government debt capital accumulation and the terms of trade in a model of interdependent economies this paper extends diamond s overlapping generations model into a two good two country setting to analyze the impact of an increase in domestic government debt on the terms of trade the current account and capital accumulation at home and abroad it is found that while the direction of change in the terms of trade is indeterminate in the short run for stability it must agree with that in the steady state which in turn is dependent on the initial debt status in trade of the home country the higher level of government debt leads unambigously to lower levels of capital stocks however

cotton subsidies the wto and the cotton problem wto and the cotton problem following an 8 year long dispute over cotton subsidies brazil and the united states signed a memorandum of understanding on april 21 2010 effectively paving the way for settling the dispute this paperargues that cotton subsidies are just the tip of the iceberg while a number of other perhaps more important issues require attention and indeed political will chief among them is the persistent divergence between cotton prices and the prices of other agricultural commodities which reflects for the most part the large supply response by china and india a direct consequence of con version to biotech cotton varieties in these and other countries such response which kept cotton prices low compared with other commodities imposes a competitive disadvantage to non users of biotech cotton the paper also highlights two additional constraints faced by the cotton producing countries of west and central africa namely the structural inefficiencies of their primary processing industries also known as ginning and the appreciation of the cfa franc against the us dollar without downplaying the importance of subsidy elimination the paper concludes that these impediments should receive high priority in the policy agenda

how efficient is the substitution of debt for taxes in influencing demand a 52 country macro theoretic model is developed in order to test the ricardian view that debt and tax finance are equivalent the alternative traditional view is that government expenditures financed by tax revenue affect the economy in profoundly different ways than expenditures financed by bond issuance a rigorous testing of the model indicates that a present value preserving transfer of income from future generations affects the consumption of the current generations in a positive for solvent countries or negative for debt ridden countries way an explanation for this divergence in consumer s behaviour is attempted via the concept of debt illusion

dealing with debt abstract this paper explores the menu of options for renormalizing public debt levels relative to nominal activity in the long run should governments eventually decide to do so although debt ratios may need to rise further in some cases a vision of longer term options is key to weighing alternative medium term stabilization strategies orthodox ones the standard fare of officialdom include enhancing growth running primary budget surpluses and privatizing government assets heterodox polices include restructuring debt contracts generating unexpected inflation taxing wealth and repressing private finance advanced countries have relied far more on heterodox approaches than many observers choose to remember

short term and long term interest rates in a monetary model of a small open economy abstract this paper analyzes the effects of both anticipated and unanticipated monetary and fiscal disturbances on the dynamic behavior of a monetary model of a small open economy it focuses on the adjustment of the short term and long term interest rates and the divergence of their transitional paths particularly in anticipation of these disturbances the analysis demonstrates how anticipation of a future policy change can generate perverse short run behavior the essential reason for the divergence between the short and long rates is that the latter is dominated by long term expectations while the former is primarily determined by current influences

do competitive workplaces deter female workers a large scale natural field experiment on job entry decisions an important line of research using laboratory experiments has provided a new potential reason for gender imbalances in labour markets men are more competitively inclined than women whether and to what extent gender differences in attitudes toward competition lead to differences in naturally occurring labour markets remains an open question to examine this we run a natural field experiment on job entry decisions where we randomize almost 9000 job seekers into different compensation regimes by varying the role that individual competition plays in setting the wage and the gender composition we examine whether a competitive compensation regime by itself can cause differential job entry the data highlight the power of the compensation regime in that women disproportionately shy away from competitive work settings yet there are important factors that attenuate the gender differences including whether the job is performed in teams whether the position has overt gender associations and the age of the job seekers we also find that the effect is most pronounced in labour markets with attractive alternative employment options furthermore our results suggest that preferences over uncertainty can be just as important as preferences over competition per se in driving job entry choices

