others the benchmark level of consumption as well as on the level of the consumer s own consumption the socially optimal balanced growth path is characterized by the modi ed golden rule and by a condition on the intergenerational allocation of consumption in each period a competitive economy can be induced to attain the social optimum by a lump sum pay as you go social security system and a tax on capital income

are larger treasury issues more liquid evidence from bill reopenings this paper makes use of a natural experiment of the u s treasury department to examine the relationship between treasury security issue size and liquidity treasury bills that were first issued with 52 weeks to maturity and then reopened at 26 weeks are shown to be more liquid than comparable maturity bills that were first issued with 26 weeks to maturity the relationship is less pronounced when bills are on the run the most recently auctioned bills of a given maturity than when they are off the run and persists when controlling for other factors that affect liquidity the reopened bills are found to have higher yields lower prices than comparable maturity bills showing that the indirect liquidity benefits of reopenings are more than offset by the direct supply costs

the emergence of local capacity lessons from colombia abstract the paper analyzes the process of capacity development in a sample of colombian local governments which resulted from a strategy of state decentralization initiated in the mid 1980s the central message of the study is that competition for political office opened the door to responsible and innovative leadership that in turn became the driving force behind capacity building efforts more widespread community participation expanded the range of possibilities open to local governments and provided the basis to sustain capacity over time the experience of these municipios suggests that capacity can be enhanced through skillful innovations even under difficult circumstances

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

misery loves company equilibrium portfolios with heterogeneous consumption externalities the present article extends the arrow debreu portfolio model to consumption externalities it is assumed that each investor has a von neumann morgenstern utility that is a function of her own consumption and of the average consumption in the group to which she belongs individual degrees of risk aversion and conformism are heterogeneous within each group and between the different groups in the economy we show that under some conditions on the degree of conformism in the economy the optimal portfolio and consumption choices observed at equilibrium in each group with consumption externalities are equivalent to those that are optimal without any externality but with an adjusted degree of risk aversion if these conditions are not fulfilled groups have no representative agent and the demand for pure zero mean lotteries may be positive thereby showing that not all diversifiable risks are washed away at equilibrium we characterize the relationship between the distribution of conformism in the economy to the competitive allocation of risk and to the equity premium we provide conditions for the two fund separation property to hold

conformism and structural change using a simple multisector model of endogenous growth we show that commodity specific consumption externalities can be a source of structural change when the degrees of consumption externalities are different between goods each sector grows at a different rate however the aggregate economy exhibits balanced growth in that capital stock and expenditure grow at the same constant rate a three sector version of our model may reconcile kaldor s stylized facts with empirically plausible profiles of industrial structure transformation

the effects of migration on collective action in the commons evidence from rural china summary over the past three decades scholars have studied the effects of more than three dozen factors on collective action in the commons but little is known about the effects of rural to urban migration we examine this question with the case of china which has the world s most extensive levels of rural to urban migration using ols logit and probit models and data from a survey of 1 780 households from 18 provinces we find that migration has a statistically significant adverse effect on collective irrigation controlling for a large number of theoretically relevant variables the effects of migration on collective action in the commons are possibly mediated by a number of factors frequently identified in the literature including leadership social capital sense of community economic heterogeneity and dependence on resources we speculate that massive out migration partly explains the significant drop in the use of collective canal irrigation and exacerbated the significant increase in groundwater irrigation since the start of reforms in 1980s these findings have important policy implications for commons governance in china given that massive rural to urban migration will continue in the next decade because of the increasing rural to urban migration worldwide especially in developing countries the findings could also partly explain the deteriorating state of rural village infrastructure natural common pool resources and ecological systems in many developing countries

