water markets market reform and the urban poor results from jakarta indonesia abstract roughly 20 of the eight million persons in jakarta receive water from municipal water connections to their homes remaining supplies are essentially private and include street vendors standpipes and wells the last of these an inexpensive but increasingly contaminated source in many areas an expansion of the network of in house connections is in progress but will take several decades to complete in the interim various strategies have been advanced to deal with persistent problems of access to good water by the poor this study examines the impacts of one such plan put to action the april 1990 deregulation measure permitting private homes with water connections to resell municipal water we present preliminary evidence that the primary social benefits of deregulation are the money savings and increased consumption by former vendor and standpipe customers in most respects the aggregate effect is equivalent to a costless expansion in the standpipe system with the difference on the supply side that significant transfers from vendors and standpipe operators to household resellers may occur

learning about a new technology pineapple in ghana this paper investigates the role of social learning in the diffusion of a new agri cultural technology in ghana we use unique data on farmers communication patterns to define each individual s information neighborhood conditional on many potentially confounding variables we find evidence that farmers adjust their inputs to align with those of their information neighbors who were surpris ingly successful in previous periods the relationship of these input adjustments to experience further indicates the presence of social learning in addition applying the same method to input choices for another crop of known technol ogy correctly indicates an absence of social learning effects jel d83 013 033 q16

dollars debt and international financial institutions dedollarizing multilateral lending financial dollarization is increasingly seen as a concern because of its tendency to contribute to financial crises and output volatility as a result the debate on financial dollarization has shifted in favor of a more proactive stance on dedollarization while often neglected lending from international financial institutions is an important source of financial dollarization in emerging economies and must be considered in any dedollarization strategy this article revisits old and new arguments in favor of international financial institution lending in the local currency and argues that any such initiative should rely at least initially on demand from residents seeking stable returns in units of the local consumption basket but who are reluctant to take on sovereign risk superior enforcement capacity enables international financial institutions to intermediate these savings currently invested in dollarized foreign assets back into the local economy the international financial institutions can offer investment grade local currency bonds and use the proceeds to dedollarize their own lending to noninvestment grade countries thereby reducing financial dollarization and fostering the development of local currency markets

what are households willing to pay for improved water access results from a meta analysis abstract although several factors contribute to low rates of access to improved water and sanitation in the developing world it is especially important to understand and measure household demand for these services one valuable source of information regarding demand is the growing empirical literature that has applied stated preference methods to estimate households willingness to pay wtp because it is difficult to generalize and support planning based on this scattered literature we conduct a meta analysis to take stock of the worldwide sample of household wtp for improved drinking water services using 171 wtp estimates drawn from 60 studies we first describe this sample and then examine the potential factors that explain variation in wtp estimates our results suggest that households are willing to pay between approximately 3 and 30 per month for improvements in water access specifically in line with economic theory and intuition wtp is sensitive to scope the magnitude of improvement in drinking water services as well as household income and stated preference elicitation method we demonstrate how our results can be used to predict household level wtp for selected improvements in drinking water access in regions with low coverage and find that private benefits exceed the cost of provision

social networks and technology adoption in northern mozambique despite their potentially strong impact on poverty agricultural innovations are often adopted slowly using a unique household dataset on sunflower adoption in mozambique we analyse whether and how individual adoption decisions depend upon the choices of others in the same social networks since farmers anticipate that they will share information with others we expect farmers to be more likely to adopt when they know many other adopters dynamic considerations however suggest that farmers who know many adopters might strategically delay adoption to free ride on the information gathered by others we present empirical evidence that shows that the relationship between the probability of adoption and the number of known adopters is shaped as an inverse u in line with information sharing the network effect is stronger for farmers who report discussing agriculture with others the data contains information which is needed to ameliorate the identification issues that commonly arise in this context in particular social networks are precisely identified and in addition we can control for village heterogeneity and endogenous group formation