testing ricardian equivalence a reconsideration empirical evidence on the determinants of private consumption in 52 countries over the period 1979 88 indicates that in contrast to the ricardian equivalence proposition a significant relationship exists between consumption and the variable the ratio of tax revenue to changes in government debt which measures the extent of substituting debt for tax financing the results obtained from estimating euler equations for the representative individual s stochastic dynamic optimization problem are favourable to the proposition that the choice between current taxation and debt issuance to finance a given government expenditure stream is relevant to the determination of the level of aggregate demand

in and out of the labour market long term income consequences of child related interruptions to women s paid work why do canadian mothers have lower incomes than women who have never had children microdata from the 1995 gss allow examination of two hypotheses 1 mothers have spent more time out of the labour force thus acquiring less human capital 2 higher levels of unpaid work lead to fatigue and or scheduling difficulties measuring work history does little to account for the family gap the estimated child penalty is reduced by allowing for human capital depreciation and controlling for unpaid work hours but the two hypotheses together cannot entirely explain the gap jel classification j0 j3 entrees et sorties marche du travail et consequences a long terme des interruptions dans l experience sur le marche du travail a cause des enfants ce memoire se demande pourquoi les femmes canadiennes qui ont eu des enfants ont des revenus plus bas que ceux des femmes qui n en ont pas eus les microdonnees de l enquete sociale generale de 1995 de statistiques canada permettent d examiner deux hypotheses 1 les meres ont passe plus de temps en dehors de la main d oeuvre active et donc ont accumule moins de capital humain ou 2 des niveaux plus eleves de travail non remunere peuvent entrainer fatigue ou difficultes d organisation du temps des efforts pour construire une meilleure image de l experience de travail des femmes ne permettent pas d expliquer cet ecart familial meme si la possibilite qu il y ait depreciation du capital humain reduit la penalisation attachee au fait d avoir un enfant en particulier si l interruption dans l experience sur le marche du travail est suivie d un changement d emploi le nombre hebdomadaire d heures de travail non paye est relie negativement aux revenus et si l on normalise pour tenir compte des heures de travail non paye cela reduit la penalisation attachee au fait d avoir un enfant cependant les deux hypotheses combinees ne suffisent pas pour expliquer l ecart

the stock market and exchange rate dynamics abstract this paper articulates a model of the open economy in which as in tobin 1978 the price of shares in the stock market subtitutes for the real interest rate in the determination of aggregate demand the stock market reduces the impact of monetary policy on the real exchange rate indeed if the link between stock prices and aggregate demand is important enough the impact of monetary policy on the real exchange rate can be reversed in contrast with standard dynamic mundell flemming models anticipated fiscal policy can be expansionary rather than contradictionary as in for example burgstaller 1983 blanchard 1984 and branson et al 1985

revisiting the cotton problem a comparative analysis of cotton reforms in sub saharan africa summary the cotton sector has been among the most regulated in sub saharan africa ssa and still largely is in west and central africa wca despite repeated reform recommendations by international donors on the other hand orthodox reforms in east and southern africa esa have not always yielded the expected results this paper uses a stylized contracting model to investigate the link between market structure and equity and efficiency in ssa cotton sectors explain the outcomes of reforms in esa and analyze the potential consequences of reforms in wca we illustrate our arguments with empirical observations on cotton sector performance

long run limits on the us federal debt abstract this letter distinguishes three nested long run constraints on the u s federal debt tests and rejects the strongest of the three and illustrates how hazardous it is to base inference regarding unit roots on misspecified test regressions

the effects of competition and equal treatment laws on gender wage differentials discrimination if it is inefficient can be eliminated by competition in most countries it is also forbidden by law this paper evaluates the influence of economic and legal factors on the portion of male female wage differentials that is not explained by other worker characteristics and may be due to discrimination we use a new international data set of suitable gender wage gap measures constructed from the results of existing studies meta analysis of the data shows that increased competition and adoption of international conventions concerning equal treatment laws both reduce gender wage gaps while legislation that prevents women from performing strenuous or dangerous jobs tends to increase it doris weichselbaumer and rudolf winter ebmer