the role of the structural transformation in aggregate productivity we investigate the role of sectoral differences in labor productivity in explaining the process of structural transformation the secular reallocation of labor across sectors and the time path of aggregate productivity across countries using a simple model of the structural transformation that is calibrated to the growth experience of the united states we measure sectoral labor productivity differences across countries productivity differences between rich and poor countries are large in agriculture and services and smaller in manufacturing moreover over time productivity gaps have been substantially reduced in agriculture and industry but not nearly as much in services in the model these sectoral productivity patterns generate implications that are broadly consistent with the cross country evidence on the structural transformation aggregate productivity paths and relative prices we show that productivity catch up in industry explains about 50 percent of the gains in aggregate productivity across countries while low relative productivity in services and the lack of catch up explains all the experiences of slowdown stagnation and decline observed across countries

is more always better a survey on positional concerns abstract we use survey data to provide some empirical information about concerns regarding relative standing respondents chose between a world where they have more of a good than others and one where everyone s endowment of the good is higher but the respondent has less than others questions asked about education attractiveness and intelligence for one s child and oneself income vacation time approval and disapproval from a supervisor and papers to write half of the respondents preferred to have 50 less real income but high relative income concerns about position were strongest for attractiveness and supervisor s praise and weakest for vacation time

a variety expansion model of growth with external habit formation abstract this paper introduces consumption externalities into one of the base line models of growth in which continuing expansion of product variety sustains long term growth we assume that consumers set a benchmark stock of consumption for each good so that there are commodity specific external effects each good is produced by a monopolistically competitive firm and the firm exploits the presence of consumption external effects in determining its profit maximizing price given those settings we show that the introduction of consumption externalities may affect the balanced growth characterization transitional dynamics and policy effects in fundamental manners

a dynamic approach to forest regimes in developing economies abstract in the developing economies optimal forest regimes should incorporate the socio economic characteristics of the user groups and since socio economic factors will change with time optimal forest regimes will also follow a dynamic path the two most important socio economic factors are the heterogeneity of the user group with respect to forest management and the direct dependence of the user group on forest normally the heterogeneity will increase and dependence will decrease with economic growth of user group an optimal control model is used to integrate the dynamics of natural system such as joint product of forests and its growth function and the dynamics of the two socio economic factors heterogeneity and dependence the model demonstrates that the dynamics of optimal forest regimes will depend upon the change in natural factors socio economic factors and on the interactions between natural and socio economic factors hence optimal forest management strategies would require a continuous refinement in forest management regimes instead of static state regimes as local communities in developing economies pass through different phases of economic growth

nosy preferences benevolence and efficiency author affiliation chetan dave cdave nyu edustefan dodds sdodds uwinnipeg ca acknowledgment we would like to thank ingela alger sheryl ball nathan berg tarek coury rachel croson frances woolley participants at the 2008 canadian economics association meetings seminar participants at queen s university and two anonymous referees for valuable comments all errors are those of the authors 1 introductionthe pareto principle declares that if everyone in a society prefers some social state of the world x to another state y then the aggregated social ranking should reflect this as well minimal liberalism requires that no individual s preference relation between social states say z and w be violated in the social choice provided that the position of other individuals is unaffected across states z and w both of these principles can be appealing to economists as they evaluate the normative features of various policies however the liberal paradox of sen 1970 demonstrates that the pareto principle and minimal liberalism are potentially at odds with one another the paradox shows that if individuals possess nosy preferences that is they hold opinions about what others should do even though their own material well being is unaffected by others actions then it is in general impossible to arrive at a unique social choice that jointly satisfies these two axioms 1 as an elegant proof by contradiction the paradox adds to the list of social choice impossibilities 2sen s paradox highlights the tension between freedom of choice and efficiency with nosiness as the key ingredient in this article we re examine this tension by using recent insights from behavioral economics the idea that individuals may have concern for others namely altruism is well established in the behavioral economics literature becker 1974 however the concept of nosy preferences and what they imply for collective choice environments has not been extensively studied from a behavioral perspective here we provide such a study to do so we recast nosiness as a new form of social preference in a strategic setting this insight stems from the analysis of segal and sobel 2007 who consider a model where players in a game possess preferences over both outcomes and strategies employed by all players we embed our version of nosiness into a more general model of social preferences individuals in the model derive utility from three sources intrinsic payoffs from the outcomes of strategic choice nosy payoffs based on specific actions taken by other individuals to generate such outcomes and unconditionally altruistic or benevolent payoffs positively related to the extended utilities of other individuals this framework allows us to analyze strategic environments in which there exist interdependent preferences over utilities and actions or just one of these features we apply this particular model of preferences to two environments the first was suggested by aldrich 1977 who sought to provide a game theoretic interpretation of sen s paradox for this environment we are interested in the efficiency of equilibria and to what extent inefficiency depends on particular forms of social preferences we thus offer a new behavioral interpretation of sen s paradox following the behavioral theme we show that when individuals exhibit loss aversion over their own actions the paradox may be robust to schemes that attempt to generate efficiency by restricting action sets ex ante the second environment we consider is that of relative consumption concerns we show that applying our particular model of interdependent preferences to this environment allows us to find cases where individuals will voluntarily restrict consumption to mitigate the negative externality arising from nosy concerns about what others consume

