an economic theory of self control the concept of self control is incorporated in a theory of individual intertemporal choice by modeling the individual as an organization the individual at a point in time is assumed to be both a farsighted planner and a myopic doer the resulting conflict is seen to be fundamentally similar to the agency conflict between the owners and managers of a firm both individuals and firms use the same techniques to mitigate the problems which the conflicts create this paper stresses the implications of this agency model and discusses as applications the effect of pensions on saving saving and the timing of income flows and individual discount rates

a search theoretic model of the retail market for illicit drugs a search theoretic model of the retail market for illegal drugs is developed trade occurs in bilateral potentially long lived matches between sellers and buyers buyers incur search costs when experimenting with a new seller moral hazard is present because buyers learn purity only after a trade is made this model is consistent with some new stylized facts about the drugs market and it is informative for policy design the effectiveness of different enforcement strategies is evaluated including some novel ones that leverage the moral hazard present in the market copyright oxford university press

the metamorphosis of development economics abstract the scientific paradigm of development economics is not dead nor is it declining in importance instead it has desynthesized into more than 30 analytical and specialized subparadigms which deal with the complex economic phenomena in ldcs the great number of sub disciplines of development economics is a verification of the dynamic evolution of the discipline and shows its trend towards increased specialization which seems to be the true index of the scientific progress of the subject for those who complain that the current output of new development theories is smaller w a lewis we remind them that development economics is a discipline which has more of a praxeological concrete orientation than a theoretical abstract one it seems that the world today needs more the exercise of development praxeology by the activist than the abstract theorizing of the purists however the study and empirical research of development phenomena in the context of the 30 or more specialized sub disciplines offers an opportunity for improving the quality of our knowledge on these phenomena by the recurrent validation and consolidation of development theories

a positive effect of human capital on growth abstract recent studies have found that economic growth appears to be unrelated to increases in educational attainment in this note i show that there is a correlation in one dataset but it is typically hidden by unrepresentative observations

the rule of law and economic growth where are we summary it is widely assumed that the rule of law is essential for economic growth however the rule of law is clearly a multidimensional concept encompassing a variety of discrete components from security of person and property rights to checks on government and control of corruption we review the theory underlying these different causal mechanisms linking the rule of law to economic growth and provide an introduction to some outstanding measurement issues we find that the correlation among different components of the rule of law concept are not tight among developing countries and that some inferences about the effects of property rights protection may not be warranted

accounting for underutilization of trade preference programs the us generalized system of preferences the us generalized system of preferences gsp provides duty free market access to developing countries yet despite these preferences about 40 of imports qualifying for gsp enter the us without claiming the benefits this paper documents variations in gsp utilization rates and explains their determinants with a special emphasis on the production structure of beneficiary countries as captured by local content the findings suggest that higher local content shares in output lead to higher utilization rates in addition the utilization rate rises with the preference margin size of exports and regional cumulation in general and declines with degree ofprocessing resume expliquer la sous utilisation des programmes de preferences commerciales le systeme generalise de preferences des etats unis le systeme generalise de preferences sgp donne acces sans droits de douane au marche americain pour des pays en developpement mais malgre ce traitement de faveur a peu pres 40 des importations qui se qualifieraient entrent aux etats unis sans reclamer ces avantages ce memoire documente les variations dans le taux d utilisation du sgp et les facteurs qui peuvent expliquer ce phenomene en mettant l accent sur la structure de production des pays beneficiaires telle que saisie par le contenu local les resultats suggerent qu une portion elevee de contenu local dans le produit entraine un plus haut taux d utilisation du sgp de plus le taux d utilisation s accroit avec la marge de preference la taille des exportations et la cumulation d autres arrangements regionaux et diminue a proportion que le degre de transformation s accroit

environmental and ecological economics in the 21st century an age adjusted citation analysis of the influential articles journals authors and institutions we investigate the influence of articles authors journals and institutions in the field of environmental and ecological economics we depart from studies that investigated the literature until 2001 and include a time period that has witnessed an enormous increase of importance in the field we adjust for the age effect given the huge impact of the year of an article s publication on its influence and we show that this adjustment does make a substantial difference especially for disaggregated units of analysis with diverse age characteristics such as articles or authors we analyse 6597 studies on environmental and ecological economics published between 2000 and 2009 we provide rankings of the influential articles authors journals and institutions and find that ecological economics energy economics and the journal of environmental economics and management have the most influential articles they publish very influential authors and their articles are cited most the university of maryland resources for the future the university of east anglia and the world bank appear to be the most influential institutions in the field of environmental and ecological economics

exporting europe s trade policy there are three well known observations about the current regional trade policy of europe the first one is the central role played by the european union in the worldwide spreading of regional agreements the second is the new policy of signing bilateral deep regional trade agreements the third is the growing demand for harmonisation of international and domestic trade regulations we show that the combination of these three trends results in europe increasingly weighing on the policy decisions of its trade partners in particular with regard to their trade policies the european hegemonic influence which can be viewed as europe exporting its policy models is extending to all partners in preferential trade agreements not only the accession candidates it has two main broad manifestations a prescriptive approach to push bilateral partners into regional agreements among themselves and a tendency to diffuse european rules in its bilateral agreements with its partners we review the various provisions of the agreements through which this influence operates although this policy can be viewed as desirable in some instances it also generates actual and potential future costs for developing countries as well as posing non trivial dangers to the process of multilateral liberalisation and to the building of appropriate policies for the partner countries

strategic interdependence in models of property rights the concept of strategic interdependence has opened a wide spectrum of explanation beyond the robinson crusoe economy this essay explores the implications of strategic interdependence for the theory of property rights and the new institutional economics schotter it attempts to clarify some of the linkages from institutional economics to micro and macroeconomic theory by considering how property institutions result from strategic interdependence confer payoffs to individual agents and reflect collective choices based on individual preferences

patterns of productivity in the finance literature a study of the bibliometric distributions this study finds a bibliometric regularity in the finance literature that the number of authors publishing n papers is about 1 nc of those publishing one paper we find that the finance literature conforms very well to the inverse square law c 2 if data are taken from a large collection of journals when applied to individual finance journals we find that values of c range from 1 95 to 3 26 we also find that top rated journals have higher concentrations among their contributors this implies that the phenomenon success breeds success is more common in higher quality publications it is frequently observed in bibliometric matters and in various social phenomena that success breeds success a frequently cited paper is more likely to be cited again than one little cited an author of many papers is more likely to publish again than one who has published little a journal which has been frequently consulted is more likely to be consulted again than one of previously infrequent use this is analogous to the folk saying the rich get richer and the poor get poorer lotka s law of scientific productivity is an example of such empirical laws lotka 1926 proposes an inverse square law relating authors of scientific papers to the number of papers written by each author specifically using data in the decennial index of chemical abstracts and in the name index of auerbach s geschichtstafeln der physik lotka plots the number of authors against the number of contributions made by each author on a logarithmic scale lotka finds that the points are closely scattered around a straight line having a slope of approximately negative two on the basis of this empirical observation lotka concludes the following in the cases examined it is found that the number of persons making 2 contributions is about one fourth of those making one the number making 3 contributions is about one ninth etc the number making n contributions is about 1 n2 of those making one and of all contributors the proportion that make a single contribution is about 60 percent thus lotka s empirical finding can be summarized by the equation an a1 n2 n 1 2 3 1

migration remittances and the family remittances by migrants along with migration itself are elements in a migrant familys intertemporal contractual arrangement the reasons why the migrant and his family voluntarily enter into a mutually beneficial contractual arrangement with each other rather than with a 3rd party are discussed and the conditions under which the contractual arrangement is self enforcing are identified both parties can usually benefit from a number of pareto efficient mutual contractual arrangements this gives rise to an indeterminacy problem solved through a bargaining process between the parties who consequently converge to a contractual arrangement implying a specific flow of migrant to family remittances the chosen contractual arrangement reflects the relative bargaining powers of the parties and variables impinging upon these powers thus bear upon remittances in the light of these arguments tests are conducted on observed remittance behavior across individual migrants in botswana authors

