a stylized model of home buyers and bankers behaviours during the 2007 2009 us subprime mortgage crisis a predatory perspective abstractwe examine the behaviour of market agents during the years leading to the 2008 us subprime mortgage crisis using a stylized capital asset pricing model model in our study an average investor eager to make money by flipping houses meets a banker who offers him subprime mortgage deals we refer to recent research that shows the mechanics of the psychological and behavioural components of these two market agents in particular much in line with the famous stanford experiment it is assumed that investors adopt a predator or a prey position our analysis shows that given a historical tendency towards financial predatory acts on the part of market agents including buyers government regulations should be adapted and strengthened to face this dooming reality

women as policy makers evidence from a randomized policy experiment in india this paper uses political reservations for women in india to study the impact of women s leadership on policy decisions since the mid 1990 s one third of village council head positions in india have been randomly reserved for a woman in these councils only women could be elected to the position of head village councils are responsible for the provision of many local public goods in rural areas using a dataset we collected on 265 village councils in west bengal and rajasthan we compare the type of public goods provided in reserved and unreserved village councils we show that the reservation of a council seat affects the types of public goods provided specifically leaders invest more in infrastructure that is directly relevant to the needs of their own genders

bubbles crises and policy in many recent cases financial liberalization has led to a bubble in asset prices the bursting of the bubble results in a banking crisis and recession it is suggested such bubbles are caused by an interaction of the risk shifting problem arising from agency relationships in intermediaries and uncertainty concerning the expansion of credit two important policy objectives are identified the first is the prevention of bubbles in asset prices the second is minimizing the impact of spillovers on to the real economy during post bubble banking crises the different policy approaches taken in norway and japan are compared copyright 1999 by oxford university press

why political reservations many countries are amending their political systems to set aside positions to groups such as women and racial or religious minorities that are perceived as being disadvantaged using evidence from india this article assesses the case for these reservations jel h4 o15 several countries have introduced procedures either explicit quotas or forms of gerrymandering to ensure political representation of disadvantaged groups such as women or ethnic minorities in 2001 quotas for women in parliaments were in force in more than 30 countries in india seats are reserved for historically disadvantaged groups scheduled castes or sc and scheduled tribes or st in federal or state legislative assemblies and for both historically disadvantaged groups and women at all levels of the panchayat system the system of decentralized decision making on the basis of evidence accumulated about the indian experience this paper reviews the case for reservation

centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

does affirmative action reduce productivity a case study of the indian railways summary our objective is to shed empirical light on a claim often made by critics of affirmative action policies that increasing the representation of members of marginalized communities in jobs comes at the cost of reduced productive efficiency we undertake a systematic empirical analysis of productivity in the indian railways the world s largest employer subject to affirmative action in order to assess whether higher proportions of affirmative action beneficiaries in employment have reduced efficiency in the railway system we find no evidence for such an effect indeed some of our results suggest that the opposite is true

endogenous federal grants and crowd out of state government spending theory and evidence from the federal highway aid program contrary to simple theoretical predictions existing evidence suggests that federal grants do not crowd out state government spending a legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and preferences for public goods this correlation has likely biased existing work against measuring crowd out to correct for such endogeneity the model motivates instruments based on the political power of state congressional delegations exploiting this exogenous variation in grants the instrumental variables estimator reports crowd out that is statistically and economically significant this endogeneity may explain the flypaper effect a nonequivalence between grant receipts and private income jel d70 h40 h77

multiple and pairwise non nested tests of the influence of taxes on money demand the minimal computational requirements of the linear embedding techniques initiated by davidson and mackinnon 1981 accommodate multiple and binary tests of autoregressive non nested regression models with different dependent variables the small sample adjustments of fisher and mcaleer 1981 effectively reduce the size of the p tests for our models our application to transactions demand for money models supports the holmes and smyth 1972 hypothesis that pre tax variables are preferred to gnp in m1 money equations

