benefit incidence public spending reforms and the timing of program capture assessments of the distributional effects of public spending reforms have generally been based on average rates of program participation by income or expenditure group this practice can be deceptive because the socioeconomic composition of participants can change as a social program expands or contracts the geographic variation found in 1993 94 household survey data for rural india is used to estimate the marginal odds of participating in schooling and antipoverty programs the results suggest early capture of these programs by the non poor it is shown that conventional methods for assessing benefit incidence underestimate the gains to the poor from higher public outlays and underestimate the losses from cuts

buying votes vs supplying public services political incentives to under invest in pro poor policies this paper uses unique survey data to provide for the first time in the literature direct evidence that vote buying in poor economies is associated with lower provision of public services that disproportionately benefit the poor various features of the data and the institutional context allow the interpretation of this correlation as the equilibrium policy consequence of clientelist politics ruling out alternate explanations such as for example poverty driving both vote buying and health outcomes the data come from the philippines a country context that allows for measuring vote buying during elections and services delivered by the administrative unit controlled by winners of those elections the data reveal a significant robust negative correlation between vote buying and the delivery of primary health services in places where households report more vote buying government records show that municipalities invest less in basic health services for mothers and children and quite strikingly as a summary measure of weak service delivery performance a higher percentage of children are severely under weight

is volatility clustering of asset returns asymmetric abstract volatility clustering is a well known stylized feature of financial asset returns this paper investigates asymmetric pattern in volatility clustering by employing a univariate copula approach of chen and fan 2006 using daily realized kernel volatilities constructed from high frequency data from stock and foreign exchange markets we find evidence that volatility clustering is highly nonlinear and strongly asymmetric in that clusters of high volatility occur more often than clusters of low volatility to the best of our knowledge this paper is the first one to address and uncover this phenomenon in particular the asymmetry in volatility clustering is found to be more pronounced in the stock markets than in the foreign exchange markets further the volatility clusters are shown to remain persistent for over a month and asymmetric across different time periods our findings have important implications for risk management a simulation study indicates that models which accommodate asymmetric volatility clustering can significantly improve the out of sample forecasts of value at risk

an interest group model of direct income redistribution an interest group model of the determinants of policies which directly re distribute income to low income persons is developed and tested the model assum es that altruistic taxpayers nonaltruistic taxpayers and needy beneficiaries f orm separate interest groups from which politicians seek support benefit levels depend on variables such as taxpayer income and the price of benefits but unlike median voter models the model also implies a role for interest group strengt h and competition between political parties the author uses latent variable met hods and data on the aid to families with dependent children program to demonstr ate empirical support forthe model copyright 1986 by mit press

capture and governance at local and national levels 135 despite the importance of this issue not much systematic research appears to have been devoted to assessing the relative susceptibility of national and local governments to interestgroup capture here we describe a model of two party electoral competition with probabilistic voting behavior and lobbying by specialinterest groups based on david baron 1994 and gene grossman and elhanan helpman 1996 that helps identify determinants of relative capture at different levels of government these include relative levels of voter awareness and interest group cohesiveness electoral uncertainty electoral competition heterogeneity of districts with respect to inequality and the electoral system while some of these uphold the traditional madisonian presumption others are likely to create a tendency for lower capture at the local level so the net effect is theoretically ambiguous this suggests that the extent of relative capture may be context specific and needs to be assessed empirically

early birds late risers and sleeping beauties bank credit growth to the private sector in central and eastern europe and in the balkans abstract following a period of privatization and restructuring commercial banks in central and eastern europe and more recently in the balkans have expanded rapidly their lending to the private sector this paper studies whether these developments are consistent with a process of convergence and structural financial deepening by estimating an equilibrium level of the bank credit to gdp ratio it concluded that while there is no clear evidence that the recent increases in bank credit ratios is inconsistent with financial deepening policy makers will have to evaluate carefully its implications for macroeconomic developments and financial stability

the social appraisal of local public spending using revealed fiscal preferences abstract growth rate differentials between local governments are used to reveal preferences over local spending policies when fiscal tastes vary according to income and housing tenure and are constrained by local budgets and housing markets conditions are derived which indicate whether or not a locally financed fiscal expansion is desirable according to a generalized utilitarian social welfare function the setting for the empirical work is sydney australia

using referenda to improve targeting and decrease costs of conditional cash transfers cost effective allocation of conditional cash transfers cct requires identifying recipients with low opportunity costs who might change behavior this paper develops a low cost approach for improving program implementation by using a stated preference referendum style survey question to calculate willingness to accept wta for cct contracts this is illustrated in the context of mexico s payments for ecosystem services program with the paper finding that the estimated social cost based on wta is substantially lower than actual payments simulation of three geographic targeting approaches shows that joint selection using deforestation risk and wta could increase program impact under the same budget the paper also simulates modified payment schedules based on predicted wta and demonstrates that these could reduce program cost

do local officials know something we don t decentralization of targeted transfers in albania abstract albania provides a small amount of social assistance to nearly 20 of its population through a system which allows a degree of community discretion in determining distribution this study indicates that relative to other safety net programs in low income countries social assistance in albania is fairly well targeted to the poor moreover the poverty targeting exceeds that which could be expected on the basis of proxy indicators of targeting alone communes appear to be using local information unlikely to be obtained on the basis of a questionnaire or formula this remains the case conditional on the level of funding allocated from the central government

