pricing the invaluable it is constructive of ecological economics to invite comments on this imaginative and stimulating article nature 387 15 may 1997 which draws attention to the value of the services provided by ecological systems and natural capital stocks such an article should in principle elicit unreserved commendation from ecological economists who are more aware than other specialists of the contribution made by ecological systems to economic activities and human welfare nevertheless i find my own reactions to the article rather mixed on one level i salute this brave attempt at pricing the invaluable but on yet other levels i have some misgivings which i shall try to summarize below the range of valuation offered is considerable 38 trillion amounting roughly to two and half times the lower estimate and exceeds significantly the average estimate of 33 trillion such a wide range while perhaps unavoidable considering the current state of our knowledge inevitably detracts from the estimates worth we are told that these estimates are almost certainly a minimum thus there is the possibility that as these initial estimates are scaled upward the range might broaden still further that there is a chance of double counting in that the ecological services here identified must have been at least in part already counted in the global gross product this while explicitly admitted by the authors cannot go away and should perhaps be quantified at a future date and reconciled with the estimates the importance of this point derives from the fact that a vivid comparison is made between the estimated value of ecosystem services and the global gross national product 18 trillion a comparison apparently made to convey the impression that the value of such services is a multiple of the recorded product

exchange rates and the fiscal theory of the price level abstract this paper addresses exchange rate determination under a nominal interest peg in a two country cash in advance model under two types of cash in advance constraints if both governments peg the nominal interest rate on domestic bonds there is a continuum of equilibria each consistent with different nominal exchange rates and real resource allocations the well known finding of equilibrium uniqueness under a nominal interest rate peg in a closed economy does not survive in a multi country multi currency setting

money demand and seigniorage maximizing inflation conventional estimates of the seigniorage maximizing inflation rate often make use of the cagan form which implies a constant semielasticity of money demand with respect to inflation this paper shows that the elasticity of substitution in transactions between money and bonds determines how the inflation semielasticity of money demand changes as inflation rises allowing for a variable semielasticity estimates of seigniorage maximizing inflation for a panel of eleven high inflation countries are lower than those obtained by using the cagan form estimates based on the correct measure of the opportunity cost of money also differ sharply from those obtained when using conventional inflation measures copyright 1995 by ohio state university press

natural resources and the marshallian effects of input reducing technological changes abstract input reducing technologies are often cited as potential solutions to the pressure for over harvesting natural resources the underlying implicit assumption that technological change reducing the hicksian input demand also reduces the marshallian input demand neglects the impacts of input reducing technological changes on marshallian supplies this reasearch shows that marshallian supply effects generally offset the impacts of technological change on hicksian input demands and if the offset is large enough marshallian input demands could even increase as an example i statistically determine the extent increased technological efficiency in lumber production reduced the demand for sawlogs in the pacific northwest the statistical results indicate that input reducing technological changes did not reduce the overall marshallian demand for sawlogs resource conservation policies which rely solely on the implementation of input reducing technologies may be ineffective or even counterproductive

the new institutional economics this outstanding book presents new original contributions from some of the world s leading economists including ronald coase douglass c north masahiko aoki oliver e williamson and harold demsetz it demonstrates the extent and depth of the new institutional economics research programme which is having a worldwide impact on the economics profession

estimating a market equilibrium search model from panel data on individuals from albrecht and axell 1984 and is based on workers who are homogeneous in terms of market productivity and heterogeneous in terms of nonmarket productivity and on firms which are heterogeneous in terms of productive efficiency the equilibrium model is contrasted in terms of its fit to the data with an unrestricted version of the model which is based on a mixture of negative binomial distributions the equilibrium model fails to conform to the data in exactly the dimension of its major focus namely it implies that measurement error accounts for almost all of the dispersion in observed wages the equilibrium model also does not do well in fitting the unemployment duration distribution compared to the unrestricted model the problem is that the duration distribution itself does not support the existence of significant heterogeneity as evidenced by the estimates of the unrestricted model the paper also illustrates the use of such models for policy analysis by simulating the welfare effects of a minimum wage

