children s welfare exposure and subsequent development abstract we examine the extent to which children are exposed to the welfare system through their mother s receipt of benefits and its impact on several developmental outcomes using data from the matched mother child file from the national longitudinal survey of youth nlsy we find that children s welfare exposure is substantial by age 10 over one third of all children will have lived in a welfare household black non hispanic children face a much higher rate of exposure simple correlations suggest a strong negative relationship between maternal welfare receipt and children s outcomes in this paper we implement three alternative strategies instrumental variables sibling differences and child fixed effects models designed to identify whether this correlation can be attributed to the mother s welfare receipt directly or to other characteristics of mothers who receive welfare regardless of whether or not those characteristics are observable to the researcher based on the results of all three estimation strategies we find little evidence of any causal link between maternal welfare receipt and children s developmental outcomes

ecosystem services from eye opening metaphor to complexity blinder abstract what started as a humble metaphor to help us think about our relation to nature has become integral to how we are addressing the future of humanity and the course of biological evolution the metaphor of nature as a stock that provides a flow of services is insufficient for the difficulties we are in or the task ahead indeed combined with the mistaken presumption that we can analyze a global problem within a partial equilibrium economic framework and reach a new economy project by project without major institutional change the simplicity of the stock flow framework blinds us to the complexity of the human predicament the ecosystem services approach can be a part of a larger solution but its dominance in our characterization of our situation and the solution is blinding us to the ecological economic and political complexities of the challenges we actually face

reflections on some unsettled problems of irrigation it is instructive to read the article that katharine coman published in the first issue of the american economic review to gain insight into the problems of collective action related to irrigation in the american west one gains further understanding of the problems coman identifies by using a social ecological system ostrom 2007 2009 to organize the diverse variables identified by coman one gains a general lesson from this analysis that changing the formal governance structure of irrigation is not sufficient to ensure efficient investment in facilities or that farmers are able to acquire property and make a reasonable living building knowledge and trust are however essential for solving collective action problems jel b31 n51 q15 q25 katharine coman wrote a fascinating article in the first issue of the american economic review dealing with the challenge of organizing effective irrigation systems in the united states west of the one hundredth meridian in the late nineteenth

economic policy and equality of opportunity we employ eop definitions that have appeared in the philosophical literature on distributive justice and apply it to a formal economic model which incorporates human capital investment and luck within and across generations the human capital acquisition technology features multiple stages of parental investments during childhood and on the job investments in adulthood the benchmark model features an intergenerational borrowing constraint education and low income subsidies which are financed by a progressive income tax the model is calibrated to the u s in 1990 on which we operationalize philosophical concepts by using the children s continuation values as outcomes and the state space of the recursive decision problem as circumstances this reveals that intergenerational investments should be accounted for when comparing measures of eop when conditioning on parental luck instead of outcomes eop looks much larger luck is overwhelmed by human capital accumulation in contrast when looking at children s net wealth instead of lifetime earnings eop looks worse intergenerational borrowing constraints are more pronounced in wealth than in earnings in counterfactual experiments we find that education subsidies increase utilitarian welfare and decrease overall inequality but does little to promote eop this is for two reasons when one takes the view that intergenerational efforts should be rewarded there is little room for improvement in eop to begin with on the other hand when one takes the view that intergenerational efforts should not be rewarded much stronger redistribution is needed for the policies to have a quantitative impact

deviations from purchasing power parity in the long run this paper demonstrates that deviations from purchasing power parity reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible rate periods for a wide variety of countries and in both monthly and annual data since this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage the paper proposes an alternative explanation which instead relies on financial arbitrage in bonds as the underlying mechanism this paper will demonstrate that deviations from purchasing power parity ppp reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible exchange rate periods for a wide variety of countries and in both monthly and annual data this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage the paper therefore proposes an alternative explanation which does not presuppose free trade in goods but which instead relies on financial arbitrage in bonds as the underlying mechanism the major implication of the theory and the results is that ppp is as likely to be violated in the long as in the short run as an empirical matter deviations from ppp can be observed for most currencies at any instant see kravis et al 21 stockman 37 and genberg 15 among others these deviations are typically both cumulative and persistent the real exchange rate can remain on either side of parity for lengthy but variable time intervals of a year or more as a consequence the current consensus shared