upgrading traditional technologies in small scale industry clusters collaboration and innovation adoption in indonesia there is by now sufficient evidence that small scale industry clusters matter in developing countries this article intends to contribute to the discussion on cluster transformation by focusing on innovation adoption in a roof tile cluster in indonesia clustering allows small scale enterprises to grow in riskable steps by sharing the costs and risks through collaboration using data from longitudinal field surveys we find that technological change is not only a matter of comparing costs and benefits of technologies but also a matter of access collaboration among leaders is crucial in innovation adoption when technological indivisibilities play a role in our case study it appears that joint action should be viewed as a means to an end only it was given up in favour of traditional hierarchies in the cluster as soon as possible

money demand in open economies a currency substitution model for venezuela abstract this paper investigates the extent to which domestic money balances in venezuela are influenced by foreign exchange considerations to this end individuals are assumed to choose the levels of foreign and domestic money that minimize the borrowing costs associated with a given level of monetary services the solution to this optimization problem yields a closed form demand function for domestic money that allows for foreign exchange considerations this specification is estimated and the results point to an elasticity of currency substitution in excess of one conditioned on these estimates the paper estimates the risk premium for the period 1981 82 prior to the collapse of the exchange rate system in 1983

contingent valuation and actual behavior predicting connections to new water systems in the state of kerala india in 1988 families in kerala state in india were surveyed to ascertain their willingness to pay for household connections to a piped water supply system in 1991 the families in these communities were surveyed again and their actual decisions recorded this article explores the validity of the findings of the 1988 study on the basis of actual behavior it looks at the question of benefit revelation did people behave as they said they would and it looks at the question of benefit transfer did people in one site behave as they were predicted to behave on the basis of the predictions of a behavioral model for a different site the data were also used to analyze the policy relevance of behavioral modeling coauthors are john briscoe bhanwar singh radhika ramasubban and ramesh bhatia copyright 1995 by oxford university press

toward equitable and sustainable rural water supplies a contingent valuation study in brazil because many rural people are poor it is usually assumed that rural water supplies must be financed by government agencies it is now widely recognized however that many rural people can and will pay for improved water supplies and that sustaining and extending services depends on mobilizing this willingness to pay this article describes a study of willingness to pay for water in brazil the study shows that surveys of actual and hypothetical water use practices can provide policy relevant information on willingness to pay which is shown to vary according to household socioeconomic characteristics and the characteristics of the existing and new supplies of water in rural brazil tariffs for yard taps can be increased substantially before significant numbers of housebolds would choose not to connect to an improved system whereas provision of free water at public taps can protect the poor without jeopardizing the financial viability of the scheme billions of people in developing countries face daily problems in obtaining water for drinking cooking bathing and washing more than 1 500 million people 30 percent of the world s population are estimated to be without access to uncontaminated water and an unknown but large proportion have to spend hours daily to collect water briscoe and de ferranti 1988 churchill 1987 because the adverse consequences for productivity health and quality

monetary policy dollarization and parallel market exchange rates the case of the dominican republic abstract excessive money creation may give rise to inflation tax revenues and to a depreciation of the domestic currency this in turn leads to a shift away from the domestic currency into a foreign currency e g the us dollar hence the term dollarization from the domestic monetary authority s point of view dollarization is an unwelcomed phenomenomn thus the monetary authorities will attempt to arrest the dollarization phenomenon while maintaining the excessive money growth this paper develops and tests a model which analyzes the effects of monetary policy on dollarization and the parallel market exchange rates

currency substitution portfolio diversification and money demand we extend the thomas 1985 dynamic optimising model of money demand and currency substitution to the case in which the individual has no access to bonds denominated in foreign currency we show that in this case the demand for domestic money is influenced by portfolio decisions contrary to what defended by the portfolio balance approach to currency substitution the results obtained in this paper suggest that the significance of an expected exchange rate depreciation term in the demand for domestic money provides a valid test for the presence of currency substitution the results also suggest that in countries facing monetary instability and currency substitution restricting the availability of interest bearing assets denominated in foreign currency may have a destabilising impact on the money demand

