an appraisal of alternative blueprints for international policy coordination this paper examines two schemes for the international coordination of macroeconomic policy using a world econometric model the national institute global econometric model the first is the extended target zone scheme proposed by j williamson and m miller 1987 which involves targeting fundamental equilibrium exchange rates using monetary policy and using fiscal policy to control domestic demand the second uses fiscal policy to target the current account and monetary policy to stabilize domestic demand both schemes are parameterized using optimal control techniques on the national institute global econometric model and the welfare gains in using these schemes compared to historical experience from 1974 to 1986 are assessed

lender penalty for environmental damage and the equilibrium cost of capital in a model of the lending relationship incorporating both adverse selection and moral hazard we show that increasing the liability of lenders for environmental damage done by their borrowers has a qualitatively ambiguous impact upon interest rates this calls into question the assertion of financial community representatives that such reform will necessarily driveup interest rates and have adverse macroeconomic consequences if it is this fear which is preventing reform then that reluctance may in the case of many classes of pollutant be misplaced the implications of such reform for credit rationing are also explored

optimal taxation of flow pollutants when firms may also inflict catastrophic environmental damage in many industries firms affect the environment in two distinct types of ways firstly they emit routine anticipated volumes of flow pollutants secondly they can potentially inflict catastrophic environmental damage liability for which may be overhanging or limited by the law operaters of chemical plants nuclear power stations and oil tankers are three examples if an emissions tax or charge is to be levied on the flow pollutants in these cases how should it be set we use simple dynamic programming techniques to characterise second best optimality we identify contexts in which the tax should be raised above its pigovian level to take account of the catastrophic potential and others where it should be set below that level the analysis has significant implications for how policymakers should go about calibrating ecological taxes in a number of high profile industries

food preferences and nutrition in rural bangladesh t he dietary choice of households near subsistence levels of nutrient intake is one of obvious policy importance in many countries such as bangladesh national goals are set in terms of nutritional intake and there is heavy intervention in the markets for foods however little is known about the manner in which food preferences vary with food expenditure and nutrient intake the design of efficient programs to aid nutritionally deficient households in attaining minimal levels of nutrient intake requires information on all ownand cross price elasticities for both target and non target groups the net effect of a food price subsidy on the consumption of food nutrients cannot be predicted without knowledge of the complete elasticity matrix results presented below demonstrate that substitution effects can be so strong that the subsidization of certain foods quite often reduces nutrient consumption in this study demand equations for nine foods which allow for extremely flexible consumer price response are estimated from the individual budgets of 5 750 rural bangladeshi households estimation at the household level is preferred because it more readily permits the incorporation of household composition variables into the demand analysis such as household size occupation and employment status that are typically lost in aggregation there is also a greater range and variation in expenditure levels than found in grouped data this is of particular importance in the study of nutritional well being as it is the poorest households which are of special interest moreover the household sample provides sufficient degrees of freedom to estimate a simple varying parameter model which requires the estimation of 270 parameters previous econometric analysis of income class specific dietary choice has been limited and not altogether satisfactory pinstrup anderson de londono and hoover 1976 estimated complete sets of price elasticities for different income strata using frisch s scheme in order to study the impact of changes in relative prices on nutrient consumption their results are suspect because of the assumption of want independence necessary for this methodology to be valid alderman and timmer 1980 who were also concerned with studying the relationship between food price policy and nutrient intake by income classes econometrically estimated separate price coefficients for each income group by including slope dummy variables in their demand equations for rice and cassava in indonesia the inclusion of these dummy variables revealed surprisingly large differences in compensated price response across income groups although their results support the notion that poorer households respond differently to prices than the rich the limitations of their data constrained them to consider only two foods and to specify changes in price response which are discontinuous with respect to income i the formulation and estimation of the food demand equations is discussed in section ii below section iii presents the results of the estimation and discusses the nutritional implications of movements in relative food prices and other exogenous variables section iv summarizes our findings

comment on endogenous objectives and the evaluation of targeting rules for monetary policy 1 four mccallum principles itis bothanprivilege andapleasureformetoparticipateinthisconferenceinhonorofbennettt mccallum henceforthbtm thus beforeproceedingtomakespeci c comments regarding carl walsh s elegant paper on endogenous objectivesand targeting rules i would like to begin by providing some context in light ofbtm snumerouscontributionstotheanalysisofmonetarypolicy forthispurpose itishelpfultohighlightfourbasicprinciplesofeffectivemonetarypolicythatbtmhas consistently emphasized over the past several decades given the logicalcoherencyandintuitiveappealofhisworkonthissubject itisonlynaturaltorefertothesefourpointsasthe mccallumprinciples the rstmccallumprincipleisthatmonetarypolicymatters thatis theconductof monetary policy can have important consequences for social welfare btmanalyzedthetheoreticalandempiricalunderpinningsofthisprincipleinaseriesof

effects of food prices and consumer income on nutrient availability economic factors such as food prices and consumer income affect food choices with consequences for the availability of nutrients a new research model is developed to estimate how the availability of 28 nutrients would change as consumers alter their food purchases in response to changes in food prices and income through the interdependent food demand relationships