the world trade organisation s doha cotton initiative a tale of two issues four west african nations have demanded that the world trade organization s doha development agenda include a cotton initiative that involves two issues cutting cotton subsidies and tariffs and assisting farm productivity growth in africa the authors provide estimates of the potential economic impacts of 1 complete or partial removal of cotton subsidies and import tariffs globally and 2 cotton productivity growth through the adoption of genetically modified gm cotton varieties they use the latest version of the gtap database and model their results confirm that unlike for other agricultural subsidies and tariffs for cotton it is subsidy reductions rather than tariff cuts that would make by far the largest impact for sub saharan africa the potential gains are huge relative to the effects on that region of reforming other merchandise trade policies and they could be more than doubled if that reform provided the cash for farmers to take advantage of the biotechnology revolution and adopt gm cotton varieties but those potential gains and the affordability of switching to costly gm seed depend crucially on the extent to which high income countries are willing to lower domestic support to their cotton farmers

current and anticipated deficits interest rates and economic activity abstract there is a widespread feeling that current deficits in europe and the u s may hurt rather than help the recovery this paper examines some of the issues involved through a sequence of three models the first model focuses on sustainability and characterizes its determinants it suggests that the issue of sustainability may indeed be relevant in some countries the second model focuses on the effects of fiscal policy on real interest rates and in particular on the relative importance of the level of deficits and the level of debt in determining interest rates the third model focuses on the effects of fiscal policy on the speed of the recovery it shows how a sharply increasing fiscal expansion might be initially contractionary rather than expansionary

do women avoid salary negotiations evidence from a large scale natural field experiment one explanation advanced for the persistent gender pay differences in labor markets is that women avoid salary negotiations by using a natural field experiment that randomizes nearly 2 500 job seekers into jobs that vary important details of the labor contract we are able to observe both the extent of salary negotiations and the nature of sorting we find that when there is no explicit statement that wages are negotiable men are more likely to negotiate for a higher wage whereas women are more likely to signal their willingness to work for a lower wage however when we explicitly mention the possibility that wages are negotiable these differences disappear completely in terms of sorting we find that men in contrast to women prefer job environments where the rules of wage determination are ambiguous this leads to the gender gap being much more pronounced in jobs that leave negotiation of wage ambiguous this paper was accepted by gerard p cachon behavioral economics

orchestrating impartiality the impact of blind auditions on female musicians a change in the audition procedures of symphony orchestras adoption of blind auditions with a screen to conceal the candidate s identity from the jury provides a test for sex biased hiring using data from actual auditions in an individual fixed effects framework we find that the screen increases the probability a woman will be advanced and hired although some of our estimates have large standard errors and there is one persistent effect in the opposite direction the weight of the evidence suggests that the blind audition procedure fostered impartiality in hiring and increased the proportion women in symphony orchestras

output the stock market and interest rates this paper develops a simple model of the determination of output the stock market and the term structure of interest rates the model is an extension of the is lm model and borrows from it the assumption that output is determined by aggregate demand and that the price level can only adjust over time to its equilibrium value however whereas the is lm emphasizes the interaction between the interest rate and output this model emphasizes the interaction between asset values and output asset values rather than the interest rate are the main determinants of aggregate demand and output current and anticipated output and income are in turn the main determinants of asset values it is this interaction that the model intends to capture its goal is to characterize the joint response of asset values and output to changes in the environment such as changes or announcement of changes in monetary and fiscal policy as the above brief description makes clear anticipations are central to the story the assumption made in this paper will be one of rational expectations the paper is organized as follows section i describes the model and sections ii iv characterize the behavior of the economy under the extreme but convenient assumption that prices are fixed forever sections v and vi extend the analysis to the case where prices adjust over time to their equilibrium value