variation in the real exchange rate as a source of currency substitution abstract this paper presents a shopping cost money service model in which it is shown that the real exchange rate influences the desired ratio of domestic to foreign currency bank deposits empirically it is found that if the real exchange rate value of the canadian dollar falls then us dollar deposits of canadians rise relative to canadian m2 this relationship is found to be cointegrated dynamic adjustment analyzed using an error correction model indicates a cyclical adjustment the results provide evidence that variation in the real exchange rate is a source of currency substitution and reinforces the argument that demand side factors influence the money stock jel e41

estimating a socially optimal water price for irrigation versus an environmentally optimal water price through the use of geographical information systems and social accounting matrices this article develops a method for establishing water prices and their effects in order to provide policy makers an environmentally and socially optimal range of regional prices for irrigation water two prices are determined the environmentally optimal price of water is defined as the one that internalizes the environmental costs generated by agricultural consumption the social optimally price of water is defined as the one that maximizes levies on water for agriculture without affecting the regional economy the environmentally optimal price is calculated with an economic model built over a geographical information system gis that allows the economic quantification and valuation of the environmental cost of water in different basins the optimal price is calculated with a demand curve for irrigation water introduced into a social accounting matrix sam to observe if the regional economy can accept higher prices without affecting the regional gdp potential water prices are established ranging from prices that minimize the negative impact in the regional economy to those that totally internalize the environmental cost of water

adoption of agricultural innovations in developing countries a survey this paper reviews various studies which have provided a description and possible explanation to patterns of innovation adoption in the agricultural sector the survey points out that the tendency of many studies to consider innovation adoption in dichotomous terms adoption nonadoption may not be appropriate in many cases where the actual decisions are defined over a more continuous range more attention needs to be given to the socio cultural and institutional environment in area studies so that their interrelation with economic factors affecting adoption can be inferred the presence of several interrelated innovations is another aspect that needs to be considered more carefully in future research since a number of simultaneous decisions may be involved furthermore the possibility of regular sequential patterns in adopting components of a new technological package should be specifically addressed in future studies finally the impact of differential adoption rates on land holding distribution merits attention in future research

demand for piped and non piped water supply services evidence from southwest sri lanka in many countries water supply is a service that is seriously underpriced especially for residential consumers this has led to a call for setting cost recovery policies to ensure that the tariffs charged for water supply cover the full cost of service provision identification of factors driving piped and non piped water demand is a necessary prerequisite for predicting how consumers will react to such price increases using cross sectional data of 1 800 households from southwest sri lanka we estimate water demand functions for piped and non piped households using appropriate econometric techniques the marginal price elasticity is estimated at 0 15 for households exclusively relying on piped water and at 0 37 for households using piped water but supplementing their supply with other water sources the time cost elasticity for households relying on non piped water only is estimated at 0 06 on average but varying across sources for both piped and non piped households we find evidence of substitutability between water from different sources we discuss the implications of these results in terms of pricing policy

portfolio theory and currency substitution one of the major reasons friedman 1953 and johnson 1972 advocated flexible exchange rates was to eliminate supply side monetary substitutability which can incapacitate domestic monetary policy however contributors to the currency substitution literature including miles 1978 girton and roper 1981 and mckinnon 1982 have argued that when economic agents hold both domestic and foreign monies variations in foreign interest rates or expected future exchange rates can make domestic money demand functions unstable as economic agents shift resources in response to changes in prospective relative returns as a result they and others have claimed that flexible exchange rates may not secure domestic monetary autonomy l the major purpose of this paper is to demonstrate the conditions under which foreign and domestic monies are substitutes in demand when economic agents have motives to hold both and to contrast the determinants of currency substitutability with those of the more general concept of asset substitutability importantly it is demonstrated that the usual portfolio theoretic justification for including opportunity cost variables such as foreign interest rates foreign inflation rates or expected

calculating the value of time spent collecting water some estimates for ukunda kenya abstract this article presents two procedures for estimating the value of time spent hauling water in developing countries both approaches are used to derive estimates of the value of time for households in ukunda kenya the results indicate that households in this village place a surprisingly high value on the time they spend collecting water a value approximately equivalent to the wage rate for unskilled labor these findings suggest that the economic benefits of improved water services in developing countries may be much greater than is commonly realized