administrative overspending in indonesian districts the role of local politics summary we analyze the determinants of the excessive administrative spending of local governments in indonesia in an unbalanced panel data set of 399 districts for 2001 09 we show that the proliferation of districts has not led to increased administrative spending instead a lack of political accountability is responsible for this excess the degree of political competition influences the level of administrative spending significantly newly introduced direct elections of district heads however did not curtail the waste

the long run consequences of living in a poor neighborhood author s oreopoulos philip abstract many social scientists presume that the quality of the neigborhood to which children are exposed affects a variety of long run social outcomes i examine the effect on the long run labor market outcomes of adults who were assigned when young to substantially different public housing projects in toronto administrative data are matched to public housing addresses to track children from the program for over 15 years the main finding is that neighborhood quality plays little role in determining a youth s adult earnings education attainment or welfare participation but does affect exposure to crime while living in contrasting housing projects cannot explain large variances in labor market outcomes family differences as measured by sibling outcome correlations account for up to 30 percent of the total variance in the data

does local school control raise student outcomes evidence on the roles of school autonomy and parental participation abstract school autonomy and parental participation have been frequently proposed as ways of making schools more productive less clear is how governments can foster decentralized decision making by local schools this article shows that across eight latin american countries most of the variation in local control over school decisions exists within and not between countries that implies that the exercise of local authority to manage schools is largely a local choice only modestly influenced by constitutional stipulations regarding jurisdiction over school personnel curriculum and facilities as a consequence estimated impacts of local school autonomy parental participation or school supplies on student performance must account for the endogeneity of local efforts to manage schools empirical tests confirm that local managerial effort by the principal and parents and the adequacy of school supplies are strongly influenced by parental human capital and the size and remoteness of the community and th

reaching the poor cash transfer program targeting in cameroon identifying and selecting poor households with efficient targeting methods is essential for effective poverty alleviation programs this paper assesses the ex post performance of two popular targeting mechanisms proxy means testing pmt and community based targeting cbt in a pilot cash transfer program in cameroon several indicators and metrics to measure each method s performance in terms of inclusion of poor households and exclusion of non poor households are employed results consistently show that cbt performs poorly in terms of selecting households with low per capita consumption when compared to pmt cbt appears to select households with low physical and human capital regardless of actual consumption level however cbt also shows more variability in the selection decision than pmt even when alternative poverty definitions are used as robustness tests the pmt method used in the pilot slightly outperforms other targeting methods hybrid alternative pmt and universal targeting with equal budget but errors remain high when selecting 35 of the population for program participation the results suggest caution is needed in employing cbt methods to select households with low per capita consumption in an environment where poverty levels are high and administrative capacities are limited cbt performance may be improved through more uniform and consistent guidance on program selection criteria and process including explicit criteria that enable cbt monitoring as well as a better integration between pmt and cbt

inequality and group participation theory and evidence from rural tanzania abstract this paper investigates the determinants of group membership and in particular the effect of income inequality on individual incentives to join economic groups drawing on a simple model we show that an increase in inequality has an ambiguous effect and that the type of access rule open versus restricted access is key in determining what income categories are represented in the group furthermore the shape of the income distribution can be crucial to determine whether increased inequality leads to more or less group participation using survey data from rural tanzania we find that inequality at the village level has a negative impact on the likelihood that the respondents are members of any group this effect is particularly significant for relatively wealthier people both when relative wealth is objectively measured and when it is subjectively defined however when we disaggregate groups by type of access rule we find that inequality decreases participation in open access groups when there are wide disparities at the bottom of the distribution while it increases participation in restricted access groups when the disparities are around the middle and top part of the distribution finally we assess the impact of inequality on various dimensions of group functioning

on the unequal inequality of poor communities important differences exist between communities with respect to their needs capacities and circumstances as central governments are not able to discern these differences fully they seek to achieve their policy objectives by relying on decentralized mechanisms that use local information however household and individual characteristics within communities can also vary substantially a growing theoretical literature suggests that inequality within communities can influence policy outcomes and that this influence could be harmful or helpful depending on the circumstances empirical investigations into the impact of inequality have to date largely been held back by a lack of systematic evidence on community level inequality the authors use household survey and population census data to estimate per capita consumption inequality within communities in three developing countries ecuador madagascar and mozambique communities are found to vary markedly from one another in terms of the degree of inequality they exhibit the authors also show that there should be no presumption that inequality is less severe in poor communities they argue that the kind of community level inequality estimates generated in this paper can be used in designing and evaluating decentralized antipoverty programs