relative efficiencies and comparative advantages in job search a model of employed and unemployed job search is estimated from a panel of new entrants into the labor force as well as prime age workers after investigating the relative efficiency of the two mai

balance of payments crises in a cash in advance economy the author shows that a flexible prices sidrauski type model with a cash in advance constraint is capable of depicting some of the phenomena associated with a balance of payments crisis like the onesrecently observed in argentina and mexico current accounts deficits and appreciation of the real exchange rat e it is also shown that these phenomena become exacerbated as the rate of devaluation before the crisis occurs becomes smaller copyright 1987 by ohio state university press

do employers use unemployment as a sorting criterion when hiring evidence from a field experiment the stigma associated with long term unemployment spells could create large inefficiencies in labor markets while the existing literature points toward large stigma effects it has proven difficult to estimate causal relationships using data from a field experiment we find that long term unemployment spells in the past do not matter for employers hiring decisions suggesting that subsequent work experience eliminates this negative signal nor do employers treat contemporary short term unemployment spells differently suggesting that they understand that worker firm matching takes time however employers attach a negative value to contemporary unemployment spells lasting at least nine months providing evidence of stigma effects

use value exchange value and resource scarcity abstract i review the literature on natural resource scarcity indicators scarcity indicators can be classified by what is being measured value of the resource stock or value of extracted resource commodities who s value is considered social vs private scarcity and by the mode of valuation considered exchange value and use value prices and rents are common measures of exchange value or indicators of exchange scarcity and unit costs can be seen as use value indicators or indicators of use scarcity the major aim of this paper is to demonstrate the links between productivity indicators such as unit costs and the classical concept of use value the two classes of indicator relate to john commons discussions of scarcity and efficiency and a marginal vs a non marginal approach to value and scarcity the classical use value concept also has wider relevance for issues of valuation in energy resource and environmental policy

economic indicators of resource scarcity a critical essay abstract the theoretical arguments of the conceptual and empirical literature on economic indicators of long run resource scarcity are logically flawed if resource allocators were informed of the nature of resource scarcity their behavior and the economic indicators it generates would reflect the scarcity but if they were so informed we could simply ask them if resources were scarce if they are not informed their behavior and economic indicators are as likely to indicate their ignorance as the reality unfortunately there is no way of knowing whether they are informed or not unless we already know whether resources are scarce

prospective deficits and the asian currency crisis this paper argues that a principal cause of the 1997 asian currency crisis was large prospective deficits associated with implicit bailout guarantees to failing banking systems the expectation that these future deficits would be at least partially financed by seigniorage revenues or an inflation tax on outstanding nominal debt led to a collapse of the fixed exchange rate regimes in asia we articulate this view using a simple model whose key feature is that a speculative attack is inevitable once the present value of future government deficits rises we present empirical evidence in support of the key assumptions underlying our interpretation of the crisis

a search model applied to the transition from education to work this paper presents the specification and estimation of a search model applied to the transition from education to work the theoretical search model includes the possibility of variable search intensity the empirical model with a reservation wage relation is estimated using maximum likelihood methods a data set containing information on new law graduates is used for the estimation finally the model is estimated for two separate subperiods to investigate the effects of market changes

a fiscal theory of currency crises an exchange rate crisis is caused when the fiscal authority lets the present value of primary surpluses inclusive of seigniorage deviate from the value of government debt at the pegged exchange rate in the absence of long term government bonds the exchange rate collapse must be instantaneous with long term government bonds the collapse can be delayed at the discretion of the monetary authority fiscal policy is responsible for the inevitability of a crisis while monetary policy determines its characteristics that is the timing of the crisis and the magnitude of exchange rate depreciation

currency crises and contingent liabilities a contingent liability is a future spending commitment that is realized with some probability international organizations emphasize the dangers of contingent liabilities when providing advice why one answer is obvious if significant contingent liabilities are realized they commit governments to substantial fiscal costs there is a further reason by taking on a contingent liability the government can increase the probability of the underlying shock taking place this paper describes how the issuance of government guarantees and the methods by which they are financed affect the probability of crises taking place it also discusses the determinants of post crisis inflation and depreciation