the contribution of environmental amenities to low income housing a comparative study of bangkok and jakarta central and local governments and their creditors are increasingly interested in cost recovery for public services these strategies have two aims increasing revenues and making a better connection between benefits received and consumer bills this paper estimates a hedonic model for household level data in a rare contrast of slums in two asian mega cities to provide comparative information about how the poor value environmental amenities and basic infrastructure access the results suggest that slum housing prices do reflect differentials in public service access and that rough estimates of the value of access can be cheaply and usefully obtained for planning purposes

inequality leverage and crises the paper studies how high leverage and crises can arise as a result of changes in the income distribution empirically the periods 1920 1929 and 1983 2007 both exhibited a large increase in the income share of the rich a large increase in leverage for the remainder and an eventual financial and real crisis the paper presents a theoretical model where these features arise endogenously as a result of a shift in bargaining powers over incomes a financial crisis can reduce leverage if it is very large and not accompanied by a real contraction but restoration of the lower income group s bargaining power is more effective

monetary integration and currency substitution in the ems the case for a european monetary aggregate abstract this paper examines the phenomenon of cross currency substitution and the validity of monetary aggregation within the european monetary system using non parametric methods which exploit the relationship between intergroup substitution and separability the separability property is tested using the methodology developed by varian the nonparametric approach to demand analysis econometrica 50 945 974 1982 nonparametric tests of consumer behaviour review of economic studies 51 99 110 1983 and is violated in the case of most european countries suggesting that the hypothesis of zero currency substitution which forms the basis of national monetary aggregation should be rejected the results do however validate the use of monetary aggregates for the ems as a whole and i use a standard parametric demand for money approach to compare the performance of an ems divisia index with that of simple sum aggregates during the 1980s and 1990s

nash in nash tariff bargaining abstract we provide an equilibrium analysis of the efficiency properties of simultaneous bilateral tariff negotiations in a three country model of international trade we consider the setting in which discriminatory tariffs are allowed and we utilize the nash in nash solution concept of horn and wolinsky 1988 we allow for a general family of political economic country welfare functions and assess efficiency relative to these welfare functions we establish a sense in which the resulting tariffs are inefficient and too low so that excessive liberalization occurs from the perspective of the three countries

the rural non farm economy prospects for growth and poverty reduction summary policy makers have high expectations for the rural non farm economy rnfe given high income shares growing employment and frequently low capital requirements they see the rnfe as a potential pathway out of poverty for their rural poor yet available evidence suggests that pro poor rural non farm growth does not occur automatically for the poor to benefit from rural non farm growth policy makers must stimulate buoyant rural economies with robust non farm income growth not simply low productivity employment moreover the poor must gain access to growing market niches fluid labor markets provide one important bridge linking the rural poor to growing non farm opportunities

governance failure rethinking the institutional dimensions of urban water supply to poor households summary this paper applies a conceptual framework of governance failure to an analysis of the institutional dimensions of urban water supply provision to poor households focusing on the case of jakarta data from a household survey archives gis based mapping and interviews are used to document governance failures that create disincentives for utilities to connect poor households and for poor households to connect the paper concludes by suggesting that the debate over the relative merits of public and private provision has diverted attention from the pressing issue of governance reform and by raising the question of whether household provision of networked water supply by monopolistic providers whether public or private is universally feasible given the current water supply policy norms

currency substitution and the demand for money some evidence for canada recently the possibility that foreign and domestic currencies are substitutes has received considerable attention see 1 2 3 10 19 21 currency substitution has important implications for the working of flexible exchange rates if the degree of currency substitution is high small changes in the money supply would induce large changes in the exchange rate furthermore currency substitution would transmit the effect of monetary disturbances from one country to another indeed significant currency substitution would seriously undermine the ability of flexible exchange rates to provide monetary independence this paper examines the empirical importance of currency substitution in the framework of the demand function for money if currency substitution is important the expected change in the exchange rate should be a significant determinant of the demand for home currency in section 2 we undertake such a test for the canadian demand for money during the recent flexible exchange rate period there is considerable evidence that the forward exchange rate is a good measure of the expected exchange rate our own tests confirm these results for canadian data since 1970