structural change in a multisector model of growth we study a multi sector model of growth with differences in tfp growth rates across sectors and derive sufficient conditions for the coexistence of structural change characterized by sectoral labour reallocation and constant aggregate growth path the conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists we present evidence from us two digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services we show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model

participatory exclusions community forestry and gender an analysis for south asia and a conceptual framework abstract the idea of people s participation has long been part of development thinking but today the management of local natural resources by village communities is widely accepted as an institutional imperative it is therefore essential to examine how these institutions perform especially from the perspective of the more disadvantaged based on extensive fieldwork among community forestry groups in india and nepal and existing case studies this paper demonstrates how seemingly participatory institutions can exclude significant sections such as women it provides a typology of participation spells out the gender equity and efficiency implications of such exclusions and analyzes what underlies them it also outlines a conceptual framework to help analyze the process of gender exclusion and how it might be alleviated

beyond balanced growth balanced growth models are commonly used in macroeconomics because they are consistent with the well known kaldor facts regarding economic growth these models however are inconsistent with one of the most striking regularities of the growth process the massive reallocation of labour from agriculture into manufacturing and services this paper presents a simple model consistent with both the kaldor facts and the dynamics of sectoral labour reallocation

an investigation of cost differences between public sales and private placements of debt abstract we examine the cost differences between public sales and private placements of debt for a sample of public utility issues the lowest cost method depends on a firm s transaction costs which comprise flotation costs agency costs and the costs of searching the market our findings suggest that firms minimize the cost of issuing securities by selecting the market providing the lowest transaction costs

jealousy and equilibrium overconsumption the idea that the happiness of an individual depends upon the consumption of others is widely viewed as an important feature of our shared social existence recent research in finance has used this idea through consumption externalities to explore asset pricing anomalies consumption externalities potentially break the link between pareto optimality and competitive equilibria and open the door for beneficial government intervention e g lars ljungqvist and harald uhlig 2000 in this paper we delineate two effects that a consumption externality may have an increase in aggregate consumption may a raise the marginal utility of individual consumption relative to leisure and or b lower an individual s utility level we refer to a as keeping up with the joneses henceforth kuj following jordi gali 1994 and we refer to b as jealousy jealousy is a distinct concept from kuj under kuj an individual derives greater utility from additional own consumption relative to leisure when others consume more at the same time higher per capita consumption holding fixed individual consumption can trigger either jealousy so that individual utility falls or admiration so that individual utility rises in section i of this paper we show that jealousy implies that the laissez faire equilibrium consumption level is greater than the optimal level whether preferences exhibit kuj is not necessary for this main result intuitively in the presence of jealousy consumption is similar to pollution overpollution exists because individuals do not take into account the cost of polluting on others not because an increase in economywide pollution makes the return to individual polluting higher similarly overconsumption exists because individuals do not take into account the negative effect of own consumption on jealous others things go in the opposite direction when individuals are admiring in section ii we consider a functional form that encompasses several existing models we show that jealousy determines the optimal tax to correct overconsumption and that kuj is mainly important for asset pricing