decentralization of governance and development all around the world in matters of governance decentralization is the rage even apart from the widely debated issues of subsidiarity and devolution in the european union and states rights in the united states decentralization has been at the center stage of policy experiments in the last two decades in a large number of developing and transition economies in latin america africa and asia the world bank for example has embraced it as one of the major governance reforms on its agenda for example world bank 2000 burki perry and dillinger 1999 take also the examples of the two largest countries of the world china and india decentralization has been regarded as the major institutional framework for the phenomenal industrial growth in the last two decades in china taking place largely in the nonstate nonprivate sector india ushered in a landmark constitutional reform in favor of decentralization around the same time it launched a major program of economic reform in the early 1990s on account of its many failures the centralized state everywhere has lost a great deal of legitimacy and decentralization is widely believed to promise a range of benee ts it is often suggested as a way of reducing the role of the state in general by fragmenting central authority and introducing more intergovernmental competition and checks and balances it is viewed as a way to make government more responsive and efe cient technological changes have also made it somewhat easier than before to provide public services like electricity and water supply relatively efe ciently in smaller market areas and the lower levels of government have now a greater ability to handle certain tasks in a world of rampant ethnic cone icts and separatist movements decentralization is also regarded as a way of diffusing social and political tensions and ensuring local cultural and political autonomy these potential benee ts of decentralization have attracted a very diverse range

exploring the role of the realized return distribution in the formation of the implied volatility smile abstract this article explores the role of the realized return distribution in the formation of the observed implied volatility smile using the framework of an adaptive expectations model according to this framework investors update their expectations of future events through which options are priced by incorporating information from the underlying asset traded in the spot market our study is conducted at the level of cumulants which provide a complete description of investors expectations and can be considered as largely non parametric with a minimal set of assumptions for the stochastic process that drives asset returns the empirical results based on the s p 500 index support the significance of the realized distribution in the formation of the implied volatility smile

using state child labor laws to identify the effect of school year work on high school achievement this article uses variation in the labor supply of twelfth grade students created by interstate variations in child labor laws to estimate the effect of school year work on twelfth grade math achievement the instrumental variable estimates in this article indicate that an exogenous decrease in school year hours worked of 10 hours per week would result in a 0 2 standard deviation increase in math scores comparisons to ordinary least squares estimates suggest that failure to account for the endogeneity of the labor supply decisions of high school students will result in underestimates of the negative impact of school year work on academic achievement

local inequality and project choice theory and evidence from ecuador this paper provides evidence consistent with elite capture of social fund investment projects in ecuador exploiting a unique combination of data sets on village level income distributions social fund project administration and province level electoral results we test a simple model of project choice when local political power is unequally distributed in accordance with the predictions of the model poorer villages are more likely to receive projects that provide excludable private goods to the poor such as latrines controlling for poverty more unequal communities are less likely to receive such projects consistent with the hypothesis of elite capture these results are sensitive to the specific measures of inequality and elite power used in the empirical analysis and are strongest for expenditure shares at the top of the distribution

aid and agency in africa explaining food disbursements across ethiopian households 1994 2004 abstract we use a principal agent framework and data from the ethiopian rural household survey between 1994 and 2004 to understand biases in the distribution of food aid in ethiopia we show that even when aid is systematically misallocated aid recipients may match official classifications of needy households if agents deviate from allocation rules in ways that are difficult to monitor agent behavior is therefore best understood by comparing aid along dimensions of need that are visible to the principal with those that are difficult to observe outside the village we do this by using data on a panel of 943 households observed over six rounds of the ethiopian rural household survey in support of our model we find that while the demographics of aid recipients do match official criteria disbursements are increasing in pre aid consumption self reported power and involvement in village level organizations we conclude that the extent to which food aid insulates some of the world s poorest families from agricultural shocks depends on a nuanced interaction of policy constraints and informal structures of local power

pricing operating efficiency and profitability among large commercial banks abstract this study uses statistical cost accounting techniques to examine the relationship between bank profitability and two dimensions of operating performance pricing and operating efficiency the traditional statistical cost accounting model which relates a firm s income to its asset and liability mix is expanded to account for differences in market structure regional demand and supply conditions and macroeconomics factors the study focuses on large above 500 million in domestic deposits banks comparing a sample of relatively profitable banks against a matched group of much less profitable banks over the period 1970 1977 after allowing for regional supply and demand factors the high and low profit banks are estimated to earn equal market rates of return on individual assets and liabilities there is virtually no evidence that differential prices are an important discriminator between the two bank groups some evidence is found that the high earnings banks experience lower operating costs on some liabilities but the opposite is true with respect to selected asset items after taxes are taken into account however any such cost differentials virtually disappear overall there is no compelling evidence that high profit banks are characterized by greater operating efficiency than their low earnings counterparts this finding is consistent with the view that over time and especially among relatively large banks information flows and competitive pressures act to reduce operating efficiency differences that may appear in the short run

poverty alleviation in federal systems the case of mexico the function of poverty relief has been the subject of debate in terms of the tier of government that should perform it on the one hand some of the literature in the economics and political science fields argues that this function should be federal because of factor mobility on the other hand because of the distance factor which makes citizens more sensitive to poverty others argue that it should a subnational responsibility finally others in both fields argue that it is more accurate to view the recent trends witnessed in developing countries as delegation of service delivery by the central government to different sets of agents the fact is that the different levels of government across countries intervene in this government obligation this paper employs the case of mexico to test the different implications of the theories this country is studied because it decentralized this activity in 1998 and thus it is subject to evaluation the results suggest that decentralizing the poverty relief function has not delivered results thus they suggest that this task should be a national one however the reason for this is the lack of political accountability at the subnational level and not mobility that is when accountability is introduced a subnational government may in fact perform well

