horizontal and vertical intra industry trade an empirical test of the homogeneity hypothesis in this paper we study if and how country specific factors affect intra industry trade iit when heterogeneity among sectors is allowed for the paper is novel in that it is the first that addresses an issue raised by greenaway et al oxford bulletin of economics and statistics 1999 61 365 specifically employing data on a sample of oecd countries over a 10 year period 1997 1998 we build on and take forward a methodology pioneered by balassa and bauwens economic journal 1987 97 923 to study the determinants of horizontal and vertical iit using a multi industry approach in doing this we seek to avoid the more extreme measurement problems by allowing for heterogeneity among sectors when country specific factors are analysed and among countries when industry specific factors are considered the results are compared to those obtained using the traditional method that does not consider intersectoral heterogeneity we find that the two models yield statistically different results moreover the tests regarding the choice of model that is econometric tests designed to compare one model with another when different sets of explanatory variables are used confirm the relevance of intersectoral heterogeneity in affecting iit to the best of our knowledge a similar analysis has not yet appeared in the empirical literature on iit

estimating willingness to pay from survey data an alternative pre test market evaluation procedure closed ended contingent valuation surveys are used to assess demands in hypothetical markets and recently have been applied widely to the valuation of non market environmental resources this int

the factor content of foreign trade in the factor proportions trade theory the heckscher ohlin theory the factor content of the pattern of trade plays a major role both in theoretical and in empirical investigations it is therefore valuable to identify restrictions on permissible vectors of the factor content of trade which necessarily hold in equilibrium if certain restrictions are empirically testable they can be used for preliminary testing of the theory before a more thorough examination is undertaken or they can be used to reject the theory it is my intention to develop in this paper a set of restrictions on the vectors of the factor content of trade which can be used for these purposes it is well known that autarky commodity prices impose restrictions on possible patterns of trade these restrictions provide a precise prediction of the pattern of trade for a two country two commodity world in the sense that the exporter of a good is readily identifiable from autarky price data as the country with the lower relative price of the good i will start by showing that in the presence of factor price equalisation autarky factor rewards impose restrictions on the factor content of trade patterns which are completely analogous to the restrictions imposed by autarky commodity prices on the commodity patterns of trade this result is in line with the view that in the factor proportions model trade in commodities represents indirect trade in factor services unfortunately these restrictions rely on autarky information and they are therefore not very useful for empirical work in order to overcome this difficulty i explore an alternative approach i argue that common predictions of the factor content of trade flows which are based on post trade observable data the data relevant for empirical studies rely on unnecessarily restrictive assumptions i e the assumption that preferences are homothetic and identical across countries and the assumption of factor price equalisation the assumption of identical homothetic preferences seems to be necessary when factor price equalisation is assumed because in this case there is an indeterminancy in the pattern of production nevertheless the two assumptions taken together imply the same factor content of a country s net import vector from the rest of the world for every equilibrium production pattern however in a many country world the factor content of bilateral trade flows depends on the realised production patterns and they cannot therefore be predicted i will show that in the absence of factor price equalisation which many

genetically modified crops corporate pricing strategies and farmers adoption the case of bt cotton in argentina this article analyzes adoption and impacts of bt cotton in argentina against the background of monopoly pricing based on survey data it is shown that the technology significantly reduces insecticide applications and increases yields however these advantages are curbed by the high price charged for genetically modified seeds using the contingent valuation method it is shown that farmers average willingness to pay is less than half the actual technology price a lower price would not only increase benefits for growers but could also multiply company profits thus resulting in a pareto improvement implications of the sub optimal pricing strategy are discussed recently genetically modified gm crops have brought about important changes in the global market for agricultural technologies especially seeds prospects of high economic returns and tightened intellectual property rights iprs have provided new incentives for the private sector to invest in crop improvement and extend its business to nontraditional markets the increasingly proprietary nature of seed technologies has implications for farmers adoption and benefit distribution private innovators endowed with a patent on a technology will attempt to capture the gains from their innovation through monopoly pricing moschini and lapan recent studies have looked into the partitioning of welfare created by gm crops among agricultural producers consumers and innovating input firms e g moschini lapan and sobolevsky falckzepeda traxler and nelson in these studies however the market price of the technology is

state responses to fiscal crises the effects of budgetary institutions and politics this paper explores the dynamics of state taxes and spending during the late 1980s when regional economic downturns and increased expenditure demands led to substantial state budget deficits more restrictive state fiscal institutions such as no deficit carryover rules and tax and expenditure limitations are correlated with more rapid fiscal adjustment to unexpected deficits political factors are also important when a single party controls the state house and the governorship deficit adjustment is much faster than when party control is divided in gubernatorial election years tax increases and spending cuts are both significantly smaller than at other times