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

the economics of predation what drives pricing when there is learning by doing predatory pricing a deliberate strategy of pricing aggressively in order to eliminate competitors is one of the more contentious areas of antitrust policy and its existence and efficacy are widely debated the purpose of this paper is to formally characterize predatory pricing in a modern industry dynamics framework that endogenizes competitive advantage and industry structure our framework encompasses important phenomena such as learning by doing network effects switching costs dynamic demand and certain types of adjustment costs due to its prominent role in legal cases involving alleged predation we examine learning by doing in more detail we first show that predation like behavior arises routinely in our learning by doing model equilibria involving predation like behavior typically coexist with equilibria involving much less aggressive pricing to disentangle predatory pricing from mere competition for efficiency on a learning curve we next decompose the equilibrium pricing condition and develop alternative characterizations of a firm s predatory pricing incentives we finally measure the impact of these incentives on industry structure conduct and performance we show that forcing a firm to ignore the predatory incentives in setting its price can have a large impact and that this impact stems from eliminating equilibria with predation like behavior along with the predation like behavior however a fair amount of competition for the market is eliminated

can democracy induce development a constitutional perspective we examine the constitutional design required for democratic societies to overcome poverty traps restricting agenda setting by ensuring subsistence levels of consumption and applying simple majority voting as a decision rule will not enable a society to overcome poverty we show that a combination of suitable constitutional rules can however overcome poverty and induce economic well being besides majority voting these rules include rotating agenda setting agenda repetition and tax protection rules we thus highlight the crucial role of democratic institutions for economic development

did women s suffrage change the size and scope of government this paper examines the growth of government during this century as a result of giving women the right to vote using cross sectional time series data for 1870 1940 we examine state government expenditures and revenue as well as voting by u s house and senate state delegations and the passage of a wide range of different state laws suffrage coincided with immediate increases in state government expenditures and revenue and more liberal voting patterns for federal representatives and these effects continued growing over time as more women took advantage of the franchise contrary to many recent suggestions the gender gap is not something that has arisen since the 1970s and it helps explain why american government started growing when it did

a pseudo bayesian model in financial decision making with implications to market volatility under and overreaction abstract this paper develops a model of weight assignments using a pseudo bayesian approach that reflects investors behavioral biases in this parsimonious model of investor sentiment weights induced by investors conservative and representative heuristics are assigned to observations of the earning shocks of stock prices such weight assignments enable us to provide a quantitative link between some market anomalies and investors behavioral biases the seriousness of an anomaly can be quantitatively assessed by investigating into its dependency on weights new results other than the short run underreaction and long run overreaction can be derived and new hypotheses can be formed

risk and insurance in a rural credit market an empirical investigation in northern nigeria credit contracts play a direct role in pooling risk between households in northern nigeria repayments owed by borrowers depend on realizations of random shocks by both borrowers and lenders the paper develops two models of state contingent loans the first is a competitive equilibrium in perfectly enforceable contracts the second permits imperfect information and equilibrium default estimates of both models indicate that quantitatively important state contingent payments are embedded in these loan transactions but that a fully efficient risk pooling equilibrium is not achieved the research is based on a year long survey in zaria nigeria conducted by the author

does political reservation for minorities affect child labor evidence from india summary this paper examines the impact of state level political reservation for two minority groups scheduled castes and scheduled tribes on the incidence of child labor in india we estimate the effect of political reservation on the incidence of child labor by exploiting the state variation in the share of seats reserved for the two minority groups in state legislative assemblies mandated by the constitution of india using data from state and household level surveys on fifteen major indian states we find that at the household level schedule tribe reservation decreases the incidence of child labor while scheduled caste reservation increases the total number of children working we examine these impacts on the general as well as the disadvantaged group population independently and across the gender of children we also explore potential explanations for the differential impact of sc and st political reservation including geographic isolation caste fragmentation support for the congress party and decentralization of power our results survive a variety of robustness checks

stepping into formal politics women s engagement in formal political processes in irrigation in rural india summary gender quotas decentralization of irrigation management and reliance on mgnrega for labor provision challenge the traditional patriarchal canal management system by institutionalizing women as formal decision makers and members of the irrigation labor force in northern india based on a survey of 592 women in rural himachal pradesh this paper quantitatively analyses how these policies affect women s engagement in formal political processes results indicate that factors from the private and individual domains influence female participation in formal political processes most importantly india s gender inclusive policies provide women with the opportunity to legitimately engage in formal political processes governing resource management