competition between employed and unemployed job applicants swedish evidence we use the swedish applicant database to investigate empirically whether being unemployed per se reduces the probability of getting contacted by a firm all searchers looking for a new job are invited to submit their personal details to this database over the internet since we have access to exactly the same information as the firms we can minimize the problems associated with unobserved heterogeneity our results show that an unemployed applicant faces a lower contact probability than an otherwise identical employed applicant thus supporting the notion that firms view employment status as a signal of productivity

excess worker reallocation workers face a trade off between macroeconomic and individual incentives to work in different occupations industries namely between search frictions and personal comparative advantages workers endowed with heterogeneous multi dimensional skills search for jobs that require different skill combinations in equilibrium specialized individuals contact few selected types of vacancies where they are likely to be hired those with weak comparative advantages are seldom chosen among competing applicants thus seek any job type in a tight labour market comparative advantages dominate waiting costs offsetting labour mobility across industries occupations excess worker reallocation is lower and matches are more successful consistently with direct and indirect evidence

mining of the forest and the time path of the price of timber abstract the paper analyzes the effect of transportation site specific costs and the effect of mining depletion of the forest on the time path of the price and of the net price of timber in two forestry models the models differ in that one has zero costs and the other has positive costs the analyses yield the standard mining theory results for certain cases they also yield extentions of these results for cases with growth of the harvested trees and or regeneration on the harvested land the paper concludes as one would expect that the theory of the mine is useful in analyzing the time path of the price of timber

searching for sustainability the poverty of spontaneous order abstract traditional approaches to sustainability rely on models that depend upon judgments of welfare across future generations right prices and some sense as to what future persons will find giving of utility these models both accept the spontaneous order of market processes and rely on that order to derive optimal consumption paths into the future sustainability is however not a problem of divining optimal paths predicated upon right prices rather sustainability to be operational requires a prior constructed order predicated upon rights for future persons and duties for those now living who sit in a position as dictator over the settings and circumstances that will be passed on to future persons rights based approaches to sustainability do not rely upon unknowable preferences of future persons but rather upon an environmental regency in which those now living agree to preserve settings and circumstances for the future this reminds us that the issue of sustainability concerns not how much to preserve but what to preserve

a model of crises in emerging markets this paper presents a perfect foresight model of speculative attacks on emerging markets credit constrained governments are assumed to have two objectives to accumulate liquid assets in order to self insure against shocks to national consumption and to insure poorly regulated domestic financial markets this policy regime generates endogenous fiscal deficits defined to include the growth of contingent liabilities the model sets out a sequence of yield differentials consistent with capital inflows followed by anticipated speculative attacks the model suggests that a common shock generated capital inflows to emerging markets in asia and latin america after 1989

is energy cost an accurate indicator of natural resource quality abstract the use of energy cost as an indicator of natural resource quality is examined energy cost is the direct and indirect energy used to produce a unit of a resource commodity different approaches to the role of energy in the economy are discussed and it is demonstrated theoretically that energy cost can give false indications of changes in resource quality this is because energy cost is only an accurate indicator of resource quality if either energy is the single primary factor of production and the economy can be represented by an input output model or if there is substitutability between the factors of production then marginal products must be proportional to the factors embodied energy these conditions are tested empirically using data from the us agricultural sector the results show that there is substitutability and marginal products are not proportional to embodied energy however the strong neoclassical assumption of price taking profit maximization can be rejected at a 5 level of significance though not at the 3 5 level the generality of the empirical results may be restricted due to data limitations but the theoretical framework can be applied to other data sets other resources and even other indicators

collapsing exchange rate regimes some linear examples abstract we construct a pair of linear examples to study the collapse time of a fixed exchange rate regime the first example is a perfect foresight continuous time model which allows calculation of the exact collapse time and the tracking of reserves the second example is a discrete time stochastic model which yields an endogenous probability distribution over the collapse time and produces a forward discount of the exchange rate