fiscal institutions fiscal policy and sovereign risk premia in emu we investigate the effect of fiscal institutions such as the strength of the finance minister in the budget process and deficits on interest rate spreads of eurozone countries deficits significantly increase risk premia measured by relative swap spreads the effect of deficits is significantly lower under emu this effect partly results from neglecting the role of fiscal institutions after controlling for institutional changes fiscal policy remains a significant determinant of risk premia in emu better institutions are connected with lower risk premia furthermore deficits matter less for risk premia in countries with better institutions markets acknowledge that better institutions reduce fiscal difficulties rendering the monitoring of annual developments less important

hypothetical bias cheap talk and stated willingness to pay for health care subjects with rheumatoid arthritis ra enrolled in an online panel were asked to evaluate pairs of treatment alternatives with different attributes half of the sample saw a cheap talk text preference parameters were estimated using random parameters logit models to account for unobserved taste heterogeneity the models also were estimated in willingness to pay wtp space instead of conventional utility space cheap talk not only affected the coefficient on the cost attribute but also preferences for other attributes wtp estimates were generally lower in cheap talk sample except for the most important attribute and a 2 level attribute subjects who were presented with cheap talk discriminated between the adjoning attribute levels better than the subjects in the control sample

coffee economic fluctuations and stabilisation an intertemporal disequilibrium model with capital market imperfections abstract this paper develops a two period disequilibrium model of a small open economy under keynesian unemployment to analyse the effects of temporary anticipated and permanent coffee price shocks the model includes a government sector that administers a commodity price stabilisation fund and allows for capital market imperfections the type of capital market imperfection makes an important difference to the results of the model in particular when the government borrows on more favourable terms than individuals the coffee price stabilisation fund reduces the multiplier effects of temporary and permanent shocks not only in the first but also in the second period by contrast when individuals face an upward sloping supply of capital curve the stabilisation fund shifts some of these effects from the first to the second period

specification of the logit model the case of valuation of nonmarket goods abstract we address the proper specification of the logit model for estimation of nonmarket commodity demand economic theory is used to show the conditions which must be met by the logit functional form if it is to yield valid estimates of welfare change measures and demand relationships an empirical example is used to illustrate the argument recreational boating data were collected using the contingent valuation method cvm in texas in one instance the demand curve is positively sloped due to the specific functional form chosen the estimated demand curve for the theoretically preferred functional form has the expected negative slope

measuring the consumer benefits of improving farm animal welfare to inform welfare labelling abstract policy makers in the european union are envisioning the introduction of a community farm animal welfare label which would allow consumers to align their consumption habits with their farm animal welfare preferences for welfare labelling to be viable the market for livestock products produced to higher welfare standards has to be sufficiently segmented with consumers having sufficiently distinct and behaviourally consistent preferences the present study investigates consumers preferences for meat produced to different welfare standards using a hypothetical welfare score data is obtained from a contingent valuation study carried out in britain the ordered probit model was estimated using bayesian inference to obtain mean willingness to pay we find decreasing marginal wtp as animal welfare levels increase and that people s preferences for different levels of farm animal welfare are sufficiently differentiated making the introduction of a labelling scheme in the form of a certified rating system appear feasible

openness to trade in manufactures in the oecd abstract how open are the advanced economies to trade with each other in this paper openness is calculated relative to the predictions of the monopolistic competition trade model using data on manufacturing trade and production in the oecd in 1985 the paper finds that 1 japan imports much less than other large oecd countries while the european countries have larger import volumes than does the us 2 japan and the us engage in less intra industry trade than the rest of the oecd and 3 the eu countries are less open to imports from japan and the us than those countries are open to imports from the eu

the factor content of international trade without factor price equalization abstract within the basic two factor multi commodity model of a two country world the present paper shows that international factor price equalization is unnecessary for deriving the heckscher ohlin theorem in its factor content version according to which the bundle of goods exported by the capital abundant country will use more capital and less labour than the bundle exported from the labour abundant country the factor content version remains valid when the model is generalized to include trade impediments intermediate goods or additional countries except perhaps if the first of these extensions is combined with either of the other two

