bank reserve requirements as an impediment to signaling bank reserve requirements as an impediment to signaling effective legal reserve requirements may hamper the private capital market s ability to price bank deposits in the model developed here the market has less information about bank assets than the banks have and a bank can therefore signal its superior information through its choice of excess reserves mandatory reserves can inhibit such signaling and therefore result in inefficient deposit pricing i introduction although the basic of fractional reserve banking were explained by edgeworth 1888 the rationale for legal reserve requirements as well as the details of their design have continued to evolve and the impetus for reform has been gathering momentum in recent years the time honored liquidity motivations as well as the more contemporary monetary control consideration have been widely debated and while the latter remains popular increasing skepticism has been expressed by benston 1978 greenbaum and kanatas 1982 laurent 1979 1981 robertson and phillips 1974 and starleaf 1975 among others like many of these papers this one questions the benefits of reserve requirements whereas most dispute their value as a monetary policy instruments however a new argument presented here shows that reserve requirements may subvert efficient deposit pricing and thereby aggravate asset quality and bank solvency problems the argument relates to the recent proposal that the private capital markets should play an expanded role in monitoring the exposure of banks we examine the potential of a commercial bank s excess reserves to signal asset quality in an environment without deposit insurance the results apply so long as deposit insurance remains incomplete and where the risk of each bank s assets is a priori unknown to all except the bank in such a setting the efficient pricing of deposit depends on a depositor s ability to ascertain the risk characteristics of the bank s assets it is shown that excess reserves can signal the unknown risk and thus resolve the informational asymmetry the ability to signal using excess reserves varies inversely however with reserve requirements thus reserve requirements may impede the ability of excess reserves to inform market participants reserve requirements are likely to impede signaling when i loan rates and reserve requirements are high or ii reserve requirements are low but a bank s deposit base is large reserve requirements are unlikely to impede signaling when banks are similar in their asset characteristics the underlying intuition is discussed in section iii excess reserves based signaling may be important because of its potential in facilitating the private sector s monitoring of banks we show that any effort to expand the private market s monitoring of bank asset quality through more accurate deposit pricing presupposes an appropriate regulatory milieu exposing large depositors to losses may be a precondition for expanding the role of the private capital markets but this analysis indicates that reserve requirements and or inappropriate discount window pricing can subvert such efforts the potential for conflict between the federal reserve focusing on monetary policy and the deposit insurers seeking to mitigate their monitoring burden and exposure is palpable thus the model clarifies the conditions necessary to engage the private market in monitoring bank asset quality through deposit pricing these requirements are formidable and the interdependence of regulatory constraints used for monetary policy and bank soundness purposes could frustrate programs based on piecemeal reform the model posits a risk neutral two period economy where each bank issues deposits and makes risky loans at the outset although asset quality varies across bank the choice of assets is not endogenous this is an important simplification since in general a bank s asset choice will impinge on the posited signaling problem

marriage market divorce legislation and household labor supply this paper provides a theoretical framework for analyzing the impact of the marriage market and divorce legislation on household labor supply in our approach the sex ratio in the marriage market and the rules governing divorce are examples of distribution factors these factors are defined as variables that affect the household members bargaining position but not preferences or the joint budget set we extend the collective labor supply model developed by chiappori to allow for distribution factors we show that our model imposes new restrictions on the labor supply functions and eases the identification of individual preferences and the intrahousehold decision process the model is estimated using psid data for the year 1988 our results do not reject the restrictions imposed by the model also the sex ratio and divorce laws deemed favorable to women are found to affect labor supply behavior and the decision process in the directions predicted by the theory and to have sizable effects

rational household labor supply traditionally household behavior is derived from the maximization of a unique utility function in this paper we propose an alternative approach in which the household is modeled as a two member collectivity taking pareto efficient decisions the consequences of this assumption are analyzed in a three good model in which only total consumption and each member s labor supply are observable if the agents are assumed egoistic i e they are only concerned with their own leisure and consumption it is possible to derive falsifiable conditions upon household labor supplies from both a parametric and nonparametric viewpoint if alternatively agents are altruistic restrictions obtain in the nonparametric context useful interpretation stems from the comparison with the characterization of aggregate demand for a private good economy

labor supply of husbands and wives a simultaneous equations approach labor supply functions for married men and women are formulated as a dynamic simultaneous equations system which is estimated using panel data controlling for fixed individual effects allows marginal labor supply responses to be disentangled from permanent patterns in hours worked due to assortative mating the results suggest that the labor supply of husbands and wives without pre school children is not jointly determined in the short run while families with young children exhibit strong interactions in work hours and negative cross earnings effects neither the joint utility model of family labor supply nor an ad hoc traditional family model is supported by these results the data are for the united states and concern 381 couples from the denver income maintenance experiment excerpt