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

behavioral economics for environmental policy abstract the predictions of widely prescribed global and country level environmental policies at present are based mainly on mainstream economic models which treat individual actors to be unboundedly rational in their decision making in recent years however behavioral and experimental economists have found that the individual actors in many circumstances act within a bounded rationality framework suggesting that predictions based on the unbounded rationality models would be less valid while some of mainstream economists have already started adopting the bounded rationality based models in their academic discourse many environmental economists seem to be reluctant to use these alternative models of rationality in their research and policy prescriptions this paper highlights the implications of using bounded rationality models in environmental research in general and policymaking in particular

intertemporal trades and problems of self control abstract this paper develops a model which explains how individuals manage self control strategies for situations in which an average level of activity per unit time is what needs controlling the focus of the model is intertemporal trades times when for example a dieter decides to eat dessert with lunch by promising himself he will forego dessert at dinner self control is managed successfully by those who learn to complete such trades the paper analyzes the process of learning about the reliability of ones strategies for intertemporal trades

testing for forward looking behaviour evidence from the enactment of smoking restrictions abstractthis paper develops a new test for forward looking behaviour based on the establishment of public smoking restrictions given that the announcement of these restrictions effectively increases the future cost of smoking we should expect forward looking smokers to curb their consumption before the restriction is effective due to complementarity between present and future consumption i perform the estimation using detailed high frequency household level purchase data the results provide evidence against the forward looking behaviour of smokers households do not reduce their cigarette purchases before announced public smoking restrictions are established they only do so once the restriction is in effect

quasi hyperbolic discounting and social security systems hyperbolic discounting has become a common assumption for modeling bounded rationality with respect to individual savings decisions we examine the effects of hyperbolic discounting on the comparison of alternative social security systems we show that this form of bounded rationality breaks the equivalence between funded and pay as you go systems established in sheshinski and weiss 1981 intergenerational transfers within a payg economy are usually secured by the social security system and independent of longevity whereas this is not the case for the funded economy the savings level under hyperbolic discounting is lower than under exponential discounting laibson et al 1996 but the ratio between the savings level under hyperbolic discounting within a funded economy and a payg economy depends on the effectiveness of the commitment devices it is shown that if individuals are hyperbolic discounters then in a payg economy any change in the mandated level of intergenerational transfers is neutralized by individuals voluntary bequests this does not apply to a funded system

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

circumventing formal structure through commitment presidential influence and agenda control although the formal institutional structure that defines the temporal order of play in a policy game between the congress and president ought to provide congress with agenda power the president is traditionally treated as the dominant player in this relationship we show that if the president can make clear cut commitments presidential commitment can counter the dominance hierarchy and the complexion of equilibrium outcomes thus the details of political interactions in particular the possibilities for commitment may be as important as the formal specification of institutional structure

consumption self control by rationing purchase quantities of virtue and vice consumers attempts to control their unwanted consumption impulses influence many everyday purchases with broad implications for marketers pricing policies addressing theoreticians and practitioners alike this paper uses multiple empirical methods to show that consumers voluntarily and strategically ration their purchase quantities of goods that are likely to be consumed on impulse and that therefore may pose self control problems for example many regular smokers buy their cigarettes by the pack although they could easily afford to buy 10 pack cartons these smokers knowingly forgo sizable per unit savings from quantity discounts which they could realize if they bought cartons by rationing their purchase quantities they also self impose additional transactions costs on marginal consumption which makes excessive smoking overly difficult and costly such strategic self imposition of constraints is intuitively appealing yet theoretically problematic the marketing literature lacks operationalizations and empirical tests of such consumption self control strategies and of their managerial implications this paper provides experimental evidence of the operation of consumer self control and empirically illustrates its direct implications for the pricing of consumer goods moreover the paper develops a conceptual framework for the design of empirical tests of such self imposed constraints on consumption in consumer goods markets within matched pairs of products we distinguish relative virtue and vice goods whose preference ordering changes with whet her consumers evaluate immediate or delayed consumption consequences for example ignoring long term health effects many smokers prefer regular relative vice to light relative virtue cigarettes because they prefer the taste of the former however ignoring these short term taste differences the same smokers prefer light to regular cigarettes when they consider the long term health effects of smoking these preference orders can lead to dynamically inconsistent consumption choices by consumers whose tradeoffs between the immediate and delayed consequences of consumption depend on the time lag between purchase and consumption this creates a potential self control problem because these consumers will be tempted to over consume the vices they have in stock at home purchase quantity rationing helps them solve the self control problem by limiting their stock and hence their consumption opportunities such rationing implies that per purchase occasion vice consumers will be less likely than virtue consumers to buy larger quantities in response to unit price reductions such as quantity discounts we first test this prediction in two laboratory experiments we then examine the external validity of the results at the retail level with a field survey of quantity discounts and with a scanner data analysis of chain wide store level demand across a variety of different pairs of matched vice regular and virtue reduced fat calorie or caffeine etc product categories the analyses of these experimental field and scanner data provide strong convergent evidence of a characteristic crossover in demand schedules for relative vices and virtues for categories as diverse as among others potato chips chocolate chip cookies cream cheese beer soft drinks ice cream and frozen yogurt chewing gum coffee and beef andturkey bologna vice consumers demand increases less in response to price reductions than virtue consumers demand although their preferences are not generally weaker for vices than for virtues constraints on vice purchases are self imposed and strategic rather than driven by simple preferences we suggest that rationing their vice inventories at the point of purchase allows consumers to limit subsequent consumption as a result of purchase quantity rationing however vice buyers forgo savings from price reductions through quantity discounts effectively paying price premiums for the opportunity to engage in self control thus purchase quantity rationing vice consumers are relatively price in sensitive from a managerial and public policy perspective our findings should offer marketing practitioners in many consumer goods industries new opportunities to increase profits through segmentation and price discrimination based on consumer self control they can charge premium prices for small sizes of vices relative to the corresponding quantity discounts for virtues virtue consumers on the other hand will buy larger amounts even when quantity discounts are relatively shallow a key conceptual contribution of this paper lies in showing how marketing researchers can investigate a whole class of strategic self constraining consumer behaviors empirically moreover this research is the first to extend previous theoretical work on impulse control by empirically demonstrating its broader implications for marketing decision making

globalization and its challenges rudi was born and grew up in krefeld germany he was an undergraduate at the university of geneva and completed his ph d at the university of chicago in 1971 which is where we met he was a student of robert mundell and both the subject matter the development of the mundell fleming model and the elegance and insights of his early work reflected mundell s influence he taught at the university of rochester and at the university of chicago before accepting an offer from mit in 1975

what is considered development economics commonalities and differences in university courses around the developing world we use a combination of surveys of instructors and data from course syllabi to examine how the subject of development economics is taught at the undergraduate and master s level in over 200 courses

hyperbolic discounting and the phillips curve using a standard dynamic general equilibrium model we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long run effects on real variables