how should consumers willingness to pay be measured an empirical comparison of state of the art approaches abstract this study compares the performance of four commonly used approaches to measure consumers willingness to pay with real purchase data real the open ended oe question format choice based conjoint cbc analysis becker degroot and marschak s bdm incentive compatible mechanism and incentive aligned choice based conjoint icbc analysis with this five in one approach the authors test the relative strengths of the four measurement methods using real as the benchmark on the basis of statistical criteria and decision relevant metrics the results indicate that the bdm and icbc approaches can pass statistical and decision oriented tests the authors find that respondents are more price sensitive in incentive aligned settings than in non incentive aligned settings and the real setting furthermore they find a large number of none choices under icbc than under hypothetical conjoint analysis this study uncovers an intriguing possibility even when the oe format and cbc analysis generate

alternative hypotheses and the volume of trade the gravity equation and the extent of specialization we examine why the gravity equation works and the implications for its use first we demonstrate that the gravity equation as a statistical relationship can be generated from a model with incomplete specialization and trade costs second we analyse the predominance of zero bilateral trade values as a puzzle broadly inconsistent with the complete specialization models typically used to derive the gravity equation but consistent with the alternative hypothesis of incomplete specialization third we demonstrate that the explanation for why the gravity equation works has considerable relevance for how the gravity equation is interpreted and used and how we view bilateral trade diverses hypotheses et le volume du commerce l equation de gravite et le degre de specialisation les auteurs examinent comment fonctionne l equation de gravite et les implications de son usage on propose trois contributions d abord on montre que l equation de gravite en tant que relation statistique et non pas en tant que prediction specifique de commerce bilateral peut etre produite a partir d un modele avec specialisation incomplete et couts de transaction ensuite on analyse la predominance de valeurs zero dans les commerces bilateraux en tant qu enigme generalement incompatible avec les modeles de specialisation complete utilises habituellement pour deriver l equation de gravite mais compatible avec l hypothese de rechange de specialisation incomplete enfin on montre que les raisons pour lesquelles l equation de gravite fonctionne ont un impact sur la facon de l interpreter et de l utiliser et sur notre facon de concevoir le commerce bilateral

oil prices and rural migration the dutch disease goes south abstract we construct a two period general equilibrium model to evaluate policies affecting agricultural migration and exports the model is applied to mexico for the period 1986 1987 to obtain certain qualitative policy conclusions related to the dutch disease brought about by oil price increases dutch disease phenomena can be brought about both as the result of real exchange rate changes as well as price changes caused by migration out of agriculture in the short run it may be possible to use fiscal policy such as value added subsidies to agriculture to at least partially negate the effects of an oil price increase on agricultural exports jel f31 f41

drivers of vertical intra industry trade the case of the hungarian agri food sector this article investigates the drivers of vertical intra industry trade viit in hungarian agri food trade with the european union eu it identifies three possible ways to measure intra industry trade iit flows ghm ff and n methods and defines six hypotheses to test for the drivers of viit with three panel data models static dynamic and fevd the results suggest that factor endowments are negatively while economic size is positively and significantly related to viit distance and viit were found to be negatively related as is commonly the case in the standard gravity model it was also found that viit is greater if a new member state nms is exporting agri food produce to an nms while eu accession has ambiguously influenced the share of viit in general it seems that our results are independent from model estimations and interestingly they do not differ considerably as we a priori expected moreover our results seem surprisingly robust across various measurements of itt

the ricardian approach to budget deficits persistent budget deficits have increased economists interest in theories and evidence about fiscal policy this paper develops the ricardian approach and contrasts it with standard models the discussion considers from major theoretical objections to ricardian equivalence finite lifetimes imperfect capital markets uncertainty about future taxes and incomes and the distorting effects of taxation the paper then considers empirical evidence on interest rates consumption and saving and current account deficits the conclusion is that the ricardian approach is a useful first order approximation and that this approach will probably become the benchmark model for assessing fiscal policy this abstract was borrowed from another version of this item

a new paradigm for valuing non market goods using referendum data maximum likelihood estimation by censored logistic regression abstract this paper challenges the w m hanemann amer j agr econom 66 332 341 1984 and c sellar j p chavas and j r stoll j environ econom management 13 382 390 1986 utilizations of logit models to estimate the value of non market resources from referendum survey data these data are more informative than conventional choice data the random utility interpretation of logit models is therefore too restrictive bypassing the utility function entirely it will be shown that parameters and standard errors for utility theoretic inverse hicksian demand functions can be extracted directly and much more simply estimated demand functions need not be limited to those corresponding to the linear in parameters utility difference specifications which can be handled by packaged logit programs