optimal prediction rule an application to debt reschedulings this paper develops and tests a new model for assessing country credit risk and is called multivariate cumulative sum this model is dynamic in nature and allows the user to predict early enough a financial distress that could lead to debt rescheduling the findings suggest that the model is capable of detecting potential debt repayment difficulties as early as three years in advance this has serious financing implications since the lender can have ample time to re evaluate his investment opportunities towards that country and thus avoid or limit a disastrous financial exposure

logistic regression and probability of default of developing countries debt this paper presents a logistic regression model for determining the default probability of developing countries debt the study incorporates 79 countries over a period of 19 years the model predicted the default of mexico brazil and argentina two years in advance results indicate that the model has high predictive power

household labor market choices and the demand for recreation this paper introduces household labor market choices into the demand for recre ation showing that the opportunity cost of time wage rate connection is severed when several household members have the opportunity to par ticipate in the labor market at fixed wages an ap plication of recreation demand for households in new bedford massachusetts shows that the rec reation demand models and estimates of con sumer surplus are sensitive to household labor market choices q26

introducing household production in collective models of labor supply in a recent paper chiappori 1992 i proposed a model of labor supply based on a collective representation of household behavior in this framework each household member is characterized by his or her own utility function and decisions are only assumed to result in pareto efficient outcomes i showed that these simple assumptions were sufficient to i generate testable restrictions on labor supply functions and ii recover individual preferences and the outcome of the decision process from observed behavior for the sake of simplicity the results were derived in the simplest possible case namely a static labor supply model with private consumptions such a framework was appropriate only for the purpose of the paper that is a preliminary exploration of the properties of collective models of labor supply the next step is to evaluate the robustness of the results to various extensions of the basic model this opens a general research program and generates a wide range of particular problems that it is hoped will be considered in the future among the most serious shortcomings of the 1992 model is the absence of household production as in most labor supply models agents were assumed to divide their time between market activities and leisure as apps and rees 1997 in this issue very rightly point out in their comment the absence of domestic production is far from innocuous as soon as welfare issues are considered for instance a low level of market labor supply will automatically be interpreted as a large consumption of leisure whereas it may in fact reflect the specialization of one of the members in domestic

country risk portfolio decisions and regulation in international bank lending abstract this paper examines the concept of country risk and relates it to the construction of efficient loan portfolios in international banking applicability of conventional portfolio theoretic concepts to the management of country lending exposure is examined as are the requisites of country review systems for national exposure management the issue of international banking regulation is assessed in this context focusing on the dangers inherent in national and international regulatory initiatives for optimum global capital allocation

two nested constant elasticity of substitution models of recreational participation and site choice an alternatives model and an expenditures model two demand modelsof recreational participation and s ite choice are developed an alternatives model and an expenditures model both assume maximization of utility over the year so allow for diminishing marginal utility they do not impose the restrictive assumption that where one goes on a trip isindependent of where one plansto go on other occas ions es timation iswith a nes ted constant elasticity of substitution preference ordering it is relatively easy to estimate because of global regularity it allowss itesto be complements and it hasthe potential to be locally flexible the application is to atlantic salmon fishing

banker judgement versus formal forecasting models the case of country risk assessment abstract the allocation of credit to less developed countries depends upon lenders judgements of country risk research in psychology suggests that human judgement may be prone to bias this paper uses the institutional investor country credit ratings as indicators of banker judgement in terms of their ability to predict the emergence of arrears on external debt service it is shown that bankers are overly pessimistic about the creditworthiness of less developed countries multivariate statistical models have a higher overall predictive accuracy although they may arguably be outperformed by banker judgement when allowance is made for the differential costs of type i and type ii errors

estimation of censored demand equations from large cross section data the article develops an alternative econometric methodology to estimate a system of censored demand equations using a large cross section data from colombian urban households the approach preserves the behavioralinformation expressed by zero expenditures and conforms with the requirements imposed by consumer theory in a way consistent with the random utility hypothesis we motivate the choice of the tobit modelas a statistical representation of consumer behavior and introduce the methodology by specifying the aids model modified according to both a translating and scaling demographic transformation we propose to estimate each demand equation in unrestricted form using the jackknife technique we then recover the demand parameters imposing the cross equations restrictions by using minimum distance estimation the empirical results of the censored demand system for specific households of policy relevance are reported copyright 2000 oxford university press

the limitations of market value accounting and a more realistic alternative abstract market value accounting mva might improve market and regulatory discipline on financial institutions unfortunately there are serious conceptual measurement and incentive problems with implementing mva that have not received significant attention these problems are suggested by the theory of asymmetric information and the role intermediaries play in solving information and monitoring problems after analyzing the problems with mva we develop an alternative approach that applies mva principles where they are most feasible and uses a statistical procedure where asymmetric information problems make mva particularly problematic an empirical analysis suggests that this procedure may substantially improve the distribution of regulatory discipline