we are what we eat obesity income and social comparisons abstract the empirical evidence of a non monotone relation between income and obesity is not well explained we build a theoretical model combining income inequality and social comparisons to explain the link between income and obesity and study tax policy implications for fighting obesity we assume that differences in food consumption patterns between poor and wealthy households partly reflect positionality which is the concern for social status our key assumption is that positionality for low calorie food consumption is positively related to a country s wealth in this framework body weight outcomes reflect competing income and positionality effects yielding the following results we explain the link between average obesity rates and standards of living and suggest the existence of a kuznets curve for obesity in accordance with empirical evidence for cross sections of the population we explain the observed correlation between income and obesity which is positive in poor countries and negative in rich countries we find that increasing the relative cost of high calorie food is less effective at decreasing the relative weight of poor individuals in rich countries than in poor countries

changes in sectoral composition associated with economic growth in this paper the author uses dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth she shows that growth is affected by sectoral composition and vice versa the model is basically a solow model of sustained growth with multiple consumption goods and nonhomothetic preferences each consumption good is produced using different factor intensities the rate of exogenous technological change is different in each sector nonhomotheticity of preferences drives the result that sectoral composition affects growth rates copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

liquidity taxes and short term treasury yields this article investigates differences in yields on identical treasury notes and bills and shows that they reflect differences in liquidity immediacy risk and taxes it proposes an empirical measure for differences in the liquidity risk of notes and bills the volatility ofthe underlying rate times the ratio of bills turnover to notes turnover because differential taxes affect sellers but not buyers of bills and notes the results reject free of informational problems the hypothesis that the notes demand curve is horizontal note bill yield differences also decrease with inventories of notes the less liquid asset

bond returns liquidity and missing data this paper examines holding period returns to constant duration portfolios of u s govern ment notes and bonds and measures the return premium generated by liquidity differences in bonds the approach compares constant duration portfolios constructed in two distinct ways one using only bonds issued in the most recent treasury auction one using all other bonds comparisons of the resulting series are made meaningful by choosing narrow du ration ranges in the portfolio formation procedure this in turn induces a missing data problem in the created time series parameters of return distributions are therefore estimated employing a maximum likelihood framework that explicitly accounts for the missing data it is estimated that recently issued bonds are priced to return a premium of around 55 basis points per annum over otherwise equivalent instruments

the shelf registration of debt and self selection bias prior studies report lower issue costs for shelf registered debt and conclude that the benefits of increased underwriter competition can be realized by those firms using this registration procedure this study re examines the purported superiority of issuing debt via shelf registration and finds that the savings in issue costs displayed by earlier studies can be attributed to a self selection bias and not the method of registration

who participates in labor intensive public works in sub saharan africa evidence from rural botswana and kenya abstract provision of low wage menial employment through public works schemes promises to provide low cost targeting of the poor especially in rural areas where instruments for income transfer are scarce findings from survey based studies in rural botswana and kenya show that the working poor are more willing to participate in public works schemes especially those with few assets and limited access to private income transfers access to short term employment through these schemes appears to improve the net income of the very poor and decrease poverty among the rural poor the significant number of nonpoor in the schemes indicates however a need for improving poverty targeting through setting wage rates that closely reflect the labor supply characteristics of the poor in rural labor markets in addition these schemes have to be complemented with other income transfer interventions to ensure that the poor who fail to meet work requirements are not excluded from public assistance