the learning curve predation antitrust and welfare an economic definition of predation is applied to a dynamic model of duopoly competition with learning curves it is shown that rational predation occurs in equilibrium although below cost pricing is neither a necessary nor a sufficient indicator of predation a conceptual framework for antitrust analysis of predation shows that a prohibition of predation might help or harm consumer welfare depending on details of market structure although the informational requirements of fashioning an effective legal rule against harmful predation are formidable

local politics political institutions and public resource allocation abstractthis article examines how political institutions and local power structures interact with and influence local public resource allocation in the indian state of karnataka we use data from 80 village councils and 225 villages to examine how this local political economy influences the allocation of public resources our empirical strategy exploits a unique policy of political representation in karnataka that mandates representation or reserves seats in local governments for both historically disadvantaged groups and politically dominant groups these policy induced differences in the caste composition of these village councils therefore allow us to examine whether and how the form of such local politics distorts local public resource allocation representation in village councils is a nonlinear function of the demographic shares of these groups controlling for the latter allows us to identify the role of local power structures through the effect of social identities and the associated relative ba

a cross country analysis of electricity market reforms potential contribution of new institutional economics abstract the paper explores whether the question of why some countries are able to implement more extensive reforms is closely related to the question of why some countries have better institutions than others we analyze this question by using an empirical econometric model based on poisson regression with cross section data covering 51 states in the us 13 provinces in canada and 51 other countries in the course of the study we check the validity of three important arguments of new institutional economics nie for the power market liberalization process the first argument is the path dependency to test its impact on the reform progress we try to explain whether the background of the chairperson of the regulatory agency when reforms started or that of the governor minister responsible for energy policy at that time has an impact on the subsequent reform progress the second argument is the impact of democracy as an institution on the reform progress we look at the effect of two important indicators of democracy i e civil liberties and political rights on the reform progress the final argument of nie is about transaction costs we concentrate on the level of corruption in a country as one of the key factors that determine transaction costs and try to explore its impact on the reforms the results show that the backgrounds of the chairperson and the minister governor the level of democracy and corruption in a country are significantly correlated with how far reforms have gone in that country the negative relationship between reform progress and civil liberties may indicate that reforms may be limited in democratic countries with strong civil society institutions such as trade unions or other organized structures in the society that may consider reforms as harmful to their self interest

the politics of public good provision evidence from indian local governments this paper uses village and household survey data from south india to examine how political geography and politician identity impacts on public good provision we provide evidence that the nature of this relationship varies by type of public good for high spillover public goods residential proximity to elected representative matters in contrast for low spillover public goods sharing the politician s group identity is what matters jel d78 h40

ethnic diversity social sanctions and public goods in kenya abstract this paper examines ethnic diversity and local public goods in rural western kenya the identification strategy relies on the stable historically determined patterns of ethnic land settlement ethnic diversity is associated with lower primary school funding and worse school facilities and there is suggestive evidence that it leads to poor water well maintenance the theoretical model illustrates how inability to impose social sanctions in diverse communities leads to collective action failures and we find that school committees in diverse areas do impose fewer sanctions on defaulting parents we relate these results to the literature on social capital and economic development and discuss implications for decentralization in less developed countries

are emily and greg more employable than lakisha and jamal a field experiment on labor market discrimination we study race in the labor market by sending fictitious resumes to help wanted ads in boston and chicago newspapers to manipulate perceived race resumes are randomly assigned african american or white sounding names white names receive 50 percent more callbacks for interviews callbacks are also more responsive to resume quality for white names than for african american ones the racial gap is uniform across occupation industry and employer size we also find little evidence that employers are inferring social class from the names differential treatment by race still appears to still be prominent in the u s labor market jel j71 j64

public good provision in indian rural areas the returns to collective action by microfinance groups self help groups shgs are the most common form of microfinance in india the authors provide evidence that shgs composed of women only undertake collective actions for the provision of public goods within village communities using a theoretical model this paper shows that an elected official whose aim is to maximize re election chances exerts higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods this effect occurs although government and private contributions are assumed to be substitutes in the technology of providing public goods using first hand data on shgs in india the paper tests the prediction of the model and shows that in response to collective action by shgs local authorities tackle a larger variety of public issues and are more likely to tackle issues of interest to shgs the findings highlight how the social behavior of shgs can influence the governance of rural indian communities