evidence for the ineffectiveness of debt rescheduling as a policy instrument where an economy cannot meet its external debt service obligations it is forced to appeal to creditors for rescheduling of the debt as such rescheduling is evidence of a country s incapacity to carry a debt burden this article explores factors that explain the probability of a country requiring debt rescheduling in a panel framework the current literature is extended by modelling a dynamic random effects panel probit in order to identify a presence of state dependence after controlling for country heterogeneity we find clear evidence of state dependence when a 2 year lag of the dependent variable is allowed for suggesting that overall the fact that a country has experienced a rescheduling arrangement in the past does indeed make them more likely to experience further rescheduling the article stresses that in order to draw the appropriate policy conclusions from this finding one must understand that the debt rescheduling variable is itself a policy response variable the fact that further resche

consumption inequality and intra household allocations the current literature on consumption inequality treats all adults within the household equally making the implicit assumption that all consumption inequality is between not within households however increased marital sorting on earnings and the subsequent rise in the share of women s income in the household may have important implications for consumption inequality measured at the individual level we use an extension of the collective framework of chiappori to estimate a rule for assigning resources to individual household members we then construct a measure of individual level inequality by looking at implied changes in intra household allocations and explore the implications of our framework for the measurement of individual level versus household level consumption inequality our analysis which is based on households comprising one or two adults suggests that the conventional approach of ignoring intra household allocations underestimates the level of cross sectional consumption inequality by 30 and overstates the trend by two thirds our findings also indicate that increases in marital sorting on wages and hours worked can simultaneously explain virtually all of the decline in within household inequality and a substantial fraction of the rise in between household inequality in the uk since the 1970s

the demand for site specific recreational activities a characteristics approach abstract a model of constrained utility maximizing behavior is developed to explain how a representative individual allocates his ski days among alternative sites the physical characteristics of the ski areas and the individual s skiing ability are explicit arguments in the utility function the budget allocation is given along with the parametric costs to ski including travel costs entrance fees equipment costs and the opportunity cost of his time shares a site s share being the proportion of ski days that the individual spends at that site are derived and assumed multinomially distributed a stochastic specification which maintains the inherent properties of the shares maximum likelihood estimation confirms the basic hypothesis that costs ability and characteristics all are important determinants of the sites shares the model explains a large proportion of the skier s allocation of ski days a multinomial logit model of skier behavior is also developed and maximum likelihood estimates of its parameters are obtained examination of the summary statistics from my model and the logit model indicates that my model predicts the skier s choice of sites better than the logit model

altruism within the family reconsidered do nice guys finish last this paper criticizes the view that altruism either increases the benefits of group interactions or improves the allocation of resources within families the authors identify a variety of circumstances in which members of a group would prefer to interact with less altruistic individuals and in which the efficiency of resource allocation is inversely related to the prevailing degree of altruism reasons that altruism might be a counter productive social force include 1 it can alter the social utility possibility frontier in surprising and sometimes unfortunate ways 2 it can entail exploitability causing family members to behave in ways that leave all parties worse off 3 altruists may take inefficient actions to preempt exploitation and 4 family members may establish efficient resource allocation by punishing selfish behavior a rise in the level of altruism may lead to the exclusion of certain punishment strategies on the grounds of credibility 1 general positive result is that sufficiently high levels of altruism almost always lead to efficient resource allocation one should not necessarily expect to find strong altruistic linkages between spouses nor should altruism necessarily contributed to marital stability in addition to the connections between this work and the literature on family behavior this analysis has broader implications concerning the role of altruism in society and the evolution of social conscience

love and spaghetti the opportunity cost of virtue author s bergstrom ted abstract this paper was written in the form of two puzzles one puzzle concerns romeo and juliet who love spaghetti and each other they wear flimsy clothing and have abdominal hedonimeters the other puzzle asks who benefits from tax deductions to the rich for charitable deductions

recovering individual preferences for non market goods a collective travel cost model traditional recreation demand models do not make a distinction between a household and an individual as the reference decision making unit thus assuming that a family maximizes a single utility function even if the family consists of different individuals such models ignore the possibility of family members divergent preferences for non market goods this study proposes a novel approach the collective travel cost model ctcm to eliciting individual preferences for a non market good such as a recreation site by using revealed preference data this approach accounts for the intra household resource allocation and the role of each household member s preferences we show that the collective travel cost model can be applied to estimating a recreation demand model that yields individual welfare estimates appropriate for policy analysis of non market goods such as the willingness to pay to access a recreation site we find that how resources are distributed within the household reflects significant differences in welfare measures

estimation and welfare analysis with large demand systems we develop an approach for estimating individual or household level preferences for a large set of quality differentiated goods and for constructing hicksian welfare measures within the demand system framework our approach uses a maximum simulated likelihood procedure to recover estimates of the structural parameters and a multistage monte carlo markov chain algorithm for constructing hicksian consumer surplus estimates we illustrate our approach with a recreation dataset consisting of day trips to 62 mid atlantic beaches