are stated preferences confirmed by purchasing behaviours the case of fair trade certified bananas in switzerland as the market share of fair trade food products in countries of the north grows understanding consumer preferences with regard to this recent label is becoming increasingly important this article reports on a test of the consistency of consumers stated preferences for which a survey was conducted at the place and time of actual purchase decisions the aim of the survey was to further improve the understanding of consumers stated motivations for buying fair trade and organic fair trade bananas in switzerland hypothetical questions with double dichotomous choices were used to compare two types of bananas conventional and labelled and to assess the average stated willingness to pay wtp for fair trade labelled bananas the results show that fair trade is largely accepted in switzerland and that the premium for purchasing such products is influenced by age the number of young children and the perception of the fair trade label i then used a comparative test of field observations and stated preferences for bananas to measure inconsistency in choices this comparison reveals that less than one fifth of the answers are in principle inconsistent these results point to the importance of confidence in the fair trade labels if consumers purchases are to increase

the elusive costs and the immaterial gains of fiscal constraints we study whether fiscal restrictions affect volatilities and correlations of macrovariables and the probability of excessive debt for a sample of 48 us states fiscal constraints are characterized with a number of indicators and volatilities and correlations are computed in several ways the second moments of macroeconomic variables in states with different fiscal constraints are economically and statistically similar excessive debt and the mechanism linking budget deficit and excessive debts are independent of whether tight or loose fiscal constraints are in place creative budget accounting may account for the results

validation of empirical measures of welfare change a comparison of nonmarket techniques since the passing of the flood control act of 1936 the attention of many resource economists has been directed towards measuring the benefits and costs of alternative uses of natural resources increasingly it has been recognized that the value of some of these uses is not explicitly determined through market transactions this has led to the focus of much attention upon the development of nonmarket methods to estimate the value of these uses in the 1940s the groundwork for the travel cost method was established by hotelling prewitt 1949 following this in the 1960s davis initiated the basic foundation for bidding methods davis 1963 which were later to be subsumed under the heading of contingent valuation methods brookshire randall and stoll 1980 schulze d arge and brookshire 1981 thayer 1981 both of these methods will be further discussed below in addition to these two methods a third approach the unit day value method has been recognized as acceptable but not preferred for the valuation of recreational uses of water and related land resources dwyer kelley and bowes 1977 u s water resources council 1979 given the existence of alternative methods of estimating the value of resource uses several obvious questions arise one of the first of these is under what circumstances is each method most appropriate existing literature has focussed sufficiently on this question and pointed out limitations of each especially the travel cost method and unit day value methods brookshire ives and schulze 1976 dwyer kelly and bowes 1977 freeman 1979 mcconnell 1975 randall ives and eastman 1977 schulze d arge and brook

trade creation and diversion revisited accounting for model uncertainty and natural trading partner effects summary the effect of preferential trade agreements ptas on trade flows is subject to model uncertainty stemming from the diverse and even contradictory effects suggested by the theoretical pta literature the existing empirical literature has produced remarkably disparate results and the wide variety of empirical approaches reflects the uncertainty about the correct set of explanatory variables that ought to be included in the analysis to account for the model uncertainty that surrounds the validity of the competing pta theories we introduce bayesian model averaging bma to the pta literature statistical theory shows that bma successfully incorporates model uncertainty in linear regression analysis by minimizing the mean squared error and by generating predictive distributions with optimal predictive performance once model uncertainty is addressed as part of the empirical strategy we find strong evidence of trade creation trade diversion and open bloc effects our results are robust to a range of alternative empirical specifications proposed by the recent pta literature copyright 2010 john wiley sons ltd

country size income level and intra industry trade this study investigates three testable hypotheses of intra industry trade it begins by developing a theoretical two country model the model explicitly includes two goods differentiated products and homogeneous goods then three empirical hypotheses are derived as follows the share of intra industry trade will be large a if the two economies are of similar size b if the capital labour endowment ratio of both countries is similar and c if the total size of the two economies is large from the cross sectional analysis using 1970 1994 data results are obtained that support the model furthermore the results are confirmed using panel analysis on the pooled data

oil production and macroeconomic adjustment in the indonesian economy abstract this paper is concerned with identifying and modelling the macroeconomic contribution of the oil sector to the indonesian economy a brief overview of macroeconomic developments for indonesia is conducted for the period 1970 1991 focusing upon the contribution of oil revenues to gdp the current account and government revenue in addition a simple theoretical macroeconomic model incorporating oil is presented and used for numerical simulation purposes to identify and analyse potential macroeconomic developments for indonesia arising from oil related shocks the overview suggests that oil price shocks are of particular interest in the context of indonesia as are therefore the simulation results derived from this case consideration is also given to the effects upon macroeconomic outcomes arising from various policy responses to oil related shocks in particular emphasis is given to the use of oil revenues for the purpose of stimulating domestic demand or the supply side of the economy and the adoption of a more or less export oriented policy towards oil production