returns from research in economies with policy distortions hybrid sorghum in sudan conventional estimates of the economic return to agricultural research use market prices for the values of products and inputs on this basis economic rates of return are typically well above the cost of capital suggesting that more investment in research would be socially desirable but these estimates may be incorrect if as is often the case market prices are distorted by market failures or government policies and hence do not reflect social values this paper presents a simple partial equilibrium methodology with which to improve the measurement of social returns to research by taking account of multiple distortions in the market prices of products inputs and foreign exchange the method also takes account of variation in domestic and world prices making a product tradable in some years and nontradable in others the method is applied to the case of hageen dura 1 hd 1 sub saharan africa s first commercially successful hybrid sorghum hd 1 was released in the sudan in 1983 from the start of research in 1979 to 1992 the hd 1 breeding program had an estimated irr of 97 when all major policies in the sorghum market the fertilizer market and the exchange rate are taken into account the high rate of return to hd 1 research was due to the program s low cost and rapid payoff pointing to the potential value of small adaptive research programs taking full advantage of foreign technology and genetic material to produce locally appropriate crosses in a short period of time even in the highly distorted economies of africa such programs can yield very high payoffs

evaluating returns to agricultural research a review this paper reviews and compares the most common approaches used to evaluate public agricultural research investment ex post studies fall into two major groups a consumer and producer surplus analyses estimating average rates of return to research and b production function analyses estimating marginal rates of return to research ex ante studies fall into four groups a those using scoring models to rank research activities b those employing benefit cost analysis to establish rates of return to research c those using simulation models and d those using mathematical programming to select an optimal mix of research activities

bankruptcy and care choice this article considers the care choice of a potentially bankrupt injurer when care is pecuniary and the legal system is characterized by strict liability i show contrary to previous results that such an injurer may take too little or too much care and that neither injurer care nor victim welfare is necessarily increasing in injurer wealth when injurers behave optimally analysis of an expected cost function demonstrates that injurer expected costs are a concave and increasing function of injurer assets a result suggesting applications to the study of vertical relationships and markets for agents

how liable should a lender be the case of judgment proof firms and environmental risk comment recently u s environmental law has shown a tendency toward increased lender liability a model of a potentially judgment proof owner of a firm a lender and a potential victim is developed in which this policy can increase accident frequency and reduce efficiency full partial and zero lender liability rules and a minimum equity requirement are analyzed partial lender liability and an equivalent minimum equity requirement deliver the highest level of efficiency although the former can deliver a higher contribution by the lender to the victim than the latter policy and empirical implications are also discussed copyright 1995 by american economic association

determinants of the intrahousehold allocation of food in the rural philippines this study shows that the opportunity cost of time for husbands and wives can affect the intrahousehold distribution of food in a developing country equations which explain the relative allocation of calories within households were estimated for husbands wives and children with data for the rural philippines the estimating equation is derivable from both a joint household utility function and a bargaining model because the same households were included in the four survey rounds the various observations for a given individual were averaged for each variable in the estimation procedure wages were estimated using the heckman approach

evaluating the extended target zone proposal for the g 3 this paper evaluates the extended target zone proposal of williamson and miller using the national institute world economic model gem williamson and miller s proposals envisage that real exchange rates will be controlled by movements in relative interest rates that fiscal policy will be used to steer nominal demand towards a target which depends on capacity utilization inflation and the current balance and that the average level of world interest rates will be used to control global nominal demand we evaluate the performance of these rules for the united states germany and japan over the period 1975 84 using control methods to determine the best choice of parameters in the feedback rules we then consider how history would have differed from actual events had such rules been in place the results suggest that such rules would have led to a significant improvement in economic performance exchange rate variability would have been reduced and the dramatic increase in united states interest rates which took place after 1980 would have been avoided this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

the imf s food financing facility much ado about nothing abstract in may 1981 the executive board of the international monetary fund imf announced its decision to extend compensatory financing assistance to members encountering balance of payments difficulties caused by increased cereal import costs at the time the food financing facility was welcomed as a significant step towards providing a more adequate level of world food security since its establishment only limited use has been made of the facility and the director general of the fao commented recently that it needs to be improved

returns to policy oriented agricultural research the case of barley fertilization in syria summary in 1984 icarda and its syrian partners initiated farming systems research that led to a change in national fertilizer allocation policy evidence is assessed on the policy influence of the fertilizer response research and on the impact of switching to a more inclusive policy that relaxed the government s probation of fertilizer allocation to barley interviews with key informants make a persuasive case for attribution estimates from economic surplus models are consistent with a high rate of return on investment in the policy oriented research this case study provides a contribution to the limited empirical literature on returns to research under policy distortions

nutrient availability food costs and food stamps nutrient consumption patterns of low income households were analyzed using data from the special low income component of the 1977 78 nationwide food consumption survey a system of simultaneous equations for estimating food cost and diet component availability levels in home food supply was applied the derived reduced form showed that food stamp program participation had a positive impact on diet component availability levels impacts of other socioeconomic variables examined for diet component availability were generally larger than those for program participation and income diet component availability levels were relatively constant across households with different income and food stamp program bonus levels

the choice of a liability regime when there is a regulatory gatekeeper consider a firm planning a project that poses a risk of environmental spillovers such a firm might be deterred by the threat of legal liability or restrained by gatekeeper regulation if regulators would be perfect gatekeepers then negligence based liability combined with regulation is more efficient that strict liability with or without regulation however if the regulator has incomplete information then any of a variety of regimes could be the most efficient harsher regimes regulation rather than laissez faire and strict liability rather than negligence are more appropriate for larger risks the choice of a liability regime is more complicated however if regulators are biased if they are biased against projects then negligence plus regulation is less likely to be the most efficient regime if regulators are biased toward projects then it is possible that apparently soft liability regimes are more desirable when risk is high