assessing the impact of unilateral trade policies eba and agoa on african beneficiaries exports using matching econometrics the existing literature studying the impact of non reciprocal preferential trade agreements nrptas assumes implicitly nrptas are non randomly assigned without showing the evidence of that using a matching methodology this paper investigates whether the african growth and opportunity act agoa and the everything but arms eba unilateral trade concessions have had an impact and in what magnitude on the exports of african beneficiary countries in the light of the evidence of the non random nature endogeneity of nrptas methodologically previous studies using the matching procedure focused on bi or multilateral trade agreements our work focuses on nrptas that depend only on donors conditions accordingly we show that for nrptas gravity covariates cannot be used for the matching procedure we propose to use political variables as determinants for obtaining non reciprocal trade preferences in order to address the endogenous nature of nrpta assignment our main results confirm that a country becomes eligible for a nrpta only when it meets certain conditions defined by their donors such as political stability and economic regulation for agoa and freedom of expression and human development for eba results also show that both agoa and eba policies have had a positive impact on african beneficiary countries exports to nrpta s providers even if the magnitude impact of eba is significantly lower than that of agoa

rational addiction with learning and regret we present a theory of rational behavior in which individuals maximize a set of stable preferences over goods with unknown addictive power the theory is based on three fundamental postulates that consumption of the addictive good is not equally harmful to all that individuals possess subjective beliefs concerning this harm and that beliefs are optimally undated with information gained through consumption although individual actions are optimal and dynamically consistent addicts regret their past consumption decisions and regret their initial assessment of the potential harm of the good addict prone individuals who believe it could not happen to them are most likely to be drawn into a harmful addiction

a framework for journal assessment the case of the journal of banking finance abstract we propose a citation based framework for the assessment of journal influence and demonstrate its application with the journal of banking and finance the framework assesses the current position of the journal its trends and the reasons behind the trends the journal of banking and finance is found to be one of the leading journals in the field of finance and its influence is increasing in fact it appears to be part of a group of leading journals that is separating itself from the other journals that are generally regarded as peers finally the journal of banking and finance is found to be the only leading finance journal with a high concentration of banking articles making it a primary outlet for influential articles in this area

an assessment of environmentally related non tariff measures international trade can affect the environment in different ways this may justify the introduction of border measures by the importing countries in addition to various dispositions in the gatt gats trips agreements as well as in the agreement on agriculture this issue is regulated by the agreements on technical barriers to trade tbt and on the application of sanitary and phyto sanitary standards sps despite these rules abuse of environmental arguments for protectionist reasons remains an open issue in order to disentangle protectionism from dispositions justified on the grounds of true environmental concerns we systematically review notifications of sps and tbts by importing countries at the tariff line level trade is considered as being potentially affected when an environmental sps tbt is notified on grounds of environmental concerns affected trade is defined as imports by countries notifying such barriers protectionist use of environmental barriers is likely when only a limited number of countries impose an environmental obstacle on the imports of a given product considering data for 2001 we find that 88 per cent of the value of world trade is in products potentially affected by such measures while 39 per cent of the value of world imports is potentially subject to a protectionist use of such measures agriculture the automobile industry the pharmaceutical industry and many other sectors are concerned

the value of a finance journal publication the empirical analysis examines the salary and publication records of 311 finance professors at public research universities to calculate the worth of a top finance journal article within rank salary regressions provide measures of the direct returns of a journal publication while probit models consider the indirect returns that result from promotion ultimately the analysis uses a reduced form salary equation to measure both the direct and indirect effects of publishing a journal article depending on professorial rank the present value of the first top finance journal article is between 19 493 and 33 754 with the additional result of large returns to subsequent publications what is a journal publication worth has long been a question of interest to academics in the finance and economics profession perhaps it is the desire to value assets the need to examine personal economic decisions or simply intellectual curiosity that motivates the many studies that exist whatever the reason economists continue to investigate the marginal contribution to a professor s salary of publishing one more article in a refereed journal the extant empirical research typically uses multiple linear regression analysis to examine a publication s marginal contribution to salary regression results in studies by bertin and zivney 1992 and delorme hill and wood 1979 support a positive relation between a professor s salary and the number of publications in an attempt to capture diminishing marginal returns tuckman and leahey 1975 first estimated a salary regression inodel with dummy variables for different publication ranges i e 1 2 publications 3 4 publications 5 10 publications etc they fit an incremental salary curve to the estimated publication range coefficients and then used the nonlinear function to evaluate average and marginal returns a second important contribution to the literature by tuckman and leahey is their observation that a journal publication has both a direct and indirect

publish or perish what the competition is really doing this study provides comprehensive publications performance data over a twenty five year period for finance doctorates these data indicate that publishing one article per year in any finance journal or finance accounting economics or business journal over any prolonged period of time is a truly remarkable feat met by only 5 percent of the graduates tenure screens combining various quantity and quality requirements are examined to assess their ability to predict future publication productivity faculty and administrators seeking defensible benchmarks for evaluating faculty research productivity in finance will find that these data and results are particularly useful copyright 1992 by american finance association

saving more in groups field experimental evidence from chile abstract we test the impact of a peer group program on savings in a sample of microcredit clients we conduct two randomized trials among these 2687 microcredit clients the first finds that a savings group treatment which combines public goal setting monitoring in the group and non financial rewards increases savings in a new savings account significantly the number of deposits grows 3 7 fold and the average balance almost doubles in contrast a more classical measure a substantially increased interest rate has no effect for most participants and raises the savings balance only for the very top of the distribution a second experiment conducted a year later tests an alternative delivery mechanism and shows that effects of similar size can be achieved through feedback text messages without meetings rewards or peer pressure given that participants are borrowing at 90 apr we discuss how and when saving more could be harmful or beneficial

the new institutional economics and its applicability to development abstract the several remarkable developments in the social sciences which have come to be known as the new institutional economics nie have not yet been fully exploited for analyzing the determinants and effects of institutional change in the context of development this paper identifies two important components of the nie and illustrates both a potential complementarities between them and b their applicability to various problems and policies in the long term development of developing countries

the fewer the better number of goals and savings behavior abstract this article examines the effect of the number of goals on consumers savings behavior drawing from research on implementation intention the authors show that under certain conditions presenting a single savings goal leads to greater savings intention and actual savings than presenting multiple savings goals multiple goals typically evoke trade offs among competing goals and thus increase the likelihood that people will remain in a deliberative mind set and defer actions in contrast the authors propose and demonstrate that a single goal evokes a stronger implementation intention which in turn has a greater effect on behavior change they also show that the advantage of a single goal over multiple goals on saving is attenuated when saving is easier to implement or when the multiple savings goals are integrated rather than competing among themselves theoretical and practical implications are discussed

rethinking trade preferences how africa can diversify its exports this paper argues that the contribution of trade preferences to economic development needs to be reappraised in light of the growth of globalised trade in manufactures trade preferences may be able to act as a catalyst for manufacturing exports leading to rapid growth in exports and employment to do so preferences need to be designed to be consistent with international trade in fragmented tasks as opposed to complete products and need to be open to countries with sufficient levels of complementary inputs such as skills and infrastructure recent experience with the african growth and opportunities act shows that in the right conditions sub saharan african countries have had large manufacturing export supply response to trade preferences

temptation and taxation we study optimal taxation when consumers have temptation and self control problems embedding the class of preferences developed by gul and pesendorfer into a standard macroeconomic setting we first prove in a two period model that the optimal policy is to subsidize savings when consumers are tempted by excessive impatience the savings subsidy improves welfare because it makes succumbing to temptation less attractive we then study an economy with a long but finite horizon which nests as a special case the phelps pollak laibson multiple selves model thereby providing guidance on how to evaluate welfare in this model we prove that when period utility is logarithmic the optimal savings subsidies increase over time for any finite horizon moreover as the horizon grows large the optimal policy prescribes a constant subsidy in contrast to the well known chamley judd result