an analytical framework for joint vs separate decisions by couples in choice experiments the case of coastal water quality in tobago this paper offers an analytical framework for analyzing joint and separate decisions by couples in the context of choice experiments for nonmarket valuation it reports results from an attribute based stated preference study in which members of couples are asked to conduct a choice experiment first individually and then jointly the choice context was the selection of which beach to visit while on vacation in tobago available alternatives differed in attributes related to coastal water and beach quality such as level of coastal development and fish abundance tests of preference equality are reported and structured so as to identify the intra couple decision making patterns under taste heterogeneity with both finite and continuous mixed logit results from the latter suggest that women s preferences are found to be predominant in the joint choice experiment results suggest caution in using individual choice rather than joint couple choice when valuing quality changes impacting on couple activities such as water and beach quality in tobago and call for further research on the topic

estimating consumption economies of scale adult equivalence scales and household bargaining power how much income would a woman living alone require to attain the same standard of living that she would have if she were married what percentage of a married couple s expenditures are controlled by the husband how much money does a couple save on consumption goods by living together versus living apart we propose and estimate a collective model of household behaviour that permits identification and estimation of concepts such as these we model households in terms of the utility functions of its members a bargaining or social welfare function and a consumption technology function we demonstrate generic non parametric identification of the model and hence of a version of adult equivalence scales that we call indifference scales as well as consumption economies of scale the household s resource sharing rule or members bargaining power and other related concepts copyright 2013 oxford university press

the microeconomics of efficient group behavior identification1 consider a group consisting of s members facing a common budget constraint p 1 any demand vector belonging to the budget set can be privately or publicly consumed by the members although the intragroup decision process is not known it is assumed to generate pareto efficient outcomes neither individual consumptions nor intragroup transfers are observable the paper analyzes when to what extent and under which conditions it is possible to recover the underlying structure individual preferences and the decision process from the group s aggregate behavior we show that the general version of the model is not identified however a simple exclusion assumption whereby each member does not consume at least one good is sufficient to guarantee generic identifiability of the welfare relevant structural concepts

predicting the quantity of ldc debt rescheduling in this paper we estimate a type 2 tobit model to explain both the timing and quantity of developing country debt rescheduling using an annual data set for 27 countries from 1977 1981 and six monthly data for 59 countries from 1977 1985 we obtain a satisfactory model for both the timing and quantity of rescheduling which will be more useful for country risk analysis than models which predict the timing alone

political risk in emerging and developed markets using analyst estimates of political risk we show that political risk represents a more important determinant of stock returns in emerging than developed markets average returns in emerging markets experiencing decreased political risk exceed those of emerging markets experiencing increased political risk by approximately 11 per quarter in contrast the difference is only 2 5 per quarter for developed markets further the difference between the impact of political risk in emerging and developed markets is statistically significant we also document a global convergence in political risk over the last 10 years political risk has decreased in emerging markets and increased in developed markets if this trend continues the differential impact of political risk in emerging vs developed markets may narrow

a cournot nash model of family decision making this paper models a two person family each family member is utility maximising yet family members are interdependent because of caring and public goods within the family the two family members interdependent utility maximisation problems are first solved using a non cooperative or cournot nash game theoretic framework the cournot nash equilibrium is then used as a threat point in a bargaining game the paper provides a rigorous derivation of the properties of household demands a full analysis of the determinants of intra household resource allocation including the effect of varying household bargaining power and consideration of policy implications

stage financing and the role of convertible securities venture capital financing is characterized by extensive use of convertible securities and stage financing in a model where a venture capitalist provides staged financing for a project we illustrate an advantage of convertible debt or warrants over a mixture of debt and equity essentially when the venture capitalist retains the option to abandon the project the entrepreneur has an incentive to engage in window dressing and bias positively the short term performance of the project reducing the probability that it will be liquidated an appropriately designed convertible security prevents such behaviour because window dressing also increases the probability that the venture capitalist will exercise the conversion option becoming the owner of a substantial fraction of the project s equity

recovering hicksian consumer surplus within a collective model hausman s method for the household the purpose of this paper is to describe the implications of the collective model of household behavior for the methods used to estimate the economic value of non marketed environmental resources after demonstrating how the separability restrictions inherent in the collective model allow individual preference and household income allocation choices to be distinguished the paper demonstrates how the framework can be used to recover hicksian consumer surplus an algebraic example is used to illustrate how the framework can be used in valuing environmental resources

bank reserve requirements and monetary aggregates the paper criticizes the traditional belief in the usefulness of reserve requirements for the control of monetary aggregates it is shown that the efficacy of this policy tool is maintained only if the incentive it provides for financial innovations is ignored if the relevant monetary aggregate is broader than that which is reserve constrained we show that reserve requirements may be counter productive an alternative policy involving the payment of interest on voluntarily held reserves is proposed and analyzed it is shown that this approach has the stabilization effects attributed to reserve requirements but without any of the latter s adverse incentives