agricultural price policy in general equilibrium models results and comparisons a number of alternative policies toward agricultural prices food subsidies and intersectoral allocation of investment are analyzed with computable general equilibrium models for six countries the models generally allow us to trace the intersectoral and intertemporal growth effects of these policies as well as their income distribution effects across social groups the results obtained are shown to be eventually quite different from those derived from partial equilibrium and multimarket approaches sensitivity analysis to alternative specifications of the mechanism of wage determination shows that the real income effects of price policies are critically dependent upon the particular theory of wage determination used

solving for optimal simple rules in rational expectations models this paper presents algorithms that solve for optimal simple monetary policy rules in rational expectations models with precommitment and discretion the algorithms are applied to the models in fuhrer j money credit banking 29 1997 214 clarida et al j econ lit 37 1999 1661 and rudebusch econ j 112 2002 402 to examine the efficiency properties of operational policy rules we show that optimized taylor type rules preform well in these models but that aside from the fuhrer moore model this result is sensitive to whether the central bank can respond to current period shocks taylor type rules that are operational in the sense that they do not respond to current period information are found to be highly inefficient in the rudebusch model and in the clarida et al 1999 model

imperfect competition functional forms and the size and distribution of research benefits abstract the effects of functional forms for supply and demand on the size and distribution of the returns to research are examined under a range of forms of competition under perfect competition the choice of functional form is relatively unimportant for the estimation of research benefits under imperfect competition the combination of the choice of functional forms for supply and demand and the nature of the research induced supply shift can have profound implications for the results functional form plays a much more important role than in the competitive model the most important contrast is between the constant elasticity model and the linear model along with various cases of a generalized linear model these findings are illustrated using a combination of analytical results and numerical simulations

nutritional functional classification study of panama abstract despite significant progress wide spread malnutrition persists in panama this article describes a study which found that over half the malnutrition in the country is clustered in functional groups economically connected to the agricultural sector and which indicates that food availability is a serious problem for 25 of the population food intake deficits were equally prevalent among the urban and rural populations dietary composition was not seen as the principal problem rather malnutrition problems are linked to low wages and poor access to public services a nutrition policy for panama must be centred first on employment and income generation and then on extending and maintaining public health and nutrition services particularly for the extremely poor in the central provinces food policy per se would not seem a priority area for public intervention

nutrient demand and the allocation of time evidence from guam this paper presents an econometric study of nutrient intake in guam which explicitly accounts for household time allocation and household capital variables the empirical framework is based on a household production model of nutrient consumption food expenditure and the allocation of time between labour leisure and food preparation activities the study finds evidence that 1 capital and wage variables have significant impacts on households nutrient demands 2 income wage and educational status have very different effects on the nutrient choices of low calorie households than on the nutrient choices of high calorie households and 3 a family s participation in the food stamp programme leads to higher levels of food expenditure but this impact is attributable to the purchase of more costly taste characteristics in food rather than to the purchase of more nutritious foods

the benefits of extended liability we characterize the optimal regulation of a firm that undertakes an environmentally risky activity this firm the agent is protected by limited liability and bound by contract to a stakeholder the principal the level of safety care exerted by the agent is nonobservable this level of care depends both on the degree of incompleteness of the regulatory contract and on the allocation of bargaining power between the principal and the agent increasing the wealth of the principal that can be seized upon an accident has no value when private transactions are regulated but might otherwise strictly improve welfare an incomplete regulation supplemented by an ex post extended liability regime can sometime achieve the second best

property transfers and environmental pollution incentive effects of alternative policies this paper considers how trans ferring some or all future responsibility for cleanup of a contaminated site affects the cur rent owner s incentives to reduce contamina tion given that he anticipates selling his prop erty in the future the results depend on the probabilities that the parties will be judgment proof the distribution of surplus and whether there is joint and several liability contrary to popular belief we show that transferring liabil ity can actually increase the seller s incentive to invest in pollution abatement furthermore abatement incentives are at least as great and generally greater with joint and several liability than without it jel q2

the effect of the value of time on food consumption patterns in developing countries evidence from sri lanka this study shows that the opportunity cost of women s time can affect household food consumption patterns in developing countries demand equations for rice bread and the ratio of bread to total cereal consumption are estimated for urban sri lankan households the demand specification which is based on the new household economics includes as explanatory variables the woman s estimated market wage and the household s full income and alternatively observed income wages are estimated using the heckman procedure to correct for sample selection bias

prevention and treatment in environmental policy design abstract in many environmental contexts the damages that result from some externality generating activity can be reduced either through prevention prior to the occurrence of the event or treatment after that occurrence the existing literature has focused on the use of prevention only polinsky and shavell 11 consider explicitly the use of mitigation but their analysis is limited to the case of pareto efficiency in reality policymakers often pursue other objectives such as minimizing damages subject to a budget constraint or minimizing the cost of maintaining a certain safety level this paper provides an analytical framework for examining the choice of prevention vs treatment in the context of these alternative behavioral assumptions it considers first the case where the effectiveness of treatment is known at the time that the allocation decision must be made we then extend the analysis to the case where the effectiveness of treatment is uncertain and develop a framework for addressing the tradeoff between prevention and treatment under a safety rule in both cases we examine the factors that influence the allocation of resources between prevention and treatment and show that these factors can affect the second best allocations of resources in ways that are contrary to the effect under the pareto efficient allocation