what s the big idea the third generation of policies for economic growth economists and reform minded policymakers in latin america are asking themselves and are being asked hard questions these days the broad consensus is that two decades of reform have had too little toshow for it sporadic and sputtering economic growth and stagnant real wages especially for the unskilled is not what was expected this paper puts the latin american experience in the global context and examines the processes that brought the region to this point we look at the trends in policy advice on economic growth and how they were formed and we address the question of what economists can do now to help the region move in restoring economic growth

frames of mind in intertemporal choice recent research has demonstrated that choices between gambles are systematically influenced by the way they are expressed kahneman and tversky s prospect theory kahneman d a tversky 1979 prospect theory an analysis of decision under risk econometrica472 363 391 explains many of these framing effects as shifts in the point of reference from which prospects are evaluated this paper demonstrates the applicability of the reference point concept to intertemporal choice three experiments demonstrate that when people choose between immediate and delayed consumption the reference point used to evaluate alternatives can significantly influence choice the first study elicited relative preference for immediate and delayed consumption using three methods each of which differently framed choices between alternatives offering identical end state consumption the conventional discounted utility model predicts that the three methods of elicitation should yield similar estimates of time preference but preferences were found to differ in accordance with a reference point model the second and third studies extend and replicate the results from the first the third using real rather than hypothetical choices

development paradigm failures over time the international development community has advocated various development paradigms but countries following these paradigms have often performed poorly we provide an explanation for this poor performance in our model the political leader of a developing country chooses a policy and whether to implement it in an honest or corrupt manner these choices affect domestic production and aid inflows production is high when productive capacity is high and when the policy is appropriate in the country specific circumstances and implemented honestly aid inflows are high when the policy is close to the paradigm in equilibrium countries with low productive capacity and high corruption resulting from weak political institutions follow the paradigm more closely hence our model suggests that development paradigms have a tendency to fail because they are primarily followed by countries that would fail anyway we provide empirical evidence in support of the main assumptions and results

management of a capital stock by strotz s naive planner abstract the capital management problem posed by r h strotz is analyzed for the case of the naive planner who fails to anticipate changes in his own preferences by imposing progressively stronger restrictions on the primitives of the problem namely the discounting function the utility index function and the investment technology the planner s behavior is characterized first as the solution to an ordinary differential equation and then via explicit formulae inasmuch as these characterizations leave the discounting function essentially unrestricted the theory can accommodate in particular decision makers who discount time according to the hyperbolic and quasi hyperbolic curves used in applied work and said to be supported by psychological studies comparative statics of the model are discussed as are extensions of the analysis to allow for credit constraints limited foresight and partial commitment

free trade agreements and governance of the global trading system n 1995 when the wto was established it seemed to be final confirmation of the success of a system that had managed multilateral trade relations since 1947 it provided an institutional framework within which governments were not only able to negotiate reductions in trade barriers but also to bind themselves to rules of conduct that in principle were both universal and nondiscriminatory about the same time however the new wave of regional and bilateral free trade agreements ftas was beginning to gather strength for some this has emerged as a threat to the central role of the wto as manager of the trading system and even to presage the fading of an era of multilateralism in trade relations for others it has been a call to revise long held conceptions about the multilateral system and to embrace a more complex world composed of networks of multilateral plurilateral regional and bilateral arrangements in this article we aim to contribute to this debate by exploring how far ftas have strengthened or weakened global governance of the trading system for the most part the contribution of economists to the debate has centred around the effects of preferential tariff regimes including their rules of origin on merchandise trade and trade relations we think that the almost exclusive focus on tariff regimes is too narrow a prism for one thing we are sceptical of the practical significance of the tariff preferences that have been actually introduced in affecting trade flows more important the focus on tariff barriers leaves aside the other major aspects of trade relations that multilateral plurilateral regional and bilateral arrangements seek to address central to these

product differentiation and the treatment of foreign trade in computable general equilibrium models of small economies this paper examines the treatment of exports and imports and external closure rules adopted in recent single country computable general equilibrium models of small economies the paper presents a simple one sector analytic model which captures the major features of the multi sector counterpart used in applied models the paper derives graphical and algebraic solutions to the model and shows that unlike some earlier external closures this one gives rise to a well behaved price taking economy the model is also useful to illustrate the role of elasticities in popular trade theoretic models that include traded and non traded goods

small hubs large spokes and overlapping free trade agreements the proliferation of overlapping free trade agreements fta in recent years has led to pair wise hub and spokes has throughout the world being avid subscribers to ftas many countries in the asia pacific region including the united states japan singapore south korea thailand and australia have become trade hubs to their partners who are in turn relegated to spoke status in this paper we question whether being a hub is welfare optimal for a small and open economy such as singapore compared to membership in a single bilateral fta or a multi member free trade zone within this context we use a computable general equilibrium model to examine the welfare implications of the triangular trade relationship of the united states singapore and japan this is facilitated by the japan singapore economic partnership agreement the usa singapore free trade agreement and a hypothetical usa japan economic partnership agreement the analysis is extended to incorporate super hub effects that is the spoke countries could be trade hubs in other has systems our experiment reveals that hub status generates positive welfare gain and is the highest singapore can get from the trade configurations considered meanwhile japan loses more than the usa when both are relegated to spoke status these findings prove to be robust under different market structures and production technologies deeper economic integration super hub effects as well as uncertainty in the key model parameters and the extent of trade liberalisation shocks

goal setting and self control abstract this paper addresses the role of non binding goals to attenuate time inconsistency present biased agents have linear reference dependent preferences and endogenously set a goal that is the reference point they face an infinite horizon optimal stopping problem in continuous time when there is sufficient commitment to expectation based goals goal setting attenuates the present biased agent s tendency to stop too early and may even lead an agent to wait longer than the first best in particular reference dependence is strictly worse for a time consistent agent notably none of the effects of goal setting require loss aversion

tobacco taxes and starting and quitting smoking does the effect differ by education this article uses duration analysis to investigate the role of tobacco taxes in starting and quitting smoking applying a variety of parametric duration models to a sample of irish women it finds that in general tobacco taxes do influence starting and quitting smoking in the expected direction it also finds that the effect for starting differs by education but in a nonmonotonic way with the greatest effect for women with intermediate levels of education the results for quitting suggest the greatest effect for women with the lowest level of education these results are unchanged when account is taken of unobserved heterogeneity

the institutional foundations of public policy documento de trabajo 90 presidential address to the latin american and caribbean economic association lacea paris november 2005 titulo tomado de la pantalla de presentacion visto 12 de septiembre de 2011 noviembre 2005 incluye referencias bibliograficas

the behavioral life cycle hypothesis self control mental accounting and framing are incorporated in a behavioral enrichment of the life cycle theory of saving called the behavioral life cycle blc hypothesis the key assumption of the blc theory is that households treat components of their wealth as nonfungible even in the absence of credit rationing specifically wealth is assumed to be divided into three mental accounts current income current assets and future income the temptation to spend is assumed to be greatest for current income and least for future income considerable empirical support for the blc theory is presented primarily drawn from published econometric studies

the social discount rate what discount rate should be applied to social investments it is standard to use the market interest rate thereby respecting private preferences we show that application of this revealed preference criterion rests on faith not on logic it is justified only if preferences over all choices including past choices are time invariant the conditions for this to be true are stringent under more reasonable conditions policy makers should be more patient than private citizens whose choices define the most short sighted pareto optimum