child health and household resources in south africa evidence from the old age pension program this paper presents nonparametric evidence on the effects of the expansion of the old age pension program in south africa on child health did this increase in household resources improve child health and nutrition does the gender of the recipient of the pension affect its impact the answers to these questions have very important policy implications there is evidence that inadequate nutrition during childhood and even in utero affects long term physical development as well as the development of cognitive skills this in turn affects productivity later in life see partha dasgupta 1993 john strauss and duncan thomas 1998 t paul schultz 1999 in the united states the evidence suggests that monetary transfers to the poor have very little impact on child welfare janet currie 1995 susan mayer 1997 however the effects of parental income and monetary transfers on child outcomes are likely to be of greater magnitude among poor households in developing countries the south african pension program provides an unusual opportunity to evaluate the possible effects of such a monetary transfer this paper exploits the rapid increase in the coverage and benefits of the old age pension program in south africa which took place in the early 1990 s anne case and angus deaton 1998 at the end of the apartheid era the government committed to achieving parity of benefits and eligibility requirements between whites and africans this was achieved mostly by increasing the benefits received by the africans in 1993 80 percent of african women above age 60 and 77 percent of african men above 65 received the pension the maximum benefit of 370 rands per month aproximately 3 per day was equal to half of the minimum wage and about twice the median income per capita in rural areas due to living arrangements inherited from the apartheid era close to onethird of african children under the age of 5 currently live with a pension recipient children who live with a pension recipient tend to come from relatively disadvantaged backgrounds as a consequence they tend to be smaller than other children their age to estimate the effect of receiving a pension on the anthropometric status of children this paper exploits the fact that height reflects accumulated investments in child nutrition the larger the proportion of her life during which a child is well nourished the taller she will be given her age due to the expansion of the program in the early 1990 s individuals of qualified age became more likely to receive a pension and the benefits became substantially larger thus children born after the expansion of the program are more likely to have spent a larger fraction of their lives wellnourished if they live with a pension recipient to the extent that the pension resulted in improved nutrition in this paper i present nonparametric evidence of the program s effect on nutrition based on this observation

children s resources in collective households identification estimation and an application to child poverty in malawi children s resources matter but they are hard to identify because consumption is typically mea sured at the household level modern collective household models permit some identication of indi vidual household member resources but these models typically either ignore children or treat them as attributes of adults we propose a collective household model in which children are people with their own utility functions possibly assigned to them by parents extending the frameworks of browning chiappori and lewbel 2007 and lewbel and pendakur 2008 we show identication of children s resource shares within households we invoke semiparametric restrictions on individual preferences and use data on the household level consumption of assignable private goods to achieve identication of each individual s resource share within the household we show this without being able to observe consumption by individual household members of goods that are partly or wholly shared goods within the household further we obtain identication using only engel curves and so do not require ob served price variation in the data we estimate our model using data from malawi andnd that as the number of children in a household grows women s resource shares fall and children s resource shares rise and men s resource shares are basically unchanged we alsond evidence of gender bias against girls and observe that the resource shares of mothers and children are increasing in the education level of the mother finally we use our estimates to construct poverty indices at the person level andnd that per capita poverty indices understate the incidence of child poverty in malawi

regulation asymmetric information and auditing this article analyzes a model of a regulated firm that is better informed about its cost function than is the regulator by auditing at a cost however the regulator is assumed to be able to observe the realized cost of the firm if the regulator finds that the firm had misrepresented its costs at the time at which prices were set he can order a refund to consumers in the optimal policy the regulator audits when the firm reports for pricing purposes that its costs will be high and orders a refund when the auditfinds that realized costs are lower than anticipated given the original report a separation result that obtains for an important case indicates that the initial pricing decision is independent of the auditing decision the auditing decision however depends on the price that was initially set the optimal auditing strategy is characterized and the nature of the welfare gains are identified the methodology used in the analysis involves the characterization of an equilibrium of a revelation game with an ex post observable

asking for individual or household willingness to pay for environmental goods implication for aggregate welfare measures the aggregate welfare measure for a change in the provision of a public good derived from a contingent valuation cv survey will be higher if the same elicited mean willingness to pay wtp is added up over individuals rather than households a trivial fact however once respondents are part of multi person households it becomes almost impossible to elicit an uncontaminated wtp measure that with some degree of confidence can be aggregated over one or the other response unit the literature is mostly silent about which response unit to use in wtp questions and in some cv studies it is even unclear which type has actually been applied we test for differences between individual and household wtp in a novel web administered split sample cv survey asking wtp for preserving biodiversity in old growth forests in norway two samples are asked both types of questions but in reverse order followed by a question with an item battery trying to reveal why wtp may differ we find in a test between samples that the wtp respondents state on behalf of their households is not significantly different from their individual wtp however within the same sample household wtp is significantly higher than individual wtp in particular if respondents are asked to state individual before household wtp our results suggest that using individual wtp as the response unit may overestimate aggregate wtp thus the choice of response format needs to be explicitly and carefully addressed in cv questionnaire design and further research in order to avoid the risk of unprofitable projects passing the benefit cost test