estimation methods for stochastic volatility models a survey abstract although stochastic volatility sv models have an intuitive appeal their empirical application has been limited mainly due to difficulties involved in their estimation the main problem is that the likelihood function is hard to evaluate however recently several new estimation methods have been introduced and the literature on sv models has grown substantially in this article we review this literature we describe the main estimators of the parameters and the underlying volatilities focusing on their advantages and limitations both from the theoretical and empirical point of view we complete the survey with an application of the most important procedures to the s p 500 stock price index

school decentralization helping the good get better but leaving the poor behind abstract the decentralization of public services is a major feature of institutional innovation the main argument in support of decentralization is that it brings decisions closer to the people thereby alleviating information asymmetries and improving accountability however decentralization can also degrade service provision in poor communities that lack the ability to voice and defend their preferences in this paper we analyze the average and distributional effects of school decentralization on educational quality in argentina we find that decentralization had an overall positive impact on student test scores the decentralization gains however did not reach the poor thus although bringing decisions closer to the people may help the good get better the already disadvantaged may not receive these benefits

the social impact of social funds in jamaica a participatory econometric analysis of targeting collective action and participation in community driven development qualitative data from a case study of the jamaica social investment fund reveal that the social fund process is elite driven and decision making tends to be dominated by a small group of motivated individuals however there is broad based satisfaction with the outcome quantitative data from 500 households mirror these findings by showing that ex ante the social fund does not address the expressed needs of the majority of individuals in the majority of communities by the completion of the project however 80 per cent of the community expresses satisfaction with the outcome an analysis of the determinants of participation reveals that better educated and better networked individuals dominate the process propensity score analysis demonstrates that jsif has had a causal impact on improvements in trust and the capacity for collective action but these gains are greater for elites

decentralizing eligibility for a federal antipoverty program a case study for china in theory the informational advantage of decentralizing the eligibility criteria for a federal antipoverty program could come at a large cost to the program s performance in reaching the poor nationally whether this happens in practice depends on the size of the local income effect on the eligibility cutoffs china s di bao program provides a case study poorer municipalities adopt systematically lower thresholds roughly negating intercity differences in need for the program and generating considerable horizontal inequity so that poor families in rich cities fare better the income effect is not strong enough to undermine the program s overall poverty impact other factors including incomplete coverage of those eligible appear to matter more

land reallocation in an agrarian transition liberalising key factor markets is a crucial step in the transition from a socialist control economy to a market economy however the process can be stalled by imperfect information high transaction costs and covert resistance from entrenched interests the article studies agricultural land reallocation in the wake of vietnam s efforts to establish a free market in land use rights following de collectivisation inefficiencies in the initial administrative allocation are measured against an explicit counterfactual land allocation responded positively but slowly to the initial inefficiencies there is no sign that the transition favoured the land rich or that it was thwarted by local officials vietnam s agrarian transition has closely followed a now classic policy scenario for economies in transition first one privatises the main productive assets in this case agricultural land use rights then one legalises their free exchange in the first step the de collectivisation of vietnam s agriculture meant that the land that had previously been farmed collectively was to be allocated by administrative means across households within each commune without a market mechanism to guide the process it can be expected that inefficiencies in land allocation would remain with some households having too much land relative to a competitive market allocation and some too little ravallion and van de walle 2004 document evidence of such inefficiencies in the initial administrative allocation at the time of de collectivisation

does compulsory school attendance affect schooling and earnings we establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws individuals born in the beginning of the year start school at an older age and can therefore drop out after completing less schooling than individuals born near the end of the year roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws we estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education the instrumental variables estimate of the return to education is close to the ordinary least squares estimate suggesting that there is little bias in conventional estimates every developed country in the world has a compulsory schooling requirement yet little is known about the effect these laws have on educational attainment and earnings 1 this paper exploits an unusual natural experiment to estimate the impact of compulsory schooling laws in the united states the experiment stems from the fact that children born in different months of the year start school at different ages while compulsory schooling laws generally require students to remain in school until their sixteenth or seventeenth birthday in effect the interaction of school entry requirements and compulsory schooling laws compel students born

multi tier targeting of social assistance the role of intergovernmental transfers albania provides a small amount of social assistance to nearly 20 percent of its population through a system that allows some community discretion in determining distribution this study investigates how well this social assistance program is targeted to the poor relative to other safety net programs in low income countries social assistance in albania is fairly well targeted nevertheless the system is hampered by the absence of a clear objective criterion to determine the size of the grants from the central government to communes as well as limited information that could be used to implement this criterion substantial gains in targeting could be achieved if the central government better allocated transfers to local governments even holding local targeting at base levels

money credit constraints and economic activity when government expenditures exceed current tax revenues the resulting deficit must be financed either by issuing bonds which imply obligations to levy future taxes or by creating high powered money the choice between money and bonds is often thought to be of great moment for both real and nominal variables that is monetary policy matters there is by now a wide empirical consensus that monetary policy has effects on real variables like output and employment but there is far less agreement about why this is so the purpose of this paper is to take issue with some currently fashionable views of why money has real effects and to suggest a new theory or rather resurrect an old one the loanable funds theory and give it new improved microfoundations this abstract was borrowed from another version of this item