bilateral free trade agreements and customs unions the impact of the eu republic of south africa free trade agreement on botswana the eu has indicated that after 2008 its trade relationships with developing countries will be dominated by the development of preferential trade agreements although not a consequence of the cotonou agreement the free trade agreement between the eu and the republic of south africa eu rsa fta is clearly one of the first fruits of this approach to trade relationships however there is no evidence that the design of the eu rsa fta incorporated a comprehensive general equilibrium evaluation of the agreement for either the signatories or the other southern african nations the analyses reported here indicate that while the eu rsa fta may substantially benefit the signatories there are appreciable negative impacts for other states especially the rsa s immediate neighbours moreover the reluctance of the eu to fully liberalise trade in food and agriculture commodities results in a major reduction in the benefits for the rsa without ameliorating substantively the adverse implications for other nations

the effect of credit on spending decisions the role of the credit limit and credibility the objective of the present research is to study consumer decisions to utilize a line of credit the life cycle hypothesis from economics argues that consumers should intertemporally reallocate their incomes over their life stream to maximize lifetime utility one form of intertemporal allocation is to use past income in the form of savings in the future a second form is the use of future income in the present this can only be done if consumers have access to a temporary pool of money that they can draw from and replenish in the future a function performed by consumer credit however our research reinforces prior findings that consumers are unable to correctly value their future incomes and that they lack the cognitive capability to solve the intertemporal optimization problem required by the life cycle hypothesis instead we argue that consumers use information such as the credit limit as a signal of their future earnings potential specifically if consumers have access to large amounts of credit they are likely to infer that their lifetime income will be high and hence their willingness to use credit and their spending will also be high conversely consumers who are granted lower amounts of credit are likely to infer that their lifetime income will be low and hence their spending will be lower however based on research in the area of consumer skepticism and inference making we also argue for a moderating role of the credibility associated with the credit limit specifically we argue that the above effect of credit availability would be particularly strong for consumers who believe that the credit limit credibly signals their future earnings potential i e a naive consumer who has limited experience with consumer credit however as consumers gain experience with credit they start discounting credit availability as a predictor of their future and start questioning the validity of the process used to set the credit limit hence with experience the effect of credit limit on the willingness to use credit should be attenuated we test these predictions in five separate studies in the first experimental study we manipulate credit limit and credibility and pose subjects with a hypothetical purchase opportunity consistent with our prediction credit limit impacted the propensity to spend but only when the credibility was high in the second experimental study we replicate these findings even when subjects were given information about their expected future salaries and also show that the credit limit influences their expectation of future earnings potential in the third study we show that the mere availability and increase of current liquidity cannot explain our findings in the fourth study we conduct a survey of consumers in which we measure a number of demographic characteristics and also ask them for their propensity to spend in a given purchase situation in the fifth study we use the survey of consumer finances scf dataset a triennial survey of u s families that is designed to provide detailed information on the use of financial services spending behaviors and selected demographic characteristics results from both studies 4 and 5 provide further support for our proposed framework credit limits influence spending to a greater extent for consumers with lower credibility younger consumers and less educated consumers across all studies we achieved triangulation by using a variety of approaches surveys and experiments subjects types young students and older consumers nature of predictor variables manipulated and measured dependent measures purchase likelihood credit card balance new charges and methods of analysis anova and regression and consistently found that increasing credit limits on a credit card increases spending especially when the credibility of the limit is high this paper joins a growing body of literature in marketing and behavioral decision theory that goes beyond the traditional domains of inquiry e g product choice effects of marketing mix variables and focuses on consumer decisions relating to the appropriate use of income to finance consumption our framework differs from prior research on the effect of payment mechanisms on spending in two significant ways first we are interested in the effects of the availability of credit on spending and not necessarily in the effect of the transaction format that is associated with each payment mechanism second while prior research has studied the point of purchase and historic i e prepurchase effects of credit the present research is concerned with the availability of credit in the future specifically our framework is invariant to the current and prior usage of credit by the consumer

fdi agoa and manufactured exports by a landlocked least developed african economy lesotho lesotho a resource poor country located inside south africa is now africa s largest exporter of apparel to the us its performance very unusual for africa relies heavily on asian investors and trade privileges this article traces the origins of fdi in lesotho and the determinants of its export competitiveness showing that apparel production suffers from low productivity poor skills and weak local links its prospects after agoa the african growth and opportunities act remain uncertain unless the government addresses these structural problems lesotho holds important lessons for industrial development in africa going beyond creating a good investment environment

self control for the righteous toward a theory of precommitment to indulgence prior research has examined consumers use of self control to avoid hedonic myopic temptations such as overspending and smoking in this research we investigate the opposite form of self control whereby consumers force themselves to indulge and avoid default forms of spending on utilitarian necessities and or savings in particular consumers who have difficulty choosing items that are perceived as indulgences or luxuries e g a cruise over necessities e g saving for college education and cash in everyday decisions may use precommitments to indulgence especially when the psychological cost of such commitments is less concrete these propositions were tested in a series of studies involving real and hypothetical choices as well as process measures the results indicate that a substantial segment of consumers choose hedonic luxury rewards over cash of equal or greater value consumers typically explain such choices based on the need to precommit to indulgence to make sure that the award does no

self signaling and the costs and benefits of temptation in consumer choice abstract the literature on self control emphasizes that temptation is costly the authors propose that temptation entails not only costs but also benefits for consumers these arise from self signaling effects of how consumers handle tempting choice options succumbing to temptation is a costly self signal of weak willpower whereas resisting temptation is a beneficial self signal of strong willpower five experiments demonstrate that these self signaling costs and benefits of temptation depend not only on the chosen item but also on the temptation from the nonchosen options the authors discuss theoretical implications of their findings for research on impulsive choice and self control and on self signaling and managerial implications for pricing and assortment strategies

self command in practice in policy and in a theory of rational choice an increasingly familiar occurrence for obstetricians is being asked by patients to withhold anesthesia during delivery the physician often proposes that a facemask be put beside the patient who may inhale nitrous oxide as she needs it but some determined patients ask that no such opportunity be provided if gas is available they will use it and they want not to be able to the request is interesting for decision theory and raises questions of ethics policy and physician responsibility even if the woman is merely making a mistake if she simply does not know how painful labor will be and how glad she will be even in retrospect if the pain is relieved but some women who make this request have had earlier deliveries during which they demanded anesthesia and received it they are acquainted with the pain they anticipate asking for relief and they want it withheld when they do they expect to regret afterwards any recourse to anesthesia this particular instance of attempted selfdenial has features that are special but many that are common the woman is so far as we know in good health physically and mentally she anticipates a transient period when her usual values and preferences will be suspended or inaccessible she has reasons for wanting to frustrate her own wishes at the critical time she needs cooperation she may ratify her choice afterward by expressing herself grateful that no anesthesia was offered even when requested there are ethical dilemmas and legal issues and there is conflict if say the husband disagrees with the physician in the delivery room about what his wife really wants

the journal of financial economics data for the 516 papers published in volumes 1 30 of the journal of financial economics in the period 1974 91 are analyzed 477 authors from 136 institutions contributed papers and these papers received 16 231 citations according to the social science citation index lists of authors and institutions who have contributed the most papers to the jfe and a list of the mostly highly cited jfe papers show why the journal has been successful in influencing the finance and economics literature during its first 18 years

myopia and addictive behaviour we present a theory of addictive behaviour which can account for addicts apparent disregard for the future consequences of their current actions the discounting of future utility is increasing in past consumption indicating increasingly myopic behaviour as consumption increases the intertemporal complementarity generated by the endogenous discounting produces multiple steady states which can account for the simultaneous existence of myopic addicts and non myopic non addicts within a time consiste nt expected utility framework the theory also accounts for the probabilistic incidence of addiction and successful rehabilitation and the possibility of recurrence