does the liquidity of a debt issue increase with its size evidence from the corporate bond and medium term note markets to investigate the liquidity of large issues this study tests for yield differences between corporate bonds and medium term notes mtns in the sample mtns have an average issue size of 4 million compared with 265 million for bonds among mtns that have the same issuance date the same maturity date and the same corporate issuer we find no relation between size and yields moreover bonds and mtns have statistically equivalent yields thus rather than suggesting that large issues have greater liquidity these findings indicate that large and small securities issued by the same borrower are close substitutes the objective of this study is to test for a relation between the size of corporate debt offerings and their yields if investors value large offerings for their greater liquidity then large issues will have lower yields than small issues alternatively if investors view securities of the same borrower as close substitutes there may be no relation between issue size and yields to investigate whether issue size is a significant determinant of liquidity we test for yield differences between medium term notes mtns and bonds of the same corporate issuers in most respects mtns are similar to corporate bonds however mtns have an average issue size of around 5 million in contrast most offerings in the bond market raise at least 100 million thus if liquidity increases with issue size bonds will have lower yields than mtns and large mtns will have lower yields than small mtns the data we use consist of 4 182 mtns and 68 bonds offered by four large borrowers between october 1987 and december 1992 the issues in the sample range in size from 102 000 to 1 2 billion a disperse distribution that allows us to make reliable inferences about the relation between issue size and yields to test for a size effect within the mtn market we create subsamples of mtns that have the same issuance date the same maturity date and the same corporate issuer mtns in these subsamples are identical except for their yields and size on average yields on large mtns in the subsamples are 0 35 basis point higher than yields on small mtns a finding that is inconsistent with the liquidity hypothesis we also test for a yield difference between bonds

can traditional theories of structural change fit the data two traditional explanations for structural changes are sector biased technological progress and non homothetic preferences this paper integrates both into an otherwise standard growth model and quantitatively evaluates them vis a vis time series the exercise identifies a set of puzzles for standard theories i the model cannot account for the steep decline in manufacturing and rise in services in the later data ii the standard model requires implausibly low elasticity of substitution across goods to match the consumption and output data and iii the behavior of consumption and output shares differs significantly from that of employment shares we argue that models that incorporate home production sector specific factor distortions and differences across sectors in the accumulation of human capital are promising avenues to amend the standard models jel o11 o14 o41

should public policy respond to positional externalities abstract a nice suit is one that compares favorably with those worn by others in the same local environment more generally a positional good is one whose utility depends strongly on how it compares with others in the same category 1 a positional externality occurs when new purchases alter the relevant context within which an existing positional good is evaluated 2 for example if some job candidates begin wearing expensive custom tailored suits a side effect of their action is that other candidates become less likely to make favorable impressions on interviewers from any individual job seeker s point of view the best response might be to match the higher expenditures of others lest her chances of landing the job fall but this outcome may be inefficient since when all spend more each candidate s probability of success remains unchanged all may agree that some form of collective restraint on expenditure would be useful in such cases however it is often impractical to negotiate private solutions do positional externalities then become legitimate objects of public policy concern in attempting to answer this question i employ the classical libertarian criterion put forth by john stuart mill 3 who wrote the state may not legitimately constrain any citizen s freedom of action except to prevent harm to others i argue that many positional externalities appear to meet mill s test causing not just negative feelings but also large and tangible economic costs to others who are ill equipped to avoid them i also discuss an unintrusive policy remedy for positional externalities one modeled after the use of effluent charges to curb environmental pollution the paper is organized as follows section 1 notes the deep similarity between the conditions that give rise to positional arms races and those that give rise to conventional military arms races section 2 follows with a review of evidence concerning the strength of concerns about relative position section 3 describes some of the tangible economic costs that people experience as a result of positional externalities arising from such concerns section 4 takes up the question of whether collective action directed against positional externalities is consistent with respect for individual rights section 5 describes how a progressive consumption tax could neutralize many of the most costly effects of positional externalities

relative consumption and tax evasion abstract relative consumption effects or status concerns that feature jealousy in the sense of dupor and liu 2003 boost consumption expenditure if consumption is financed by labour income such status considerations increase labour supply and hence the tax base a higher taxable income in turn can make tax evasion more attractive we show for various specifications of preferences that the tax base effect generally dominates consequently relative consumption effects tend to reduce tax evasion this is true irrespective of whether tax parameters are exogenous guarantee a balanced budget or are set optimally