the compensation regime in liability law incentives to curb environmental harm ex ante and ex post this paper analyzes private incentives for precautions against environmental harm before accidents occur and for clean up after the fact we consider the compensatory regimes used in various jurisdictions which differ in terms of the basis for compensation the level of harm clean up costs or some combination of the two and the resulting levels of compensation we establish that socially optimal decisions are usually not induced by liability law in any of the compensatory regimes however the different types and levels of compensation have distinct effects allowing the policy maker to identify the most appropriate regime for specific circumstances

regulatory schemes and self protective environmental risk control a comparison of insurance liability and deposit refund systems abstract there has been an increasing interest in considering non traditional regulatory instruments for control of environmental risks traditional regulation has relied on liability in various forms after risky events have actually occurred there is concern that traditional instruments do not provide adequate signals to firms regarding social costs of risks this paper considers two important alternatives to traditional liability instruments insurance and deposit refund systems the purpose of the paper is to determine whether there is any theoretical superiority of these non traditional instruments in controlling environmental risk and safety a relatively simple model designed to capture the essential features of liability insurance and deposit refund instruments is developed and used to compare the resulting control levels under pure risk and pure uncertainty the paper shows how risk aversion limited liability afforded through bankruptcy and differences between social and private discount rates can affect the ranking of control levels under each of the three primary instruments the paper shows that under reasonable assumptions deposit refund systems such as input or discharge deposits or performance bonds will result in higher levels of controls than the other instruments results also suggest that it may be necessary to tailor regulatory instruments to specific firm situations such as requiring deposits from small firms in competitive industries

comment on mckinnons s monetary rule i f the world wishes to return to fixed exchange rates then mckinnon s monetary rule provides the right way to go about the task over the past year he has modified his longstanding proposals in order to accommodate the breakdown of monetarism he no longer urges the participants to follow a fixed rate of aggregate monetary growth consistant with zero inflation but instead to vary their aggregate monetary growth in a way that will achieve zero inflation thus recognizing the variability in velocity similarly he has widened his recommended band to 10 percent at least initially and now calls for interest rate variations to be used to manage rates except when they move to the margins at which point symmetrical unsterilized intervention becomes mandatory i see no reason to quibble with his analysis on the means to fix exchange rates the remaining question is of course whether the end of fixed nominal exchange rates is a sensible one in questioning that i am not challenging his analysis of the costs that floating rates have imposed on the world or his judgment of their vast magnitude i have tried to argue the same myself williamson 1985 pp 38 46 but that does not mean that there are not real social benefits from exchange rate flexibility in this note i shall outline those benefits and then proceed to describe my principal analytical disagreement with mckinnon the alternative which i shall contrast to the mckinnon rule is the extended target zone proposal developed in edison miller and williamson 1987 and sum

joint determination of food consumption and production in rural sierra leone estimates of a household firm model abstract this paper investigates the determination of food consumption for rural households in sierra leone that produce the foods which they consume a household firm model is estimated with seven commodities including five foods non foods and labor as compared to three commodities in past studies such food disaggregation permits tracing of the effects of socioeconomic variables on household nutrient availability household specialization in production is such that censored data is a problem a tobit approach is used to correct for this for most crops the own price effects on consumption remain negative when a price change is allowed to shift the budget constraint by effecting the profits from home production elasticities of calorie availability with respect to toal expenditure are found to be sizeable varying little by expenditure group the price elasticities of calorie availability are generally positive however an important exception occurs for price of the staple food rice this exception has several important policy implications which are explored

monetary and exchange rate policies for international financial stability a proposal w v ithout a common monetary standard the remarkable integration of western european north american and the industrialized asian economies in both commodity trade and financial flows is less efficient and becoming untenable dissatisfaction with wildly fluctuating relative currency values euphemistically called floating or flexible exchange rates is a prime cause of the resurgence in protectionism in 1986 87 the overvalued yen forced japanese industrialists to close factories retire workers and write off once valuable investments in plant and equipment this parallels what their american counterparts were forced to do between 1981 and 1985 when the dollar suddenly became overvalued similarly the paring down of the british manufacturing base was precipitated when the pound unexpectedly became a strong petrocurrency in 1979 81 in agriculture japan and european countries are determined to insulate their domestic prices of farm products from unsettling international influences including volatile fluctuations in the yen dollar or mark dollar exchange rates thus unless exchange stability is first achieved the american government s attempt to broaden the general agreement on tariffs and trade to encompass agriculture and services is likely to fail but what keeps the three major industrial blocs from developing a common monetary standard to prevent exchange rate fluctuations although many people

r d and abatement under environmental liability law comparing incentives under strict liability and negligence if compensation differs from harm abstract this paper analyzes equilibrium r d in pollution control and equilibrium pollution abatement by polluters who are subject to environmental liability law when the level of compensation differs from the level of environmental harm we contrast the performance of strict liability with that of the negligence rule privately optimal levels necessarily deviate from socially optimal ones under strict liability whereas private decisions are first best under negligence unless compensation is much smaller than harm it is established that the way in which privately optimal r d deviates from the first best level depends on the kind of technical change in pollution abatement counterintuitively polluters might overinvest into r d in pollution control if compensation falls short of harm and may underinvest if compensation exceeds harm

native american obesity an economic model of the thrifty gene theory native american obesity is hypothesized to result from three potential causes 1 a genetic predisposition or the thrifty gene 2 a rational addiction to nutrients and 3 dietary adjustment costs these hypotheses are tested using a two stage household production approach and scanner data from a panel of native and non native supermarkets nutrient intake for both groups is strongly influenced by adjustment costs native americans tend to place higher implicit valuations on protein relative to fats and carbohydrates compared to non natives consequently reductions in real carbohydrate prices over time may be a cause of high incidence of native american obesity