a context based procedure for assessing participatory schemes in environmental planning the efficiency of participatory schemes in environmental planning is an emerging research area and many issues are not solved yet regarding the assessment of such procedures it is essential for decision makers to identify improvement opportunities of participatory schemes we propose an original procedure to address such issue through a bargaining model from the signaling game literature which accounts for participation design as well as for agents preferences beliefs and bargaining power the model is calibrated using qualitative data from surveys in french local communities involved in municipal solid waste management model simulations are used to test for assumptions on the stakeholder dialogue and explore sensitivity of game outcomes to structural parameters we propose a set of performance indicators to identify the most effective participatory schemes in achieving convergence in stakeholder positions regarding environmental and land use planning

institutions and environmental governance a reconceptualization abstract this article presents the conceptual revisions needed to extend the new institutional approach to environmental governance from its current local and international domains of application to all governance solutions including national environmental and natural resource use policies and multi level governance solutions that are increasingly used to address global environmental change the article suggests that environmental governance is best understood as the establishment reaffirmation or change of institutions to resolve conflicts over environmental resources it also explains why the choice of these institutions is a matter of social justice rather than of efficiency the article suggests a way to understand formal and state centered governance solutions as forms of collective ownership not unlike common property the article demonstrates how institutional analysis can gain resolution by looking at the functional and structural tiers organization of governance functions and formulation of key institutional rules as key aspects of the design of governance institutions

the economic and financial gains from water markets in chile abstract chile is one of the few countries that has encouraged the use of markets in water resource management in order to assess the impact of water markets and transactions costs in chile four river valleys the maipo elqui limari and the azapa were selected as case studies transactions from the elqui and limari valleys during the years 1986 to 1993 were analyzed to determine the gains from trade from market transfers in the economic and financial analysis of water markets crop budgets were used to estimate the value of water in agricultural production the value of water use rights to urban water supply companies was estimated using the avoided cost of an alternative investment in a water storage reservoir the analysis demonstrated that the market transfer of water use rights does produce substantial economic gains from trade in both the elqui and limari valleys these economic gains produce rents for both buyers and sellers but buyers especially farmers growing profitable crops who buy water use rights and individuals buying water use rights for potable water supply receive higher rents then sellers large table grape producers in the limari valley and individuals buying water for human consumption in the elqui valley received the highest rents in the elqui valley net gains from trade per share were within the range of recent transfer prices of us 1000 in the limari valley gains from trade per share are 3 4 times the recent prices of us 3000 for a share of water from the cogoti reservoir where trading was active especially in the limari valley transactions costs have not presented an appreciable barrier to trading nonetheless in the large canal systems with fixed flow dividers in the elqui and maipo valley there have been very few transactions various factors contribute to the lack of trading but the absence of trading in these large canal systems highlights the costs of modifying fixed infrastructure especially for trades between farmers

testing for ppp the erratic behaviour of unit root tests abstract in this article we argue that the type of stationarity exhibited by the real exchange rate cannot be accommodated by the fixed parameter autoregressive homoscedastic models normally employed in the literature using a dataset including 39 countries and spanning a period of up to two centuries we analyse the behaviour of both wpi and cpi based measures of the real exchange rate in particular we compute a recursive t statistic and show that it has an erratic behaviour suggesting the presence of endemic instability it appears that the type of non stationarity present in the data is more complex than the unit root one this explains the contradictory results of previous studies using standard unit root tests for establishing whether ppp holds

on the intergenerational transmission of economic status we present a model in which human capital investments occur over the life cycle and across generations a la becker and tomes the human capital technology features multiple stages of childhood investments college and life cycle accumulation the model can explain a wide range of intergenerational relationships while remaining empirically consistent with cross sectional inequality much of the latter is determined by early investments in children so that borrowing constraints faced by young parents are important for understanding the persistence of economic status across generations education subsidies especially early on can significantly reduce the intergenerational persistence of economic status