political instability uncertainty and economics this paper focuses on the relationship between political instability policy making and macroeconomic outcomes the theoretical section explores various models that explain the effect of instability and political uncertainty on growth budget formation inflation and monetary policy the empirical section discusses the evidence on the predictions generated by theoretical models preliminary to this discussion however is the analysis of a few general issues concerning the specification and estimation of econometric models with political variables some new results are then produced on the empirical relevance of theories of strategic use of fiscal deficit

comparative advantage in manufactured goods a re appraisal japanese input coefficients are used to investigate the pattern of comparative advantage in the exportation of manufactured products in a cross country framework estimates are made for the imports of manufactured products as well as for net exports also alternative techniques of estimation are utilized and an attempt to explain the residuals in the regression equations and to indicate the predictive power of these equations is made the paper shows that patterns of comparative advantage in manufactured goods can be explained by reference to commodity characteristics and country characteristics in turn intercountry differences in the extent of trade orientation the concentration of exports and foreign direct investment explain part of the residuals of the cross country regression equations finally it has been found that the method applied permits projecting the factor intensity of trade for individual countries

external imbalances in the eurozone the paper examines the extent to which current account imbalances of euro area countries are related to intra euro area factors and to external trade shocks we argue that the traditional explanations for the rising imbalances are correct but are incomplete we uncover a large impact of declines in export competitiveness and asymmetric trade developments vis a vis the rest of the world x96 in particular vis a vis china central and eastern europe and oil exporters x96 on the external balance of euro area debtor countries while current account imbalances of euro area deficit countries vis a vis the rest of the world increased they were financed mostly by intra euro area capital inflows in particular by the purchase of government and financial institutions securities and cross border interbank lending which permitted external imbalances to grow over time ruo chen gian maria milesi ferretti and thierry tressel

age structure and the current account we adjust current account surpluses and deficits of 57 countries in the period 2005 2009 for differences in the age structure of their populations and find that these differences can account for a significant part of the variation in the data among the large countries we find that the adjustment increases the surpluses of germany and japan while the surpluses of china singapore hong kong korea thailand indonesia and malaysia are significantly diminished

monopolistic competition and international trade reconsidering the evidence we test some propositions about international trade flows that are derived from models of monopolistic competition developed by elhanan helpman and paul krugman we investigate whether the volume of trade between oecd countries is consistent with the predictions of a model in which all trade is intraindustry trade in differentiated products we then repeat the test with non oecd countries we also investigate whether the share of intraindustry trade is consistent with a more general theoretical model in which some but not all trade is intraindustry trade our results lead us to question the apparent empirical success of these models

composition of trade flows and the effectiveness of fiscal devaluation we empirically explore whether the magnitude of the effects of fiscal devaluation which consists of reducing the employers social security contribution rate and increasing the value added tax rate depends on the composition of trade flows our sample comprises data on bilateral balances of trade between 28 european union eu member states and their main eu trade partners over the 2000 14 period we use robust ordinary least squares regressions controlling for the country pair and time fixed effects to test whether there are differences in the sizes of relationships between these taxation forms and bilateral trade balances for different types of goods by distinguishing between i consumer intermediate and capital goods and ii labour and capital intensive goods our results show that the overall effectiveness of fiscal devaluation depends on the composition of trade flows value added tax is more strongly positively associated with bilateral balances of trade in consumer goods compared to balances of trade in capital and intermediate goods the employers contribution rate in contrast is more tightly negatively related to balances of trade in capital goods the latter finding also holds true for trade balances of labour intensive goods compared to balances of capital intensive goods

estimating willingness to pay by risk adjustment mechanism measuring consumers willingness to pay wtp without considering the level of uncertainty in valuation and the consequent risk premiums will result in estimates that are biased toward lower values this research proposes a model and method for correctly assessing wtp in cases involving valuation uncertainty the new method called risk adjustment mechanism ram is presented theoretically and demonstrated empirically it is shown that the ram outperforms the traditional method for assessing wtp especially in a context of a nonmarket good such as a totally new product

fragmented fiscal policy abstract this paper explores on a panel of 19 oecd countries the role of fragmentation in determining fiscal outcomes over the 1970 95 period we first define the notion of fragmentation of fiscal policy making as the degree to which the costs of a dollar of aggregate expenditure are internalized by individual decision makers empirically this notion has two key logical components the number of decision makers and the rules of the game or the budget process in turn the number of decision makers can refer to the number of parties in a coalition or the number of ministers in the cabinet we test all these determinants against each other and against perhaps the oldest explanation of all ideology we show that cabinet size and to a lesser degree coalition size and ideology are significant and robust determinants of fiscal outcomes in particular transfers are the budget items most affected by these factors