can the west save africa in the new millennium the western aid effort toward africa has surged due to writ ings by well known economists a celebrity mass advocacy campaign and decisions by western leaders to make africa a major foreign policy priority this survey contrasts the predominant transformational approach west comprehensively saves africa to occasional swings to a marginal approach west takes one small step at a time to help individual africans evaluation of one step at a time initiatives is generally easier than that of transformational ones either through controlled experiments although these have been oversold or simple case studies where it is easier to attribute outcomes to actions we see two themes emerge from the literature survey 1 escalation as each successive western transformational effort has yielded disappointing results as judged at least by stylized facts since again the econometrics are shaky the response has been to try an even more ambitious effort and 2 the cycle of ideas rather than a progressive testing and discarding of failed ideas we see a cycle in aid ideas in many areas in africa with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the transfor mational approach in contrast the marginal approach has had some successes in improving the well being of individual africans such as the dramatic fall in mortality

is the 2007 u s sub prime financial crisis so different an international historical comparison the first major financial crisis of the twentyfirst century involves esoteric instruments unaware regulators and skittish investors it also follows a well trodden path laid down by centuries of financial folly is the special prob lem of sub prime mortgages really different our examination of the longer historical record which is part of a larger effort on cur rency and debt crises finds stunning qualitative and quantitative parallels across a number of standard financial crisis indicators to name a few the run up in us equity and housing prices that graciela l kaminsky and reinhart 1999 find to be the best leading indicators of crisis in countries experiencing large capital inflows closely tracks the average of the previous 18 post world war ii banking crises in industrial countries so too does the inverted v shape of real growth in the years prior to the crisis despite widespread concern about the effects on national debt of the tax cuts of the early 2000s the run up in us public debt is actually some what below the average of other crisis episodes in contrast the pattern of us current account deficits is markedly worse at this juncture the book is still open on how the current dislocations in the united states will play out the precedent found in the aftermath of other episodes suggests that the strains can be quite severe depending especially on the initial degree of trauma to the financial system and to some extent the policy response the average drop in real per capita output growth is over 2 percent and it typically takes two years to return to trend for the five most catastrophic cases which include episodes in finland japan

can mandated political representation increase policy influence for disadvantaged minorities theory and evidence from india accountable governments often fail to reflect the interests of disadvantaged minorities this paper exploits the institutional features of political reservation as practiced in indian states to examine the role of mandated political representation in providing disadvantaged groups influence over policy making ifind that political reservation has increased transfers to groups which benefit from the mandate this finding also suggests that complete policy commitment may be absent in democracies as is found in this case jel d72 d78 hl 1 h50

household debt and income inequality 1963 2003 i construct an economy with heterogeneous agents that mimics the time series behavior of the earnings distribution in the united states from 1963 to 2003 agents face aggregate and idiosyncratic shocks and accumulate real and financial assets i estimate the shocks that drive the model using data on income inequality aggregate income and measures of financial liberalization i show how the model economy can replicate two empirical facts the trend and cyclical behavior of household debt and the diverging patterns in consumption and wealth inequality over time while business cycle fluctuations can account for the short run changes in household debt its prolonged rise of the 1980s and the 1990s can be quantitatively explained only by the concurrent increase in income inequality

welfare effects of criminal politicians a discontinuity based approach abstract this paper uses unique data on the criminal records of indian bureaucrats to examine the relationship between politicians criminality and consumption crime and corruption the identification relies on a regression discontinuity design by which individuals living in districts where a criminal politician was barely elected are compared with individuals living in districts where a criminal politician barely lost the results show that criminal politicians decrease consumption by vulnerable sections of society the monthly per capita expenditure of scheduled castes scheduled tribes or other backward classes decreases by 19 percent this paper suggests that the effect of criminal politicians on criminality and corruption may explain this result