revisiting the narrative approach of estimating tax multipliers we analyze whether popular measures of narrative tax shocks can be treated as relevant instruments for observable endogenous tax series of interest we find that narrative tax measures are only weakly correlated with cyclically adjusted tax revenues for the us and the uk using weak instrument robust inference narrative tax measures often yield insignificant estimates of tax multipliers we conclude that the literature currently understates the uncertainty associated with estimating the tax multiplier using the narrative approach this article is protected by copyright all rights reserved

did financial factors matter during the great recession abstract yes they mattered to reply to this question we assess the predictive content of macroeconomic and financial latent factors on the key variables industrial productivity short term interest rate and inflation during the great recession period 2007 2009 in the united states in this respect we propose a forecasting analysis using a factor augmented var model when we estimate the model with only financial factors we improve the predictions in the short and medium horizons meanwhile when we estimate the model with only macroeconomic factors we improve the forecasting performance in the longer horizon

dollarization in post hyperinflationary argentina abstract this paper analyzes the continued dollarization of the argentine economy which experienced a rapid decline in inflation following its hyperinflations of the 1980s first a measure of dollar currency circulating in argentina is developed thereby improving upon previous studies of dollarization and currency substitution that focused on dollar deposit holdings only second cointegration analysis of peso money demand in argentina finds a negative ratchet effect from inflation the reduction in peso money demand attributable to the ratchet mirrors the estimated stock of all dollar assets held domestically by argentine residents consistent with the hypothesis of irreversible dollarization

currency substitution and monetary autonomy the foreign demand for us demand deposits abstract this paper presents new evidence of currency substitution using the two step estimator of cointegrated systems developed by engle and granger 1987 we estimate and find cointegration among variables suggested by the money services model of currency substitution following engle et al 1989 we estimate an error correction model for each of five countries allowing isolation of long term from short term influences on the foreign demand for us demand deposits our results suggest that currency substitution is a potentially significant phenomenon influencing long term monetary policy independence

currency substitution and instability in the world dollar standard comment myron ross correctly points out in his comment that u s price inflation is better predicted by the american money supply mlus than by the broader ten country world money supply mlw over the whole statistical time series from 1960 to 1980 provided in mckinnon s 1982 article specifically he showed that american price inflation is more highly correlated with mlus lagged one or two years than with mlw similarly lagged however mckinnon s present tense assertion that in general growth in the world money supply is a better predictor of american price inflation than is american money growth applies only to the weak dollar standard of the 1970 s and early 1980 s as his preceding discussion intended but failed to indicate clearly only in this later period of volatile exchange rates and price level instability in the united states do alternative hard currencies such as the yen and deutsche mark become competitive as international stores of value and units of account hence international currency substitution associated with the ebb and flow of speculation against or for the dollar significantly destabilized the demand for mlus in the 1970 s and 1980 s and only in this later period might one expect the sum of these internationally substitutable monies ml to predict world and perhaps even american price inflation better than does mlus in contrast during the strong dollar standard of the 1950 s and 1960 s the dollar was unchallenged as international money exchange rates were by and large convincingly fixed speculation for or against the dollar was incapable of substantially altering u s interest rates or of directly affecting the demand for mlus because cyclical international influences did not then destabilize the demand for dollars mlus was by itself a fairly efficient predictor of american prices thus ross s statistical results for the period 1960 to 1980 show somewhat greater predictive strength in mlus compared to ml because the 1960 s data outweigh the dissimilar data of the 1970 s let us instead partition the sample of imf data around the year 1970 whence began the transition from fixed to fluctuating exchange rates and the maturation of alternative monetary systems in europe and japan after applying similar statistical correlation procedures to those used by ross we show a striking structural shift in the world s monetary system the explanatory power of mlw increases sharply as that of mlus declines moderately tan 1982 for the early period of 1960 to 1970 table 1 shows simple correlation coefficients between annual percentage changes in money supplies and changes in american and world wholesale price indices the mlus provides a good explanation of u s prices and of world prices one to two years hence whereas the broader definition of mlw in which mlus enters with a 50 percent weight does surprisingly poorly being insignificantly correlated with american or world prices apparently money growth in industrial countries other than the united states was not then an independent source of worldwide inflationary pressure during the strong dollar standard table 2 shows the same simple correlations between percentage changes in prices and money for the weak dollar standard of stanford university please note that a typographical error giving the last word in the original title as market appeared on the cover of the june 1982 issue of this review the title was correct in the table of contents and on the article