real exchange rates in the short medium and long run abstract this paper uses long horizon autocorrelations and variance ratio statistics to test for long term mean reversion in real exchange rates unlike most previous tests of this hypothesis the tests do reject a random walk for monthly data in the post bretton woods era however the statistics indicate that positively correlated innovations rather than mean reversion are the source of the rejection tests using annual data for the twentieth century also reject the random walk in this case however the rejection can be attributed to mean reversion and confirms that ppp is a long term phenomenon

the scope for collective action in a large groundwater basin an institutional analysis of aquifer governance in western australia the gnangara groundwater system in western australia supports multiple ecological systems and human uses and is under unprecedented stress this paper examines some of ostrom s situational variables for the analysis of institutional choice in common pool resources as they relate to the gnangara case the institutional analysis identifies elements of the current governance institutions that could be altered to facilitate collective action we use data from a set of water licensing documents obtained from the state s department of water a number of factors are identified as inhibiting the potential for collective action current arrangements are top down in nature with all rules monitoring and any enforcement supplied by the state level management agency norms and expectations among appropriators appear to be competitive rather than co operative and discount rates appear to be high monitoring and enforcement are under supplied and opportunistic behaviour affects compliance the interactions between user and regulator influence the appropriation of flows and have resulting impacts on the resource stock we conclude that several factors in this case prejudice the development of collective action institutions by appropriator efforts alone the study highlights important aspects of the institutional arrangements in place and their likely effects upon the attitudes and behaviours of appropriators who along with wildlife and ecosystems depend on the common pool resource

tests for symmetric and asymmetric nonlinear mean reversion in real exchange rates new tests based on smooth transition autoregressive models for mean reversion in time series of real exchange rates are proposed one test forces mean reversion to be symmetric about the integrated process central case while the other permits asymmetry the tests are applied to monthly series of seventeen real exchange rates against the u s dollar and fourteen against the deutsche mark they reveal stronger evidence against the unit root null hypothesis than does the usual dickey fuller test

the price of virtue this article offers new evidence on the determinants of u s unwed birth rates from 1981 to 1990 we show that illegitimacy rates are positively and significantly correlated with payments under the aid to families with dependent children program over a period in which real afdc payments declined we attribute this result to a decline in the social sanctions for illegitimacy because social sanctions declined so did the cost of deviance as well as the price for which unwed women sold their virtue

real exchange rate behavior the recent float from the perspective of the past two centuries using annual data spanning two centuries for dollar sterling and franc sterling real exchange rates we find strong evidence of mean reverting real exchange rate behavior using simple stationary autoregressive models estimated on prefloat data we easily outperform nonstationary real exchange rate models in dynamic forecasting exercises over the recent float such stationary univariate equations explain 60 80 percent of the in sample variation in real exchange rates although the degree of short run persistence may be high the econometric estimates imply a half life of shocks to the real exchange rate of about 6 years for dollar sterling and a little under 3 years for franc sterling

breaking the cycle the effect of education on welfare receipt among children of welfare recipients abstract we examine the impact of high school graduation on the probability individuals from welfare backgrounds use welfare themselves our data consist of administrative educational records for grade 12 students in a canadian province linked with their own and their parents welfare records we address potential endogeneity problems by 1 controlling for ability using past test scores 2 using an instrument for graduation based on school principal fixed effects and 3 using a heckman singer type unobserved heterogeneity estimator graduation would reduce the probability of welfare receipt of drop outs by 1 2 to 3 4 effects are larger for individuals from troubled family backgrounds and low income neighbourhoods

analyzing collective action collective action problems pervade all societies as well as ecological systems used by humans substantial evidence has accrued during the last several decades that human actors are able to solve some but definitely not all collective action problems on their own without external rules and enforcement imposed from the outside in this article i review some of the structural variables that have been found to affect the likelihood of collective action then i address the need to base future work on collective action on a more general theory of human behavior than has been used to model collective action over the last five decades in the last section i discuss how structural variables affect the core relationships of reputation trust and reciprocity as these affect levels of cooperation