investor yield and gross underwriting spread comparisons among u s dollar domestic yankee eurodollar and global bonds abstract the characteristics and features of domestic foreign eurobonds and global bonds differ from one another as do their regulation we develop regression models to compare investor yield differences that should logically exist at issuance for these bond market segments for u s dollar denominated bonds our empirical results show that ceteris paribus both privately placed and rule 144a eurodollar issues yield more than publicly placed bonds yankee bonds yield insignificantly more than domestic bonds and the bearer feature common to eurodollar bonds is not prized enough by institutional investors for them to accept a lower yield relative to domestic or yankee bonds we do not find a statistically significant difference between the investor yield spread on u s dollar global bonds and u s domestic bonds or yankee bonds or eurodollar bonds we also study underwriting costs of publicly traded bonds and find ceteris paribus that eurodollar bonds are far more costly for the firm to issue than domestic bonds yankee bonds or global bonds domestic and yankee bonds are more expensive than global bonds and there is no significant cost difference between domestic and yankee bonds

does it pay to participate in decision making survey evidence on land co management in jiangsu province china member participation in decision making is a critical part of resource co management however little is known about the welfare consequences of participation this paper analyzes the impact of cooperative member participation in decision making on their incomes using data from 364 members of china s land cooperative program we distinguish two levels of participation in decision making voting and obtaining financial information and use a bivariate probit model and propensity score matching to estimate their impact the results indicate that household head s age gender and education and family size wealth and political affiliation determine participation in decision making participation in either voting or obtaining financial information has a positive impact on cooperative members land income there is also a strong joint effect of voting and obtaining information with an increase in land income of 16 we conclude that broad participation can ensure more equitable access to land income for members

a framework for evaluating collective action and informal institutional dynamics under a resource management policy of decentralization the decentralization of resource property rights has become an increasingly popular policy in many natural resource dependent communities of the developing world however the success of this policy approach depends on both collective action and institutionalization it is therefore important to evaluate collective action and institutionalization where the process of property rights decentralization is in progress this paper presents a modified version of the institutional analysis and development iad framework designed to analyze the decentralization of property rights and the collective action of community members to obtain these rights it describes a three phased framework for analyzing i the government property right decentralization policy ii the stock of capital assets in the community required to achieve property rights by initiating collective action and iii the development of an informal institution for effective property right distribution in the community finally to demonstrate its utility to collective action research we present a case study application of our modified framework to the fisheries property right decentralization policy of the bangladesh government and the subsequent collective action of a wetland dependent community

event risk an analysis of losses to bondholders and super poison put bond covenants ten percent of the investment grade industrial bonds that were associated with major capital restructurings between 1 983 and 1988 had already been downgraded to speculative grade as of august 1989 in response to these downgrades and the corresponding wealth losses for bondholders over 40 percent of recently issued investment grade industrial bonds are protected from this type of event risk by virtue of specialized covenants these event risk convenants may have initially reduced interest costs for borrowers by roughly 20 to 30 basis points however the magnitude of the effect appears to have declined along with the general decline in corporate restructurings the wave of corporate restructurings in the 1980s and the accompanying expansion of debt gave rise to a marked deterioration in credit quality in the corporate bond market the financing of the restructurings typically included new debt with a priority equal to or higher than that of the firm s outstanding bonds as a result of the increase in risk billions of dollars in outstanding bonds were downgraded from investment grade to speculative grade in the process investors became increasingly concerned with event risk the risk of a substantial decline in the market price of a firm s outstanding bonds arising from an unforeseen and major change in its capital structure since late 1988 several corporate bond offerings have included event risk covenants as a safeguard against leverage induced losses most of the covenants are super poison puts which give investors the right to sell their bonds back to the issuer at par in the event of a leveraged restructuring and subsequent downgrading to speculative grade