thousands of models one story current account imbalances in the global economy the global financial crisis has led to a revival of the empirical literature on current account imbalances this paper contributes to that literature by investigating the importance of evaluating model and parameter uncertainty prior to reaching any firm conclusion we explore three alternative econometric strategies examining all models selecting a few and combining them all out of thousands or indeed millions of models a story emerges the chance that current accounts were aligned with fundamentals prior to the financial crisis appears to be minimal

measuring consumers willingness to pay at the point of purchase abstract economists psychologists and marketing researchers rely on measures of consumers willingness to pay wtp in estimating demand for private and public goods and in designing optimal price schedules existing market research techniques for measuring wtp differ in whether they provide an incentive to consumers to reveal their true wtp and in whether they simulate actual point of purchase contexts the authors present an empirical comparison of several procedures for eliciting wtp that are applicable directly at the point of purchase in particular the authors test the applicability of becker degroot and marschak s 1964 well known incentive compatible procedure for assessing the utility of lotteries to measuring consumers wtp in three studies the authors explore the reliability validity and feasibility of the procedure and show that it yields lower wtp estimates than do non incentive compatible methods such as open ended and double bounded contingent valuation they show experimentally t

external adjustment and the global crisis abstract the period preceding the global financial crisis was characterized by a substantial widening of current account imbalances across the world since the onset of the crisis these imbalances have contracted to a significant extent in this paper we analyze the ongoing process of external adjustment in advanced economies and emerging markets we find that countries whose pre crisis current account balances were in excess of what could be explained by standard economic fundamentals have experienced the largest contractions in their external balance we subsequently examine the contributions of real exchange rates domestic demand and domestic output to the adjustment process allowing for differences across exchange rate regimes and find that external adjustment in deficit countries was achieved primarily through demand compression rather than expenditure switching finally we show that changes in other investment flows were the main channel of financial account adjustment with official external assistance and ecb liquidity cushioning the exit of private capital flows for some countries

willingness to pay estimates using the double bounded dichotomous choice contingent valuation format a test for validity and precision in a bayesian framework the double bounded dichotomous choice db dc contingent valuation format is thought to yield more precise welfare estimates questions remain about its validity the initial bid may represent information with which respondents update their willingness to pay a bayesian model of respondent decision making is estimated for two data sets the results indicate updating or shifts in respondent willingness to pay between iterated valuations nonparametric testing of the welfare estimates reveals that the model incorporating updating yields different values from the standard model the expected increases in the precision of the db dc welfare estimates are lost when updating occurs

efficient estimation methods for closed ended contingent valuation surveys closed ended contingent valuation surveys can be very useful in the evaluation of nonmarket resources respondents merely state whether they would accept or reject a hypothetical threshold amount either as payment for giving up access to the resource or as a fee for its use the authors develop a maximum likelihood procedure which exploits the variation in the threshold values to allow direct and separate point estimates of regression like slope coefficients and error standard deviations without truncation bias their illustration uses data from a survey of recreational fisherman to examine factors which influence individuals willingness to pay copyright 1987 by mit press

assessing holistic economic value for multifunctional agriculture in the us abstract this study used contingent valuation method to shed light on public preferences on the multifunctional roles of the us agriculture and to present a holistic estimate of the economic value of the nonmarket goods and services of us agriculture contingent valuation survey instrument was administered to a sample composed from the ipsos web based panel fishbein s model of reasoned behavior and mediation hypothesis were combined to model the relationship between wtp behavioral intentions and sets of explanatory variables including attitudes perceived attributes about family farms farmland preservation programs government involvement in agricultural markets and ecological state of our world and socio demographic profiles results show that while exerting a highly significant impact on wtp attitudes mediate the effects of the attribute variables on wtp i e the attributes influence wtp directly as well as indirectly through attitudes the estimated mean wtp was 515 per taxpayer annually aggregating individual wtps across the us taxpayers above 20 years old produces 105 billion representing a crude estimate of the economic value that the us consumers place on the multifunctional roles of us agriculture

chapter 11 pricing models in marketing publisher summary this chapter brings together a set of diverse efforts in the recent literature on the modeling of price decisions and related questions in marketing there has been an impressive growth in the array of topics investigated in the literature various trends in the development of pricing models are evident from the foregoing review first one trend has been to develop theoretical models to describe observed pricing strategies in the marketplace and to derive conditions under which certain strategies are optimal this trend is clearly evident when one considers the area of dynamic pricing models another trend is an attempt to develop pricing models in which certain aspects of consumer behavior e g asymmetric response to price increases versus price decreases are incorporated this development is quite recent and does offer a large potential a third dominant direction is the use of game theoretic models for developing equilibrium pricing strategies