information and the operation of markets tests based on a general equilibrium model of land leasing in india abstract this paper develops an estimable general equilibrium model of land leasing to test the extent to which information is commonly held in a village and whether village markets are efficient information regarding the relative farming skill of households is found to be widespread but the assumption of perfectly efficient markets within the village is rejected these results have ramifications for the estimation of agricultural household models and for our understanding of rural institutions the model is derived from the primitives of the production technology the extent of information and the distributions of assets and several household unobservables simultaneity and selection issues are dealt with explicitly in a two stage maximum likelihood estimation procedure using panel data from india

targeting public goods to the poor in a segregated economy an empirical analysis of central mandates in rural india abstract while local governments are increasingly being vested with control over funds for public goods concern over the capture of decentralized funds by local elites has led decentralization to be combined with central mandates which require a certain proportion of funds to directly benefit the poor if local capture is pervasive however central mandates may not be effective despite the popularity of this combination of decentralization and centralized control there is little empirical evidence which separately identifies their effect on investment in public goods and hence assesses the effectiveness of central mandates this paper provides such evidence using data collected by the authors for the north indian state of punjab an economy where economic conditions facilitate such an analysis we find that central mandates are effective enhancing intra village equality in expenditure on public goods this finding informs the debate on the equity effects of centralized versus decentralized programs

bank interest rates and credit relationships in italy abstract when evaluating the performance of a financial system in supporting the investment activity of the corporate sector a distinction is usually drawn between banking economies and market economies the former being characterized by long term relations between banks and the industrial sector although theoretical studies and empirical results seem to agree that lending relationships increase the available quantity of capital to firms they have little to say on the cost of bank credit it is not clear whether a close relationship with a main bank would allow the borrower to pay a lower interest rate or expose him to a monopolistic rent using a unique data set reporting detailed information on the evolution over time of individual bank borrower relationships in italy we show evidence that a main bank provides credit at a lower cost and that some competition helps to reinforce the commitment between the borrower and the bank

money flows water trickles understanding patterns of decentralized water provision in tanzania summary over the past three decades an increasing number of low and middle income countries have decentralized water provision to the local government level and have sought to more thoroughly involve users in service delivery such reforms reflect the twin goals of encouraging greater responsiveness to local needs and promoting sustainability this study illustrates how the aims of decentralization can be undermined in the absence of robust democratic competition and how governments interpret demand by voters in such settings focusing on the tanzanian water sector the paper first traces the distribution of money for water from the central government to the district level next i consider how district governments use these funds to distribute water infrastructure within their jurisdictions using geo referenced data on all 75 000 water points serving rural tanzanians i find that the central government s allocation of money to districts is fairly unresponsive to local needs however the pattern of distribution cannot primarily be explained by politics with the exception of consistent favoritism of the minister for water s home district political favoritism is more pronounced at the local level within districts the distribution of new water infrastructure is skewed to favor localities with higher demonstrated levels of support for the ruling party in addition wealthier and better connected communities those with the resources to more effectively express their demands are significantly more likely to benefit from new construction this suggests that demand responsive approaches to water provision can entrench regressive patterns of distribution

the allocation and impact of social funds between 1992 and 1998 the peruvian social fund foncodes spent about us 570 million funding microprojects throughout the country many of these projects involved constructing and renovating school

are poorer states worse at targeting their poor abstract as a rule the governments of poor states provinces or countries do not seem to be very good at targeting public spending to their poor yet anti poverty programs often target poor states in the hope of reaching poor people should this change

benefits on the margin observations on marginal benefit incidence benefit incidence analysis has become a popular tool over the past decade especially for researchers at the world bank despite or perhaps because of the popularity of this method recent research has pointed out many of its limitations one of the most common criticisms of benefit incidence analysis is that its description of average participation rates is not necessarily useful in guiding marginal changes in public spending policies this article considers a variety of methods for analyzing the marginal benefit incidence of policy changes a key conceptual point is that despite the fact that the various methods measure marginal incidence they do not measure the same thing nor are they intended to do so there are many possible policy changes and thus many margins of interest each method captures one of these and so is of interest for some analyses and inappropriate for others empirically the precision of the methods differs substantially with those relying on differenced data or aggregations of households yielding standard errors that are quite large relative to the estimated shares

decentralized targeting of an antipoverty program abstract developing country governments often delegate authority over the targeting of antipoverty programs to community organizations while retaining control over how much goes to each community we offer a theoretical characterization of the information structure in such programs and the interconnected behavior of the various players our model motivates an econometric specification for explaining distributional outcomes results for bangladesh s food for education ffe program indicate that within village targeting improved with program size lower land inequality less remoteness fewer shocks and less private redistribution there is no sign that the center took account of village attributes conducive to reaching the poor

efficient intra household allocations a general characterization and empirical tests the neoclassical theory of demand applies to individuals yet in empirical work it is usually taken as valid for households with many members this paper explores what the theory of individuals implies for households that have more than one member we make minimal assumptions about how the individual members of the household resolve conflicts all we assume is that however decisions are made outcomes are efficient we refer to this as the collective setting we show that in the collective setting household demands must satisfy a symmetry and rank condition on the slutsky matrix we also present some further results on the effects on demands of variables that do not modify preferences but that do affect how decisions are made we apply our theory to a series of surveys of household expenditures from canada the tests of the usual symmetry conditions are rejected for two person households but not for one person households we also show that income pooling is rejected for two person households we then test for our collective setting conditions on the couples data none of the collective setting restrictions are rejected we conclude that the collective setting is a plausible and tractable next step to take in the analysis of household behavior