food preference poverty and the nutrition gap in recent decades widespread poverty has been observed in the developing economies studies probing the relationship of development to income distribution or poverty suggest either no development effect on the extent of poverty or a widening of inequality of incomes during the initial stages of development 2 a recent study by dandekar and rath of poverty in india showed the prevalence of poverty in both rural and urban areas after nearly three five year plans although these plans enabled india to achieve a sustained high rate of growth 3 other studies just preceding and following confirmed and extended the major conclusion of dandekar and rath s study 4 while income distribution studies relate to the extent of relative poverty studies similar to dandekar and rath s relate to absolute poverty in the latter the measurement of poverty is related to calorie intake levels in at least one study it is related to a collection of basic goods recent studies at the international level give evidence of poverty in the past decade and project a further spread in the next they too have used the calorie based poverty line 6 in this paper i maintain that calories or other nutrients taken singly or together measure only one attribute of food another is its taste the demand for food is a joint demand for these attributes and others like bulk which gives a sense of fullness i maintain that to concentrate on nutrition or calories alone leads to inaccuracy in measuring the extent of poverty we must ask therefore what role food preferences play in food consumption and nutrition intake my attempt is to understand food habits especially at low income levels although measurements are given regarding food preferences

food security policy in a stochastic world abstract food security may be increased by variance reducing strategies by food aid or by development strategies this paper uses a korea cge model subjected to random fluctuation in world prices and domestic food productivity to evaluate these policies we find that poverty reducing development strategies are the most food security strategies

comparing the global performance of alternative exchange arrangements abstract this paper presents and applies a methodology useful for studying the operating characteristics of a number of alternative monetary arrangements using a large scale simulation model of the world economy we consider the performance of the regimes when policymakers do or do not observe the shocks and when policymakers infer the shocks using an optimal filtering rule although the results are model specific and at best illustrative of the issues involved the approach does have the advantage of providing a richer framework of analysis than is possible in simple models of international interdependence

the gains from price stabilization a quantitative assessment a widely discussed problem in economics is the benefits from price instability the original work by waugh used consumer surplus to show that individuals benefit from price variation vis a vis stabilization at the mean a later model by oi did the same for producers while massel integrated the two analyses an excellent account of the development of this problem is turnovsky 1978 these analyses relied on models of consumer surplus with linear or log linear demand functions neither of which can be derived from utility maximizing behavior as a result these demand curves do not relate to known measures of consumer welfare such as hicksian compensated variation or the true cost of living realizing this hanock recast the problem in terms of the indirect utility function under the assumption of cardinal utility hanock and turnovsky shalit and schmitz derived the conditions including those relating to risk under which consumers gain under the assumption of ordinal utility we prove the proposition that consumers gain from price instability next these benefits are quantified via a monte carlo experiment

modelling the choice between regulation and liability in terms of social welfare using a formal political economy model with asymmetric information we illustrate the conditions under which an environmental protection system based on extending liability to private financiers is welfare superior inferior or equivalent to a system based on an incentive regulatory scheme subject to capture by the regulatees we explicitly consider the following factors the cost of care and its efficiency in reducing the probability of an environmental accident the social cost of public funds the net profitability of the risky activities the level of damages and the regulatory capture bias we characterize in such a parameter space the regions where one system dominates the other jel classification d82 k32

will developing country nutrition improve with income a case study for rural south india aggregate estimates of food expenditure are consistent with such a possibility implying income expenditure elasticities close to one however the high degree of aggregation at which such estimates are made means that the considerable increase in price per nutrient as income increases is ignored and the nutrient elasticities are therefore overstated estimates for a rural south indian sample indicate that this bias is considerable and that the true nutrient elasticities with respect to income may be close to zero

from pigou to extended liability on the optimal taxation of externalities under imperfect financial markets an important contribution of economics to public policy rests on the precept that price signals should force producers of externalities to internalize the welfare of other economic agents pigou 1920 s celebrated insight on the taxation of externalities provided an intellectual foundation for a variety of policies from pollution taxes permits to experience rating pigovian taxation s policy appeal is limited if the polluter has insufficient resources to pay the damage when it occurs to defend pigovian taxation in the presence of judgment proof agents its proponents point at the many institutions extending liability to third parties yet little is known about the validity of pigou s analysis in this context the paper analyzes the costs and benefits of extended liability and investigates whether full internalization is called for in the presence of agency costs between potential polluters and providers of guarantees its contribution is two fold it first shows that the better the firms corporate governance and the stronger their balance sheet the more closely taxes should track the corresponding externality it then develops the first analysis of extended liability when guarantors themselves may be judgment proof and the extension of liability may give rise to further externalities relatedly it derives the curvature of the optimal taxation of externalities in a multiplant firm

environmental liability and privatization in central and eastern europe toward an optimal policy it has been estimated that the costs of remediating contaminated sites in central and eastern europe cee will be very high these contingent environmental liabilities have emerged precisely at the time cee countries are attempting to privatize their capital stocks creating major challenges for privatization agencies it is also generally agreed that an inadequate handling of these liabilities in the past has reduced sales of state owned enterprises in central and eastern europe this paper uses an analytical model to identify optimal policies for minimizing the damage to privatization processes from environmental liabilities policy simulations are conducted which evaluate the effects of the use of liability indemnifications and environmental audits on privatization sales prices and government revenues net of environmental costs the major finding of the paper is that goals to mitigate the effects of environmental liability on privatizations and maximize government net revenues from privatization sales require equivalent environmental liability policies both goals require optimal provision of information and indemnifications to investors and moreover it is found that the two policies are complementary rather than substitutes