fiscal policy and the real exchange rate abstract this paper reconsiders some conventional notions about fiscal policy under flexible exchange rates using an extended version of the dornbusch overshooting model the extension allows for a long run link between output and the real exchange rate unanticipated permanent fiscal policy affects both current and long run output while the long run effect is always in the expected direction it is possible that the current effect is perverse both fiscal and monetary policy must cause either nominal exchange rate overshooting or perverse domestic interest rate effects the results suggest that real shocks are a potential source of high exchange rate variability

the rise and fall of european current account deficits this paper traces the rise and fall of current account deficits in certain euro area countries and in the baltics these countries all entered the global financial crisis with sizable current account deficits and the unwinding of these deficits has been a complex and painful process for most while much of the general policy discussion of the large pre crisis deficits has focused on losing export competitiveness this paper highlights other results in the literature regarding import booms as well as a dimension that is rarely discussed the drop in the non trade portion of the current account transfers and net income balance in many countries the paper also examines progress made in unwinding these deficits most countries have made tangible progress but with different degrees improvement of price competitiveness and a shift of production from non tradable to tradable sectors has helped increase exports and along with compressed imports close the current account deficits the adjustment though has taken place against recessions and low growth in the euro area and the paper also considers what has made the process more painful in some countries rather than others we find that large current account balances prior to the crisis is the best predictor of a sharp drop in output during the crisis supportive macro policies to cushion the adjustment process and keep overall euro inflation at or above target level are necessary in the longer term improving institutions to deal with imbalances and preventing them at future entry are important

valuing climate protection through willingness to pay for biomass ethanol abstract this study uses a multi part split sample contingent valuation method cvm and fair share fs survey to better understand the public s valuation of mitigating global climate change through its willingness to pay for biomass or cellulosic ethanol in addition to a basic cvm question a related scenario was developed that asked half of the survey respondents to state their fair share cost to lessen a potential food shortage in the next decade also through the expanded use of cellulosic ethanol three alternative biomass feedstocks were assessed farming residues forestry residues and paper mill wastes and municipal solid wastes overall a slightly larger proportion of respondents were wtp extra for cellulosic ethanol in the basic cvm scenario than in the fs scenario though no significant differences were found in the wtp for the different feedstocks bid curve lognormal regression results for the two models were similar supporting the idea that asking a fs rather than a conventional wtp question may be justifiable in some circumstances such as in cases of a national emergency

macro policy responses to natural resource windfalls and the crash in commodity prices policy prescriptions for managing natural resource windfalls are based on the permanent income hypothesis none of the windfall is invested at home and saving in an intergenerational swf is dictated by smoothing consumption across different generations furthermore with dutch disease effects the optimal response is to intertemporally smooth the real exchange rate smooth public and private consumption and limit sharp fluctuations in the intersectoral allocation of production factors we show that these prescriptions need to be modified for the following reasons first to cope with volatile commodity prices precautionary buffers should be put in a stabilisation fund second with imperfect access to capital markets the windfall must be used to curb capital scarcity invest domestically and bring consumption forward third with real wage rigidity consumption must also be brought forward to mitigate transient unemployment fourth the real exchange rate has to temporarily appreciate to signal the need to invest in the domestic economy to gradually improve the ability to absorb the extra spending from the windfall fifth with finite lives the timing of handing back the windfall to the private sector matters and consumption and the real exchange rate will be volatile finally with nominal wage rigidity we show that a taylor rule is a better short run response to a crash in commodity prices than a nominal exchange rate peg

long term relationships of major macro variables in a resource related economic model of australia a cointegration analysis abstract the paper reports the results of a simple cointegration analysis applied to bivariate causality models using data on resource output oil prices terms of trade current account and output growth to investigate the long term relationships in the sense of granger among these major macroeconomic aggregates in a resource related economic model of australia for the period 1960 90 the empirical evidence indicates that these five macro variables as formulated in our model are not random walks in addition resource production and oil prices are significantly cointegrated and they are also significantly cointegrated with the current account terms of trade and economic growth these findings provide support to the long term adjustments foundation of our resource related model