collective labor supply and welfare the paper develops a general collective model of household labor supply in which agents are characterized by their own possibly altruistic preferences and household decisions are only assumed to be pareto efficient an alternative interpretation is that there are two stages in the internal decision process agents first share nonlabor income according to some given sharing rule then each one optimally chooses his or her own labor supply and consumption this setting is shown to generate testable restrictions on labor supplies moreover the observation of labor supply behavior is sufficient for recovering individual preferences and the sharing rule up to a constant finally the traditional tools of welfare analysis can be adapted to the new setting

married with children a collective labor supply model with detailed time use and intrahousehold expenditure information we propose a collective labor supply model with household production that generalizes an original model of blundell chiappori and meghir 2005 in our model adults individual preferences not only depend on own leisure and individual private consumption of market goods they also depend on the consumption of domestic goods which are produced by combining goods bought on the market with individuals time we apply our model to new and unique data on dutch couples with children the data contains detailed information about the spouses time use and the intrahousehold allocation of all expenditures our application uses a novel estimation strategy that builds upon the familiar two stage allocation representation of the collective model we obtain interesting and plausible empirical results spouses preferences depend on the consumption of domestically produced goods including children s welfare in addition pareto weights depend on variables like the individual wages and the share in the household s nonlabor income finally and perhaps surprisingly we do not nd evidence that mothers care more for their children than fathers this paper draws on data of the liss panel of centerdata special thanks go to marika de bruijne and arthur van soest who helped to construct the questionnaire and to guillaume schollier

time and the recreational demand model in this paper a theoretically consistent approach to including time costs in recreational demand models is developed the demand model is conditional on the recreationist s labor market situation for individuals at corner solutions in the labor market utility maximization is subject to two constraints leading to a demand function with travel costs and travel time as independent variables with interior solutions in the labor market time is valued at the wage rate and combined with travel costs to produce one full cost variable in an illustration welfare measures based on the new model are estimated for a sample of sportfishermen

gender agricultural production and the theory of the household virtually all models of the household assume that the allocation of resources is pareto efficient within many african households agricultural production occurs on many plots controlled by different members of the household pareto efficiency implies that factors should be allocated efficiently across these plots i find in contrast that plots controlled by women are farmed much less intensively than similar plots within the household controlled by men the estimates imply that about 6 percent of output is lost because of inefficient factor allocation within the household the paper suggests a new approach to modeling intrahousehold allocation consistent with the empirical results

efficient intra household allocations a general characterization and empirical tests the neoclassical theory of demand applies to individuals yet in empirical work it is usually taken as valid for households with many members this paper explores what the theory of individuals implies for households that have more than one member we make minimal assumptions about how the individual members of the household resolve conflicts all we assume is that however decisions are made outcomes are efficient we refer to this as the collective setting we show that in the collective setting household demands must satisfy a symmetry and rank condition on the slutsky matrix we also present some further results on the effects on demands of variables that do not modify preferences but that do affect how decisions are made we apply our theory to a series of surveys of household expenditures from canada the tests of the usual symmetry conditions are rejected for two person households but not for one person households we also show that income pooling is rejected for two person households we then test for our collective setting conditions on the couples data none of the collective setting restrictions are rejected we conclude that the collective setting is a plausible and tractable next step to take in the analysis of household behavior

spending on children direct survey evidence we present estimates of spending on children from a danish expenditure survey which asks respondents directly about allocations of expenditures to individual household members our main finding is that the average danish family allocates 44 of total assignable spending on non food non durables and services to children there is considerable variation across households more is spent on older children and expenditure on children is an increasing concave function of the number of equivalent children we find that households in which the mother has had a child by a previous partner spend 24 less on children than otherwise similar households

household willingness to pay equals individual willingness to pay if and only if the household income pools abstract i show household and individual willingness to pay are equal if and only if household choices satisfy income pooling providing a test of whether the individual respondent speaks for the household an assumption implicit in much stated preference practice

individual and household willingness to pay for public goods the issue of whether willingness to pay wtp for the benefits generated by a public good should be elicited on an individual or on a household basis is addressed differences between individual and household wtp may arise when members of the household are mutually altruistic it is shown that for general specifications of altruism household wtp is less than the sum of household members individual wtp implications for the choice between household and individual measures of wtp are considered and issues in the elicitation of household wtp are addressed

debt arrears in latin america do political variables matter political instability and debt problems characterise latin america in the last two decades this article estimated a logit model of debt arrears including economic as well as political variables our results suggested that both economic and political indicators affected debt repayment in latin america during 1971 86 we also cast a shadow on the viewpoint that authoritarian and military regimes have an advantage over democratically elected governments with regard to debt related issues