disaggregating food consumption parameters designing targeted nutritional interventions abstract this article is concerned with a new nutritional intervention strategy which is based on the belief that malnourished people eat different types of food to the well nourished the calculation of disaggregated food consumption parameters can identify inferior food commodities and the subsidization of these commodities will target intervention to those most in need the effectiveness of this policy depends on the understanding of its theoretical basis the author introduces the policy maker to this by reviewing the theoretical basis for consumption analysis and then several key studies

self reporting of pollution and the firm s behavior under imperfectly enforceable regulations abstract motivated by the nature of u s laws a model is developed for a firm that maximizes expected profit and faces imperfectly enforceable pollution standards with imperfectly enforceable reporting requirements some previous models of imperfectly enforceable standards and taxes are special cases of this general mode when the fine for violating the pollution standard is linear in excess pollution the form will equate the marginal cost of control to the marginal fine rate and thus actual pollution will be insensitive to enforcement parameters related to under reporting the more complex comparative statics that exist when the fine is non linear are analyzed and comparisons with other models are made

beyond export led growth abstract in light of the adverse conditions in the current international economic environment this paper reassesses the feasibility of continuing to rely on manufacturing export led growth as the major development dynamic for most ldcs during the next decade this paper argues that after the initial stages of industrial development the emphasis in policy toward agriculture should shift from surplus extraction to surplus creation and to the generation of demand linkages with the rest of the economy the author compares the relative merits of two alternative open development strategies export led industrialization and agricultural demand led industrialization adli by means of several simulation experiments the experiments are performed with a computable general equilibrium model of a small low income semi industrial open economy which is a stylization of south korea of 1963 they are carried out in an international environment assumed to represent the next decade based on a rate of growth of international demand for imports of about half the 1960 1973 rate the results support the adli approach on all counts

are grains of sand in the wheels of international finance sufficient to do the job when boulders are often required this paper criticises the effectiveness of a tobin tax in acting as a deterrent to short run round trip speculation on exchange rate movements it is demonstrated that given the usual magnitude of a proposed tobin tax the deterrent to short term speculation will be negligible and in all likelihood smaller than the deterrent to real trade flows and arbitrage activities finally an alternative proposal for preventing currency speculations while creating incentives for global full employment based on keynes s 1940s writings is proposed

liability transfers an economic assessment of buyer and lender liability abstract this paper examines the conditions under which it is efficient to transfer liability for contamination of a given piece of property from the seller to the buyer at the time of sale and then for debt financed sales for which there is a foreclosure subsequently to the lender who has financed the purchase we identify two key potential sources of inefficiency which depend on the relative probabilities that the parties will be judgment proof at the time liability is imposed the results suggest that the efficiency effects of liability transfers will depend on the relative magnitudes of these two sources of inefficiency

income effects of donated commodities in rural panama analyses of food expenditure data from rural households in panama showed that the marginal propensity to consume food out of additional income in the form of donated food is not different than the marginal propensity to consume food out of money income for households participating in the veraguas supplemental feeding program these results suggest that take home food programs can have significant income mediated impacts on the acquisition of food and accordingly food supplementation programs should be designed to maximize the income value of the donated commodities in terms of prices prevailing in the local markets

the economic role of commodity storage one of the earliest and most successful exainples of economic policy is the oftquoted biblical account of joseph s interpretation of the pharoah s dream joseph foretold that seven years of abundant harvests would precede seven years of drought and recommended that the pharoah accumulate grain during the good years since that time the central role of storage in stabilising the economy in the face of exogenous disturbances has been obvious but our understanding of the nature of that role has not greatly advanced without divine assistance in forecasting stochastic production the storage decision is considerably more complex than the one joseph faced and the role of storage quite different in fact several commonly held impressions about the role of storage of commodities such as grains are incorrect rather than stabilising production storage actually accentuates its variability rather than causing a mean price preserving decrease or a mean output preserving decrease in the dispersion of price storage generally causes a more complex modification of the distribution of price rather than being most effective at eliminating short falls in consumption storage actually is more effective at eliminating the incidence of exceedingly high consumption in this paper we explore the role of storage in a model where production is stochastic and both production and storage are performed by competitive profitmaximisers who form rational expectations about the returns to their activities we derive the subtle but very important interactions among production price expectations and storage which simpler models cannot capture finally we make a comparative statics assessment of the distributional implications of storage these results while confirming the importance of the specification of the demand function and the supply elasticity identified in recent analytical studies e g wright i979 and newbery and stiglitz i979 are surprisingly favourable to consumers considering the asymmetric nature of the effects of storage on consumption and price storage is simply a productive activity one that transfers a commodity from one period to the next like other forms of production it is costly the total cost of storing an amount st from period t to period t i is as of period t i