sustainable stakeholder capitalism a moral vision of responsible global financial risk management the author identifies the major micro meso and macro level financial risk shifting factors that contributed to the great global recession and how the absence of a compelling moral vision of responsible financial risk management perpetuated the economic crisis and undermined the recovery by blind reliance upon insufficiently accountable bailouts the author offers a new theoretical model of sustainable stakeholder capitalism by exercising moral imagination which inclusively and moderately balances four multi level factors types of capitalism moral theories human nature drives and credit risk profiles finally the author recommends micro meso and macro level practical reforms to prevent a recurrence of the current economic freefall to re create systemic global financial institution integrity and to promote responsible risk management for sustainable global prosperity for current and future generations

low level versus high level equilibrium in public utility services abstract heterogeneity of public utility services is common in developing countries in a high level equilibrium the quality of utility services is high consumer willingness to pay for services is high the utility is well funded and staff well paid in order to induce high quality of performance in a low level equilibrium the opposite is the case which alternative occurs depends on both the quality of utility management and public perceptions about service quality if a utility administration has the potential to offer high quality service and the public is aware of this high quality equilibrium also requires the public s service payments to be high enough to fund the needed pay incentives for the utility staff when the public lacks knowledge about the utility administration s quality the public s initial beliefs about the utility administration s quality will also influence their willingness to pay sufficiently for a high quality equilibrium to be realized this paper shows that with low confidence only a low level equilibrium may exist while with higher initial confidence a high level equilibrium becomes possible intermediate in between the low and high level outcomes can also occur in early periods with high level outcomes later on

don t touch my road evidence from india on affirmative action and everyday discrimination summary this article investigates whether affirmative action in the form of electoral quotas affects group based discrimination the redistributive effect of quotas is subject to debate and their ultimate target is discrimination to identify the effect of electoral quotas i take advantage of their rotation across space and over time in india to proxy discrimination i use a measure of caste based exclusion from a public infrastructure namely streets in 2006 44 5 household members of the marginalized castes labeled scheduled castes sc still suffered from caste based exclusions i document that ongoing sc quotas reduce the likelihood of caste based exclusion for members of the scs by about one fifth the results also imply that the effect is not persistent it disappears with the end of the sc quota from a policy maker s perspective these results are mixed since electoral quotas do affect everyday discrimination even if the effect does not last these results are consistent with a temporary change in the behavior of members of the dominant castes after a one shot electoral quota these results are inconsistent with either a change in the stereotypes held by members of the dominant castes or a change in the aspirations of members of the lower castes

does political competition lessen ethnic discrimination evidence from sri lanka abstract the impact of political competition on ethnic discrimination remains largely unexplored to address this gap this paper explores the relationship between the level of political competition and the probability of receiving government transfers among ethnic minorities in sri lanka in the run up to the national elections of 2000 the paper shows that making politicians dependent on the votes of members of ethnic groups other their own can encourage moderation in discriminatory practices towards ethnic minorities specifically we find that political competition positively influenced the distribution of government food stamps among sri lankan tamils who otherwise are less likely to receive food stamps relative to the sinhalese majority the negative impact of political competition on discrimination is higher when minorities form part of swing constituencies than when they form part of the base support for political parties lessons learnt here suggest that having built in incentives in the design of the electoral process for intergroup bargaining and cooperation in countries with ethnically heterogeneous societies can be an effective restraint on ethnic discrimination this is consistent with other research that considers political institutions to be a key lever for making ethnically divided societies more inclusive

the spillover effects of affirmative action on competitiveness and unethical behavior we conduct an artefactual field experiment to examine various spillover effects of affirmative action policies in the context of castes in india we test a if individuals who enter tournaments in the presence of affirmative action policies remain competitive after the policy has been removed and b whether having been exposed to the policy generates unethical behavior and spite against subjects from the category who has benefited from the policy we find that these policies substantially increase the confidence and the competitiveness of the backward caste members however we find no spillover effect on confidence and competitiveness once affirmative action is withdrawn any gain in competitiveness due to the policy is then entirely wiped out furthermore the strong existing bias of the dominant category against the backward category is not significantly aggravated by affirmative action except when individuals learn that they have lost the previous competition

rational contagion and the globalization of securities markets this paper argues that globalization may promote contagion by weakening incentives for gathering costly information and by strengthening incentives for imitating arbitrary market portfolios in the presence of short selling constraints the gain of gathering information at a fixed cost may diminish as markets grow moreover if a portfolio manager s marginal cost for yielding below market returns exceeds the marginal gain for above market returns there is a range of optimal portfolios in which all investors imitate arbitrary market portfolios and this range widens as the market grows numerical simulations suggest that these frictions can have significant implications for capital flows in emerging markets