spousal control and intra household decision making an experimental study in the philippines i elicit causal effects of spousal observability and communication on financial choices of married individuals in the philippines when choices are private men put money into their personal accounts when choices are observable men commit money to consumption for their own benefit when required to communicate men put money into their wives account these strong treatment effects on men but not women appear related more to control than to gender men whose wives control household savings respond more strongly to the treat ment and women whose husbands control savings exhibit the same response changes in information and communication interact with underlying control to produce mutable gender specific outcomes

a test of the unitary and collective models of household labour supply this paper tests the unitary and the collective household labour supply models within a structural framework a nonlinear unrestricted household labour supply system is postulated and the set of parametric restrictions imposed by each model is derived our results generally reject the income pooling restrictions embodied in the unitary model also the symmetry of cross wage effects is rejected however the collective model is not rejected for groups with no pre school children

a dual approach to modeling corner solutions in recreation demand abstract the dual approach of lee and pitt to estimating demand systems for which individuals often choose not to consume one or more of the available goods provides a utility consistent framework for estimating preferences over visits to recreation sites because of the complexity of the model however this approach has not been applied in the recreation demand literature this paper provides the first application of the model to recreation demand and develops a methodology for conducting welfare analysis relying on monte carlo integration to derive estimates of compensating variation the methods are applied to the demand for fishing in the wisconsin great lakes region

early warning of debt rescheduling abstract this study addresses the early warning of debt rescheduling by developing countries the early warning capability of different statistical methods is compared by using the same data base i e 52 countries from 1974 to 1978 the results especially show that cluster analysis techniques don t do well and that multiple discriminant analysis is inferior to logit analysis the integration of qualitative and projected data is proposed in order to arrive at bank specific systems

monetary policy and country risk this article develops an econometric model in order to study country risk behaviour for six emerging economies argentina mexico russia thailand korea and indonesia by expanding the country beta risk model of harvey and zhou 1993 erb et al 1996a b and gangemi et al 2000 towards this end we have analysed the impact of macroeconomic variables especially monetary policy upon country risk by way of a time varying parameter approach the results indicate an unstable effect of monetary policy upon country risk in periods of crisis however this effect is stable in other periods and the favero giavazzi effect is not verified for all economies with an opposite effect being observed in many cases

on the empirical implementation of some game theoretic models of household labor supply this paper discusses some issues in the empirical implementation of game theoretic models of household labor supply in particular we focus on the identification problems inherent in many of these models as an illustration we estimate a game theoretic model which uses data on preferred working hours as additional identifying information

intra household resource allocation an inferential approach if household income is pooled and then allocated to maximize welfare then income under the control of mothers and fathers should have the same impact on demand with survey data on family health and nutrition in brazil the equality of parental income effects is rejected unearned income in the hands of a mother has a bigger effect on her family s health than income under the control of a father for child survival probabilities the effect is almost twenty times bigger the common preference or neoclassical model of the household is rejected if unearned income is measured with error and income is pooled then the ratio of maternal to paternal income effects should be the same equality of the ratios cannot be rejected there is also evidence for gender preference mothers prefer to devote resources to improving the nutritional status of their daughters fathers to sons

the choice of ski areas estimation of a generalized ces preference ordering with characteristics abstrac t a generalized ces gences preference ordering is developed and estimated it incorporates characteristics of both the individual and the activities the gences is used to explain the share of ski time an individual allocates to each ski area as a function of site characteristics skiing ability and costs the stochastic specification limited the shares to the 0 1 simplex this specification was found to be more appropriate than the conventional normality assumption the null hypothesis that preferences are homothetic and additive is rejected charactenrstics ability and costs are important determinants of demand the estimated elasticities provide numerous insights into skier behavior

the value of automobile travel time implications for congestion policy abstract public policy has remained stoutly resistant to the economic profession s call to use congestion tolls to minimize the social costs from automobile congestion this paper explores this issue by using stated preference models to estimate the value that commuters are willing to pay to save travel time we find that this value is low and surprisingly insensitive to travel conditions and how toll revenues are used it appears that even high income commuters having adjusted to congestion through their modal residential workplace and departure time choices simply do not value travel time savings enough to benefit substantially from tolls

fiscal sustainability and monetary versus fiscal dominance evidence from brazil 1991 2000 under a monetary dominant md regime the primary surplus adjusts to limit debt growth permitting monetary policy to be conducted independently of fiscal financing requirements in brazil some evidence favours an md regime for 1995 1997 but not for the decade of the 1990s as a whole while fiscal adjustments of 1999 yielded a primary surplus of about 3 of gdp consistent with solvency a credible md regime would require further adjustments of the primary surplus if debt increases growth falls or interest rates rise