liability and large scale long term hazards this paper analyzes the application of liability to large scale long term hazards the key features distinguishing such hazards are the long temporal separation between exposure to a hazard and disease and the large damages when injuries finally emerge the large scale of damages creates a strong incentive to avoid liability payments and the long temporal separation creates numerous avenues through which parties can avoid paying possible damage awards the analysis focuses on the incentive to avoid paying damages by vertically divesting production tasks associated with serious occupational risks such divestiture can lower liability costs if the small firm operating the risky stage goes out of business before latent injuries emerge or has insufficient assets to pay damages and declares bankruptcy when suits are filed the paper then presents an empirical regression analysis of small firm entry into the u s economy between 1967 and 1980 the period in which liability laws were changing the point estima

the theory and econometrics of health information in cross sectional nutrient demand analysis understanding the role of health information in food and nutrient demand has become an important issue over the last decade endogeneity and measurement error are two empirical problems that are inherent in this type of analysis while some type of instrumental variables estimation would appear the obvious solution this article provides several theoretical and empirical reasons why this is not the case in cross sectional analysis an alternative estimation strategy is pursued an empirical example is given and the implications are discussed copyright 2001 oxford university press

specification of policy rules and performance measures in multicountry simulation studies abstract much recent analysis of international monetary and fiscal policy issues has been conducted by stochastic simulations with multicountry econometric models in these studies it has become standard practice to consider alternative policy rules of a form that calls for departures of a policy instrument from some baseline reference path that are proportional to deviations of a specified target variable from its own baseline path the present paper argues that this standard rule form is seriously defective for such issues because th eimplied rules often fail to be operational and have associated performance measures that can be misleading in important cases jel c50 f30

macroeconomic adjustment and income distribution alternative models applied to two economies abstract to analyze the impact of alternative macroeconomic adjustment mechanisms on the distribution of income in developing countries we construct a cge model that is general enough to incorporate neoclassical neo keynesian and a variety of structuralist macro closure rules the model is applied to two economies brazil and korea with alternative macro closures both for savings investment and for the balance of trade we find that 1 the size distribution of income is largely insensitive to macro closure rules 2 the functional distribution is very sensitive to macro closure rules and 3 the balance of trade closure is at least as important in determining distributional outcomes as the savings investment closure

risk and incentives in the financing of hazardous waste cleanup abstract this paper evaluates alternative approaches to financing hazardous waste cleanup recognizing that future cleanup costs are not known with certainty and that the choice of a financing approach implies a specific allocation of risk both retroactive and prospective use of different forms of strict liability are considered in the prospective case the standard principal agent paradigm is extended to capture the risk sharing and incentive effects relating to the choice of waste generating inputs the results indicate when a fund used for cleanup should or should not be subrogated

generalized progress of abatement technology incentives under environmental liability law this paper considers the incentives environmental liability creates to improve pollution abatement technology our analysis considers technical progress in end of pipe abatement and in the production technology used thereby generalizing the approach taken by endres et al environ resour econ 36 341 366 2007 we establish that this generalization has drastic repercussions on incentives under negligence liability while the performance of strict liability is not compromised furthermore it is demonstrated that the social desirability of investment in abatement or production technology or both decisively determines how ex ante and ex post regulation fare with respect to welfare maximization in the case of negligence liability

exchange rate management the role of target zones the essence of the regime of unmanaged floating that prevailed among the major currencies from march 1973 until the plaza agreement in 1985 was that the exchange rate was treated as a residual in the process of macroeconomic policy determination admittedly there were occasions such as october 1976 in the case of the pound sterling and october 1978 in the cases of both the u s dollar and the swiss franc when particular countries became so concerned with a misalignment of their currency that they were forced to abandon benign or malign neglect but such incidents were episodic views about a proper or desirable level of the exchange rate played no systematic role in policy formulation section i explains why i judge the performance of unmanaged floating to have been unsatisfactory section ii lists the real social benefits that exchange rate flexibility can afford which should be preserved by any reformed system section iii describes the target zone proposal and explains why it would preserve the real benefits of flexibility while overcoming the weaknesses of unmanaged floating section iv sketches a possible set of comprehensive principles for policy coordination of which target zones would be one natural element

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

market intervention policies for increasing the consumption of nutrients by low income households this study employs a market equilibrium displacement approach to examine the nutrient consumption effects of market intervention programs such as food subsidies income transfers and agricultural input subsidies the results permit comparison of the direct treasury costs of achieving marginal increases in nutrient intake with alternative programs when applied to a case study of the food markets and population of cali colombia it was found that a marginal increase in caloric intake among the poor could be achieved at lowest cost with a consumer subsidy of certain cereals although black market activity might raise this cost to that of an income subsidy

efficient pollution regulation getting the prices right this paper argues for efficient environmental regulations that equate the mar ginal damage of pollution to marginal abatement costs across space the paper estimates the source specific marginal damages of air pollution and calculates the welfare gain from making the current sulfur dioxide allowance trading pro gram for power plants more efficient the savings from using trading ratios based on marginal damages are between 310 and 940 million per year the potential savings from setting aggregate emissions efficiently and from includ ing more sources of air pollution are many times higher jel h23 q53 q58

flexible consumer demand systems and linear estimation food in india demand equations in real income and nominal prices can be obtained directly by differentiating a cost function in which output is replaced by real income this derivation is possible because recent advances show that certain index numbers provide close approximation to real income without knowledge of the utility function parameters three flexible functional forms corresponding to well known flexible cost functions were used to estimate food demand elasticities time series and cross sectional data from ten indian states for twenty years were used the estimates provide a complete set of expenditure price and cross price elasticities for four commodities some close substitutes