an institutional analysis of payments for environmental services abstract in this paper the characteristics and functioning of pes is analyzed from an institutional perspective while in theory pes is seen as a market solution to environmental problems as an alternative to state hierarchical and community governance a review of a large amount of case studies shows that pes in practice depends rather fundamentally on state and or community engagement hence pes are foremost a reconfiguration of the roles of public bodies and communities becoming core intermediaries or buyers first to establish pes rights to the land that delivers the environmental service must be clarified this demands public action second transacting over environmental amenities is very costly creating markets for environmental services depends therefore crucially on state and community facilitation hence buyers are often public agencies high transaction costs also influence price setting payments do not follow the market format as intermediaries frequently are setting the price with users often being unaware even of the fact that they pay finally the distinction between payments as incentives and as fair compensations is emphasized while payments may strengthen community relations and simplify action for environmental care they may also introduce a purely instrumental logic and in some cases worsen the environmental status by crowding out environmental virtues for the future greater awareness of these dynamics is warranted

institutional ecological economics abstract new institutional economics and its forerunners have we argue made important contributions to the evolving agenda of ecological economics the conceptualisation of environmental problems as instances of interdependence and the acknowledgement of positive transaction costs are key insights into the nature of environmental problems we also discuss how plurality of behavioural motivations and limited cognitive capacity have important implications for environmental decision making and its analysis we show how evolutionary and collective action theories offer complementary takes on the choice and change of environmental governance institutions and how the concept of social capital can enrich analyses of environmental governance we conclude that an emerging institutional ecological economics has the greatest relative advantage in analysing the design implementation and effectiveness of environmental governance solutions

some new stylized facts of floating exchange rates abstract this paper re examines real exchange rate behavior of oecd currencies under the current float using the more extensive dataset that an additional decade s worth of experience has made available what emerges is a new set of stylized facts which suggest that the problems of the current float were not as commonly believed generic to that system but in fact rather specific being largely confined to one sub period the early and mid 1980s and one currency the us dollar this dollar behavior ranks as one of the important puzzles of the past 25 years

purchasing power parity and markov regime switching we revisit the evidence on ppp in the twentieth century allowing for markov regime switching in the adf regression using lopez et al s 2005 extension of taylor s 2002 original data set our results are 1 for most countries there are periods over which the real exchange rate is stationary and ppp holds and periods over which the real exchange rate is non stationary and ppp does not hold namely regime dependent stationarity thus real exchange rate stationarity is a stochastic event itself 2 the probability that the real exchange rate is stationary is less than 50 for most countries 3 there is evidence of non stationarity during both the bretton woods and the recent float periods for the majority countries the comparative performance of ppp is slightly better during bretton woods than the recent float

the intergenerational transmission of welfare receipt a nonparametric bounds analysis using a nonparametric bounding method and data from the panel study of income dynamics i examine the effect that growing up in a household that receives aid to families with dependent children af

nonlinear mean reversion in real exchange rates abstract this paper modifies a unit root test procedure in the nonlinear star framework recently advanced by kapetanios et al journal of econometrics 2001 in press using a detrending methodology suggested by schmidt and phillips oxford bulletin of economics and statistics 54 1992 257 we derive an alternative unit root test and apply it to the bilateral real exchange rates for the g7 countries we find that the use of our test is able to uncover evidence of nonlinear mean reversion for most cases whereas the standard dickey fuller test based on the linear model cannot

afdc participation across generations william julius wilson s influential book the truly disadvantaged 1987 has sparked a vigorous debate about the existence and causes of an urban underclass while there is still no clear agreement about definitions the growing literature on the underclass focuses both on traits of the current generation and the traits of their parents if an underclass exists its current members are assumed to live in deteriorating inner cities to experience long spells of joblessness or welfare dependency and or to engage in illegal and antisocial activities furthermore these traits are assumed to be correlated across generations leading to a cycle of deprivation in this paper i focus on one such link across generations by examining the correlation in welfare participation of daughters and their parents i first present the state of knowledge about the extent to which children of parents who received aid to families with dependent children afdc are themselves more likely to participate in this welfare program second i discuss the remaining gaps in our understanding and give several contrasting altemative explanations for the observed correlation each with a different policy implication