decentralizing development allocating public goods via competition abstract decentralizing the allocation of public goods by giving funds directly to communities takes advantage of local information concerning needs but leaves funds open to misuse or capture by local elites a large scale development project in indonesia attempts to overcome this downside of decentralized allocation by having communities compete locally for block grants competition weeds out less efficient projects increasing the number of villages bidding by 10 leads to a 1 8 decline in road construction costs increased community participation in project planning also leads to better outcomes

network structure and the aggregation of information theory and evidence from indonesia abstract we use unique data from over 600 indonesian communities on what individuals know about the poverty status of others to study how network structure influences information aggregation we develop a model of semi bayesian learning on networks which we structurally estimate using within village data the model generates qualitative predictions about how cross village patterns of learning relate to network structure which we show are borne out in the data we apply our findings to a community based targeting program where citizens chose households to receive aid and show that the networks that the model predicts to be more diffusive differentially benefit from community targeting jel d14 d83 d85 i32 o12 z13

long term educational consequences of secondary school vouchers evidence from administrative records in colombia colombia s paces program provided over 125 000 poor children with vouchers that covered the cost of private secondary school the vouchers were renewable annually conditional on adequate academic progress since many vouchers were assigned by lottery program effects can reliably be assessed by comparing lottery winners and losers estimates using administrative records suggest the paces program increases secondary school completion rates by 15 to 20 percent correcting for the greater percentage of lottery winners taking college admissions tests the program increased test scores by two tenths of a standard deviation in the distribution of potential test scores jel i21 j12 i28

local capture evidence from a central government transfer program in uganda according to official statistics 20 percent of uganda s total public expenditure was spent on education in the mid 1990s most of it on primary education one of the large public programs was a capitation grant to cover schools nonwage expenditures using panel data from a unique survey of primary schools we assess the extent to which the grant actually reached the intended end user schools the survey data reveal that during 1991 1995 the schools on average received only 13 percent of the grants most schools received nothing the bulk of the school grant was captured by local officials and politicians the data also reveal considerable variation in grants received across schools suggesting that rather than being passive recipients of flows from the government schools use their bargaining power to secure greater shares of funding we find that schools in better off communities managed to claim a higher share of their entitlements as a result actual education spending in contrast to budget allocations is regressive similar surveys in other african countries confirm that uganda is not a special case

information learning and wage rates in low income rural areas in this essay we present evidence that employers in rural areas of developing countries have imperfect information with regard to the productivity of heterogeneous workers in addition to obtaining direct measures of the completeness of employer information we consider the implications of information asymmetries for the structure of casual labor markets we then evaluate the extent to which casual labor markets do in fact exhibit these attributes we find that 1 there is adverse selection out of the time rate labor market 2 employers discriminate statistically given two workers with different observed characteristics but the same actual productivity the worker from the group with the higher average productivity will have a higher wage 3 employers exhibit learning over time the extent of employer ignorance is negatively related to labor market exposure on the part of the workers and 4 calorie consumption affects productivity but is not rewarded in the time rate labor market in concluding we argue that an analysis of wage and employment patterns and the implications of these patterns for human capital investment in rural areas of developing countries that ignored the role of information problems could yield misleading conclusions

benefits on the margin benefit incidence analysis has become a popular tool over the past decade especially for researchers at the world bank despite or perhaps because of the popularity of this method recent research has pointed out many of its limitations one of the most common criticisms of benefit incidence analysis is that its description of average participation rates is not necessarily useful in guiding marginal changes in public spending policies this article considers a variety of methods for analyzing the marginal benefit incidence of policy changes a key conceptual point is that despite the fact that the various methods measure marginal incidence they do not measure the same thing nor are they intended to do so there are many possible policy changes and thus many margins of interest each method captures one of these and so is of interest for some analyses and inappropriate for others empirically the precision of the methods differs substantially with those relying on differenced data or aggregations of

persistence and cycles in historical oil price data abstract this paper deals with the analysis of two observed features in historical oil price data in particular persistence and cyclicity using monthly data from september 1859 to october 2013 we observe that the series presents two peaks in the spectrum one occurring at the long run or zero frequency and the other at a cyclical frequency these features can be well described in terms of a long memory model that incorporates both peaks in the spectrum it is found that the order of integration at the zero frequency is about 0 6 and the one at the cyclical frequency is substantially smaller of about 0 3 with the length of the cycles being approximately of about 74 periods months which is consistent with the length suggested by the business cycle theory

state and development the need for a reappraisal of the current literature this essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible developmental role of the state it refers to a broader range of development goals including the structural transformation of the economy and focuses on problems like the resolution of coordination failures and collective action problems the conflicting issues of commitment and accountability and the need for balancing the trade offs they generate some ingredients of state capacity and political coalition building usually missed in the literature the possible importance of rent sharing in a political equilibrium the advantages and problems of political centralization and decentralization and the multidimensionality of state functions that may not be addressed by markets or private firms