fiscal rules and twin deficits the link between fiscal and external balances this paper investigates the relationship between countries fiscal balances and current accounts with an emphasis on the role of fiscal rules the direct effect of fiscal policy on the current account via aggregate import demand is potentially amplified by indirect effects materializing through interest rate effects and inter generational transfers that reduce savings on the other hand the implied positive relation between fiscal and external balances is potentially attenuated by offsetting changes in savings through ricardian equivalence considerations we expect this attenuation effect to be stronger in countries with more stringent fiscal rules and test this hypothesis using a panel of 73 countries over the period 1985 2012 as previous studies we find a positive effect of fiscal balances on the current account supporting the twin deficit hypothesis however the effect of fiscal balances on the current account depends on the stringency of fiscal budget balance or debt rules in place it is reduced by one third on average and virtually eliminated for countries with the most stringent fiscal rules authors abstract

boom or gloom examining the dutch disease in two speed economies traditional studies of the dutch disease do not account for productivity spillovers between the booming resource sector and other domestic sectors we put forward a simple theory model that allows for such spillovers we then identify and quantify these spillovers using a bayesian dynamic factor model the model allows for resource movements and spending effects through a large panel of variables while also identifying disturbances to other shocks using australia and norway as representative cases studies we find that a booming resource sector has substantial productivity spillovers on non resource sectors effects that have not been captured in previous analysis

on the impact of transportation costs on trade in a multilateral world this article proposes to account for the differences in the importance of transport costs depending on characteristics of trading partners in a multiregion model of trade in differentiated goods we expect a smaller impact of transport costs on a country s exports as a share of importer gross domestic product gdp the more less relatively capital abundant the exporter importer is and the lower higher production costs are as captured by gdp at given factor endowments and diversity all else equal empirically this requires four interaction terms in addition to the direct impact of transport costs when estimating log linear gravity models one with the exporter gdp per capita or capital labor ratio a second one with the importer gdp per capita or capital labor ratio and a third and fourth with exporter and importer gdp respectively the hypotheses are strongly supported by the evidence from a large panel of bilateral trade between 1970 and 2000

risk sharing and industrial specialization regional and international evidence the authors provide empirical evidence that risk sharing enhances specialization in production to the best of their knowledge this well established and important theoretical proposition has not been tested before the empirical procedure is summarized as follows first the authors construct a measure of specialization in production and calculate an index of specialization for each of the european community ec and non ec oecd countries u s states canadian provinces japanese prefectures latin american countries and regions of italy spain and the united kingdom then they estimate the degree of capital market integration a measure of risk sharing within each of these groups of regions the ec countries the non ec oecd countries the united states canada japan italy spain and the united kingdom and rely on another author s estimate for latin america finally they perform a regression of the specialization index on the degree of risk sharing controlling for relevant economic variables they find a positive and significant relation between the degree of specialization of individual members of a group of countries provinces states or prefectures and the amount of risk that is shared within the group the authors perform regressions using variables such as shareholder rights and the size of the financial sector relative to gdp as instruments for the amount of inter regional risk sharing these regressions confirm that risk sharing facilitated by a favorable legal environment and a developed financial system is a direct causal determinant of industrial specialization this abstract was borrowed from another version of this item

what do we know about investment under uncertainty recent theoretical developments relating to investment under uncertainty have highlighted the importance of irreversibility for the timing of investment expenditures and their expected returns this has subsequently stimulated a growing empirical literature which examines uncertainty and threshold effects on investment behaviour this paper presents a review of this literature a variety of methods have been used to investigate the empirical implication of irreversibility in investment the majority focusing on the relationship between investment flows and proxy measures of uncertainty a general conclusion is that increased uncertainty at both aggregate and disaggregate levels leads to lower investment rates this suggests that there is an irreversibility effect under which greater uncertainty raises the value of the call option to delay a commitment to investment this effect appears to dominate any positive impact on investment arising from the fact that greater uncertability under certain circumstances increases the marginal profitability of capital the methods used raise a number of issues which call into question the reliability of the findings and these are addressed in the paper however if such irreversibility effects are present then their omission from traditional investment models casts doubt on the efficacy of such specifications jel classification d81 d92 e22

international standards and international trade empirical evidence from iso 9000 diffusion abstract empirical scholarship on the standards trade relationship has been held up due to methodological challenges measurement varied effects and endogeneity considering the trade effects of one particular standard iso 9000 we surmount methodological challenges by measuring standardization via national penetration of iso 9000 allowing standardization to manifest via multiple quality signaling information compliance cost and common language channels and using instrumental variable multilateral resistance and panel data techniques to overcome endogeneity we find evidence of common language and quality signaling augmenting country pair trade yet iso rich nations benefit the most from standardization while iso poor nations find iso 9000 to represent a trade barrier due to compliance cost effects