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

heteroscedasticity of deviations in market bubble moments how the goods and bads lead to the ugly abstractwe conjecture that market bubbles may be the results of the interplay of goods and bads toxic products which develop through three interlocking moments herding swarming and stampeding with deviations marked by heteroscedasticity we use our stylized model of financial predation the consolidated model of financial predation and data we have accumulated through in the field eight year research and the study of 30 years of u s market history in order to explore the foundations of market crises we find that blind trust or the positivity bias and of the fear to miss out on an opportunity to enter exit a market impacts the investors decisions to invest or retract we show how markets are driven towards a make or break predatory dynamic that creates winners and losers due in part to weak regulations and identify a constant k that permeates market behaviours

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

can gender quotas break down negative stereotypes evidence from changes in electoral rules abstract in this paper we analyze the effect of gender quotas on women s involvement in political activity by using a rich data set providing information on all italian local administrators who were elected from 1985 to 2007 gender quotas were introduced by law in italy in 1993 and were in force until 1995 because of the short period covered by the reform some municipalities never voted under the gender quota regime this allows us to identify a treatment and a control group and to estimate the effects of gender quotas by using a difference in differences estimation strategy our estimates show that women s representation in politics after the reform increased significantly more in municipalities that were affected by the reform than in municipalities that were not affected this result also holds true if we exclude from our analysis elections which took place during the period in which the reform was in force moreover the higher women s representation in gender quota municipalities is not related to the advantages that women who were elected during the reform have obtained from incumbency and does not seem to be driven by differences in temporal trends between southern and northern regions these findings suggest that affirmative actions can be of use in breaking down stereotypes against women

jealousy and equilibrium overconsumption the idea that the happiness of an individual depends upon the consumption of others is widely viewed as an important feature of our shared social existence recent research in finance has used this idea through consumption externalities to explore asset pricing anomalies consumption externalities potentially break the link between pareto optimality and competitive equilibria and open the door for beneficial government intervention e g lars ljungqvist and harald uhlig 2000 in this paper we delineate two effects that a consumption externality may have an increase in aggregate consumption may a raise the marginal utility of individual consumption relative to leisure and or b lower an individual s utility level we refer to a as keeping up with the joneses henceforth kuj following jordi gali 1994 and we refer to b as jealousy jealousy is a distinct concept from kuj under kuj an individual derives greater utility from additional own consumption relative to leisure when others consume more at the same time higher per capita consumption holding fixed individual consumption can trigger either jealousy so that individual utility falls or admiration so that individual utility rises in section i of this paper we show that jealousy implies that the laissez faire equilibrium consumption level is greater than the optimal level whether preferences exhibit kuj is not necessary for this main result intuitively in the presence of jealousy consumption is similar to pollution overpollution exists because individuals do not take into account the cost of polluting on others not because an increase in economywide pollution makes the return to individual polluting higher similarly overconsumption exists because individuals do not take into account the negative effect of own consumption on jealous others things go in the opposite direction when individuals are admiring in section ii we consider a functional form that encompasses several existing models we show that jealousy determines the optimal tax to correct overconsumption and that kuj is mainly important for asset pricing

choosing among multiple nonlinear non nested regression models with different dependent variables abstract the linearly embedded regression model approach of davidson and mackinnon 1981 is used to construct joint tests of seven non nested autoregressive money demand equations with different regressands the results support the holmes smyth 1972 hypothesis that taxes affect money demand

predator or prey parasitic enterprises in economic development abstract in many developing and transition economies mafia like activities are rampant extortion and other forms of predation lower profitability in private businesses and distort investment incentives incorporated in a model of industrialization bimodal club convergence may result economies may get stuck in a predators club characterized by a vicious cycle of poverty and predation societies with a low flow of new entrepreneurs are especially vulnerable to predation and never get out of this club poor societies with a high flow of new entrepreneurs however may grow out of the trap and join the rich producers club