impatience and equilibrium indeterminacy abstract this paper extends the neoclassical one sector optimal growth model by postulating that individual agents time preference impatience depends on the economy wide average consumption and average income which are social factors taken as external by individual agents the paper shows that with the socially determined individual time preference local equilibrium indeterminacy can arise moreover local indeterminacy can also be associated with global indeterminacy in many cases the results hold in models with bounded and unbounded growth

structural change in advanced nations a new set of stylised facts we provide new evidence on patterns of structural change in advanced economies reconsidering the stylised facts put forward by kaldor 1963 kuznets 1971 and maddison 1980 since 1980 the services sector has overwhelmingly predominated in the economic activity of the european union japan and the us but there is substantial heterogeneity among services personal finance and business services have low productivity growth and increasing shares in employment and gdp by contrast shares of distribution services are constant and productivity growth is rapid we find that the labour share in value added is declining while the use of ict capital and skilled labour is increasing in all sectors and regions

can information about local government performance induce civic participation evidence from the philippines abstract the question of whether people are motivated to engage in civic activities once informed of their local government s performance is relevant to many developing countries that adopted decentralisation applying propensity score matching technique on a unique household level dataset from the philippines it is found that the knowledge of an index of local government performance has positive and statistically significant effects on the likelihood of membership in local organisations and participation in local projects thus the results support policies for greater transparency in local governance to deepen citizenship

decentralization and participation the governance of common pool resources in nepal s terai summary decentralization has emerged as an important instrument of environmental and development policy in the last two decades presumed benefits of environmental policy decentralization depend in significant measure on broad participation in the programs that governments create to decentralize decision making related to resource management this paper uses data from protected areas in nepal s terai to examine who participates in environmental decentralization programs on the basis of our statistical analysis we highlight the fact that the likelihood of participation in community level user groups is greater for those who are economically and socially better off we also find that individuals who have greater access to and who visit government offices related to decentralization policies more often are also more likely to participate in user groups created by state officials finally we find a negative correlation between education and levels of participation our study and analysis support the argument that for decentralization policies to be successful on equity issues it is important to build institutional mechanisms that encourage poorer and more marginal households to access government officials improve access to educational opportunities and create incentives to promote more interactions between less powerful rural residents and government officials 2005 elsevier ltd all rights reserved

does participation in common pool resource management help the poor a social cost benefit analysis of joint forest management in jharkhand india abstract joint forest management jfm has succeeded in halting forest degradation in india but its poverty reduction objective has not fully been evaluated previously this paper compares jfm forests and government managed forests to assess their respective net social benefits to different groups of local villagers it shows that the jfm regime reflects the social preference of the rural nonpoor and that the poor are net losers over a 40 year time horizon future plans for jfm need to include suitable compensatory mechanisms to reduce the poverty of the poorest within a village

getting ahead of the joneses when equality increases conspicuous consumption among bottom tier consumers it is widely believed that increasing the equality of material possessions or income in a social group should lead people at the bottom of the distribution to consume less and save more however this prediction and its causal mechanism have never been studied experimentally five studies show that greater equality increases the satisfaction of those in the lowest tier of the distribution because it reduces the possession gap between what they have and what others have however greater equality also increases the position gains derived from status enhancing consumption since it allows low tier consumers to get ahead of the higher proportion of consumers clustered in the middle tiers as a result greater equality reduces consumption when consumers focus on the narrower possession gap but it increases consumption when they focus on the greater position gains i e when consumption is conspicuous social competition goals are primed and the environment is competitive

individual well being in a dynamic perspective this paper explores the determinants of individual well being as measured by self reported levels of satisfaction with income making full use of the panel data nature of the german socio economic panel we provide empirical evidence for well being depending on absolute and on relative levels of income in a dynamic framework this finding holds after controlling for other influential factors in a multivariate setting the main novelty of the paper is the consideration of dynamic aspects individual s own history as well as the relative income performance with respect to the others living in the society under analysis do play a major role in the assessment of well being