income smoothing and self control the case of schoolteachers experimental economics is frequently criticized on the grounds that the incentives offered to subjects in the laboratory are too low to give the results any validity in particular when the results reject the standard economic maximizing model the presumption is frequently made that anomalies will go away if incentives are raised to levels faced in the real world indeed as camerer and hogarth 1999 have recently noted it is an open question what results from the laboratory tell us about incentives in naturally occurring environments 1 in this article we report the choices made by subjects in one such naturally occurring environment the choice of payment pattern by california public schoolteachers we calibrate the size of their incentives and show that depending on the discount rate chosen not insignificant amounts of income may be given up by large numbers of individuals all of whom are college graduates to implement what may be considered a sensible consumption plan but one that is not optimal according to the standard income smoothing utility maximizing model i the choice problem teachers usually work 10 months in a 12 month academic year so that if they are paid only during their working period they receive no salary in july and august in the standard economic model of intertemporal financial planning however the absence of summer salary payments would present no problem because teachers could simply save some fraction of their salary arranging whatever summer consumption pattern was desired within the overall budget constraint moreover because the income saved would accumulate interest this strategy would dominate a strategy of asking that the same annual salary be paid in 12 equal installments several authors e g thaler 1980 schelling 1984 thaler and shefrin 1981 loewenstein and prelec 1992 laibson 1997 rabin 1997 have questioned the validity of the standard model and proposed an alternative approach 2 in this new approach the teacher may well agree that the optimal plan is to smooth consumption by saving with interest during the earning months but executing this optimal plan is not without cost thaler and shefrin 1981 who explicitly note the schoolteachers planning problem argue that these implementation costs or costs of self control could change the behavior of teachers and make them willing to enter an implicit savings program at zero interest even though that would lower the present value of their income an obvious question for field investigation is how many do this and at what cost in addition for those teachers who enter such schemes it is of interest to know if they see themselves as being challenged by issues of self control ii the data our data come from two questionnaires the first questionnaire see appendix a was sent to 259 school districts in california 3 replies with usable data were received from 130 districts 50 a follow up telephone survey checked on the possibility that a school district might pay interest to teachers who choose to have their 10 months salary paid over 12 months and also that teachers might choose to be paid over an 11 month period 4 a second questionnaire shown in appendix b was sent to all teachers in one of the school districts identified in the first survey as offering a 12 month payment option 5 we obtained 121 responses with at least some useful information a response rate of 32 given the personal nature of some of the questions this response rate is reasonable though it does of course raise a question about the representativeness of our sample and its small size suggests that only tentative conclusions can be drawn from it iii choices offered and taken in the first survey 71 school districts 55 did not offer their employees any choice of salary arrangement of these 37 with 15 205 teachers paid salaries on a 10 month basis 15 with 11 284 teachers paid on a 12 month basis and i 0 districts paid teachers who work 10 months on a 10 month basis and those who work 12 months 12 times

the trade and fiscal impact of eu acp economic partnership agreements on west african countries abstract the european union is currently negotiating free trade agreements called economic partnership agreements epas with african countries as part of the cotonou agreement between the european union and african caribbean and pacific countries the paper empirically assesses the impact of the epas on trade flows and government revenue for 14 west african countries the results indicate that the decline in import duties due to the preferential tariff elimination might be of some cause for concern and that complementary fiscal and economic policies have to be implemented before or at the time the epas come into force

regionalism within multilateralism the wto trade policy review of canada the world trade organisation published a trade policy review of canada in 2003 in this paper we discuss the wto review and augment the discussion by presenting original data and reviewing the empirical literature the wto concludes that canada s trade regime is open and transparent but maintains barriers in a few important sectors we subject this claim to empirical scrutiny comparing canada s actual imports to a multilateral benchmark based on the gravity equation we show that canada imports about what should be expected given the size of its economy and its location in a second benchmarking exercise we show that canada s anti dumping initiations are in proportion to its imports and that canada s exports are targeted less by other countries anti dumping investigations than what might be expected based on canadian export levels like many other countries canada has pursued trade liberalisation through the world trade organisation while simultaneously signing multiple regional trade agreements our summary of the recent literature indicates that canada s regional trade agreements have generated more trade creation than trade diversion canada has also spurred imports from the least developed countries by unilaterally eliminating tariffs and quota barriers on 48 of the world s poorest countries in january 2003 we also discuss canadian progress in opening its agriculture and clothing industries overall we conclude that canada appears committed to advancing globalisation through multilateral trade liberalisation supplemented by unilateral and bilateral initiatives

market access and welfare under free trade agreements textiles under nafta the effective market access granted to textiles and apparel under the north american free trade agreement nafta is estimated taking into account the presence of rules of origin first estimates are provided of the effect of tariff preferences combined with rules of origin on the border prices of mexican final goods exported to the united states u s and of u s intermediate goods exported to mexico based on eight digit harmonized system tariff line data a third of the estimated rise in the border price of mexican apparel products is found to compensate for the cost of complying with nafta s rules of origin and nafta is found to have raised the price of u s intermediate goods exported to mexico by around 12 percent with downstream rules of origin accounting for a third of that increase second simulations are used to estimate welfare gains for mexican exporters from preferential market access under nafta the presence of rules of origin is found to approximately halve these gains

foreign exchange constraints and growth possibilities in the ldcs abstract we analyse the influence of foreign exchange constraints on output growth in the ldcs by studying the effect that these constraints have on the speed of adjustment of both investment and import activities we model the speed of adjustment of investment as a function of available foreign exchange resources and allow for imperfect substitutability between the domestic and the foreign capital stocks

migration amongst the batswana the present study undertakes analysis of the effects of employment probabilities and wage alternatives on migration decisions in the context of botswana adopting micro level data both to estimate a multinomial migration function and to develop prediction equations for wages and likelihood of employment data are from the 1978 1979 national migration survey the factors that influence rural batswana adults to remain at home migrate to town on a short or long term basis move to another rural area or emigrate to south africa are examined consideration is given to the effects of employment alternatives on the rate of internal migration and the selectivity of movements with respect to personal household and locational factors excerpt

empirical measures of factors affecting social rates of discount economists have long considered possible divergences between private and social rates of time preferences in this paper we investigate factors hypothesized to affect this potential divergence results indicate that time preferences of individuals may be influenced by 1 whether the resource in question is publicly or privately managed respondents tend to have lower rates of time prefernce for publicly managed resources and 2 the type of good being managed respondents tend to have lower rates of time preference for income derived from a forest than for income derived from a portfolio of stocks and bonds additional factors which may influence the revealed rate of time preference include the pattern of benefits derived over time and various personal characteristics of the respondent although numerous methodological problems cloud the issues our results suggest that capital markets may fail to aggregate utility over individuals and between goods and that it may therefore be appropriate for governments to consider using lower rates of discount than the private sector and to vary the rate used according to the type of good being evaluated

the impact of rules of origin on trade flows a great deal of post war trade liberalization resulted from regional preferential trade agreements preferential trade agreements cut tariffs on goods originating only in those nations that have signed the agreement therefore they need rules of origin to determine which goods benefit from the tariff cut rules of origin have long been ignored for two good reasons they are dauntingly complex and at first sight appear mind numbingly dull the third standard reason for ignoring them the assertion that they do not matter much turns out to be wrong we show that rules of origin are important barriers to trade moreover such rules are emerging as an important trade issue for three additional reasons first preferential trade deals are proliferating worldwide second the global fragmentation of production implies complex international supply chains which are particularly constrained and distorted by rules of origin third the extent to which regionalism challenges the wto based trading system depends in part on incompatibilities and rigidities built into rules of origin our empirical results exploit a natural experiment that was created by technical changes to europe s lattice of rules of origin roos in 1997 this change known as diagonal cumulation relaxed the restrictiveness of rules of origin on trade among the eu s free trade agreement fta partners without changing the degree of tariff preference our analysis allows us to establish a lower bound and upper bound estimate of trade impact of roos reduced trade among the eu s trade partners the lower bound we find is something like 10 while the upper bound is around 70 the second part of the paper draws the policy lessons that arise from considering the implications of our empirical findings the most direct lessons are for fta writers we argue that europe s implementation of cumulation is a good way of reducing the welfare reducing impact of overlapping rules of origin without gutting their fraud fighting ability we also suggest a three part procedure for establishing a more multilateral framework for rules of origin which would be more transparent flexible administratively feasible and negotiable patricia augier michael gasiorek and charles lai tong