cotton in a free trade world i introduction cotton has been at the center of much of the controversy surrounding the inability of the world trade organization wto membership to reach consensus regarding significant agricultural trade reform in 2003 four african countries benin burkina faso chad and mali circulated a proposal presented as their negotiating position for the cancun ministerial conference wto 2003 this proposal called for the elimination of cotton subsidies worldwide due to its status as a special product essential for agricultural and economic development in many less developed countries ldc support for this proposal solidified among other developing countries referred to as the group of 21 g 21 with a leading role played by the nation of brazil which had filed its own grievance against u s cotton programs in 2003 failure on the part of developed countries to meet the demands of the g 21 resulted in a collapse of the cancun meetings at the recently concluded hong kong ministerial declaration language was included in the ministerial declaration that reaffirms the intent of the wto 2005 to specifically reform the global trading rules for cotton while the text of this intent appears in brackets indicating that it does not represent complete consensus on the issue by all negotiating parties it is consistent with the wording of the july agreement and the cotton initiative s call for an early harvest of cotton as noted by wto 2004 cotton has been described as the litmus test seatini 2004 for the ideals of the doha development agenda to deliver on its commitments to correct and prevent restrictions and distortions in world agricultural markets wto 2001 agreement on meaningful reform of the cotton trade might break the impasse that currently exists in agriculture negotiations failure to do so may threaten gains made in the doha round itself as noted by andrews 2005 while the commodity support programs of developed countries in general have been criticized in global trade talks only recently has the legality of u s commodity programs been directly and specifically challenged with a particular emphasis on cotton attention on cotton is predicated by the fact that in 2002 2003 the united states accounted for 40 of world cotton exports and 63 of world cotton subsidies as noted in goreaux 2004 but cotton production is subsidized in other countries as well in the european union eu greece and spain produce 2 5 of the world s cotton yet receive 18 5 of the world s cotton subsidies as observed by goreaux 2004 as shown in table 1 subsidies to eu cotton growers are approximately 1 per pound of lint compared to 20 cents per pound in the united states in china the world s largest cotton producer the estimate of per pound assistance for cotton growers is 8 cents other per pound subsidies offered to cotton producers include egypt at 14 cents mexico at 8 cents and 6 cents in turkey in addition to the trade distorting effect of domestic support offered to producers many importing countries have been using tariffs to restrict imports china the world s largest importer of raw cotton has as wto mandated two tier tariff structure on cotton imports known as a tariff rate quota trq the in quota tariff rate for cotton to china is 1 while the out of quota tariff rate is 40 for any imports above 890 000 metric tons about 4 million bales 1 other import tariffs rates by major cotton importers include india at 10 mexico at 9 7 excluding tariff free imports from the united states as part of the north american free trade agreement and pakistan at 5 table 1 also provides a comparison of these cotton import tariff rates across importing countries as noted by the overseas development institute odi 2004 many studies have attempted to quantify the impacts of both united states and other countries subsidies on world cotton prices and production

u s federal indebtedness and the conduct of fiscal policy abstract this paper examines whether the conduct of u s fiscal policy since the 1920s has been influenced by constraints on the accumulated stock of outstanding federal debt the evidence is affirmative during most of the inter and post war period policy in effect stabilized the federal debt relative to gnp but after 1981 large debt and debt service costs failed to produce deficit reductions consistent with the pattern of previous decades

government spending interest rates and capital accumulation in a two sector model this paper investigates dynamic impacts of a temporary fiscal expansion in a two sector growth model if the expansion falls on consumption investment commodities capital accumulation can be either promoted or reduced and the short term interest rate unambigu ously rises if the expansion falls on consumption commodities capital accumulation is crowded out and the short term interest rate declines during the period of the fiscal expan sion it is also shown that fiscal spending on the consumption commodity can move the short and long term interest rates in opposite directions jel classification e43 e62 041