financial dollarization and systemic risks new empirical evidence abstract this paper explores the persistence of financial dollarization in a group of 79 economies with different levels of development our main hypothesis is that a high level of domestic debt combined with default risk explains this persistence even after a decline in inflation rates using the generalized method of moments gmm in a panel data analysis our results show that inflation risks caused by increasing probability of default account for financial dollarization more than inflation rate itself after the decrease in inflation rates the foreign currency denominated deposits remain large because of the high debt to gdp ratios particularly in speculative grade economies high public indebtedness leads to expectations of default dollarization is a rational response to the future inflation associated with investors expectations of default observed in highly indebted economies

links between nonfarm income and farm investment in african households adding the capital market perspective farm household surveys in the 1970s and 1980s showed that nonfarm activities provide an important share of household income contrasting with the conventional image of rural african households as deriving their food entitlement almost exclusively from the land e g matlon collier and lal low reardon et al haggblade hazell and brown much of the literature on nonfarm income has concentrated

forecasting the depression harvard versus yale was the depression forecastable after the crash how long should it have taken contempo rary forecasters to realize how severe the downturn was going to be these questions are addressed by studying the predictions of the harv ard economic service and yale s irving fisher during 1929 and the ear ly 1930s the data assembled by the harvard and yale forecasters tog ether with modern historical data are subjected to statistical analy sis to learn whether their verbal pronouncements were consistent with the data both the harvard and yale forecasters were systematically too optimistic yet nothing in the data suggests that the optimism w as unwarranted copyright 1988 by american economic association

evaluating the empirical evidence for currency substitution a case study of the demand for sterling in europe currency substitution has important implications for the cost of european monetary union if it is significant it will help to reduce costs of convergence to a single currency this paper informs the policy debate by testing for its existence on a consistent european database making use of cointegration methods the results demonstrate that in the two types of models tested there is no clear evidence of currency substitution in either the short or the long run and that therefore currency substitution between sterling and ec currencies cannot be relied upon as a mechanism or an aid to reduce the costs of monetary convergence copyright 1994 by royal economic society

possible adverse effects of increasing block water tariffs in developing countries ture in which a commodity is priced at a low initial rate up to a specified volume of use block then at a higher or several increasingly higher rates for additional blocks used the ordinary household municipal water bill in developing countries is often calculated on some sort of ibt structure and donor organizations and consultants continue to recommend this practice for town and city water systems the majority of world bank sponsored water tariff studies conducted since 1970 for example have recommended the use of increasing block water tariffs there are two commonly accepted justifications for using ibts the first based on a rationale of equity is that ibts should assist low income households and ensure an equitable allocation of the costs of water production and distribution the argument in this case is that low income households use less water than high income households because they have fewer water using appliances and are less likely to have large lawns and gardens an ibt results in higher marginal prices to the customer and thus higher average prices for higher income households the price of water in the initial block may be set very low usually at a subsidized rate to ensure that the poor are not discouraged from using the amount of water considered essential for human needs typically estimated at 25 50 liters per capita per day the price of water in the initial block is thus sometimes termed the lifeline rate the second justification for ibt structures is that the higher prices charged beyond the initial block discourage extravagant water use and promote water conservation both these justifications for ibts assume that each household has