are price controls necessarily bad the case of rice in vietnam abstract most economists instinctive reaction to price controls is that they are harmful its strong enforcement results in shortages and resource misallocation while weak enforcement often leads to black markets and high transaction costs given these instincts this paper assesses the pros and cons of rice price controls in vietnam using a multi sector multi household general equilibrium model these price controls fix producer prices and allow government marketing agencies to sell at higher prices and hence are in part a revenue raising device as such they may be part of an efficient tax mix particularly so since agricultural incomes and production go untaxed under the formal tax system it is argued that such controls can act to dampen costly domestic adjustments in the face of volatile world prices it is shown that this system can be supported as welfare enhancing under conditions currently prevailing in vietnam

social supply and the evaluation of food policies this study develops a model of social supply based on the hypothesis that society desires that efficient producers remain in business even if their enterprise is too small to withstand the losses caused by extreme price declines the analysis shows that this concept can be linked to the desire of society of maintaining small producers income above a minimum level and is consistent with a well behaved social welfare function the study further argues that both social demand and social supply functions may be useful for evaluating policies and projects with socially relevant effects

genetic improvements in major us crops the size and distribution of benefits the distribution of welfare gains of genetic improvements in major us crops is estimated using a world agricultural trade model multi market welfare estimates were 75 larger than estimates based on the price exogenous change in revenue method frequently used by plant breeders annual benefits of these genetic improvements range from us 400 600 million depending on the supply shift specification of this 44 60 accrues to the us 24 34 accrues to other developed countries developing and transitional economies capture 16 22 of the welfare gain the global benefits of a one time permanent increase in us yields are us 8 1 billion discounted at 10 and us 15 4 billion discounted at 5 gains to consumers in developing and transitional economies range from us 6 1 billion 10 discount rate to us 11 6 billion 5 discount rate

indivisible toxic torts the economics of joint and several liability cost effective or efficient pollution control has traditionally devoted most of its attention to analyzing the effects of legislative or regulatory policy instruments such as emission taxes or marketable emission permits recent contributions have expanded this focus to include the effects of monitoring and enforcement policies 2 with a few noteworthy exceptions 3 however the role of the court system in general and liability law in particular have not received analytical attention among environmental economists in proportion to their importance in resource allocation

the demand for calories in developing countries this paper uses household survey data on consumption to analyze the determinants of calorie intakes in developing countries it relies on characteristic demand analysis for a demand function specification for calories it explores the effect of calories price differences income and other socioeconomic factors on the intracountry and intercountry distribution of calorie intakes the paper reaches three broad conclusions i both income and price elasticities of demand for calories are below unity and are substantial for poorer consumers ii even a moderate increase in calorie prices implies a large nutritional sacrifice for the poor if present income growth and distribution trends continue and iii if moderate redistribution policies permit a substantial portion of the income increase to be allocated to the poor sizable calorie price increases would not rule out elimination of malnutrition

the distribution of benefits from technical change among classes of consumers and producers an ex anteanalysis of beans in brazil abstract because new agricultural technology in developing countries has sometimes bypassed small farmers who are an important social group in low income countries design of technology specifically appropriate to small farmers has been advocated as a policy goal this paper appraises the comparative returns to investment in small farm biased scale neutral and large farm biased technology for bean production in brazil a consumer surplus model is developed to estimate the distribution of benefits among producing sectors and classes of consumers while previous studies have relied on geometrical approximations to measure economic benefits as the area under the supply shifts here an exact analytic solution is obtained by integrating from the supply axis scale neutral technology leads to significant small farmer benefits while maximizing benefits to consumers large farm biased technology results in less benefits to small farmers and consumers and only minor gains to large farmers when compared to scale neutral technology small farm biased technology produces the greatest gains to small farmers but the lowest level of benefits to consumers

liability for past environmental contamination and privatization this paper examines the role ofliability for past environmental contaminationin the privatization processes of central andeastern europe in particular it establishes alink between a risk averse investor s amount ofinformation regarding the extent of pastenvironmental contamination and its cleanupcosts and the investor s willingness to payfor a particular enterprise i e bid as theinvestor obtains a more precise estimate of theuncertain cleanup costs the investor facesless risk therefore the investor s riskpremium falls and the investor s bid rises this link generates four hypotheses regarding aprivatization agency s responses to theinvestor s knowledge of clean up costs

more evidence on nutrition demand income seems overrated and women s schooling underemphasized abstract malnutrition is widespread in the developing world controversy continues concerning the roles of income household size and women s schooling on nutrient demand empirical estimates for nicaragua suggest that income elasticities are small and inversely associated with income levels there are some economies of scale in household size the elasticity for women s schooling is higher than those for income or household size and women s backgrounds are important the results cast doubt on the strong emphasis the world bank and others have placed on income and suggest that schooling may be working through tastes not only through productivity

privatization and contaminated site remediation in central and eastern europe do environmental liability policies matter abstract this paper examines the effects on site remediation decisions after state owned firms have been privatized of providing environmental information to potential investors and undertaking site remediation planning prior to privatization the literature suggests that to minimize distortions created by uncertain environmental problems governments should invest in environmental information for potential investors inventory problems and develop plans for remediation one of the believed benefits is a higher probability of site remediation because with uncertainty resolved potential conflicts after privatization are less likely few countries in central europe which has experienced both environmental problems and privatization on enormous scales have adopted this advice using firm level data empirical analysis is presented which suggests providing only information to investors is insufficient to spur remediation inventorying site contamination and planning remediation prior to privatization is a much more effective measure combining provision of information with remediation planning is found to be the most powerful policy package for encouraging remediation