the international transmission of policy announcement effects abstract this paper extends recent work on the effects of fiscal and monetary policy in two country models by considering an additional channel through which the effects of policy announcements may be transmitted the term structure of interest rates previous work suggests that policy announcements have no impact on worldwide aggregates and merely cause a redistribution of demand and output between the domestic and important impact effects on worlwide aggregates which necessarily introduces ambiguities concerning the effects of policy announcements on foreign output and employment

market distortions and benefits from research the benefits from cost reducing research and their distribution under a range of price policies are compared with those that would arise in the absence of the policies while any price policy affects the distribution of research benefits the net national or world benefits may be reduced lef unchanged or increased depending on the nature of the policy and the significance of the country in the world market for the commodity some implications for decisions on price policies and for distortions in incentives for the allocation of resources to research are raised

fiscal transfers and fiscal sustainability we examine whether the u s and german state governments pursue sustainable fiscal policies taking into account fiscal transfers using panel data techniques we investigate whether the debt to gdp ratio had a positive influence on the primary surplus bohn model we show that including excluding fiscal transfers changes the results if fiscal transfers are not included in the primary surplus the test results do not indicate that the u s and german state governments pursued sustainable fiscal policies our results also suggest that fiscal transfers were positively related to debt these findings indicate that intergovernmental transfers have implicitly subsidized debts

dispelling some misconceptions about agricultural trade liberalization there has been a great deal of public discussion over the impact that agricultural trade liberalization would likely have especially on low income countries unfortunately the public discussion has been characterized by a number of misconceptions this paper provides a clarifying discussion of the issues involved among the key points addressed are 1 agricultural subsidies are not nearly as large as has been portrayed 2 tariffs are actually far more distortionary than subsidies and some low income countries actually benefit from rich country subsides and 3 widespread tariff reductions will not inflict large damage on developing countries as a result of preference erosion the case for removing agricultural trade barriers remains compelling even without the exaggerations and misconceptions

recent and prospective adoption of genetically modified cotton a global computable general equilibrium analysis of economic impacts abstract this article provides estimates of the economic impact of initial adoption of genetically modified gm cotton and of its potential impacts beyond the few countries where it is currently common use is made of the latest version of the gtap database and model our results suggest that if other developing countries especially in sub saharan africa were to follow the lead of china south africa and most recently india adoption of gm cotton varieties could provide even larger proportionate gains to farmer and national welfare than in those early adopting countries furthermore those estimated gains are shown to exceed and reinforce those from a successful campaign under the wto s doha development agenda to reduce remove cotton subsidies and import tariffs globally

cotton subsidies the wto and the cotton problem following an 8 year long dispute over cotton subsidies brazil and the united states signed a memorandum of understanding on april 21 2010 effectively paving the way for settling the dispute this paper argues that cotton subsidies are just the tip of the iceberg while a number of other perhaps more important issues require attention and indeed political will chief among them is the persistent divergence between cotton prices and the prices of other agricultural commodities which reflects for the most part the large supply response by china and india a direct consequence of con version to biotech cotton varieties in these and other countries such response which kept cotton prices low compared with other commodities imposes a competitive disadvantage to non users of biotech cotton the paper also highlights two additional constraints faced by the cotton producing countries of west and central africa namely the structural inefficiencies of their primary processing industries also known as ginning and the appreciation of the cfa franc against the us dollar without downplaying the importance of subsidy elimination the paper concludes that these impediments should receive high priority in the policy agenda

performance in competitive environments gender differences even though the provision of equal opportunities for men and women has been a priority in many countries large gender differences prevail in competitive high ranking positions suggested explanations include discrimination and differences in preferences and human capital in this paper we present experimental evidence in support of an additional factor women may be less effective than men in competitive environments even if they are able to perform similarly in non competitive environments in a laboratory experiment we observe as we increase the competitiveness of the environment a significant increase in performance for men but not for women this results in a significant gender gap in performance in tournaments while there is no gap when participants are paid according to piece rate this effect is stronger when women have to compete against men than in single sex competitive environments this suggests that women may be able to perform in competitive environments per se