export supply capacity and relative prices in the neoclassical approach to specifying an export supply equation relative prices and capacity are assumed to play a crucial role in domestic firms decisions to supply exports in the keynesian approach the willingness of domestic firms to supply foreign markets is considered to be largely a function of domestic demand pressure keynesian analyses do not allow for the impact of relative prices this paper blends the two approaches in a model in which a firm is assumed to choose first the level of productive capacity and then one period later to determine production and allocation between foreign and domestic markets on the basis of realized prices demand conditions and installed capacity the conclusion both prices and capacity are significant determinants of export supply

special and differential treatment of developing countries in the wto moving forward after cancun the issue of special and differential treatment sdt for developing countries in the wto has become a source of tension in north south trade relations the absence of an effective sdt regime clearly contributed to the failure of the cancun ministerial meeting of the wto this paper argues for a new approach that puts the emphasis on efforts to improve the development relevance of wto rules and create mechanisms which allow greater differentiation across wto members in determining the applicability of wto disciplines complemented by non discriminatory liberalisation of trade in goods and services in which developing countries have an export interest the former is key in allowing the wto to expand its reach to new behind the border policies and the latter is important to establishing a development dimension in multilateral trade negotiations

export processing zones in madagascar a success story under threat summary the success of export processing zones or the zone franche in madagascar since 1990 is with the exception of mauritius an isolated and unknown case in africa this paper based on first hand data explains that the zone franche has had a highly significant macroeconomic impact in terms of exports and jobs we show that average wages in the zone franche are equivalent to the other formal activity sectors other things being equal and that labor standards there are higher than average the zone franche quickly recovered from the 2002 crisis and has benefited a great deal from agoa the final phase out of the multi fibre arrangement in 2005 is expected to have a negative impact on the zone franche

the africa growth and opportunity act and its rules of origin generosity undermined the african growth and opportunity act agoa signed into american law on may 18 2000 is a major plank of u s initiatives toward the african continent the act aims broadly at improving economic policymaking in africa enabling countries to embrace globalization and securing durable political and economic stability as an incentive for africa to adopt the necessary policy reform agoa offers increased preferential access for african exports to the united states this paper describes the provisions of agoa and assesses its quantitative impact on african exports particularly in the apparel sector its main conclusions are 1 agoa will provide real opportunities to africa even on conservative estimates about africa s supply response africa s non oil exports could be increased by about 8 11 percent 2 however the medium term gains could have been much greater if agoa had not imposed certain conditions and not excluded certain items from its coverage the most important condition is the stringent rule of origin that is the requirement that exporters source certain inputs from within africa or the united states estimates suggest that the absence of these conditions would have magnified the impact nearly five fold resulting in an overall increase in non oil exports of us 0 54 billion compared with the us 100 us 140 million increase that is expected in the presence of these restrictions these restrictions particularly on apparel will come at a particularly inopportune time as africa will be exposed to competition from other developing countries when the quotas maintained on the latters exports under the multi fiber arrangement mfa are eliminated africa s apparel exports will be lower by over 30 percent with the dismantling of the mfa if on the other hand agoa had provided unrestricted access the negative impact of the dismantling could be nearly fully offset

making eu trade agreements work the role of rules of origin a key element of the eu s free trade and preferential trade agreements is the extent to which they deliver improved market access and so contribute to the eu s foreign policy objectives towards developing countries and neighbouring countries in europe including the countries of the balkans previous preferential trade schemes have been ineffective in delivering improved access to the eu market since only a small proportion of the available preferences have actually been utilised the main reason for this is probably the very restrictive rules of origin that the eu imposes coupled with the costs of proving consistency with these rules if the eu wants the everything but arms agreement and free trade agreements with countries in the balkans to generate substantial improvements in access to the eu market for products from these countries then it will have to reconsider the current rules of origin and implement less restrictive rules backed up by a careful safeguards policy

the duration of the smoking habit i introduction most smokers smoke out of habit once the habit is ended many of smoking s most harmful effects decline rather quickly preventing and ending cigarette addiction is therefore the straightest path toward preventing the health damage done by cigarette smoking consequently the related questions of why people start smoking and why they quit are central to formulating and evaluating effective antismoking policies duration or hazard models are designed to measure the probability of transition between states and are thus ideal for investigating the structural determinants of the transition between addiction and non addiction nevertheless most previous work in the economics literature uses the aggregate smoking participation rate defined as the percentage of people who currently smoke or an individual s probability of participation rather than a hazard rate to measure the attractiveness of habitual smoking this paper models the hazard rates of both starting and quitting the cigarette smoking habit the starting hazard rate is the probability that an individual will start smoking in a given time period conditional on being a nonsmoker until then the quitting hazard rate is the probability of quitting smoking in a given time period conditional on being a smoker since the starting date both of these rates should rise and fall in response to changes in the attractiveness of smoking the two rates will respond differently to different stimuli since the starting hazard reflects the point of view of nonsmokers and the quitting hazard reflects the point of view of smokers hazard or duration models possess several advantages over smoking participation models most obviously smoking participation rates cannot directly distinguish between increased starting rates and decreased quitting rates but the hazard models can also in a participation rate model it is difficult to control for the effect of the duration of the habit whereas duration models are designed specifically to allow for and measure the dependence of the hazard rate on duration another advantage is that the participation rate at any one time will oversample the number of long term smokers relative to those who had a short term habit whereas a duration model is designed to avoid this source of bias one drawback however is that because of their inherent panel nature the data requirements of duration models are somewhat more difficult to satisfy as shall be seen the only previous work in the economics literature that estimates the hazard rate of starting smoking is douglas and hariharan 1994 my paper improves upon douglas and hariharan in at least three important ways first it estimates the hazard rate of quitting smoking as well as that of starting second it takes into account variation in state level regulation third its time varying covariate model allows hazard rates to respond dynamically to changes in cigarette price regulation and information variables the use of time varying covariates is important because it brings the empirical model into much closer accord with theory the decision whether or not to start or quit smoking is an ongoing decision made one day at a time on the basis of current information the hazard of starting is greatest when the cost of the habit appears lowest and its benefit appears highest this comparison of cost and benefit changes through time as price information income and life cycle variables change while douglas and hariharan 1994 used price information from the potential smoker s most vulnerable age on the theory that its marginal effect is greatest at that time the model used in this paper allows each individual s hazard rate to respond to changes in price and public information as they occur the leading theoretical model of the decision to smoke is the rational addiction model of becker and murphy 1988 which assumes that consumers of addictive goods begin smoking only after fully weighing the costs and benefits of the habit