accountability and decentralisation in government an incomplete contracts model this paper approaches the question of the appropriate level of decentralisation of power in government as a problem in the allocation of control rights under incomplete contracts the model of the paper compares allocations of power to local central and regional government as alternative means of motivating governments to act in the interests of citizens centralisation allows benefits from policy coordination but has costs in terms of diminished accountability which can be precisely defined as the reduced probability that the welfare of a given region can determine the re election of the government the model is extended to allow for conflicts of interest within regions and externalities between central and local governments in a federation it is also applied to determining levels of fiscal transfer between localities and to circumstances where governments may act as leviathans appropriating resources for their own use

electoral competition and special interest politics have fixed positions on some issues but vary their positions on others in order to attract votes and campaign contributions in this context we examine whether special interest groups are governed by an electoral motive or an influence in their campaign giving and how their contributions affect the equilibrium platforms we show that each party is induced to behave as if it were maximizing a weighted sum of the aggregate welfares of informed voters and members of special interest groups the party that is expected to win a majority of seats caters more to the special interests

does child labour displace schooling evidence on behavioral responses to an enrollment subsidy this brief summarizes the results of a gender impact evaluation study entitled does child labour displace schooling evidence on behavioral responses to an enrollment subsidy conducted between 1995 and 1996 in bangladesh the study observed that the subsidy increases schooling but its effect on child labour is ambiguous the subsidy increased schooling by far more than it reduced child labour substitution effects helped protect current incomes from the higher school attendance induced by the subsidy substitution effects helped protect current incomes from the higher school attendance induced by the subsidy the reduction in the incidence of child labour by boys girls represents about one quarter eighth of the increase in their school enrollment rate

monetary policy through ceilings on bank lending credit ceilings carlo cottarelli giampaolo galli paolo marullo reedtz and giovanni pittaluga credit ceilings have been adopted by many oecd countries in the belief that they allow rapid and precise control of activity inflation and the balance of payments this paper addresses three key issues first are credit ceilings effective when there exist sizeable non bank financial intermediaries the answer is clearly more a matter of degree than kind evidence from italy suggests that ceilings were initially very powerful but progressively lost their effectiveness as new financial markets developed during the 1970s and the 1980s however they remained important as a tool for influencing capital flows second it is often suggested that credit ceilings are effective because they reduce the money supply in addition to constraining spending we argue they are more likely to affect the demand rather than the supply of money and this may imply a perverse effect through the financial markets however such an effect is empirically very small in the case of italy finally the paper investigates the costs of controls italian evidence indicates that they significantly reduced competition between banks ceilings also constrained borrowers to grow at more uniform rates thus affecting the allocation of resources

cointegration fractional cointegration and exchange rate dynamics multivariate tests due to johansen 1988 1991 as implemented by baillie and bollerslev 1989a and diebold gardeazabal and yilmaz 1994 reveal mixed evidence on whether a group of exchange rates are cointegrated further analysis of the deviations from the cointegrating relationship suggests that it possesses long memory and may possibly be well described as a fractionally integrated process hence the influence of shocks to the equilibrium exchange rates may only vanish at very long horizons in the article by baillie and bollerslev 1989a it is argued that seven different nominal spot and forward exchange rates all contain unit roots in their univariate time series representations at the same time however the spot exchange rates appear to be tied together in the long run through a cointegration type relationship the latter finding of baillie and bollerslev has attracted particular interest and several studies such as those by hakkio and rush 1991 and sephton and larsen 1991 have already addressed this issue using the same data as the baillie and bollerslev article sephton and larsen 1991 describe the evidence for the presence of cointegration as being fragile and note that mixed conclusions are reached by truncating the baillie and bollerslev sample at different points in time diebold gardeazabal and yilmaz 1994 henceforth diebold et al provide interesting evidence that application of the johansen 1988 1991 tests with and without an intercept will result in different inferences on the baillie and bollerslev data set furthermore diebold et al carry out an ex ante forecasting experiment and find that the addition of an error correction term to the martingale model as implied by the standard cointegration paradigm fails to reduce the prediction mean square error when compared to a simple martingale model this therefore leads diebold et al to conclude that there exists substantial uncertainty regarding the existence of cointegration relationships among nominal dollar exchange rates this article provides some additional evidence on the existence of such a long run relationship among the same seven nominal spot exchange rates after further analysis it appears that a form of cointegration does exist between the exchange rates so that they do not drift apart in the long run we argue that this form of cointegration is

determinants of collective action on the local commons a model with evidence from mexico i develop a model of cooperation in small irrigation systems i give conditions under which an equalizing redistribution of wealth increases the level of equilibrium cooperation but also show that some redistributions that increase inequality can also increase cooperation the distributive rule a combination of arrangements for maintenance cost sharing and water allocation also affects the cooperation level i estimate statistical models of cooperation for three maintenance indicators using field data from a study of mexican irrigation societies social heterogeneity and landholding inequality are significantly associated with lower maintenance distributive rules that allocate water proportionally to landholding size likewise reduce maintenance