a unified approach to incorporating demographic or other effects into demand systems a general method of introducing demographic effects into any demand system using modifying functions is described which permits complicated interactions of demographic variables with prices and expeditures theorems give properties the modifying functions must have to ensure integrability of the resulting system demand equations of the new system are given explicitly as functions of the original demand equations and the modifying functions the procedure is interpreted as altering a households technology and is shown to encompass adult equivalent scales and related methods examples of modifying functions are derived and applications of the technique to uses other than demographic variation are considered excerpt

a model of the demand for investment banking advising and distribution services for new issues this paper presents a theory of the demand for investment banking advising and distribution services for the case in which the investment banker is better informed about the capital market than is the issuer and the issuer cannot observe the distribution effort expended by the banker the optimal contract under which the offer price decision is delegated to the better informed banker in order to deal with the adverse selection and moral hazard problems resulting from the informational asymmetry and the observability problem is characterized the model demonstrates a positive demand for investment banking advising and distribution services and provides an explanation of the underpricing of new issues an investment banker performs three functions which may be of value to an issuer of new securities underwriting advising and distribution this paper presents a theory of the demand for investment banking advising and distribution services based on an informational asymmetry between an issuer of new securities and an investment banker ultimately a theory of the organization of the financial intermediary industry is required that would predict which firms would use which types of financial intermediaries for which purposes and which firms would raise capital without engaging the services of a financial intermediary only a limited set of such predictions are developed here in the context of a model of a fixedprice offering under a negotiated contract in which the investment banker is

public good valuation and intra family allocation i derive values of marginal changes in a public good for two person households measured alternatively by household member i s willingness to pay wtp for the good on behalf of the household wtp i h or by the sum of individual wtp values across family members wtp c households are assumed to allocate their resources in efficient nash bargains over private and common household goods wtp i h is then defined by trade offs between the public good and the household good and wtp c by trade offs of between the public good and private goods wtp i h is found to be higher lower than wtp c when member i has a relatively high low marginal valuation of the public good but tends on average to equal wtp c as a consequence individuals tend to represent households correctly on average when questioned about the household s wtp for a public good even when they are purely selfish and answer truthfully adding all members wtp answers on behalf of the household then leads to double counting pure and paternalistic altruism the latter attached to consumption of the public good move each member s wtp on behalf of the household closer to the true sum of individual wtp but only paternalistic altruism raises this sum

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium

household willingness to pay and income pooling a comment abstract we demonstrate some problems with munro 2005 household willingness to pay equals individual willingness to pay if and only if the household income pools economics letters 88 227 230 furthermore we reconsider income pooling in a slightly changed framework and prove income pooling implies that household willingness to pay is equal to minimal individual willingness to pay the converse is not true

an empirical model of the brazilian country risk an extension of the beta country risk model this paper develops a statistical model to study the brazilian country risk using a country beta model in the spirit of harvey and zhou 1993 erb et al 1996a b and gangemi et al 2000 specifically the impact of macroeconomic variables is analysed using a time varying parameter approach an extension of the original model is applied in order to verify the parameters stability over time it is found that monetary policy had a significant and stable impact on brazil s country risk and international reserves presented a significant impact only during the fixed exchange rate period

income and outcomes a structural model of intrahousehold allocation there is evidence from several sources that one cannot treat many person households as a single decision maker if this is the case then factors such as the relative incomes of the household members may affect the final allocation decisions made by the household we develop a method of identifying how incomes affect outcomes given conventional family expenditure data the basic assumption we make is that household decision processes lead to efficient outcomes we apply our method to a sample of canadian couples with no children we find that the final allocations of expenditures on each partner depend significantly on their relative incomes and ages and on the level of lifetime wealth

estimation of complete demand systems from household budget data the linear and quadratic expenditure systems in this paper we explore two issues in empirical demand analysis the estimation of complete systems of demand equations using household budget data section i and the incorporation of demographic characteristics into such systems section ii although there are numerous studies which use time series data to estimate complete demand systems and many which estimate engel curves from household budget data there are virtually none which combine budget data from different periods to estimate complete systems since each budget study corresponds to a single price situation one might conjecture that estimation of complete systems would not be possible unless budget studies were available from a large number of periods this is incorrect in section i we argue that interesting complete demand systems can be estimated from a small number of budget studies despite the limited price variability represented in such data to demonstrate this we use budget study data for two periods to estimate a pair of related demand systems the familiar linear expenditure system les and a quadratic expenditure system qes a generalization of les in which the demand equations are quadratic in total expenditure the inclusion of demographic variables in the analysis of household consumption patterns is desirable because there are likely to be systematic differences in the consumption behavior of households with different demographic characteristics but the effects of demographic characteristics have seldom been studied within the framework of complete demand systems in section ii we propose translating as a general method for incorporating demographic variables into complete systems of demand equations this method has not previously been discussed as a general technique for bringing demographic variables into demand systems although it has been employed in several studies to improve the estimates of the les and the qes presented in section i we reestimate these two systems using translating to incorporate family size

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had