the welfare impact of trade liberalization i introduction what are the effects of liberalized trade this is a crucial question in the field of international economics the wide consensus among economists is that free trade generates aggregate welfare gains through efficient reallocation of resources and production reduction of prices and exposure to foreign competition in aggregate terms economies that open benefit from doing so numerous studies in the literature have addressed this issue assessing the qualitative and quantitative impact of trade liberalization at the aggregate level examples among many include the works of brown deardorff and stern 1995 and sobarzo 1995 which analyze the effects of the north american free trade agreement nafta on the economies of canada mexico and the united states 1 while there is a relative degree of agreement regarding the overall impact of free trade a topic that has not been analyzed quite as intensively in the literature deals with the distributional effects of trade liberalization reforms on the different types of households that comprise an economy if households differ in terms of income education geographical location or other socio demographic characteristics do these differences imply that they will be asymmetrically affected by a trade liberalization reform while the economy as a whole gains from increased openness some agents might benefit more than others from free trade or more drastically some people might benefit from free trade while others are hurt by it this issue is even more relevant if the trade liberalization process occurs between economies where at least one of the opening countries accounts for a large proportion of the bilateral foreign trade in this article we aim at contributing to this relatively neglected issue in the literature by analyzing the distributional effects of trade liberalization on heterogenous households to address this question we construct a static applied general equilibrium model agem which has been the standard tool adopted to assess the impact of policy reforms because it captures all the complicated linkages between the various agents that comprise an economy by using an agem we are also able to conduct sensitivity analyses and perform additional experiments that explore the implications of alternative trade liberalization arrangements since we explicitly model differentiated households we are therefore able to identify the welfare consequences of trade liberalization on diverse agents in one of the few related studies in the literature porto 2006 analyzes the general equilibrium distributional effects of trade policies using different waves of household survey data to directly estimate the impact of trade on the prices of different goods and factor inputs while the purpose is similar our methodology differs by combining the household survey data and the social accounting matrix sam for calibration of the structural model and then performing numerical experiments to simulate and directly evaluate the general equilibrium distributional effects of different trade reforms in order to quantitatively measure the household impact of liberalized trade we apply our model to the case of slovenia which joined the european union eu in may 2004 along with nine other countries accession to the eu implies among many other things an important transformation for the foreign sector of the slovenian economy in particular the accession requires slovenia to adopt the eu s tariff schedule with the rest of the world and removes its previous tariff structure in principle this implies an enormous trade liberalization reform for slovenia it removes all tariffs with its most important trade partner moreover before joining the eu slovenia was a small open economy characterized by a relatively low tariff schedule by joining the eu slovenia must now adopt a more protectionist tariff profile which will certainly impact its trade patterns

preference utilisation and tariff reduction in eu imports from acp countries textabstractdespite the long relationship between the eu and the african caribbean and pacific acp countries aimed at encouraging their exports while stimulating growth and investment the acp states still face difficulties in integrating into the world economy this paper examines the non least developed acp countries preferential trade with the eu the objective is to explain the determinants of preferential exports of acp countries towards the eu and to assess the impact of preferences on trade volumes we also investigate the existence of a threshold in the offered duty reduction under which traders have no incentives to ask for preferences

do workers prefer increasing wage profiles we present survey data challenging the assumption implicit in analyses of labor supply that all else being equal workers prefer declining over increasing wage profiles we test several explanations for our results including that a there is something special about wages e g their association with productivity as opposed to other types of payments that induces the preference for increasing wages b utility depends not only on absolute levels of consumption but also on changes in consumption over time and c respondents who prefer increasing wage profiles are irrational and would change their behavior if the rationale for preferring declining wages were explained

journal communication and influence in financial research this article uses the articles and citations from a set of eight finance journals to explore interjournal citation patterns the research interests of individual journals each journal s influence in particular areas areas of recent interest to finance and the extent of interdisciplinary borrowing by finance we find the following two journals comprise the research core of finance research most journals publish in a variety of research areas but are influential in a smaller number a higher level of interest in financial markets than in corporate finance or financial institutions and an overall low level of borrowing from outside disciplines in this study we use journal publication and citation data to explore the communication of knowledge through journals such data are used in finance research by zivney and bertin 1992 chung and cox 1990 and heck and cooley 1988 among others to explore research productivity and by jensen et al 1990 to explore journal ratings most recently schwert 1993 employs such data in examining the influence of the journal of financial economics since its inception these types of data are also useful for investigating knowledge communication because they provide evidence of both transmission and reception of knowledge among journals the remainder of this article is organized to address the following three issues interjournal communication journal publication and influence across research areas and interdisicplinary borrowing in the first section we describe our data we study interjournal communications by examining the citation patterns of an eight journal set in section ii then in section iii we investigate journal publication and influence by categorizing each journal s articles by research area and by measuring the citation frequency of a journal s articles in individual research areas we also explore the areas of high overall publication interest in section iv we examine the level of interdisciplinary borrowing in finance by categorizing every citation of every article by discipline concluding remarks are in section v

evolution of time preferences and attitudes toward risk this paper explores a general model of the evolution and adaption of hedonic utility it is shown that optimal utility will be increasing strongly in regions where choices have to be made often and decision mistakes have a severe impact on fitness several applications are suggested in the context of intertemporal preferences the model offers an evolutionary explanation for the existence of conflicting short and long run interests that lead to dynamic inconsistency concerning attitudes toward risk an evolutionary explanation is given for s shaped value functions that adjust to the decision maker s environment jel d81 d83 this paper is based on the hypothesis that individual decisions are guided by hedonic util ity an individual who faces several alternatives will choose the one that promises the greatest pleasure or happiness then given that the properties of a hedonic utility function determine individual behavior and individual behavior determines biological fitness evolutionary forces will have shaped our utility during the long time in which the modern human being evolved in this sense hedonic utility can be considered as a reward system that induces individuals to make optimal choices a view that is supported both by theory and evidence from neuroscience 1 as irving kupfermann eric r kandel and susan iversen 2000 express it pleasure is unques tionably a key factor in controlling the motivated behaviors of humans 1007 for the econo mist the interesting question is then about the properties of the evolutionary optimal reward system and how these properties adapt to the environment in which individuals make choices the present paper reconsiders and solves a general model of the evolution of utility suggested by arthur j robson 2001a which predicts how cardinal properties of utility functions should adapt to the decision environment it turns out that the optimal utility function will be steep in regions where decisions have to be made frequently and where wrong decisions would lead to large losses in fitness in those regions even small changes in consumption will cause large changes in happiness the evolution of context specific utility functions is then shown to be optimal whenever the decisions our ancestors had to make arrived in distinct choice situations the model can also be extended to incorporate learning about evolutionary relevant attributes of available options

on intertemporal selfishness how the perceived instability of identity underlies impatient consumption how does the anticipated connectedness between one s current and future identity help explain impatience in intertemporal preferences the less consumers are closely connected psychologically to their future selves the less willing they will be to forgo immediate benefits in order to ensure larger deferred benefits to be received by that future self when consumers measured or manipulated sense of continuity with their future selves is lower they accept smaller sooner rewards wait less in order to save money on a purchase require a larger premium to delay receiving a gift card and have lower long term discount rates

globalisation power and integration the political economy of regional and bilateral trade agreements in the americas this article explores the dynamics of regional economic integration in the americas economic globalisation or an increased volume of trade and investment and increased mobility of capital presents developing countries with new opportunities and challenges in particular the emergence of south east asia as a major site for the production and export of manufactured goods has generated intense competition among developing countries for foreign investment and export market shares in this article globalisation and ensuing competition is linked to the process of economic integration between the united states and countries of latin america and the caribbean fundamental changes in global patterns of investment and trade in combination with international and domestic power asymmetries contribute to the spread and proliferation of regional and bilateral trade agreements rbtas between the united states and its hemispheric neighbours

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

economics of development and the development of economics the purpose of this paper is to restore some historical perspective by highlighting the many contributions of development economics to the rest of economics we will point out to the younger generations how some of the glittering ideas they currently play with originally came from that now neglected field and how in some cases they have rediscovered with great fanfare insights that were well known in the development literature familiarity with which would have enriched their own work