making reform work institutions dispositions and the improving health of bangladesh we examine whether local governance can improve social development empirically using good and bad cases of public health outcomes in bangladesh we explore the institutional underpinnings of service provision digging down beneath the rules of the game to analyze the beliefs understandings and dispositions that drive social behavior changes in deep social attitudes led to improvements in social indicators regional variation in health outcomes is explained by the presence or absence of a dense web of relationships that enmeshed reformers in local systems of authority and legitimacy strengthening their actions and making local society more susceptible to change

political connections and social networks in targeted transfer programs evidence from rural ethiopia abstractdespite increasingly large scale social protection programs in africa we have limited evidence on the local political economy of their allocation we investigate community based processes for food aid allocation and the role of political and social networks using the case of ethiopia in the aftermath of a serious drought in 2002 local political authorities are in charge of food transfers in terms of free food aid or food for work programs we find that although targeting is clearly imperfect free food aid is responsive to need as well as targeted to households with less access to support from relatives or friends we also find a strong correlation with political connections households with close associates in official positions have more than a 12 higher probability of obtaining free food than households that are not well connected this effect is large someone without political connections has the same probability of getting food aid as someone more than twice as rich but with these conne

assessing the fuel poverty vulnerability of urban neighbourhoods using a spatial multi criteria decision analysis for the german city of oberhausen abstract tackling fuel poverty has become an increasingly important issue on many european countries political agendas consequently national governments local authorities and ngos have established policies and programmes to reduce the fuel poverty vulnerability of households however evaluations of such policies and programmes show that they barely reach those who are most in need the reasons for this failure are diverse and include fuel poverty measurement metrics local scale data availability and policy design this raises the question of how fuel poor homes can be more effectively identified and targeted to ensure that limited local and national budgets are used to benefit those who most need help area based approaches which pinpoint spatial units highly affected by fuel poverty due to their specific characteristics offer an opportunity for creating more tailored policies and programmes in this study the author developed a gis mcda multi criteria decision analysis using an ahp analytical hierarchy process and applied the approach to the german city of oberhausen the overall issue of fuel poverty was broken down into three vulnerability dimensions heating burden socio economic and building vulnerability the relative importance of fuel poverty criteria and the dimensions were evaluated by experts and an overall fuel poverty index was created to assess the relative fuel poverty vulnerability of 168 urban neighbourhoods the analysis offers insights into the spatial pattern of fuel poverty within a city and thus provides an opportunity to channel efforts towards households in those neighbourhoods most in need it also demonstrates that a trade off between ecological and social targets should be considered in the development of future policies for tackling fuel poverty

vouchers for private schooling in colombia evidence from a randomized natural experiment colombia used lotteries to distribute vouchers which partially covered the cost of private secondary school for students who maintained satisfactory academic progress three years after the lotteries winners were about 10 percentage points more likely to have finished 8th grade primarily because they were less likely to repeat grades and scored 0 2 standard deviations higher on achievement tests there is some evidence that winners worked less than losers and were less likely to marry or cohabit as teenagers benefits to participants likely exceeded the 24 per winner additional cost to the government of supplying vouchers instead of public school places

forecasting volatility and volume in the tokyo stock market long memory fractality and regime switching abstract we investigate the predictability of both volatility and volume for a large sample of japanese stocks the particular emphasis of this paper is on assessing the performance of long memory time series models in comparison to their short memory counterparts since long memory models should have a particular advantage over long forecasting horizons we consider predictions of up to 100 days ahead in most respects the long memory models arfima figarch and the recently introduced multifractal model dominate over garch and arma models however while figarch and arfima also have quite a number of cases with dramatic failures of their forecasts the multifractal model does not suffer from this shortcoming and its performance practically always improves upon the naive forecast provided by historical volatility as a somewhat surprising result we also find that for figarch and arfima models pooled estimates i e averages of parameter estimates from a sample of time series give much better results than individually estimated models

real and spurious long memory properties of stock market data we test for the presence of long memory in daily stock returns and their squares using a robust semiparametric procedure of lobato and robinson spurious results can be produced by nonstationarity and aggregation we address these problems by analyzing subperiods of returns and using individual stocks the test results show no evidence of long memory in the returns by contrast there is strong evidence in the squared returns

political market characteristics and the provision of educational infrastructure in north india in this paper we are concerned with the provision of schools in rural north india particularly with whether such provision is determined by the demographic and economic characteristics of the region or whether local democracy also plays a role we find that the probability that a governing party loses an election has a positive effect on the provision of schooling infrastructure while the margin of victory of the governing party has a negative effect political reservation for members of the scheduled castes scs has a positive effect on schooling infrastructure in villages with a large sc population but a negative effect overall

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

long range dependence in daily stock volatilities recent empirical studies show that the squares of high frequency stock returns are long range dependent and can be modeled as fractionally integrated processes using for example long memory stochastic volatility models are such long range dependencies common among stocks are they caused by the same sources of variation in this article we classify daily stock returns of standard and poor 500 companies on the basis of a company s size and its business or industrial sector and estimate the strength of long range dependence in the stock volatilities using two different methods almost all of the companies analyzed exhibit strong persistence in volatility we then use a canonical correlation method to identify common long range dependent components in groups of companies finding strong evidence in support of common persistence in volatility finally we use a chi squared test to study the effects of company size and sector on the number of common long range dependent volatility components detected in g