uncertainty and the geography of the great recession we document the link between increased levels of economic and policy uncertainty and unemployment at the state level during the 2007 2009 recession the cross sectional variation in uncertainty robustly matches the distribution of employment outcomes during this period when we instrument for this cross sectional variation using preexisting institutions we find evidence for a causal role for uncertainty in increasing unemployment a simple model of hiring and firing under uncertainty rationalizes these results and the within state distribution of effects across industries occupations and individuals is consistent with this model s predictions together these results suggest that increased uncertainty contributed to the severity of the great recession

value chain clusters and aquaculture innovation in bangladesh abstract farmers adopting and implementing innovations such as new technologies and new products often require collaborative inter segment innovation by other actors in other segments of the value chain such as wholesalers implementing new product innovations such as supply of commercial fish feed and chemicals and buying and marketing non traditional fish species we tested whether the clustering and thus economies of agglomeration with implied lower transaction costs encourage and facilitate farmers to innovate that potential determinant of farmer choices has not been studied in agriculture or aquaculture or indeed the food sector we use a unique data set from our own primary survey of the aquaculture value chain in bangladesh including micro data for 1500 fish farm households and 20 districts 77 villages for meso level data we calculate an index to include both horizontal agglomeration and vertical interconnections among actors in the value chain we find being in an area with a high clustering index is associated with a higher probability of farmers using more modern inputs and growing non traditional commodity fish species controlling for farmers other characteristics as well as proximity to cities

overcoming successive bottlenecks the evolution of a potato cluster in china summary although the role of industrial policy in economic development is a frequent topic of debate in both the literature and the political arena most discussions focus on industrial policymaking at the national level using a case study of a potato cluster in china we show that industrial policymaking at the local level contributes greatly to economic development as well many of the industrial policies affecting the cluster including leveling land developing better varieties establishing a potato trade association lobbying for increasing freight car quotas and attracting processing firms were implemented at the local level highlighting the need for discussion of local industrial policymaking as a major determinant of cluster development as the case study demonstrates economic development is a continuous process with constantly evolving binding supply side and demand side constraints often after a local policy helps remove one binding constraint a new one emerges that in turn may require a new set of policies therefore the success of clusters depends upon local industrial policies that respond to emerging binding constraints at different stages of the cluster s development

time to change what to sow risk preferences and technology adoption decisions of cotton farmers in china this paper examines the role of individual risk attitudes in the decision to adopt a new form of agricultural biotechnology in china i conducted a survey and a field experiment to elicit the risk preferences of chinese farmers who faced the decision of whether to adopt genetically modified bt cotton a decade ago in my analysis i expand the measurement of risk preferences beyond expected utility theory to incorporate prospect theory i find that farmers who are more risk averse or more loss averse adopt bt cotton later farmers who overweight small probabilities adopt bt cotton earlier

currency substitution capital mobility and money demand abstract this paper re examines the currency substitution cs issue by specifying a general portfolio balance pb model where domestic residents demand for foreign money is distinguished from their demands for foreign non monetary assets the latter possibility which reflects international capital mobility as opposed to cs per se is already a key feature in the open economy macro literature the inclusion of foreign money leaves the usual asset demand functions unchanged in the pb model that ignores cs at least as far as the appropriate rate of return arguments and their signs are concerned although this suggests that cs is of limited importance in macro modelling it implication for the estimation of money demand functions is pursued an initial attempt is made to empirically isolate the separate efects of high capital mobility and currency substitution for canada germany the united kingdom and the united states the results while not conclusive due to high multicollinearity problems bring into question the empirical as well as the theoretical relevance of currency substitution

water for all how to combine public management with commercial practice for the benefit of the poor water is critical to improving the health and welfare of the expanding urban populations of the south unfortunately few cities in poor countries have managed to develop institutions able to supply the poor with water let alone take away the waste one city that has managed to do so is bogota colombia the results of this public company are impressive and have been achieved by adopting some elements of neo liberal economic thought and by maintaining independence from political pressure recently however the water company s operations and particularly its efficiency and pricing policy have come under attack from a new left of centre mayor the paper explores the legitimacy of some of the attacks and examines whether they constitute fair political debate or a means of undermining what by the standards of the south is an effective company