technological change and the dynamics of resource scarcity measures abstract within a general competitive model of resource extraction this paper investigates the effect of technological change on the time paths of resource scarcity measures cost price and rent and the possible relationship between them it shows that the effect of technological change depends crucially on whether it is extraction biased or depletion biased it derives conditions under which the three measures move together and when they do not it argues in favor of rent as a more reliable indicator of scarcity change the theoretical insights obtained here help to explain both the sharp contrast of empirical results regarding the time trend of a specific measure as well as the observed lack of harmony among the time paths of the measures

stabilization with exchange rate management stabilization programs in open economies typically consist of two stages in the first stage the rate of currency devaluation is reduced but the fiscal adjustment does not eliminate the fiscal deficit that causes growth of debt and loss of reserves making a future policy change necessary only later at a second stage is this followed by either an abandonment of exchange rate management or by a sufficiently large cut in the fiscal deficit we study how different second stage policy changes affect economic dynamics during the first stage these changes include tax increases budget cuts on traded and nontraded goods and increases in the growth rate of money

economic indicators of resource scarcity comment abstract a recent article in this journal by richard norgaard j environ econom management 19 19 25 1990 concludes that the literature on economic indicators of resource scarcity is not a scientific endeavor we argue the contrary by surveying two research literatures omitted by norgaard but inspired by the resource indicators literature and by investigating norgaard s claim to have found a logical flaw we conclude that the research on economic indicators of resource scarcity is a scientific endeavor and that it is a distinguishing feature of the sub discipline of environmental and resource economics

job matching and occupational choice this paper presents a model of job matching the generalizes the existing literature by allowing for different jobs types or occupations such differences affect the value of job specific experience inducing a career profile where certain types are sampled before others more specifically the analysis shows that it is optimal for the young and inexperienced to gravitate toward jobs exhibiting a certain kind of risk then after deriving the equilibrium job turnover rate for an economy in which people do not switch occupations panel data are used to estimate its underlying parameters the hypothesis that people do not switch occupations is rejected against the alternative that they do thus providing empirical support for the theoretical extension undertaken here

limits to substitution and irreversibility in production and consumption a neoclassical interpretation of ecological economics abstract there are many methodological approaches within ecological economics one of the principal modes of analysis is a modified version of the standard neoclassical model this paper examines the parallels which emerge between the ideas of some ecological economists concerning production and the ideas of others concerning consumption when these ideas are interpreted in the neoclassical paradigm it is well known that ecological economics is characterized by arguments concerning limits to substitution between inputs energy natural capital etc vs manufactured capital labor etc in production and the implications these have for sustainability however various authors have also expressed concerns regarding limits to substitution in consumption either between environmental assets and other goods or between basic needs commodities and other goods though the specific reasons for non substitution are different in the production and consumption cases the underlying theme is that individual commodities and other inputs have unique physical or other properties which make them poor substitutes ideas about irreversibility in production and economic development are also prominent in ecological economics likewise many authors have argued for similar irreversibilities in consumption behavior in analogy to the term technological change i coin the term preferential change to describe these phenomena the linking themes in this case are that the economy environment system is evolutionary in character and that external effects intended and unintended consequences of actions or processes imposed on other parties or resources are all pervasive

on measuring natural resource scarcity conclusions concerning trends in natural resource scarcity may depend critically on the choice of scarcity index unfortunately the prevalence of vertical integration in natural resource industries has hindered the use of some otherwise desirable scarcity measures in this paper duality theory is used to derive an econometric procedure for estimating one such measure the shadow price of the resource in situ empirical results for the canadian metal mining industry indicate that resource scarcity as measured by this shadow price has decreased substantially over time

the concept of environmental function and its valuation the concept of environmental function and its valuation methodology were introduced by hueting 1970 1974 etc the services of functions without which humans cannot survive are defined as their possibilities to be used the value of functions or their services is sharply distinguished from the value added by labor involved in using or harvesting the functions estimating the value of functions requires data on the opportunity costs for regaining functions and on preferences for the functions because functions have no economic value if no alternative has to be sacrificed and if there are no preferences to acquire them the nature article seems to be in conflict with this approach