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

the cost of segregation in social networks abstract this paper investigates the welfare effect of income redistribution in the private provision of public goods on networks we first show that the welfare effect of income redistribution is determined by bonacich centrality then we develop an index based on the network structure of interactions which roughly speaking measures the welfare effect of income redistribution confined to a component of contributors the proposed index vanishes when applied to large components of contributors that display special segregated interactions which suggests an asymptotic neutrality of redistributive policies

democracy and demography societal effects of fertility limits on local leaders we investigate whether restricting elected leadership positions to candidates with desirable characteristics leads to society wide adoption of those characteristics in a low income democracy with high political participation exploiting quasi experimental variation in fertility limits imposed on village council members in india to curb population growth we find that rural couples significantly decreased fertility in response socially disadvantaged families exhibit the greatest reduction in marginal fertility immediately following the passage of these limits but the decline in the long run stock of children is more evenly spread across socioeconomic groups the limits however also increased the already male biased sex ratio at birth in castes with strong son preference therefore while restricting access to elected office may aid in achieving social objectives it can also worsen inequality

are we witnessing a paradigm shift in the analysis of political competition this presidential address assesses the crisis of the downsian model of political competition in light of the mounting evidence on policy divergence and evaluates the possibility that the new theories of politicians quality and political selection provide an alternative theoretical conceptualization of political competition based on a critical review of the literature and on the author s works on content analysis of policy speeches income redistribution politicians quality and political legislation cycles this address concludes that multidimensional downsian models of political competition are adequate to explain policy divergence and points out the serious theoretical and empirical problems that models of political selection have to solve

seeking the local state gender caste and the pursuit of public services in post tsunami india summary how do ordinary citizens access the state in the world s largest democracy this paper examines a critical case from india exploring the channels formal and informal through which residents of two tsunami affected villages pursued public services following the 2004 disaster external shocks such as the proliferation of aid and ngos created moments in which individuals interacted differently with public agencies different village level groups attempted to access state resources through distinct sets of intermediaries marginalized groups women and caste minorities appeared most willing and likely to utilize formal government channels while men from the locally dominant caste turned to informal non state channels

the impact of employment quotas on the economic lives of disadvantaged minorities in india abstract india has the world s biggest and arguably most aggressive employment based affirmative action policy for minorities this paper exploits the institutional features of a federally mandated employment quota policy to examine its causal impact on the economic lives of the two distinct minority groups scheduled castes and scheduled tribes my main finding is that a 1 percentage point increase in the employment quota for scheduled castes increases the likelihood of obtaining a salaried job by 0 6 percentage points for male scheduled caste members residing in the rural sector the employment quota policy has no impact for scheduled tribes contrary to popular notion i do not find evidence of elite capture among the scheduled castes the impact is concentrated among members who have completed less than secondary education consistent with the employment results i find that the policy improved the well being of scheduled castes members in rural areas who have completed less than secondary education finally the impact of the employment quota policy varies by state characteristics

mandated political representation and redistribution mandated political representation for minorities involves earmarking certain electoral districts where only minority group candidates are permitted to contest such quotas have been implemented in india for certain social groups and for women although gender quotas in the legislature are popular in several other countries this paper builds a political economy model to analyze the effect of such affirmative action on redistribution in equilibrium our model predicts that in situations where the minority group is economically disadvantaged and where voters favor candidates from their own group such a quota actually reduces transfers to poorer groups moreover redistribution in reserved districts leads to a rise in within minority group inequality

why have women become left wing the political gender gap and the decline in marriage the last three decades have witnessed the rise of a pohtical gender gap in the united states wherein more women than men favor the democratic party we trace this development to the decline in marriage which we posit has made men richer and women poorer data for the united states support this argument first there is a strong positive correlation between state divorce prevalence and the political gender gap higher divorce prevalence reduces support for the democrats among men but not women second longitudinal data show that following marriage divorce women are less more likely to support the democratic party