can informal water vendors deliver on the promise of a human right to water results from cochabamba bolivia we examine the role of informal water vendors in the urban poor s efforts to secure safe and affordable water in the squatter settlements of cochabamba bolivia using an economic justice framework we evaluate 1 how informal water markets operate 2 differences in client and vendor perceptions of distributive procedural and interactional in justice and 3 how cooperation among water vendors impedes or assists in achieving justice in water delivery the research includes a comparative institutional analysis of three key data sets long term participant observation in water scarce squatter settlements interviews with 12 water vendors and interviews with 41 clients from 23 squatter settlements we find that informal water vendors organize themselves to safeguard distributive justice e g fair pricing good water quality but clients are distressed by procedural and interactional injustices e g unreliable and inequitable service our research also shows that unionized vendors are more effective than non unionized vendors in creating and enforcing rules that advance distributive procedural and interactional justice we make concrete recommendations for improving justice in informal water markets including a larger role for unions and community consultation we conclude that despite challenges the informal economy may play an important role in advancing the human right to water

forecasting the recovery from the great recession is this time different abstract this paper asks whether the slow recovery of the us economy from the trough of the great recession was anticipated and identifies some of the factors that contributed to surprises in the course of the recovery we construct a narrative using news reports and government announcements to identify policy and financial shocks we then compare forecasts and forecast revisions of gdp to the narrative successive financial and fiscal shocks emanating from europe together with self inflicted wounds from the political stalemate over the us fiscal situation help explain the slowing of the pace of an already slow recovery

currency substitution and exchange rate instability the turkish case abstract in this paper we present evidence for the extent of currency substitution and its effects on exchange rate instability in turkey following the capital account liberalization in 1987 the private sector has responded to the failed stabilization efforts of successive governments by requesting higher real interest rates on government debt and by increasing its holdings of foreign exchange at the expense of domestic currency theoretical models of exchange rate determination indicate that exchange rate instability increases with the degree of currency substitution we use an exponential garch e garch model for exchange rate depreciation and find evidence in support of this hypothesis furthermore we test for the extent of currency substitution in determining short run dynamics of real money balances utilizing the expected depreciation series obtained from the e garch model

the influence of recession and income strata on consumer demand for protein sources though meat products are considered the primary sources of protein in the u s people consume a variety of protein sources including meat fish eggs dairy products and beans this study expands

new keynesian versus old keynesian government spending multipliers renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy because of modelling uncertainty it is essential that policy evaluations be robust to alternative assumptions we find that models currently being used in practice to evaluate fiscal policy stimulus proposals are not robust government spending multipliers in an alternative empirically estimated and widely cited new keynesian model are much smaller than in these old keynesian models the estimated stimulus is extremely small with gdp and employment effects only one sixth as large and with private sector employment impacts likely to be even smaller we investigate the sensitivity of our findings with regard to the response of monetary policy the zero bound on nominal interest rates and the inclusion of an empirically relevant degree of rule of thumb behaviour in the new keynesian model in addition we relate our findings using estimated structural macroeconomic models to the recent literature using reduced form regression techniques

exchange rate volatility and currency substitution abstract this paper employs a conventional small open economy portfolio balance macromodel to unveil new implications of currency substitution increased substitutability between foreign and domestic currency is found to affect the response of the exchange rate of both asset market and commodity market shocks in particular the extent of exchange rate overshooting and undershooting depends on the degree of currency substitution

endogenous deposit dollarization this paper explores sources of deposit dollarization unrelated to standard moral hazard arguments we argue that the equal treatment of peso and dollar claims on a bank in the event of default can induce banks to attract dollar deposits above the socially desirable level the distortion arises because dollar depositors are the only source of default risk in the model but they share the burden of the default with peso depositors as interest rates cannot be set contingent to the unobserved level of deposit dollarization the incentive to dollarize is reinforced by common banking system safety nets such as deposit and bank insurance our findings suggest that regulators in bi currency economies should depart from the currency blind benchmark and instead distinguish across currencies in a way that prevents undesirable currency mismatches even in the absence of moral hazard related to the relaxation of market discipline